LSME504 - McDonald's Case Study: External Environment & Planning

This essay explores the influence of the external environment on McDonald's strategic marketing planning within the international business context. It examines socio-economic cultures, technological developments, political environments, and ecological considerations, using McDonald's as a case study. The analysis covers how these factors affect the company's international business decisions, product offerings, and overall strategies in various markets like the US, India, Japan, Russia and the UK. The essay highlights McDonald's adaptations to local tastes and cultures, technological innovations, and the challenges faced due to political regulations and environmental concerns. Ultimately, it emphasizes the significant role of external factors in shaping McDonald's international operations and strategic choices.

The external
environment and it's
effect on strategic
marketing planning: a
case study for
McDonald's

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
How do socio-economic cultures affect McDonald's in international business ?..................1
How does technological development help McDonald's in international business ?.............2
Analyse and explain how the political environment considerations affect McDonald..........3
Restaurant international business decisions in the markets they operate...............................3
Analyse and explain how the Ecological considerations taken by McDonald Restaurant.....4
affect their international business decisions in the markets they operate...............................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
The global business situation is extremely volatile and the modern business landscape has
become increasingly precarious and full of disruptions both on a domestic and international scale
(Bernstein and Vos, 2021). The global business environment consists of various dimensions and
considerations that affects a firm's operations such as strategic marketing planning and
promotional tactics. This report will highlight the important considerations and cultures of
international business environment with the help of a case study in organizational context of
McDonald's which is a multinational fast food giant. It was founded in 1940 as a restaurant
owned by Richard and Maurice McDonald at San Bernardino, California and it's current
headquarters lie in Chicago, Illinois, United States.
MAIN BODY
How do socio-economic cultures affect McDonald's in international business ?
Multinational businesses like McDonald's get affected by various factors which are
related to the ongoing consumer trends, their preferences and the goodwill the company enjoys
in the public market along with it's social standing. Economic factors also are very important
determinants of a firm's operations and the strategy it employs for achievement of set objectives
as pointers such as GDP, growth rate of population, demographic changes and average domestic
income not only influence the policies of the company but affects it's decision to expand it's
enterprise in the first place (Donthi and Madhav, 2019). McDonald's since it's inception has
gotten benefited from major socio-economic changes such as the growth in the US auto mobile
sector in the 1960's which happened due to suburbanization and there was also a demographic
change in the types of families in the United States with the concept of nuclear families taking
over which raised the demand for cheap and quick fast food which McDonald's specialized in.
Another major effect that these elements had on the international business of McDonald's
is that the company made different product offerings to cater to each specific market according
to the taste and culture which has also been a major part behind it's success. Major examples of
this strategic approach includes McAloo Tikki and Dosa burgers in India, Peaches and Mango
Pie in Hawaii and Chicken Singaporridge in Singapore. These products are marketed by
advertisements incorporating local culture and popular customs which allows McDonald's to
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dominant the fast food industry worldwide. McDonald's operates in numerous countries ranging
from superpowers such as United States, Russia and China all the way down to smaller nations
such as Vatican City and Monaco which might make it seem like it is an aggressive or careless
expansionist but the reality is completely different. Many different economic considerations are
brought to the top management's table before a move is made in the international arena such as
strength and health of the local supply chain and delivery network, availability of cheap labour
and food ingredients in bulk along with the current supply and demand dynamics (Gogoi, 2020).
McDonald's enjoys impeccable brand strength in the market and has always built up it's
products around the changing societal cultures as the entire purpose of fast food is to save
people's time and serve them quick and tasty meals. As soon as McDonald's identified that
consumers are looking for food on the go which does not burn a hole in their pockets, it
diversified it's international menus and started serving breakfast and shakes which gave them an
edge in the market as they started catering to every segment of fast food consumers. In the big
picture, socio-economic factors have played a major role in shaping the international strategies
and operations of this company.
How does technological development help McDonald's in international business ?
