Business and Business Environment Report for McDonald's Analysis

This report provides a comprehensive analysis of McDonald's business environment. It begins with an introduction to the business environment and its impact on organizations, followed by an examination of different organizational types, including public, private, and voluntary sectors, along with their legal structures and purposes. The report then delves into the size and scope of various organizations, using McDonald's as a case study. It also explores the relationships between different organizational functions like marketing, human resources, and finance, and how they contribute to achieving organizational objectives. Furthermore, the report discusses the positive and negative impacts of the macro environment on business operations, utilizing PESTLE analysis to assess political, social, and other external factors. Finally, it analyzes the internal and external factors of McDonald's to identify strengths, weaknesses, and their interrelation with macro factors, concluding with an overview of the key findings.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1Explaination about the different types and purposes of organisations; public, private and
voluntary sectors and legal structures.........................................................................................3
P2Explaination about the size and scope of a range of different types of organisations............5
TASK 2............................................................................................................................................6
P3Explaination about the relationship between different organisational functions and how
they help to achieve organisational objectives...........................................................................6
TASK 3............................................................................................................................................8
P4Positive and negative impacts the macro environment has upon business operations...........8
TASK 4..........................................................................................................................................10
P5Internal and external analysis of specific organisations to identify strengths and
weaknesses................................................................................................................................10
P6Explaination about how strengths and weaknesses are interrelated with external macro
factors........................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERNCES.................................................................................................................................13

INTRODUCTION
Business environment refers to the surrounding which consist of external and internal
factors that influence on the company operating situations and functions (Business environment,
2018). Factors here refers to suppliers, competitors, political, technological etc. Therefore the
company which is being considered to carry to this assignment is McDonald which is a fast food
organisation with its headquarter in Chicago. This report explains about the different types of
organisation with their purpose, legal structure, size and scope. In addition to this explanation
about the relationship between different organisational functions is also being explained along
with it positive and negative impacts of macro environment on business operations. Lastly, this
file focuses on the explaining how strength and weakness of an organisation are interrelated with
external factors.
TASK 1
P1Explaination about the different types and purposes of organisations; public, private and
voluntary sectors and legal structures
Organisation is defined as a social unit of individual that is being structure and managed
in order to meet a need or a collective gaols. There exist different types of organisation and they
are namely public, private and voluntary. Each organisation have their own legal structure and
purposes which are explained below:
Private:
Private sector are the part of country economic system which is run by groups of
individuals rather than by government and most it is being run to make profit. McDonald is one
such private organisation which is a fast food organisation. Therefore private sector have their
with its own legal structure and purposes which is explained below:
Legal structure: Partnership:This is a type of legal structure in which two or more partner enter in a
contract with each other in order to achieve the common goals. Sole proprietorship:This is a type of legal structure in which the business is carried out
single person on its own risk. Limited liability:It is a type of legal structure in which the organisation possess separate
legal entity from the owners as well as liability of each partners possess some limit.

Purpose:
The main purpose of McDonald is to make profit by providing exceptional customer
experience.
Public:
This is the type of organisation which is operated and owned by the government so as to
provide services for its citizens. National heath service sector (NHS) is one such example of
public organisation. Therefore public organisation has their own purposes and legal structure
which is explained below:
Legal structure: Central government:This is the government who have the power to hold absolute
supremacy over a unitary state and to improve the quality of environment. State government:This is a type of government who have some level of political
autonomy or are subject to direct control over national or federal government. Local government:This is a type of government which consist of regional district and
municipalities and their role is to initiate community economic planning efforts.
Purpose:
The purpose of NHS is to provide services for its citizens so as to improve the social and
economical conditions.
Voluntary:
This are the types of organisation which is formed by group of individuals usually as
volunteers in order to accomplish a purpose. It is also known as non-profit organisation. Oxfam
is one such voluntary and non-profit organisation. Therefore such organisation have their own
legal structure and purpose which is mentioned below:
Legal structure: Trust:It is a type of legal structure which consist of three party fiduciary relationship in
which the first party trustor transfer his business or property to trustee for the benefit of
third party that is beneficiary. Association:In this structure simply a group of individual comes together who have the
some objectives so as to earn profit.
Purpose:

