Business and Business Environment: McDonald's Analysis Report

This report offers a comprehensive analysis of McDonald's business environment. It begins with an overview of different organizational types, including sole proprietorships, partnerships, and multinational companies, providing examples for each. The report then delves into the specifics of various bu...Read More

BUSINESS
AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Overview Of Different Types Of Organisations................................................................3
2. Details Of Different Types Of Business Organisation.......................................................4
3. Functions Of McDonald And Its Interrelationship With Organisational Objectives And Its
Structure.................................................................................................................................7
4. Positive And Negative Impact Of Various Macro Environmental Factors On Business
Operations...............................................................................................................................9
5. Internal And External Analysis Of McDonald To Identify Strength And Weakness......12
6. Interrelationship Between Strength And Weakness With External Macro Factors.........14
CONCLUSIONS............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Every business organisation gets affected by its environmental factors. Both internal and
external factors affect the business and its environment. So in order to get competitive advantage
and sustain in market, every organisation needs to analysis its business environment and make its
strategies accordingly. Various types of organisations are explained in this report, their size,
scope and legal structure are also explained. In this study report, McDonald's mission, vision and
its business objectives are discussed. PESTLE and SWOT analysis is done to analyse the internal
and external factors of Mark & Spencer and their positive and negative impacts are explained
further.
MAIN BODY
1. Overview Of Different Types Of Organisations
Overview
In this study, various types of organisations are explained in brief. An organisation aims
at providing goods and services to its customers and satisfy them. There are various types of
organisations such as sole proprietors, partnership firms, private limited companies, public
limited company, Multi National Company(MNC), global company, etc. McDonald's is a private
limited company operating its business fast food chain restaurant and offers wide range of food
products and beverages.
Organisations can be divided in three main categories such as:
Private Organisation: These are the organisations whuich have shareholders who owns the
shares of business and are owners. The shareholders or owners have limited liability in company.
The private limited company requires paper work and legal requirements to start its business
organisation and its accounts needs to be shared with government. Mcdonald is a private limited
company operating its business fast food chain business. PVT ltd companies can be categorised
into following:
Sole proprietor: Such type of business is operated and run by one person who is the owner of
business. The owner is solely responsible for liability of business. The sole proprietor business
organisation is easy to set up and starts with less legal requirements and it is usually adopted by
small business entities(Springer and et.al., 2017). It includes small business such as art studios,
local grocery shop, IT consultation service, restaurants and hotels, etc. This type of business are
profit oriented.

Partnership firms: These firms are owned and directed by two or more partners and is governed
by a Partnership Agreement. The partners jointly bring resources to the business entity and
divide profits among themselves. Partners share roles and responsibilities and also have liability
for business. The partnership businesses are generally profit oriented. Partnership firm focus on
profit maximization to survive in competitive business environment.
Public Limited Company is a government corporation where shares are traded in stock
exchange through Initial Public Offering(IPO). It requires many legal requirements and official
documents and it is very complicated to set up. Public limited company should be registered
under the companies act, 1980. Public limited company sells its shares to individuals or
organization freely and without any limitation. NHS is a public limited company which provides
health care services to clients. The main purpose of public organisation is to serve the citizens of
the country.
Voluntary Organisations: Voluntary organisations can be referred as unions or group of
individuals who volunteer for the formation of the body in order to achieve a particular objective.
The main purpose of Voluntary organisation is to serve humanity by providing various services
free of cost and does not have profitability objectives. For Oxfam is the voluntary organisation.
Multinational company is a large business organisation operating its business in the
global markets, or in more than one country. MNC have office and factories in different
countries and usually have a centralised head office for co-ordinating the work. MNC's business
have huge turnover and face large number of competition and have to follow legal requirements
given by government. MNC'S are profit oriented and always find ways for expansion and
development in order to expand its market share. Honda company is operating its business in
more than one country and is a multinational company(Hannington, T., 2016).
Joint venture business organisation are undertaken by two or more persons and they
share revenues of its business i.e. profits and looses as well. Joint venture is not considered as
business organisation, it is a kind of partnership, proprietorship and corporation.
Licensing refer to when a business organization or business arrangement gives
permission of manufacturing its product and services to another company for specified
consideration is known as licensing. There are various methods for licensing such as patents,
trademark, intellectual property, copyrights or designs.
Summary

