Business Environment of McDonald's: Types, Functions and Analysis

This report provides a comprehensive analysis of McDonald's business environment. It begins with an introduction that emphasizes the importance of understanding the business environment, including internal and external factors. The report then delves into different types of organizations, their purposes, and legal structures, with a focus on public, private, and voluntary sectors. It examines the size and scope of these organizations, using McDonald's as a case study. Furthermore, the report analyzes organizational functions, particularly marketing and human resources, and their relationship to McDonald's objectives. It assesses the positive and negative impacts of the macro-environment on business operations, along with an internal analysis of the organization, considering strengths, weaknesses, and their interrelationship with macro factors. The report includes an introduction, conclusion, and references to support the analysis.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Different types and purposes of organisations with their legal structure.........................3
P2 Size and scope of different type of organisation...............................................................5
TASK 2............................................................................................................................................7
P3 Organisational function and their relationship with McDonald objectives and functions 7
TASK 3............................................................................................................................................9
P4 Positive and negative impact of macro environment on business operations...................9
TASK 4..........................................................................................................................................11
P5 Internal analysis o organisation.......................................................................................11
P6 Interrelationship of strengths and weakness with macro factors.....................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
In the recent business sector, it has become essential for a company to investigate the
business environment. Environment consist of the internal and external elements which create
threats and opportunities for business. This comprises technology, political elements, socio-
economical factors etc. Through understanding this aspects of a company in which a business
operates, this has become more essential for running the organisation successfully at any
situation or place. McDonald is American based fast food chain which has expanded their
restaurants chain in global marketplace. The company is one of the largest chain of restaurants in
term of revenues that owns their business in more than 100 countries (Agarwal, Grassl and Pahl,
2012). Purpose of this report is to analyse different organisation types and establish the major
concepts of them. This will also evaluate macro and micro environment of business in order to
portray a proper interrelation between both of these. This assignment will also evaluate different
functions of business and how these elements help in achieving business objectives.
TASK 1
P1. Different types and purposes of organisations with their legal structure
Public Sector Organisation
There is large companies number that are being operated under the regulation of
government of United Kingdom in respect of nation within the public sector category. This
majorly involve services of enterprises that concentrate over the public welfare despite of
focusing over benefits. This working sector consist mainly schools, NHS or other health
institutions, education, electricity, infrastructure and other working associations. Often these
companies are funded by the government of nation (Aterido, Hallward-Driemeier and Pagés,
2011). The number of such organisation has been growing due to carrying out for the essential
work. But United Kingdom has been facing more evolvement in private sector organisation than
Public.
Legal Structure: Such types of elements often include two aspects of association's legal structure
that is functioned by government. Here are mentioned the public companies under:
General State: Central State: This sort of government majorly function the country. In United Kingdom,
numerous regulations and rules for people and companies. Main focus of such sorts of
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legislative authorities that is being shared through state and central for accumulating
taxes as well as currency printing. State Government: According to this aspect, the nature of state government is political
who share authorities as well as power with the national government, major motive of
forming state Govt. who monitor the entire operations of education, health and other
sector along with focusing overall development of state. Local Government: This majorly consist of management structure which functions for
the small geographical area such as town, city or state. Hence, this is highly essential for
them to manage the entire region control under itself (Auzair, 2011). There are numerous
terms and policies that are being enacted for each and every citizen that are highly
required to be complied in ideal manner.
Public Corporations: It comprises the companies which are majorly share their shares to
public as well as hence, owned by many shareholder that are known as public association, This is
the type of firm that contain limited liabilities as well as offered sales and securities.
Purpose: Major Purpose of such organisations are to serve the public, create more
appropriate infrastructure, public safety and work for better health and education in country in
order to create more advanced living standard of individual.
Private Sector: Such companies types are majorly functioned by individuals who aim to
earn maximum benefits out of executed activities. These organisations are officially not
controlled and monitored by government that include partnership, proprietorship, medium or
small sized associations such as saloon, retailer, hospitality business etc. In Unite Kingdom,
private sector play major 89% role in GDP of country (Adeoye and Elegunde, 2012). Major
organisation aim of such association is to establish and launch in order to expand the operation
area within the marketplace. Productivity and sales are being enhanced at more higher market
rate in comparison to the public sector as well as covering the share of market.
Legal Structure: Sole Trader: These elements majorly involve ownership of individual person who is
liable for finance and funding of company. Such enterprise often face high risks of debt
sand liabilities.
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 Partnership: Partnership business consist of two and more than two owners which
operates successful business functions. These owners are equally part of entire loss, debts
and liabilities. Private Limited Association: Such organisation often aims over the maximum benefits
out of operated activities (Bar-Isaac and Shapiro, 2013).. There is limited members
liabilities within PLC. Private owners are liable for the benefits which us distributed in
dividend form. Public Limited Companies: These cooperative organisation provide more benefits to
people. People working within companies does nor transfer shares of society.
