LSME504 - McDonald's in International Business: A Detailed Report

This report provides a detailed analysis of McDonald's in the international business environment, examining the impact of various external factors on its operations. It begins by exploring socio-economic cultures, highlighting how youth-oriented cultures, time constraints, purchasing power, cultural institutions, language, and family ties influence McDonald's strategies in different countries. The report then delves into technological developments, focusing on the introduction of new technologies in markets like Russia and the implementation of self-order kiosks and mobile applications. Furthermore, it discusses the political environment, including name alterations, majority rule challenges, and health concerns faced by McDonald's in various regions. Lastly, the report addresses ecological considerations, outlining the company's efforts to reduce waste, use sustainable packaging, and minimize greenhouse gas emissions. The report concludes that a thorough understanding and consideration of these diverse factors are crucial for building a strong presence and ensuring profitability in the international market.

International business

Table of Contents
INTRODUCTION ..........................................................................................................................3
Socio-economic cultures that affected McDonald's restaurant in international business :.........3
Technological developments that has affected McDonald restaurant in international business :
.....................................................................................................................................................5
The political environment affecting the business decisions of McDonald restaurant when
operating at international market :..............................................................................................6
Ecological considerations taken by McDonald :.........................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES:...............................................................................................................................9
Books and Journals:....................................................................................................................9

INTRODUCTION
The term 'international business' refers to the environment and surroundings in which
multinational companies that deals in the international market perform their business. The
process of international business can also be known as globalisation. These are the exchange of
goods and services among different countries. It is a multidimensional activity which is consisted
and impacted from several different factors such as legal issues, cultural diversification, market
trends, language issue and many more. The following report gives a detailed analysis of
international business through several factors. The company used is McDonald's, which is one
of the world's largest retailer in food service. The report covers several different external
environmental factors with the way they impacted McDonald's. It first covers the socio-
economic cultures, than further other environmental factors in accordingly form – technological,
political and ecological.
Socio-economic cultures that affected McDonald's restaurant in international business :
These are the consumer and economy related factors that give a huge impact on
companies operating in international market. These are basically based on the behaviour of its
target consumers and factors considered in economical changes that impact a company's growth
(Nambisan, Zahraand Luo, 2019). Some examples of these factor can be schooling, human
capital, income distribution and religion. Socio-economic culture factors that have affected
McDonald's in different countries are as following :
 Youth oriented culture – In 1960s and 1970s, McDonald's got benefited through using
this factor as in those years in US, the trend of decision making was shifted towards
children to some extent. Children often made decisions and demanded the selection of
places to eat. The company noticed this, and used advertisements that attracted the
teenage and children. (Cherunilam, 2020)
 Less time consuming – The US society value their worth of time and money. Mcdonald's
uses less time in providing food to its customers and also target on reasonable priced
products. This attracted the local people and created desire to purchase their meals
outside rather than making them at home on impulse basis. This impacted the demand of
McDonald's in positive way due its low price and any time available food.

 Ability to purchase – This economic factor was seriously considered by McDonald's as
they are important for determining a consumer's ability of spending money on the related
items. The more the level of income distribution and employment of an economy the
more this factor gets promoted. This also involves the buying behaviour of consumers
which shows their preference of spending their income on different segments (van
Tulder, Verbeke and Piscitello, 2018). The company took this in consideration and
preferred to expand in geodemographics in which the consumers had good ability of
purchasing with affiliated buying behaviour.
 Cultural institutions – These are society's basic values and preferences. This can include
traditions, habits, education level and many more. Considering this important element,
McDonald's made changes in their range of products. Such as in India, people prohibit
consumption of food products made with beef. The company decided not to launch its
famous Big Mac Burger which was consisted of beef. It was favourable and one of best
selling products of its stores in other demographics and it was the first MacDonald's
without beef. A different product, 'Maharaja Mac' was created in its place using a patty
made of lamb. The organisation also made changes in some other countries such as using
of slaughtered beef in Singapore and Malaysia according to the consumer's cultural
behaviour (Hamilton and Webster 2018).
 Language – When McDonald's expanded in southern china, it carefully considered to not
use the number four again and again in advertisements of its products as its pronunciation
was similar to the word which meant death in their language. The company in
consideration of its operations at Puerto Rico, developed a Spanish language campaign
which shower a considerable increase in its sales.
 Family ties – In japan, people consider their families very close, important and have
strong family ties. McDonald's took it as an opportunity and used this family related
approach in their advertisements (Yilmaz and Flouris, 2017). It made the community
believe that it is family members interacting spot through its commercials. For example –
One commercial showed a father driving a van full of boisterous kids to McDonald's for
milkshakes. This approach promoted the company's value and profitability in Japan.

Technological developments that has affected McDonald restaurant in international business :
These technological factors are the new ways of making a process easy and effective. A
business entity can get a vast advantages when used these factors correctly. These are consisted
in many elements and activities such as communication resources, increasing production,
information, technique of production research and development (Jansson, 2020). These
developments play a major role and had made many different activities more accessible to the
consumers and producers both. Using of these also impacts in changing of habits and fashions
quickly. High technologies are needed to take effective use promotional activities that can
develop new opportunities in the market. McDonald's has successfully coped up with some
technological problems and used this factor in a great way. It continuously substituted some of
the equipments that were used in its certain operations and also found new technologies to
provide their customers with more value and satisfaction with systematic planning and
positioning of it. This also provided the company with extraordinary connection between each
of its different stores with the high standard equipments to share important information and
provide the same level of satisfaction and service to its customers. Some of the various
technologies used by McDonald's are as follows :
 Providing new technology to the Soviet citizenry – When the company entered in
Russian markets, that time the other related companies of the country were not using high
technological equipments in their operations than the businesses of other countries that
were using western technology. McDonald's took it as an opportunity and planned to
bring new technology equipments that could provide long term benefits to the citizens
and company (Mäkelä, Saarenpää, McNulty, 2017).
 Self order and application facility – It's recent technology innovation include the bringing
of the company's own mobile application. Through this people can view, select and order
its products even from their homes. The mobile application also provide some important
information about the company. McDonald's also provided self order kiosk's to its
customers. Through this they can sit at their place in the restaurant and scan the scanner
provided on their tables or somewhere around, this provides them the menu of the
company through which they can order and pay with sitting at their place. This minimizes
the crowd conflicts at the counter and this also promotes the current guidelines of corona
of maintaining physical distances.

