LSME504 - McDonald's International Business: A PESTEL Analysis

This essay provides a comprehensive PESTEL analysis of McDonald's international business operations, examining the impact of socio-cultural factors, technological developments, the political environment, and ecological considerations on the company's strategies and decision-making processes. It explores how McDonald's adapts to diverse cultural norms, leverages technology for production and marketing, navigates political and legal challenges, and addresses environmental concerns in various international markets. The analysis includes specific examples of McDonald's adaptations in countries like the US, India, Japan, and Russia, highlighting the importance of understanding and responding to the unique characteristics of each market. The essay concludes by emphasizing the significance of a thorough environmental analysis for successful international business expansion.

International business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Affect of socio-cultures in McDonald's restaurants in international business.......................1
Technological developments affect McDonald Restaurant international business................2
The political environment considerations affect McDonald Restaurant international business
decisions in the markets they operate.....................................................................................3
Ecological considerations taken by McDonald Restaurant affect their international business
decisions in the markets they operate.....................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6
Online-.............................................................................................................................................7

INTRODUCTION
It is essential for a organisation to identify their business environment on regular basis to
analyse opportunities for growth (Cepel, 2019). There are two types of business environment,
internal and external business environment. McDonald's is an American fast food company
which is founded in 1955 by Richard McDonald's and Maurice McDonald's. It is headquartered
in Chicago, Illinois, US. This chain of fast food is popular for their hamburgers. The following
report cover affect of socio-economic culture, technological factors, political environment and
ecological environment upon McDonald's Restaurant in their international market. This report
also helps to analyse how these factors will affect McDonald's decision making process in
international market.
MAIN BODY
Affect of socio-cultures in McDonald's restaurants in international business
Social environment is one of the most important set of component of PESTEL analysis
which can impact upon customer purchasing decision for a particular product and services. It
consist of family background, power, income, wealth, purchasing behaviour, society perception
and many others. Companies focus on this factor and make their organisational strategies to meet
the needs of customer's social needs (Pantell and et. al., 2020). It is essential for McDonald's to
focus on the purchasing power of customers where their business exist, analysing population
fluctuation suggestions, marketing trend to satisfy customers and many others. Socio- culture
environment impacted a lot upon growth of the company. In context of McDonald's, their social
factor affect their success in US. The family structure in US is trending toward youth-oriented
culture where children of a family will decide that which restaurant they will opt to eat. Hence,
McDonald's focuses on this trend and make their advertising strategies to attract the attention of
children and teenagers. Hence, this helps the company to fulfil the needs of their socio- culture
requirement. They mainly focus to use those advertising contents which help them to attract
children and teenagers toward their products (Chan and Yuen, 2019). Secondly, in context of
given case study, it is found that US society placed on time favoured and here, customers like to
consume food within minimum time as much as possible. Hence, they try to serve their
customers as soon as possible at any time to gain their satisfaction. On the other hand,
McDonald's did not launch their Big Mac burger which is made by beef in India because Hindu
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culture is against beef consumption. Hence, the company serve chicken, fish and vegetable
burgers in India. The company is also focused to language element of social factor for their
company. When they expanded their business in Puerto Rico then they use US TV
advertisements which is dubbed in Spanish. Customers of Puerto Rico objected for such kind of
advertisements and just after this objection the company opted Spanish language campaign for
the Puerto Rico which help them to increase their sales. In context of Japan, their customers
enjoys the restaurant facilities with families. Hence, here decision making process of McDonald's
get impacted and they attract Japanese customers to have their meal within their restaurants with
their families. For example, McDonald's advertise their brand and product in Japan in such a
manner which will attract customers with family, like they advertise where a father and son
bicycling home with burgers and fries. Another advertisement in Japan show's that father is
driving a van with full of boisterous kids to McDonald's restaurant for milkshakes. It is found
that TV advertisements and international media impacted much upon customer's needs and
wants. Hence, they try to maintain their brand reputation and influence their customers through
international media to use their products. They also make sure that the advertising content which
they use should not harm any culture or religion which can decline their sales.