Purpose: Purpose of private limited companies are to maximise the invested amount as
well as develop and expand their business in global market.
Voluntary organisation: These companies can not be operated through a single
individual. This is generally called as NGO whose mission is to provide economical and social
benefits in the society. Such associations work aims to make the world better place through
working as charity. Various organisation which focus over same goal are adopting effective
strategies in order to achieve their objective. Hence, they will be able to meet the business
objectives with maximum appropriateness and effectiveness.
Charitable Companies: It can be claimed as the type of NGO that is being eliminated
from other affiliation type (Burns and Winter, 2011). Main purpose of this is to provide financial
and other services that can easily helps in accomplishing wants and requirements as well as
education, NGO majorly render irrespective merits of caste, gender, age etc. that can assist in
development and enhancement.
Purpose: Purpose of such companies are social welfare and create a better working
environment in order to develop and evolve. These aims over poverty, child education and
health, women empowerment, better environment etc.
P2 Size and scope of different type of organisation
Regarding different types of organisation companies are divided into 3 broad divisions
that include private, public and voluntary sector. Their structure, scope and size of organisation
are dependent on certain goals and objectives. In competitive business market the scope and size
depends upon their objectives, operations and purposes. Based on this factor the size and scopes
of these companies are discussed below:
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 Public – Company in these sectors are govern and operated by government bodies. All
the rules and regulation followed in this sector are formed by government organisations.
The objective of this kind of organisation is to serve more number of people in business
environment (Boons and Lüdeke-Freund, 2013). McDonald is a private sector
organisation but they are working in public interests also they feel that serving in private
sector will have brand loyalty and faith among customers in different business market.
Scope –The scope of this sector is to increase their service in different business
environment. As they are supported by government policies these, type of organisation help in
proper evaluation of different activities that are performed in diffrent business market. Many
people are not about rules and regulation in public sector so they have doubts in availing
services in public sector. The companies in these sector must concentrate promotion of their
services so that more people can avail their services.
 Private Sector- This sector includes company having private owners. All the decision
making, polices and regulation are controlled by owners only. They only have to follow
certain rules and guidelines that are laid down by government in business structure. They
focus on providing quality products, maintaining their activities and providing services to
people to earn more profit from their business activities (Chow and et. al., 2011).
McDonald is a private sector organisation , that have able to expand their business in
different geographical market in all over the world. For increasing their sales practices
they have put innovative ideas in their food products according to taste and choices of
people in that area.
Scope- The scope of this type of organisation is to provide better service to people and capture
market. Till now the McDonald have planned to to increase their retail business in different
market. By providing better fast food at an reasonable rate they are able capture large group of
people. In future planning they want to employee more market place where they can establish
more stores and perform business practices efficiently.
 Voluntary Sector: NGOs are basically functioned through finance arrangement by
donation and charity. There are more than 3million organisation in the whole world who
are working successfully in serving people. These type of organisations are formed by
funding bodies and trustees.
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Scopes – It is estimated that there are about 162,965 registered voluntary organisation are
working in all over UK and by annual report of UK government it is estimated that 50% are
earning more than £10,000 annually. It is expected this sector is fast growing sector in all UK.
McDonald is also doing voluntary work under the name 'Ronald McDonald' through which they
are serving necessary people in all over the world.
McDonald is a huge organisation that is having more than 36900 outlets at the end of 2016. It is
regards as 2nd largest private organisation with more than 1.5 million people working for them
TASK 2
P3 Organisational function and their relationship with McDonald objectives and functions
McDonald is having largest range of restaurant chain in all overt the world it is estimated
to serve 69 million customers on daily basis. For running their business company need
objectives and principles for better running their business in efficient ways for increasing their
revenue and increase their brand value ( Commander and Svejnar, 2011). By using defined
structure they can have better planning to sustain in business environment. Below are some of
the important factors that are used to perform different organisational function. Marketing ,it is
regarded as the the most important division of organisational function. By better planning and
promotional practices an a company can spread their grass roots in potent way. This
organisational structure involves different practices that includes advertisement, promotion,
position companies, market segmentation and customer base of different geographical locations.
By proper planning of these organisational function a company prosper in business structure.