The political environment affecting the business decisions of McDonald restaurant when
operating at international market :
Political factors associate to elements that are intervened by government of the particular
economy. These specifically include the areas of some particular business laws, tax policies,
trade restrictions, political stability and several other elements. These maker or changer of these
factors include the specific government departments, agencies and some groups. Many
relationships among the countries also plays role in impacting any MNC. McDonald was banned
in Iran due to the conflicts the country had with the native company of McDonald's, America.
The dimensions that play role in the evaluation of these include the government relation with
foreign markets, financial position of the respective country and government bureaucracy. These
factor impact the policy making of a company (Meyer, 2017). As MacDonald's is operating in
many countries of the world it has to keep an eye and make their moves according to the
different political backgrounds of different countries. Some of the political issues faced by
McDonald's in different countries are as follows:
 Alteration of name – In 1993, a law passed in Moscow which stated that all the
companies operating in that area are required to have a Russian name or al least it needed
to be translated in the Cyrillic alphabet form. The company was liable to change its name
in Russian or translate it into the required alphabet form. The type of incident also
happened in Japan, in which the company's pronunciation was needed to be changed. It's
altered pronunciation was MaKudonaldo.
 Majority role – In Russia, the law states that at least ¾ votes are needed to approve any
major decision (Usunier, Van Herk and Lee, 2017). This hampered the opportunities
found by McDonald's as the representatives of the company and city legalities were
needed to agree on all important decisions.
 Health concern – Fast food outlets and restaurants are always targeted by the health
conscious communities or government due to their harmful elements contained food
which are consisted of sodium, sugar and other health damaging elements. McDonald's
take continuous steps in making its products more healthy as it have to comply with safe
and health regulations to smoothly perform. Due to the harming fast food products,
McDonald's was banned in Bermuda.

Ecological considerations taken by McDonald affect their international business decisions
making:
These are the environmental factor that affect any type of living organism that can be
biotic or abiotic. The consideration of these factors are important for maintaining the
sustainability of the world so that the future generation can also enjoy their fruitfulness. The
physical and climatic study of the new market are needed to be considered by McDonald's as
these factors can play a vital in impacting its profitability and image. It serves to more than 52
million people of around 100 countries with its more than 30000 restaurants diversified locally
which leads to various ecological related groups that keeps an eye on it related to its environment
friendly practices. Some environmental groups of different countries and market forced
McDonald's to reduce or switch its use of Styrofoam and plastic packaging to some environment
friendly way. Due to some unconcerned people about environment, the company's internal
market researchers believes that these environmental issues don't play a major role on its sales
(Sutherland, 2017). Several measures taken by McDonald's in order to consider this force of
environmental factor are as follows:
 McDonald's take involvement in practising of some environment friendly and
promoting sustainable activities such as environmental defence fund, an related pressure
group that promotes the decrement of harmful wastes.
 The company uses many types of packaging items to serve customers comfortable such
as bags, cups, glasses, spoons, straws and wrappers. It is presently using only 50%
sustainable source made packagings and only 10% of its restaurants perform recycling
of their waste materials. It has made an objective to have 100% renewable or recyclable
sources of products that comes form its packaging material till the year 2025.
 Wide range of kitchen equipments are widely used in the process of making and storing
of different food products. These release several different types of gases and other
pollutants that are harmful. McDonald's is committed to use and install all the kitchen
equipments and led lightning that are energy efficient, release less or no types of
harmful pollutants in all of its stores. Till the year 2030, it is also aimed to reduce its
greenhouse gas emissions by 36% across all of its global stores through using different
methods.

CONCLUSION
From the above report it has been concluded that, performing business on international platform
needs many different types of consideration to build a strong presence and profitability for the
company. McDonald's is a leading retailer in food segment with presence in the whole world
with thousands of stores. The company used and considered the norms of researching the market
more than working on making its food products better. The different external environmental
factors- socio-economic culture, technological, political and ecological play a vital role on an
organisation and McDonald's deeply studies and succeed in all these factors.

REFERENCES:
Books and Journals:
Nambisan, S., Zahra, S.A. and Luo, Y., 2019. Global platforms and ecosystems: Implications for
international business theories. Journal of International Business Studies. 50(9),
pp.1464-1486.
Cherunilam, F., 2020. International business. PHI Learning Pvt. Ltd..
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Jansson, H., 2020. International Business Strategy in Complex Markets. Edward Elgar
Publishing.
Mäkelä, L., Saarenpää, K. and McNulty, Y., 2017. International business travellers, short-term
assignees and international commuters. In Research handbook of expatriates. Edward
Elgar Publishing.
Meyer, K.E., 2017. International business in an era of anti-globalization. Multinational Business
Review.
Sutherland, J., 2017. Key concepts in international business. Bloomsbury Publishing.
Usunier, J.C., Van Herk, H. and Lee, J.A., 2017. International and cross-cultural business
research. Sage.
van Tulder, R., Verbeke, A. and Piscitello, L. eds., 2018. International business in the
information and digital age. Emerald Group Publishing.
Yilmaz, A.K. and Flouris, T., 2017. Corporate risk management for international business.
Springer.