Business and Business Environment: McDonald's Case Study Analysis

This report provides a comprehensive analysis of McDonald's business environment, examining the impact of various macro environmental factors. It begins with an introduction to the business environment, followed by an analysis of political, economic, social, technological, environmental, and legal factors (PESTLE). The report delves into the positive and negative impacts of these factors on McDonald's operations, providing specific examples. Furthermore, it assesses the internal and external factors, identifying the company's strengths and weaknesses, and explores opportunities and threats. The report also examines the interrelationship between these strengths and weaknesses and the external macro factors, offering a holistic view of McDonald's position within its operating environment. The report concludes with a summary of the key findings and provides references to support the analysis.

Business and Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
P1. Covered in PPT................................................................................................................1
P2. Covered in PPT................................................................................................................1
P3. Covered in PPT................................................................................................................1
P4. The positive and negative impact of macro environmental factors on the business
operations with example.........................................................................................................1
P5. Internal and externals analysis of organisation to identify their strengths and weaknesses. 4
P6. Interrelation of strengths and weakness with external macro factors..............................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment includes all internal factors and external factors that directly and
indirect affect the business organisation. Internal factors can be control by company like value
system, organisation structure on the other hand external factor can't be control by company such
as economic factor, technology change, political and legal factors. Business environment helps to
identify opportunities of business and improve overall performance.
Present report based on different types and purpose and legal structure of public, private,
voluntary and small medium enterprises. Further, size and scope of different companies such as
NHS, MacDonald company, welcome trust and smith brother small medium enterprise. This
report will also cover the interrelationship of strengths and weaknesses of the company with
macro external factors.
P1. Covered in PPT
P2. Covered in PPT
P3. Covered in PPT
P4. The positive and negative impact of macro environmental factors on the business operations
with example.
There are various factors which directly affect the business operations through which
business is sis either able to work smooth or fail to achieve the desired target. Organisation must
consider all the factors before entering into the operation process and consider the positive and
negative effect of all the factors to meet the organisation with macro factors and to work
effectively and efficiently. McDonald’s have to identify all the threats and opportunities based on
the macro environment of business which is pertained to political, economical, environmental,
social, legal factors (PESTLE) analysis. It is explained below:-
Political factors
McDonald’s require to respond all the political laws and issues in many countries where
they working. They are required to comply with the health and hygiene rules and regulations so
to prevent the customers from any dissatisfaction.(Arndt, 2007). These fast food restaurant are in
under the government pressure to follow all the rules related to health safety. Government
intervention in the business determines the rate and path of the business development.
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Positive impact
 Due to the government interventions McDonald’s and other companies remain liable
towards the health safety of the public which is contribution towards the society.
 Government rules bind the company to work in true and fair manner.
 These regulation will help McDonald’s to create its brand value among large region of
the customers.
Negative impact
 The guidelines of the government regarding diet and health disrupts the company which
affects their performance(Hamilton and Webster, 2018). McDonald’s operates globally
and the government intervention will make it difficult for the company to trade and
perform, efficiently as the pressure of government subjected to the matter of criticism
relation to the effects of their products ion the consumer's health.
Economic factors-
It pertains the economic conditions and trends of the macro environment which affect the
operation of the McDonald’s. Economic changes directly or indirectly affect the complete
business and their performance(Hillary ed., 2017). The global, regional, local economies
influence the business. Economic factors includes changes in growth rates, foreign exchange
rates, inflation, interest rates, all these changes have direct impact on trading of their business
with different countries.
Positive impact
 Favourable changes in interest rates, growth rates will help the company to grow and
further development. Slow but stable growth of developed countries will also help the
McDonald’s to enhance their sales volume which resulting in higher returns.
 Rapid growth of developed countries encourage McDonald’s to start their new ventures
in more areas which ultimately increase the customer retention.
Negative impact
 Slowdown of the country's economy will then affect the organisation in adverse way.
 Economic recession will lead McDonald’s employees to leave the jobs due to low income
distribution
Social factors -
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It's relation is with the social conditions which either supports or limits the McDonald’s
business and their operations(Jong, B.J.D., 2016). Consumer behaviour is influence by the social
trends, change in fashion etc. which affect the revenue earning of the business. People tastes and
preference is the crucial subject matter for the company.