McDonald is dealing in fast food product they have different policies like happy hours,
discounts, combo offers this will help in attraction more number of employees in their business
structure. Other factor is Human resource where ecruitment and selection is the most important
part of business. Better workforce management will strengthen the work force that will aid in
proper planning and implementation of business activities. Apart from recruiting employees
company must make sure that they maintain a harmonic business environment that will increase
coordination between them to work in unidirectional business objectives (Cronan and et. al.,
2011). McDonald is having a better human resource that has helped organisation to grow
efficiently in business organisation. In terms of HR planning they believe in strengthening their
team by providing them adequate skill and knowledge that is required in performing business
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activities. Regarding resource operations they have defined roles and jobs for each kind of
employee. McDonald have planned treating each division of their organization in independent
way will help then in better evaluation of their business practices in geographical area. They
have planned training manuals for performing training practices. Some of the training practices
involves Shift Management,System Management, Restaurant Leadership, Business leadership
that are for managing business practices in organisation (Dahan and et.al., 2010). The other
important factors that is performed in McDonald business organisations are cognitive abilities,
motor and physical ability test, personality test, candidate ratio, cross culture issues, supply chain
management, resource development etc. other factor is Finance that help organisation to make
petter planning and practices for achieving business objectives. A financial manager help in
proper evaluation of different financial practices and plan their things accordingly. Accounting
manager of McDonald plays a very vital role in margining financial practices of company. This
department has to work effectively for better investment plan for business activities. The
financial front of McDonald is very stable. After the financial crisis in 2002 they have a new
financial plan '' Plan To Win” in 2003 (Fernando, 2011). To increase their competitiveness in
new business market. They have included 5Ps Promotions, product, price, place and people in
making strategies about financial planning for making potent monitory structure in different
geographical market. Operations is another factor to be considered while formulating different
organisational function in business structure. Organisational function carry out functions
according to desired need and work of organisation. They are responsible for improvement of
organisational function that includes management of human resource, marketing and financial
activities according to need and wants of customers in business structure. The operation of
Management practices are concentrate on making decisions in mainly 10 decision areas that
includes designing services and goods, Quality Management, Capacity design and processes,
geographical location, Layout strategy and design, Human Resource and job design, supply
chain management, management of inventory, maintenance and scheduling. Information and
Technology in McDonald – For managing business activities it is important to have better
communication between different organisational activities so that the business can be managed
properly. They are using MIS ( Management Information System) that help controlling different
functions that includes controlling, storing, processing and transferring information among
different organisations. MIS commonly comprises of major 3 types of factors that includes
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automatic decision making through Decision Support System, Executive information system and
Expert systems that helps in relating better decision making in business processes.
The above mentioned factors are shows the way through which the company is making
efficient strategic business planning for achieving corporate objectives. Each function unit of
organisation have their own planning and authority for carrying out business objectives. By
carrying out better strategies and planning of organisational function McDonald will be able to
successfully grow in different market across the globe.
TASK 3
P4 Positive and negative impact of macro environment on business operations
Macro factors contains all the external factors that affect the business activities of
organisation in external business organisation. Company cannot have any control of external
business sector so for sustaining in that environment an organisation must have suitable planning
and forecasting for proper estimation of business activities. These factors can have both pros and
cons on business activities of a enterprise (Gebauer, Paiola and Edvardsson, 2010). These factors
tend to impact rules, regulations and policies of organisation. So for better analysis of different
factor an organisation can opt for PESTLE analysis to understand different factor for better
regulation of activities of company. As McDonald is having business in different parts of the
world they have to understand different factors in that geographical locations. Some of these
factors are Political factor under that Government of different countries make trading laws
according to their benefits so for doing business in in several countries it is essential for
McDonald to understand political factors for performing better activities. It is difficult for
countries to do business with political instabilities like Syria is having political unsuitability so it
will not be beneficial to invest in those countries (Halbert and Ingulli, 2011). The other factor is
Positive under that understanding different political approaches of country are included.
McDonald can perform their business in efficient manner. The free trade policies of those
countries will aid in making better marketing policies and earn more revenue from business
market. It also have negative effect that include Investing in politically unstable country will
only lead to loss of money and image of company. Third factor is Economical factor that include
growth rate, inflation, employees. These factors have different role in business activities of
organisation. They may vary from countries to countries. Management of McDonald must focus
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on understanding these factors for making better economical planning it has some Positive factor
like in inflation people will have more money to invest. This will increase productivity and
increase revenue for organisation and their negative effects are Unstable business environment
and practices will affect business earning of McDonald due to this business activities cannot be
performed in longer run. 4th one is Social Factor ,this includes responsibilities of organisation
towards society. They must repay back to environment whatever they have utilised from
environment. They must have ethical values and motives to serve people. They have several
types of food that are available at reasonable rate so that they can serve more number of
customers. Positive factor are infusing ethical values and practices in their activities will help
organisation to have better image and loyalty among people in different geographical region.