The sole reason as to why firms like McDonald's have become successful multinational
prospects is because of globalization and the boundaries between worlds getting blurred for ease
of service and product movement (Van der Ven, 2019). Technological developments and new
innovative inventions are the biggest reasons for the change we see in the global business
landscape in the modern world. Earlier, collateral focused guerilla marketing campaigns and
word of mouth promotion was how companies got by but now social media and internet
marketing has taken over the world (Mialon and da Silva Gomes, 2019). In order to succeed in a
given target market and have continued sustainability, technological innovation in product and
service lines is a necessity for multinational companies expanding into different territories.
McDonald's has always been a major presence in the food industry worldwide and the
company dominates and captures a respectable market share in whichever location it decides to
enter due to it's huge brand strength and the massive popularity of it's food items. Technological
prowess and constant innovation have been important parts of the rich legacy of McDonald's
over the years as it has brought forward numerous utilities and new product technologies in
different locations worldwide to enjoy increased profitability and goodwill. McDonald's was the
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fast food chain which went into global expansion in the world and it was also the inventor and
pioneer of the order window concept and outsourcing of orders to call centres and third parties
which helped it take massive amounts of orders in populous countries like US, India and China.
McDonald's in it's international operations also uses a technically advanced order assembly line
which is a major part of it's global success as it reduces the time it takes to make a burger
effectively by half.
An important outlook on the way in which technological considerations have impacted
the working and strategies of McDonald's in it's international business is to have a look at what
the company has done in Japan and India. McDonald's in Japan got hit with a nasty food security
scandal which plummeted their sales and revenue multifold and it seemed like the end was near
for it's international operations in Japan however the company built new quality standards and
unveiled digital technology integration with popular Japanese media and video games like
Pokemon Go which helped it regain it's foothold in the country. McDonald's also has a
considerable hold in the Indian fast food industry as it has been in the upper echelons of market
leadership due to operating in the market for close to 25 years. The company has also come
forward with new digital technologies like 100% contactless food ordering and Whatsapp food
delivery in 2020 as measures to combat the COVID-19 pandemic.
Analyse and explain how the political environment considerations affect McDonald
Restaurant international business decisions in the markets they operate
The rules, regulations and political climate of the location in which firms like
McDonald's expand towards are the most important considerations to keep in mind as it directly
affects the survival of the company. The operations which foreign companies perform in a
distantly located market are subjected to different sanctions and conditioning then their home
market which is why a lot of challenges are faced by the enterprises to adapt to a new location
politically (Mukherjee, Chandler and Gentry, 2022). The local authority or the government in
charge of the expanded region are responsible for each and every activity that a business
undertakes as every public policy or industry regulations that is put into effect can either spell
success or doom for companies. McDonald's has faced plenty of legal battles and political
controversies in many locations worldwide due to strict regulatory nature of world governments
towards food and beverage industry and due to the growing scrutiny regarding large
multinationals committing shady practices and harming domestic industries in the regions they
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enter to expand their reach. One of the biggest political controversy that McDonald's found itself
it comes from it's tussle with the Russian and UK government. When the company entered
Russia, it was the first major fast food establishment in the country and people flocked to it in
large numbers which made the expansion a rousing success back in the 1980's looking at a first
glance however the political rules such as changing store and brand names to Russian language
and making the need of a three quarters majority compulsory did not help McDonald's at all as it
lost some brand value in the process. The Russian government harbours a deep resentment
towards products and services from the U.S. Which is also why it has forcefully closed a lot of
McDonald's stores over the year in many major locations without any concrete reason which has
made McDonald's Russian expansion a bit of a flop story despite being there for 30 years.
The company has also faced quite a few troubles in it's UK expansions as it was involved
in the longest lasting legal case in British law history known as the McLibel case in which
McDonald's sued a couple of small-time activists and even though the lawsuit was won by the
firm was a PR disaster and resulted in McDonald's changing it's international strategy of
pursuing legal cases. Multinational business concepts like McDonald's also get affected by
global politics and domestic economic sanctions as recent examples can be seen in India where
demonetisation and lack of cash in the economy made the company struggle their financially for
a long time and the western sanctions against Russia amidst it's invasion of Ukraine also
threatens to reduce it's market share in Russia.