Different types of business organisation have different motives and visions and they work
accordingly. Government have control on almost every business type of organisation. Every
organisation aims to earn profit and run its business operation and also to sustain in competitive
market.
2. Details Of Different Types Of Business Organisation
Overview:
In this study part, various details of different types of organisation is given. It includes
background detail, products and services offered, size and scope, their mission, vision and
business objectives.
Partnership firm
(Ben & Jerry's
Home-made
Holdings Inc)
Private limited
company
(Mcdonald)
Public limited
company
(NHS)
Multi-national
company
(Honda)
Background
details
It is an American
company started
in the year 1978
in Burlington.
It was introduced
by brother
Maurice and
Richard in 1940
in united states.
It was launched in
1948 by then
minister of health,
Aneurin Bevan.
Honda company
was founded in
1946 by Soichiro
Honda and Takeo
Fujisawa.
Products and
services offered
Ben & Jerry's
Homemade
Holdings Inc.
manufactures
dairy products
and offers ice-
cream, sorbet and
frozen yogurt to
its customers.
Mcdonald
operates its
business in fast
food chain
restaurant and
offers french
fries, burgers,
coke, etc. to its
customers.
NHS provides
free healthcare
facilities, hospital
services and
primary care to
people.
Honda deals
manufacturing
and selling in auto
mobiles, luxury
and commercial
vehicles such as
scooters, motor
cycles, water
pumps, etc.
Size and scope Its annual revenue
is approx 243.6
million dollar.
It operates its
business in
approx 37000
It provides free
healthcare
services in 100
Honda collects
net income of
344.5 billion

restaurants in 120
countries.
PFI hospitals with
1.7 million
employees
working.
dollars.
Vision/ objectives It aims to operate
its business in a
manner that
brings innovative
ways to improve
quality of life.
McDonald's
visions to provide
quick and friendly
service to its
customers.
NHS vision is to
provide better
health care
facilities to every
people(Springer
and et.al., 2017).
Honda' vision is
to deliver cost
effective and best
quality products
by using superior
technologies.
Organizational
mission
Its mission is to
operate the
organization to
bring profits
which helps in
development and
growth.
McDonald's
mission is to be
favourite place of
customers to go
and have food
and beverage.
NHS's
organizational
mission is to
provide quality
care and facilities
related to health
to every person.
Honda Mission is
to maintain a
global viewpoint,
and aims at to
supply high
quality products
at reasonable
price.
Organizational
structure
Partnership firm
adopts functional
structure to
operate its
business
activities(Hannin
gton, T., 2016).
McDonald follow
a tall
organizational
structure to
operates its
business activities
because it is large
corporation.
Public limited
company follows
flat organizational
structure in which
there are few
levels of
management
between
employees and to
management.
Multi-national
company follows
matrix structure
because span of
control remains
with top
management.
Stakeholders Its stakeholders
are customers,
Its stakeholders
are its employees,
Stakeholders of
NHS are patients,
Its stakeholders
are customers,

partners,
employees. And it
focuses on to
satisfy them.
suppliers and
customers. And it
aims to satisfy
both employee
and customers.
employees,
government,
insurance
companies,
hospitals,
physicians.
shareholders,
research
institutes, media,
government
bodies, suppliers,
employees.
Summary:
In the above study part, different organisation's details are given which explains how
they, what they work for and what is their organisational objective to be achieved(Oraman, Y.,
2014).
3. Functions Of McDonald And Its Interrelationship With Organisational Objectives And Its
Structure
Overview:
In this study part, organisational chart is given and functions of organisation and its interrelation
with other functions are also explained.
Organisational chart:
Organisational chart explains the structure followed in organisation and it shows the
relationship between one employee to another, or employee to another level of employee, or with
top management. This explains the line of authority and responsibility of each employee in an
organisation. McDonald follows tall structure in which it has many levels of hierarchy which is
also called departmentation. The lines of communications is long and span of control remains
with top management.