Their negative effect includes People and their different geographical area and cultural difference
so it will not be easy to sell their product in different business market. For example Beef and
Pork are ban in food products of McDonald in India because of different social issues the other
factor is Technological factor under which use of technology in business activities of
organisation (Hamilton and Webster, 2015). McDonald is using MIS in their business activities
so hey are able to control their business activities from one location this will generate
transparency in business activities. This will also aid them in monitoring their business through
different analytical tools for enhancing their performances. McDonald is using upgraded tools
for maintaining and analysis of their services, this will help in proper planning of business
activities in different locations. But More funding is required for installing technology in
business structure. Legal factor involves laws and act that are enacted by government. Legal
aspects includes international law and legal law (López-Gamero, Molina-Azorín and Claver-
Cortés, 2011). McDonald should follow these business practices for smooth running of their
businesses in different countries It will be a good to perform business practices in a legal
manner that will reduce any kind of deputes in performing their business activities. but
Sometimes it is very hard to cope up with several laws as the organisation cannot function
according to their plan. Environmental factors include environment and their impact on
functioning of organisation Considering environmental factor will not hamper activities of
company. It will reduce red – tapism in carrying out their work. But Company have to manage
paperwork of their business activities so that they can perform well in business activities.
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For analysing internal factor of organisational activities company should use SWOT
Analysis for better utilisation of resources and PESTLE Analysis.
TASK 4
P5 Internal analysis o organisation
Swot analysis includes Strength under which McDonald always work in making
innovative products currently they have added coffee, Angus Burger. Even in recession period
they have able to make profit through business activities (Mahmood and Hanafi, 2013). They
have a ever increasing dividend in stock market. Talking about their weakness They sometimes
find it harder to find best location of business activities. After implementation of Brexit it is
estimated that their growth rate will is expected to decrease. Opportunities of company are invest
in Chinese market and other countries of Asia. Cross cultural issues restrict them to launch new
product in different business market. Low interest rate lead to low capital growth. Their
innovation in menu are limited in many countries Threat of company are Government regulation
in food industry will hamper their growth. They are facing competition from companies like
Burger King, Yum Brand. They are having huge threat from Starbucks and Janba who are doing
efficient business in different European market. Increase in prices of commodity will destruct
their sales strategy
P6 Interrelationship of strengths and weakness with macro factors
PESTEL analysis are used to analysis external business environment. Political where
several political factor that affect business activities of McDonald are Increase in international
trading practices, Pending tax reforms, Evolution of public health policies other is Economic
factor where Several economical factors that are helpful in analysing business structure are as
follows Slow growth rate of economy of US over the years,s table but predicted to be risky
European culture, Slow Chinese economy in current business environment. 4th factor is Social
factor that includes how company is behaving in social business environment like widening of
wealth gap, Cross culture, Health and safety (Agarwal, Grassl and Pahl, 2012). 5th is
Technological factor It is about using technology to a good effect in business environment that
includes Moderate research and development in food industry , help in business
automation ,Increase in sales through mobile devices other is Ecological factors It is abut
focussing on business environment, Increasing in corporate environmental plan, focus on
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sustainable use of resources ,climatic change in different geographical location the last one is
Legal Factors where factors includes laws and policies of government,Minimum wage
policies,Local and national health in workplaces,Animal welfare
Business environment will always affect the working of organisation in business
structure. McDonald is having several strength and weakness in sustaining in competitive
market. Company is dealing in fast food, with efficient business strategy they have been able to
increase their presence in different market all over the world (Aterido, Hallward-Driemeier and
Pagés, 2011). The company have understood that for having strong presence in different
business market an organisation must have a better financial base.
Company is having a good brand equity in business market, they are considered the
major junk food company. Company have sensed that they can invest more in Indian market as
it provide opportunities because country is regarded as fast paced growing economy where the
cost of capital of people is increasing day by day. The company is able to reach out to different
people with a good price range of food items. They have potential to to expand their business in
urban and rural sectors also. Through analysing different factors in business in intentional and
external organisations structure it is concluded they have a superior dominance in business
market. They have a large range of stores through which they have extended their reach in
different business market. McDonald is having large number of employees for performing their
work successfully in business market but it is important for them to have a better work force
management so that they can execute their planning effectively in competitive environment. It is
also predicted that Brexit will also play a crucial role in business activities of organisation as
government is planning to invest in small scale organisation. So after implementation of this
forum in 2019 they have to change their business policies in UK market. Company often find it
difficult in finding locating their business activities. So demand forecasting is necessary for
better determining of place to develop their business. McDonald must make sure that they target
their competitors and make planning against them. For example Burger King is one of the
emerging company that id providing quality product at almost same price of McDonald so they
should make planning to tackle against them. They have implemented MIS as an innovative
technological tool so that they can have transparency in their business activity. By proper
monitoring their business activities they can plan better strategies according to area of region.
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