Positive impact
 There can be many factors which can taken into the considerations of socio cultural
including Rising level of disposable income which is the positive factor for McDonald’
as this will lead the organisation top generate more revenue for them as people's spending
will increase towards the product which is capable of satisfying their needs and wants.
 Engaged lifestyle in urban areas which makes difficult for the people to have a home-
made foods so they prefer the food which is readily available to them which again
enhance the sales of the company.
Negative impact
 A healthy lifestyle trend within the society will make difficult for the company to sell
their product to larger number of customers. It may brings disaster for the organisation as
McDonald's products are completely considered into the category of fast food as a “junk
food”.
Technological factors-
This include the factors which relates top the optimum utilisation of resources and
availing the maximum benefits from the available technology(Moroni, Arruda and Araujo,2015).
McDonald’s requires to address the different technological factors which includes advancement
in the technology, introduction of new and demanding technology etc.
Positive impact
 Moderate research and development activity in the industry lead the McDonald’s to make
constant changes as and when the requirements arises without putting so many efforts at a
time.
 McDonald’s sales is increasing through mobile devices in which people are more active
in using the internet and can go to the various options available to them by just clicking
on a single button.
Negative impact
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 Any introduction of new technologically make it costlier for the company to
involve in their operations and also lead to increase the cost of the production which
dissatisfies the customers.
Environmental factors-
It includes the factors which interlinked to the nature and the natural environment.
McDonald’s analysis the ecological trends which influence the business
operations(Phadermrod,Crowder and Wills, 2019). It relates to the protection of natural
environment in which business and society lives.
Positive impact
 Business can contributes towards the society and environment by increasing the emphasis
on sustainable business strategics which reflects the consumption of resources in efficient
way that it can sustain for the future. For protecting the environment, interest for
corporate environmental programmes can be increases so that business will be more
nature concern and helps in protecting the environment.
Negative impact
 Changes in climatic condition may get difficult for the organisation to store their foods
for longer and provide healthy foods to the customers, through which customers get
dissatisfied by consuming the unhealthy foods which brings a decreasing trends in seals
graph of the company.
Legal factors
Any impact and change in laws or regulations on the firm will make complicated for the
companies to go through the legal procedure by diverting their attention from their regular
performing activities(Stock and Seliger, 2016).
Positive impact
 McDonald’s, must address the legal requirements imposed by the government related to
employment law, labour law, taxes etc.
 After complying with all the laws company is free from any disruptions and able to work
effectively and efficiently.
Negative impact
 Rising of legal minimum wages makes it less profitable for the organization because of
increasing costs and prices and results in low profit margin. Imposing health regulations
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in company which limits the accessibility and availability of the fast food at schools or
workplaces which threatens the revenue of McDonald’s from these market segments.
P5. Internal and externals analysis of organisation to identify their strengths and weaknesses
This is necessary for the organisation to analyse and evaluate the strength and weakness
of the McDonald’s in addition to external factors also which affect the business organisation in
all way. Some factors have a great positive impact on the company while some are the threats
which are to b faced by the McDonald’s. The internal factors are classified into two that is
strength and weaknesses.
Strengths
 McDonald’s have expanded its products in many new items like coffees, smoothies,
burgers, and has expanded its menu into several new items which help in satisfying the
customers of the new products by providing quality goods and services.
 As McDonald’s is providing the quality goods and maintaining their standard of quality
their income has been grown(Salar. and Salar, 2014).
 McDonald’s operates their business globally which means their business is not restricted
to one economy or one currency, their operations are spread all around the world.
 McDonald’s is present in 35000+ locations in more than 100 countries across the world.
Weaknesses
 McDonald’s deal in proving the fast food which is considered in the category of junk
food and high fat and high calories foods are claimed to be not good for the people who
are health conscious which result in decreasing the sales of the company.
 McDonald’s have many jobs with low skills, low paying and high work pressure which
then result in high employee turnover which makes costlier for the company(Stock, T.
and Seliger, G., 2016. ).
 McDonald’s has promoted unhealthy eating habits and foods through press and
documentary like “Supersize me”.this chain is criticized for promoting unhealthy foods
and eating habits which creates a negative publicity.
Opportunities
 There are great opportunities available to McDonald’s outside the U.S. and they are
taking advantage of them. China can be a great opportunity for McDonald’s as is higher
portion of the complete Asia.