Functions of McDonald's:
Every business organisation aims at providing products and services to its customers and
in order to do that it needs various step or functions to be followed(Vibhor, A. and et.al., 2015).
The different functions of organisation leads to achieve its goals and objectives by providing
good and services to customers. McDonald has various functional department which are as
follows:
Research And Development: the main aim of McDonald is to provide food products and
services to its customers which satisfy them. The research and development department focuses
on identifying the needs and wants of customers so that it can meet their expectations and satisfy
them to gain their trust and loyalty which can result in achieving its objectives. McDonald's
following tall structure, makes it difficult for research and development department to
communicate with other departments directly, it needs to follow the structure which makes a
long procedure. Having the strong research and development department McDonald's can
achieve its objectives where it could identify the needs of the custoomers which is essential for
achieving the organisational objectives.
Production Department: the tall structure followed in McDonald enables different department
to communicate and share accurate information. The production department communicates with
research and development department about taste and preferences of customers, then it produces
quality goods and services which satisfy them. And it benefits McDonald in satisfaction of
Illustration 1: organizational chart

customers by properly following the organisational structure. Having the proper communication
with R&D department, McDonald's can increase or decrease their productivity depending on the
market conditions which can hep the company in achieving its objectives
Finance Department: finance department communicates with other functional department of
McDonald as to decide budget so that every department can operates its functions properly.
Finance department decides budget for marketing, production, research and development. The
tall structure followed by McDonald makes it easier for functional departments to interrelate with
other departments and work towards achievement of goals. The interrelation between the two
departments can help McDonald's to achieve objectives as it is the duty of finance department to
release funds so the various activities can be carried out by functional departments in order to
achieve objectives.
Human Resource Management: the main aim of human resource management is to manage the
human resources of McDonald. Mcdonald treats its employees as the key stakeholders who helps
towards achievement of goals and objectives. Human resource department communicates with
production department if they need more personnels because of requirement of extra production
for meeting needs and wants of customers. But it lacks as McDonald follows a tall structure in
which human resource department will not get accurate requirement of personnels in various
other departments. Here HR department can set collaboration with production which can help the
department to procure the required number of personnels for the production and can also provide
tarining to increase the skills which is essential for achieving the objectives.
Sales And Marketing Department:
Marketing department focuses on attracting customers and influencing them to purchase goods
and services offered. McDonald's research and development department identifies expectations
of target customers then communicates with marketing department about the same, and it focuses
on attracting those target customers and overall objectives are achieved(Oraman, Y., 2014). It is
the role of marketing department to generate awareness and it is the role of sales department to
increase sale so, their interrelationship can help the company in achieving the objectives.
Summary:
This interrelation between different functional department leads to accomplishment of
organisational goals and objectives by satisfying customers. The organisation structure followed
in McDonald enables in proper flow of accurate information.

4. Positive And Negative Impact Of Various Macro Environmental Factors On Business
Operations
Overview:
In this study part, various macro environmental factors are explained and their impacts are also
explained. Pestle analysis is used to identify and analyse the external environment.
PESTLE analysis
Pestle analysis is used to analyse the macro environmental factors of the business environment
which impact on the business and its environment. The analysis result is identifying the strength
and weakness of organization by monitoring various macro environmental factors such as
political, economical, environmental, technological, legal and environmental(Vibhor, A. and
et.al., 2015).
Macro environmental factors
The macro environmental factors affects business and its operations and it also decisions making.
These factors are uncontrollable and so it needs to be analyse properly so that strategies can be
made regarding to.
PESTLE analysis of McDonald
Illustration 2: macro-environmental factors

Political factors affect every business organization, it includes rules and regulations made by
government, foreign trade policies, labour law, tax law, etc. McDonald's also gets affected by
various changes in political factors(Springer and et.al., 2017).
Positive impact: new trade agreements brings positive impacts for McDonald to increase brand
image and performance in the NAFTA member nation markets. It can help the company to
increase its profitability in various other countries.
Negative impact: UK is leaving the European Union which will bring instability in business
environment. It will also affect the business operations of McDonald as rules and regulations will
be changed. For example it shatter the free movement of employees from European country to
another which may effects company's performance.
Economic factors include cost of labour, interest rates, disposable income of customers,
inflation, economic growth, etc. Every business gets affected by economic factors of a country.
Positive impact: The cost of labour of a country is low which enables McDonald to spend less for
employee and worker and it can be spend on their training and development which can lead to
innovation and efficiency in business operations. Economic stability of the country can also help
to company to carry out the business functions easily.
Negative impact: if a country is facing slow economic growth then it will be not possible for
McDonald to step in that market and target customers which limits its expansion and
development. Rise in level of income can prove expensive for the company.
Social factors are related to social environment and this factor is also known as socio-cultural
factor. It includes education level, culture followed, demographic factors, etc. It also includes
recent trends followed by people(Bull, J.W., and et.al., 2016).
Positive impact: people now-a-days go for fast food products, which facilitate McDonald to
expand its business and productivity, this leads to expansion of market share and increased
profits.
Negative impact: generally, young age group demands for fast food product and other people like
to have healthy food products, which limits the market share for McDonald.
Technological factors include various technological developments, advance ways of production,
development of technological distribution channels, etc. The advance and updated technology
facilitate every business organization in its operations.