The purpose of Oxfam is to come up with lasting solution to the iniquity of poverty.
P2Explaination about the size and scope of a range of different types of organisations
Different organisation like public, private, voluntary have their own size, scope vision,
mission and objectives which are explained below:
Private (McDonald):
Back ground of company: It is one of the fast food organisation which was founded by
Ray Kroc in 1940. It has its subsidiary' as well and they are McCafe, McDelivery etc.
Product and services: It mainly deals in products like Big Mac, French fries, McAloo
tiki and other wide variety of products and services.
Size: It has approx 37,000 restaurant all over the world and is term to be second largest
food service restaurant.
Scope: This organisation has wider scope level as it operate near about in 60 countries at
an international level.
Mission and vision:The main vision of McDonald is to be one of the top most quick
services rendering restaurant in the word. Whereas the mission is to provide hygienic food
services all across the world.
Objectives: The main objective of McDonald is to to create slid chain in an
organisation so that firm can render good return to its investors.
Stakeholders: The main stakeholders of firm is employees, executive officer, investors,
venture capitalists etc.
Public (NHS):
Back ground of company: This company was established in 1948 with its headquarter
in London and is one of the public funded national health care service sector organisation.
Product and services: It render services of health care which consist of In-patient care,
primary care etc.
Size: It consist of near about 1.5 million of employees among which 314,966 are health
visitors and nurses, 18,862 are ambulance staff, 111,127 are dental workers and 150,273 are
doctors which states that size of NHS is large enough.
Scope: This policy can be applied for all recorded information which are held by trust
even by others on the behalf of trust. Thus, this policy cannot be applied to information which
the trust only holds on the behalf of organisation or other persons.

Mission and vision: Main mission of the firm is to prevent illness by maximising health
and well being of individuals. Whereas
Objectives: NHS objectives is to improve the environment for staff and patients so as to
enhance its service level.
Stakeholders: Insurance companies, physicians, employers, governments,
pharmaceutical firms etc. are the stakeholders of firm.
Voluntary (Oxfam):
Back ground of company: It is one of the well developed firm which was developed in
1942 known as non-profit organisation. It has started with 20 charitable trust so as to reduce the
poverty level.
Product and services:It render services of removing the poverty level which is
increasing in world.
Size: The size of Oxfam is high as it has started with 20 charitable trust and operates in
near about 90 countries along will million of volunteers.
Scope: The scope of firm is wider as it render welfare services all across the world in
near about 90 countries.
Mission and vision: Main vision of the firm is to eradicate poverty from world. Whereas
the mission is to render necessary requirements to people suffering from poverty so that they can
also leave their life peacefully.
Objectives: The main objective is to increase the standard of living of individuals by
rendering them essential facilities.
Stakeholders: Charitable trust, sponsors, volunteers are the stakeholder of Oxfam.
TASK 2
P3Explaination about the relationship between different organisational functions and how they
help to achieve organisational objectives.
Organisation function of the McDonald's: Marketing: This function has been resulted in enhancing full-fledged relationship among
consumers, retailers and suppliers. In context of McDonald's, marketing has led to
increase in the customer acquisition with higher profit purpose. For McDonald's,
relationship of marketing with other departments such as finance, HR, operations will be