Technological developments affect McDonald Restaurant international business
It is essential for companies to use advance technology in their business and production
activities so that they will maintain the quality of their products and services appropriately to
satisfy their customers (Bamati and Raoofi, 2020). Technological factors also impacts to change
the lifestyle and attitude to consume products and services. It also help a company to grow with
new marketing opportunities. It helps to analyse whether local market is having sufficient
development of technological tools and machines to produce quality products or not. For
example, in case a company is facing technological issues within a country than it plans purchase
new technology from other country or they will shift their production department in that country
where they found high technological advancement. It is found that when technological factor of a
country is in appropriate condition then it can help the company to advertise their products
properly with various promotional tools. In context of McDonald's, technological factor impacted
their production activities and help them to improve their sales. Various kinds of promotional
factors are used by companies to aware more customers. They use social media marketing,
internet marketing and they also develop their website where customers can solve their queries
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and provide them reviews for their experience. On the other hand, when McDonald's enters in
Russia, then they consider that technological transfer could provide long term benefit to
company. Soviet machinery lagged 15-20 years behind Western technology which can impact
negative to the company's production activities. Hence, they decided to transfer new machinery
from Holland to harvest potatoes used to make French Fries which is one of their most popular
food item. The Chosen company has overcome various technological issues within their
business. It is essential for them to use appropriate distribution of their tools and machines for
their production and train their employees to work with high technological tools and machines.
This will help them to mitigate the risk of accidents and injuries of employees while working
with advance tools and machines (Särkkä, Gutiérrez-Poch and Kuhlberg, 2018). They can
purchase high quality of wheat cleaning machine, burger ores making tools, burger maker ovens,
blade slitter scorer machine and many other tools and machines for maintaining the quality of
products and services. It is a big opportunity for McDonald's to expand their business in those
countries where they can promote their products and services openly. They can also use social
media marketing by promoting their burger and fries on different social media platforms.
McDonald's are more popular in young generation and today's teenagers are more active on
social media sites. Hence, promoting the burgers and other eatable product of chosen company
will help them to gain more attention of targeted customers and make them influence with their
attractive promotional contents.
The political environment considerations affect McDonald Restaurant international business
decisions in the markets they operate
Political environment consist of trade restrictions, interest rate, government stability,
government attitude toward foreign market, financial policies and many others. This factor also
impacts upon growth of a company (Muhammadsidiqov, 2018). In context of McDonald's, a
legal issue occurred in Russia in the year 1993. their government of Moscow had passed a law
that all stores in the nation will must have a Russian name or the name must start with Cyrillic
alphabet. The same political issue for McDonald's was occurred in Japan and the company has
changed the pronunciation of their name and kept it as Makudonaldo. According to Russian law,
at least three-quarters vote is required to make a new decision for McDonald's. Price factors is
also one of the most important factor for a product's growth. The mentioned company is required
to focus on this factor and make sure that they will kept the prices of their new and existing
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product in new market should be related to their law. Promotional strategies are also impacted by
political factors. In most of the countries, companies are not allowed to use those content for
their advertisement activities which will hurt their local community by targeting them and
mentioning that they are living low quality of life. Every country have their different rules and
regulations for the promotions of the companies based in their country. For example, door-to-
door selling is avoided in China and France due their legal prohibition. Hence, here McDonald
can chose another way of promoting their products except door-to-door selling. On the other
hand, Germany forbids competitive claims which means they can not use those words in their
advertisements which analyse that a product of a company is better than their competitors (Peng,
Jiang and Song, 2021). Hence, companies avoid to use the words like 'better' or 'best' in their
advertisements. Hence, this political restriction must be focused by McDonald's and they must
make sure that they will not promote their burgers or their other eatable products by comparing it
with their competitors in Germany. In case they avoid these factors then they can face huge loss
in that specific region. Hence, to gain the trust of customers, companies must follow the political
rules and regulations of that country where they expanded their business. Hence, from the above
information it is analysed that political factors impacted upon company's development and a
company must analyse all political factors of a country where they planed to expand their
business.