Analyse and explain how the Ecological considerations taken by McDonald Restaurant
affect their international business decisions in the markets they operate
The natural climate and geographical terrains of a country and the location within which
a company is planning to expand is also a major consideration which affects the choice of
expansion, the mode of entry and the business decisions taken in the international operations of
the firm (Peeroo and Mooznah Auleear Owodally, 2021). The ecological factors play a major
role in determining customer trends, buying behaviour, the robustness of the supply chain and
time taken by delivery networks that McDonald's uses to procure ingredients and deliver fast
food quickly to it's customers. Another major area that has been getting increased emphasis is
sustainability and environment friendly business practices as the damage done to the natural
resources and surroundings by corporates due to dumping and emission of harmful bi-products
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has been immense and has led to collective global action towards combating global warming and
carbon emission (Ruby and Khara, 2021).
McDonald's in almost all of it's international locations has been subject to constant
criticism when it comes to environmental protection and animal rights as despite it's commitment
towards making the world a greener and better place to live in, the facts about the company's
workings currently do not deliver on that promise. The majority of food made and delivered by
this company is harmful for regular consumption and been officially found to be high in fats,
sugar and salt which can cause major issues in teens and children such as obesity and
hyperactivity. The company has been declared responsible for being a reason for bad lifestyle
choices of people in countries like India and UK multiple times. McDonald's uses beef sourced
from ex-rainforest lands which is a major detriment to the environment as it prevents natural
recovery of resources and being the world's biggest seller of beef contributes to global warming a
lot as cattle rearing emits large amounts of methane.
The current issue of environmental protection has been heating for a long time and all
these facts and ugly truths about the work that McDonald's conducts in it's international facilities
and fast food stores has made it introduce drastic operational changes in it's international
working to bring more sustainability and greenery in it's day to day routine such as changing it's
packaging from plastic to completely renewable and recyclable and partnering with the company
Loop to test reusable cups for serving hot beverages and drinks. McDonald's has also covered a
lot of ground in making it's investment portfolio consist mainly of renewable and green energy
while also making sure that it powers sources of natural energy generation in it's expanded
regions. It has also teamed with medical and agriculture experts along with the World Wildlife
Fund to find new and innovative ways to reduce methane and beef consumption.
CONCLUSION
The above concluded report went into detail regarding the various important
considerations that companies have to pay heed to while planning to expand their business
operations and to design and implement optimum strategies and policies in foreign locations. The
impact that socio-economic cultures have on a firm's international operations such as societal
customs, local product manufacturing and the role that technological innovations play in it's
success in the target market were duly discussed. The report also highlighted the political and
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ecological considerations that affect the business decisions that firms take in their target markets
on a global scale such as green sustainability and government rule compliance.
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REFERENCES
Books and Journals
Bernstein, J.M. and Vos, R.O., 2021. Green Consumerism. In SDG12–Sustainable Consumption
and Production: A Revolutionary Challenge for the 21st Century. Emerald Publishing
Limited.
Donthi, V. and Madhav, K.K., 2019. A study of consumers perception about quick service
restaurants.
Gogoi, B.J., 2020. Changing consumer preferences: Factors influencing choice of fast food
outlet. Academy of Marketing Studies Journal, 24(1), pp.1-17.
Mialon, M. and da Silva Gomes, F., 2019. Public health and the ultra-processed food and drink
products industry: corporate political activity of major transnationals in latin America
and the Caribbean. Public health nutrition, 22(10), pp.1898-1908.
Mukherjee, K., Chandler, B. and Gentry, R., 2022. McDonald’s USA: A Restaurant Icon’s
Potential to Thrive in a Global Pandemic. SAGE Publications: SAGE Business Cases
Originals.
Peeroo, S. and Mooznah Auleear Owodally, A., 2021. An Analysis of Communication Strategies
of Fast Food Outlets on Social Media in Mauritius. In Progress in Advanced Computing
and Intelligent Engineering (pp. 805-815). Springer, Singapore.
Ruby, M. and Khara, T., 2021. ‘Vegan’: Recent word, ancient ideas. Psychologist.
Van der Ven, H., 2019. Private accountability in global value chains. Global environmental
governance and the accountability trap, p.63.
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