wide and supportive in each other tasks orientation. Finance Dept. has resulted into
distribution of funds to carry out marketing activities. For better marketing assistance of
HR is necessary to hire skilled employee with right talent to facilitate defined goals
accomplishments. These relationship will be long for future profit to achieve McDonald's
defined goals or targets. Human Resource Department: HR function's has been resulted into hiring of an
employee with adequate power & potential to conduct business activities in an effective
manner. Relationship of HR with other functions such as marketing and finance has been
resulted into each other co-operation at the optimised level. In context with McDonald's,
HR hires manpower with right knowledge and exposure to ensure that its efforts should
co-relates with other functions. Marketing provides actual needs of manpower to HR for
recruitment purpose and link with finance Dept. to transfer funds. This type of
relationship will be long live and co-operatives for future goals of McDonald's. Also,
company requires to implement strategic decision making to maintain relation of HR with
others for future goals purpose.
 Finance: Finance Dept. has been resulted into accounting & controlling of funds of
McDonald's for financial year basis. This section has major responsibilities to transfer
funds to other department such as finance, operations, HR for conducting their separate
activities or accomplishment of goals and targets. Where, finance supplies funds to
marketing department to conduct sales promotion. Similarly, in same context, HR Dept.
gets funds to conduct recruitment based activities in order to hires right person for right
responsibilities. This relationship will sustain the longer period of time. McDonald's has
higher profitability with big contribution of this department.
The inter-relationship of these departments have both advantages or disadvantages on
McDonald's organisation structure. The advantages and disadvantages are as follows:
Advantage: Such inter-relationship has been resulted into effective working along with
collaborative response of each other with major targets of goals accomplishment of McDonald's.
Also, their contribution has been resulted into higher profit earnings.
Disadvantage: Independent decision making has gone, because every department needs
to co-relate with other departments and no separate interest over activities. Also, one depends on
another Dept. This kind of relationship is like a burden to organisation.

McDonald's uses divisional based organisation structure, where they are divided into
different divisions: A, B and C. Also, each and every division has its own hierarchical units with
region head. The diagram of organisation structure is as follows:
Illustration 1: Organisation chart
Source: Organisation structure of McDonald's , 2018
TASK 3
P4Positive and negative impacts the macro environment has upon business operations
Macro environmental factors are those which are not under the control of an organisation
such as social, technological, political etc. So management of McDonald must make a proper
analysis of such factors with the helps of PESTLE analysis so as to examine which factor greatly
impact upon business operations (Cranmer, 2017).
Political factor:
This is one of the factors of external environment which is specfocally related to
government actions and policies within a nations. As the government of UK is stable and even
render support to private organisation (Balfaqih and Yunus, 2014.). Thus, it positively impact
upon business operations of McDonald in achieving a long term sustainability in marketplace. In
case if the political stability of a country is not in favour of McDonald's then it will negatively

impact on business as the firm have to pay high tax and surcharge. Thus it will result in decrease
in revenue of an organisation.
Social factor:
These factor is related to the preferences of customers, as the choices and demands of
customers keeps on changing. If the McDonald produces product taking into consideration the
preferences of customer then it will help in gaining a huge competitive advantage in marketplace
which will term to be one of the positive impact of social factor (Saranya and et. al., 2014). In
case if the management will just simply produce their product by not considering customers
preferences aspect then it will fails to achieve it aims that is to make profit which will term to be
one of the negative impact of change in social factor.
Economical factor:
Change in foreign exchange rate, inflation rate, deflation rate etc., are certain economical
factors which when changes greatly impact both positively and negatively on McDonald
organisation. When there take place economic recession in a country then it negatively impact
upon organisation like McDonald as there profitability ratio goes down due to the decrease in
purchasing power of customers (Raminhos, 2017). In case if the country economic condition
terms to be in favour of McDonald then it will positively effect the business operations of firm in
the form of increase in standardization of products which will result in achieving better quality
productivity and profitability ratio of an organisation.
Technological factor:
These factors refers to the change taking place in tools and technology which are used to
produce goods and services. In case if the McDonald company adopt the modern technology to
produce goods then it will positively impact on organisation as it will be able to render superior
quality of products to customers which will result in increase in profit margin of firm (Pels and
Kidd, 2015). On the other side implementation of advanced technology in an organisation will
result in increase in training cost of firm which is negatively impacting on firm operations.
Legal factor:
These factors refers to the legal rules and regulations which are framed by the
government under which the organisations have to function their different activities (Jafari and
Asgarnajafi, 2017). Laws such as discrimination act which was imposed by government so that
there doesn't take place any kind of discrimination among members of an organisation on any