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 Fast food industry is now developing as change in the lifestyles of the people which
further leads to change in their eating habits. Nowadays almost people are engaged in
their busy life and did not get the time for the home meal, so they start preferring fast
foods which is readily available to them, which increases the opportunities for
McDonald’s to enter into diversification and can expand more and more products.
 Due to the location factor some people are not able to buy the McDonald’s products as
and when they crave. This is something which creates opportunities for McDonald’s to
start into the home delivery services to the people which ultimately helps in increasing
their sales and profits.
 They can bring more innovative products for the vegetarian markets in different countries
like India.
Threat
 There are many other restaurants which gives high competition to the McDonald’s and
can leads to reduction in market share of McDonald’s.
 People who are more health conscious starts avoiding fast food which is also a threat to
the organisation as this can reduce the sales of the organisation.
 McDonald’s is a global brand which can affected by recession and fluctuating economies
which leads to lowering their revenues and sales.
P6. Interrelation of strengths and weakness with external macro factors.
The strength and weaknesses of the company is related with the external macro factors
which directly affect the organisation. As all the strengths and weaknesses of the company is
affected by the macro factors. McDonald’s have expanded different products like coffee,
smoothies, etc. in order to increase the sales but the company should produce the products
according to the needs and wants of the customers and considering the social factors. As
customers satisfactions is required to fulfil by the company. Tastes and preference of the
customers is important factor which must be taken into consideration before launching any new
product(Phadermrod,Crowder and Wills, 2019). According to the customers' taste and preference
s the product should be innovated and produces so that they can increase their sales and revenue.
McDonald’s operate in many countries across the world and dealing in not only one
country's currency, they have to deal with many country's currency and any change in exchange
rates or political instability among different countries makes it difficult for McDonald’s top work
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and perform, smoothly their operations get suffered in dealing at global level(Jong, B.J.D.,
2016). Thus, political factors also affect the company's strength.
Economic factors influence the organisation as employee turnover is increasing due to
low pay which can be improved by giving enough amount of wages to the employees and by
providing proper and efficient training their skills can be improved to reduce the employee
turnover and by creating employment opportunities for the people of the society so that they can
earn well and can raise their standard of living which is contribution towards the economy.
McDonald’s deals in food products which are subjected to the climatic condition as
changes in environmental factors like change in weather may result in destruction of quality of
the goods which may dissatisfied the customers as they consumed the poor quality which any
effect their health. Companies needs to take actions regarding protecting their foods from any
environmental change.
CONCLUSION
From the above report, it is concluded that the company has to take into the consideration
all the environmental factors which directly or indirectly affect the organisation. The strengths
and weaknesses of the organisation are important to analysis so that they can take step for their
further operations. It is also concluded that the relationship of different organisational function is
required to integrated as all the functional department are interrelated with each other and
function of one department is completely depended on the another. The difference between the
public, private and voluntary organisation and their scope is also been explained in this report.
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REFERENCES
Books and Journals
Arndt, M., 2007. McDonald's 24/7. Strategic Direction. 23(7).
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Jong, B. J. D., 2016. The Distinction between Public and Private Companies and its Relevance
for Company Law: Observations from the United Kingdom and the
Netherlands. European Business Law Review. 27(1). pp.1-23.
Kennedy, A.M., 2016. Macro-social marketing. Journal of Macromarketing, 36(3), pp.354-365.
Martinkenaite, I. and Breunig, K.J., 2016. The emergence of absorptive capacity through micro–
macro level interactions. Journal of Business Research, 69(2), pp.700-708.
Moroni, I., Arruda, A. and Araujo, K., 2015. The design and technological innovation: how to
understand the growth of startups companies in competitive business
environment. Procedia Manufacturing. 3.pp.2199-2204.
Phadermrod, B., Crowder, R. M. and Wills, G. B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management. 44. pp.194-203.
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Stock, T. and Seliger, G., 2016. Opportunities of sustainable manufacturing in industry 4.0.
Procedia Cirp. 40.pp.536-541.
Online
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McDonald's: Strengths, Weaknesses, Opportunities, Threats, 2019[Online]Avaialble
through:<https://www.fool.com/investing/2019/03/17/will-burger-kings-5-coffee-trick-
hurt-starbucks-an.aspx>.
McDonalds SWOT Analysis, 2019[Online]Available
through:<https://businessteacher.org.uk/swot/mcdonalds.php>.
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