Ecological considerations taken by McDonald Restaurant affect their international business
decisions in the markets they operate
The Physical terrain and climate of a country is also one of the most important factor
which should be focused by companies before expanding their business in their targeted nation
(Matulewski and et. al., 2021). These factors have impacted upon demand of products. These
factors are important because in case the country is having various climatic issues and their
tourism rate is also low than no customer prefer to go out to have their meal within their
favourite restaurants. Hence, in context of McDonald's, they should not chose such countries for
their brand expansion. On the other hand, humidity and temperature are some of the climatic
condition which must focused by companies. In context of McDonald's, they reduce their plastic
and Styrofoam packaging for their products because these packaging substances will impacts
negative upon environment. Hence, McDonald's must use paper packaging or they can use any
other substance for packaging which can can be biodegradable in nature. McDonald's agrees to
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work with environmental pressure groups such as Environmental Defence Fund which help them
to focus on their wastage management activities. They can also gain the trust of their customers
by following some of the CSR and sustainable activities like planting trees, offering their
products in paper bags, label to through the used packets of burger in dustbin on their products.
Customers prefer to purchase products and services more with those companies which are
sustainable and focus to provide benefit to their society (Norese and et. al., 2021). Their main
focus is upon their packaging products and use sustainable process and material in packaging
their products. They recycled one tons of corrugated boxes and they also recycle their waste by
30%. they also focus on helping people from climatic change and control those factors which are
in their hands such as they can reduce deforestation by planting more trees and plants and they
can also control their energy consumption by reducing wastage of electricity and specifically use
solar system for gaining electricity within their restaurants. They also work to reduce the global
green house emissions by making progress in their sourcing of beef, palm oil, soy, coffee and
fiber. McDonald's have partnership with Accountability Framework, Agro Tools, CDP Forests,
Good Growth Partnership and various other firms to end deforestation (CSR Project McDonalds,
2018). The mentioned company is also working with those suppliers which are focusing to
reduce, reuse and recycle in their factories and farms across big value chain.
CONCLUSION
It is concluded that there are various kinds of factors which can impact a business at
international level. A company must follow legal regulations for their expansion and must focus
on all political factors of a nation to expand their business. Social factors such as language,
customers preference toward the offered product and many others are also important for the
growth of a company at international level. Technological factors will help the company to use
advance machinery tools and equipments to improve the quality of their products and services.
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REFERENCES
Books and Journals
Bamati, N. and Raoofi, A., 2020. Development level and the impact of technological factor on
renewable energy production. Renewable Energy, 151, pp.946-955.
Cepel, M., 2019. Social and cultural factors and their impact on the quality of business
environment in the SME segment.
Chan, C.K. and Yuen, A.W.Y., 2019, July. Mainstreaming Culture Jamming? Revisiting the
Socio-Cultural Impact of Viral Campaign. In International Conference on Applied
Human Factors and Ergonomics (pp. 95-105). Springer, Cham.
Matulewski, P. and et. al., 2021. Trampling as a major ecological factor affecting the radial
growth and wood anatomy of Scots pine (Pinus sylvestris L.) roots on a hiking
trail. Ecological Indicators, 121, p.107095.
Muhammadsidiqov, M., 2018. The influence of “religious factor” on ethno-political and
confessional conflicts in muslim countries. The light of islam, 2018(1), p.18.
Norese, M.F. and et. al., 2021. A multiple criteria approach to map ecological-inclusive business
models for sustainable development. International Journal of Sustainable Development
& World Ecology, 28(1), pp.75-91.
Pantell, M.S. and et. al., 2020. Associations between social factor documentation and hospital
length of stay and readmission among children. Hospital pediatrics, 10(1), pp.12-19.
Peng, D., Jiang, D. and Song, F., 2021, February. Changes in political meaning of the built
environment: exemplified by the transformation of the institutional plot pattern in
Beijing. In ISUF 2020 Virtual Conference Proceedings (Vol. 1).
Särkkä, T., Gutiérrez-Poch, M. and Kuhlberg, M., 2018. Technological Transformation in the
Global Pulp and Paper Industry: Introduction. In Technological Transformation in the
Global Pulp and Paper Industry 1800–2018 (pp. 1-10). Springer, Cham.
Yang, H.L. and Lin, R.X., 2019. Why do people continue to play mobile game apps? A
perspective of individual motivation, social factor and gaming factor. Journal of
Internet Technology, 20(6), pp.1925-1936.
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Online-
CSR Project McDonalds, 2018. [Online] Available Through:
<https://www.slideshare.net/ssuser2c38c0/csr-project-mcdonalds/>
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