basis neither on the basics of salary payment, nor on the basis of marital status etc. If the
McDonald will carry out its activities on the basis of legal laws then it will help in creating brand
image in the mindset of customers which will positively impact on organisation in the from of
increase in productivity and profitability ratio. In case if the management fails to carry out its
operational activity on the basis legal rules and regulation then it will negatively impact on
organisation in the form of decrease in brand image of firm in marketplace.
Environmental factor:
TASK 4
P5Internal and external analysis of specific organisations to identify strengths and weaknesses.
In order exist in market place for long period of time it is very much essential for the am anger
of McDonald to carry out SWOT analysis. With the help of this company can easily identity its
strength and weakness as well as opportunities and threats so that if there exist any threat or
weakness it can be overcome on-time in order to carry out business operations smoothly (Égert,
2017 ).
Strength Weaknesses
The major strength of McDonald is that it
possess to be second largest restaurants
network serving customers in over 120
countries which result in providing huge gains
from implementing best practices as well as
render market power over suppliers and
competitors. Whereas the second major
strength is that it is term to be the most
recognizable brand in restaurant industry.
Major weakness of McDonald is that training
cost are elevated due to increase in turnover.
Second weakness is that it mainly focuses just
on grease fried food and burger not of healthier
food items for customers. In addition to this not
much of seasonal variation in their products that
are being offered.
Opportunities Threats
McDonald can open up more of joint ventures
with several retailers as well as can be more
responsive towards society by rendering
healthier food items. Second opportunities
There exist many more competitors of
McDonald restaurant who render fast food like
KFC, Burger King, Pizza hut etc. Second major
threat which affect the operational activity of an

which can be availed by organisation is
expansion of its business into newly developed
nations of the world .
organisation is government rules and regulation
as they are considering regulation upon fas
food.
P6Explaination about how strengths and weaknesses are interrelated with external macro factors.
Changes in the external factors of political, economical, social and technological greatly
impact upon strength and weakness of McDonald organisation. Therefore below it is being
evaluated that how the strength and weakness of McDonald are interrelated with external macro
factors (Ivanov, 2016).
Political factors:
These factors here refers to the administrative practices and the government policy such
as regulatory shifts or new legislation which affect the business operations negatively and
positively. McDonald has achieved its great strength in the form of its recognizable brand image
just because firm operates its operational activity taking into consideration such changes and
accordingly implementing policies and strategies. If there take place change in government then
they come up with new rules and regulation. Thus, it effect the working activities of an
organisation as the company have to change their strategies and policies accordingly and
employees face difficulties in accepting such change from time to time which result in increase
in employees turnover.
Economical factor:
These factors refers to changes in labour cost, interest rate, inflation or deflation rate,
government policy etc. As the management of McDonald takes such changes into consideration
while implementation policies and strategies which has helped then in achieving its recognizable
brand image which is term to be the major strength of an organisation. Whereas in some case due
to poor economical condition of nation company fails to render reward system, compensation to
its workers. Therefore, it result in increase in employees turnover of an organisation which is one
of the weakness of firm.
Social factor:
When the company fails to recognize the preferences and needs of employees then it
result in increase in employees turn over which is a weakness of McDonald organisation.
Whereas Mc Donald company takes into consideration customers preferences and demands
while rendering of products and services to them which result in increase in brand image of

company in marketplace and its turns into a strength of an organisation. Thus, it can be said that
strength and weakness of an organisation are greatly related with external social factors.
Technological factor:
In some cases management of McDonald fails to accept the technological changes due to
insufficiency of capital because of which it cannot focus producing healthier food items for
customers, which then turn into company major weakness. But in case if the company adopts
modern technology when there exist appropriate budget to make purchase of such tools and
technology then it result in creating recognizable brand image in marketplace, which turn into a
major strength for firm. Therefore it can be concluded that strength and weakness of an
organisation are greatly related with external macro factors.
CONCLUSION
From the above report it can be summarized that in order to run business smoothly it is
very much essential for the manager of an organisation to analyse the external factors like
political, social, economical etc. which can effect the working operation of an organisation.
Moreover company should also conduct SWOT analysis so as to acknowledge the strength and
weakness of an organisation. This will help an organisation to overcome its weakness on time
and to grab the opportunities on time so as to achieve a successful growth in future.