Positive impact: McDonald adopts advanced and updated technology which facilitate quick
services and meets demands of customers. And it also facilitates innovation and creation which
brings efficiency.
Negative impact: the advance technology adopted by McDonald increases its budget and it also
increases its training and development cost which is required for employees which directly
affects the prices of goods and services.
Environmental factors affects business and its operations directly or indirectly and it includes
climatic changes, global warming, weather conditions, limited natural resources, scarcity of raw
materials, etc(Bull, J.W., and et.al., 2016).
Positive impact: McDonald focuses on maintaining environmental balance by adopting practices
of corporate social responsibility which creates brand image of company and it also builds trust
of customers.
Negative impact: McDonald fails to follow recycling standards which leads to creation of waste
and leads to pollution and it does affects its brand image.
Legal factors includes different laws which influences the business and its operations and are
consumer protection law, health and safety law, employment law, discrimination law, etc.
Positive impact: McDonald serves and offers goods and services by following health and safety
law and maintains hygiene and cleanliness in its business operations which brings positive
outcomes(Hannington, T., 2016).
Negative impact: UK is leaving European union which leads to creation of legal issues for
McDonald and it affects its business operations as well.
Summary:
PESTLE analysis of a company helps it to understand the various macro environmental factors
which affects the business and its operations. Strategies can be made in regard to take advantage
of macro environmental factors.
5. Internal And External Analysis Of McDonald To Identify Strength And Weakness
Overview:
The internal and external is done to find out the strength and weaknesses of McDonald. And it
also explains influences it has on decision making process.
Internal analysis of Mcdonald is done by using SWOT in order to find out strength and
weakness which affects business operations and decision making of organization.

Strength:
 McDonald uses advanced technology which brings innovation and efficiency in business
operations(McDonagh, P. and Prothero, A., 2014).
 it is the biggest fast food company which facilitate the large market share
 It can take advantage over its competitor by focusing on meeting needs and wants of
customers and also providing quality goods and services.
 Expand in global markets by using advanced and technology and available efficient
employees and also by increasing range of products and services.
 Build its brand image in the minds of customers by satisfying them and also build trust
and brand loyalty.
 Mcdonald can focus on employee relation and make its employees satisfied towards job
and bring efficiency in business operations.
Weakness:
 McDonald faces large number of competition such as KFC, Burger King, etc.
 Use of advanced and updated technology by McDonald leads to spend more and it also
needs training and development for employees.
 McDonald focuses on providing fast food products and ignores healthy food products
which decrease target customers(Oraman, Y., 2014).
 McDonald's lacks effective management of its franchises business
 large market share lacks focus on product development
 New entry of business in market is easy and free which increase the competition.
Opportunities:
 Growth in food industry is an opportunity for the McDonald's.
 Selling wide range of new products can be an opportunity for the company.
 Making innovation within the food can also be the opportunity for the company.
 Expansing to new geographic regions.
Threats:
 High competition within the industry is the major threat for the company.
 Changing consumer preferences or trends is also threat for the company.
External analysis of McDonald is done by using Porter's five force model which considers
external factors of environment to find out strength and weakness.

 McDonald has created its brand image in the minds of customers by meeting their needs
and wants which decreases the bargaining power of customers.
 Mcdonald operates its business in global market which facilitate large number of
suppliers. More number of suppliers benefit in low bargaining power.
 Mcdonald aims at meeting demand of customers which result in building trust and loyalty
in the minds of customer which result in gaining competitive advantage. Mcdonald also
aims at providing quality products to its customers which helps it to earn trust and
loyalty.
 Free entry in new markets allow McDonald to enter in new markets and expand its
market share and increase productivity and profits.
 There are many substitutes of products of McDonald in market like KFC, Burger King,
etc. McDonald gains competitive advantage by offering customer's preferences at low
cost and it also provides quick service(Polyvyanyy, A., Smirnov, S. and Weske, M.,
2015).
 Political factors greatly influences the business of McDonald's by trade related rules and
regulations, taxes, entry in new markets.
 Economic factors such as recession affects the business of McDonald's as people would
not buy its products and services which will decrease its markets share and profits as
well.
 Social factors affects mcdonald's as young people like to have fast food products,
whereas some people are health conscious and they like to have healthy food products
which influences demands of products of mcdonald's.
 Technological factors such as implementations of robot waiters attract more customers
fort McDonald's.
Summary:
The internal and external analysis helps a company to understand its strength and weakness, so
proper strategies can be made in order to sustain in competitive market and gain competitive
advantages.
6. Interrelationship Between Strength And Weakness With External Macro Factors
Overview:

In this study part, interrelationship between strength and weakness with external macro factors is
explained. External macro factors affect business operations which can be treated as strength or
weakness.
SWOT analysis refers to identifying strength, weakness, opportunities and threats of company.
And it is used to identify strength and weakness of McDonald(SWOT Analysis, 2018).
Interrelationship between external macro factors and strength and weakness of McDonald
The external macro factors affect business operations and it also influences decision making.
Political factors are foreign trade policies, rules and regulations laid down by government, tax
law, labour law, etc.
Strength: NAFTA trade agreement allow organization to do business in member nation, which
benefits McDonald to expand its market share and increase productivity and profits.
Weakness: health policies laid down by government affects business operations of McDonald
and leads it to make pressure on introducing quality and healthy food products.
Economic factors include disposable income, economic growth of country, cost of labour and it
affects directly to business operations of McDonald.
Illustration 3: SWOT analysis of
McDonald

Strength: stable economic growth of a country makes it possible for McDonald to increase its
outlets and increase markets share.
Weakness: high cost of labour in some country affects operations of McDonald to spend more on
personnel which increases overall cost of products and services and lower down the demand of
product.
Social factors include culture followed by customers, trends in economy, demographic factors,
etc. and it affects decision making of McDonald(Springer and et.al., 2017).
Strength: young age group people like to go for fast food products and facilitate business of
McDonald to target them and achieve organizational objectives.
Weakness: people now-a-days becoming more health conscious which makes a weak point for
McDonald as it offers fast food products. So, it needs to focus on introducing healthy products
which can meet demands of customers.
Technological factors affect business operations and decision making. Technological factors
include advance technology adopted by company, advanced distribution channels.
Strength: McDonald uses Robot Waiters to serve its customers which brings efficiency in
operations and attracts customers and leads to achievement of goals.
Weakness: adoption of advance and updated technology makes it more complex for employees
to handle them and it will also require training and development programs.
Legal factors influences every business organization and it includes various laws such as
consumer law, health and safety law, etc(Srdjevic, Bajcetic and Srdjevic, 2012).
Strength: Asian countries makes laws which allows entry of foreign brands, and it facilitates
McDonald to enter in new markets and increase its outlets and also increase its market share.
Weakness: UK leaving European Union leads to creation of legal issues which affects operations
of McDonald. McDonald's business gets affected by it.
Environmental factors are climatic conditions of country, global warming, or ecological
factors.
Strength: McDonald focuses on making environmental friendly products and maintaining
sustainability, which builds trust and brand image in minds of customers.
Weakness: McDonald needs to focus on global warming and other ecological factors rather than
on meeting needs and wants of customers, and it will make it difficult for McDonald(Vibhor, A.
and et.al., 2015).

Company's Strengths and weaknesses are interrelated with the macro factors which can
help to company to achieve profits or can even result in the loss. For examples company's
strengths like it brand image can help the company to face the competition and can help to
remain competitive in the market. Also, by using the advanced technology it can make
innovations in its products and service. Similarly, company's weaknesses can make it challenging
task for the company to face the risks of external factors for example lack of effective
management can make the situations worse for the company in facing the competition and not
switching to healthy i.e. ignoring the customer preference may result in loosing of customers for
the long-term.
Summary:
Various external macro factors affect business operations of a company and it does bring
strength and also can be threat. Company can make its strategies accordingly which can bring
positive outcomes.
CONCLUSIONS
Every business organization gets affected by internal and external factors of environment.
Organization should properly analyse both the factors and make decisions accordingly. SWOT
and PESTLE analysis helps to identify various factors which influences and affects business
organization. The factors affect the performance of business operations.

REFERENCES