McDonald's International Business: Examining External Environment

This case study examines McDonald's international business operations, focusing on the external environmental factors that significantly impact its strategies. It covers socio-economic aspects, highlighting McDonald's adaptation to local cultures and consumer preferences in various countries, such as introducing vegetarian options in India and unique menu items in Japan. The report also discusses technological developments, including mobile applications and self-order kiosks, and their role in enhancing customer experience and operational efficiency. Political considerations, such as government regulations and trade policies, are explored, along with ecological factors, emphasizing McDonald's efforts towards sustainable packaging and energy conservation. The study concludes that understanding and adapting to these external factors is crucial for McDonald's success in the global market, emphasizing the importance of political, social, legal, ecological, technological, and economic considerations for international business operations. Desklib provides a platform to access similar case studies and academic resources for students.

International business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Socio-economic Culture affecting McDonald restaurant ...........................................................1
Technological development affecting McDonald's Restaurant...................................................2
Political environment considerations affect McDonald Restaurant............................................3
Ecological considerations affect McDonald Restaurant.............................................................4
CONCLUSION................................................................................................................................4
References:.......................................................................................................................................6

INTRODUCTION
The concept of international business defines to trading of goods, services, technology
and capital across international borders and at global or transactional scale. Between two or more
countries it involves cross-border transactions of goods and services. With the globalization there
is shift towards the interdependent and combined global economy that generates opportunities
for international business. With the up gradation of technologies, trade barriers is reduced and
rivalry increases, the demand for individual is understood how to function in international
market. The trade opportunities is explore by the organisation outside its domestic national
borders for extending particular business activities (Bolívar, and et.al., 2019) . The international
business encourages nation to obtain foreign exchange which can be utilised for importing
merchandise from global market. This also enhances country in development prospects and
makes opportunity for employment. With the help of international business profit of organisation
are improved by selling products in nations where cost is high. The report is based on case study
of McDonald which is an American fast food brand. It holds an leading share in global brand and
serves to 52 millions people in more than 100 countries. It was founded in 1940 by Richard and
Maurice along with this it deals in products of hamburgers, chicken, French fries, soft drinks,
milkshakes and many more. The report covers external environmental factors of McDonald in
international business.
MAIN BODY
Socio-economic Culture affecting McDonald restaurant
This factor is affected by the sociological demographic trends as there is shift in spending
power. It is affected by the expenditure patterns of consumer. The McDonald is greatly known
for determining itself as per demand of consumers. The company in start brings sense of
“American way of life” .In India the citizen are mostly vegetarians for which it introduced
veggie burger in menu such Mc veggie and McAloo tikki as the Indian citizen are against beef
which is replaced by chicken. In several countries such as Singapore and Malaysia it was force to
change their food preparation methods (Zhong, and et.al., 2019). In the Japan, the families ties
are strong where list of menu is completely contrastive. It launched Rice burger, green tea ice
cream, shrimp burgers, teriyaki burger keeping in mind the wants and taste of Japanese citizens
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and in other countries it provides local taste to its consumers. Day by day there is increase in
demand of fast food products in emerging economies with the change in lifestyle of people.
In context to economic factors company is operated in more than 120 countries. The
prices of material changes with the change in exchange of currency. The employee turnover was
high as workers were leaving jobs and company has to spend lot money in recruiting people
constantly. The McDonald was affected by family structure and trends towards youth-oriented
culture. In 1960s and 70s the brand target the market successfully by using teenagers and
children in advertisements (Budhwar, and et.al., 2019). The other factor was value that US
Society place on time favouring the consumption of meals with least time effort. In determining
the consumer ability for buying an product the economic factors are essential and large customer
base is attracted. The McDonald is required to examine the local market of each country and
eating behaviour of customer is appreciated.
The most of customers in US choose fast-food restaurant for having quick service and
convenience. The McDonald is considering dynamic illustration of American culture because of
its standardised products, services and policies. The factor of wealth inequality influences the
socio-cultural environment of McDonald.
Technological development affecting McDonald's Restaurant
The technological development made worldwide travel and communication more
accessible for consumers. The change in lifestyle and attitudes leads to change in demand of
product and in what way it is sold to customers. The technological involves the factors of
creating new technologies, new products, market opportunities. The technology innovations in
McDonald involves development of mobile application, mobile order and pay, self-order kiosks
which helps in transforming customer experiences and provides customers many ways to
securely pay and personalize orders to meet their needs. The use of high technology helps in
taking full use of promotional methods by means of alternative advertisement media such as
television or websites (Cepeda, and Arias-Pérez, 2019). The careful planned and positioning of
technology help franchise to be on similar standard. From the research in 2019, it is found that
business obtains tech organisation “Dynamic yield” for improved modified menus. Therefore,
by adopting advance technologies helps in improving customer satisfaction level and leads to
increase in profitability of McDonald. In technological factor the company have opportunity of
moderate R&D activity which can improve business efficiency, increase of business automation
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for maximizing productivity which needs McDonald to change its operations management and
productivity approaches. There is increase in sales through mobile devices with the help of
technology and leads to rise in revenue and growth through mobile channels. In McDonald
restaurant the electric menu shows different items depending on factors such as weather, regional
preferences or time of day. With the help of app, the people can order their favourite items and
food can be delivered at their home. It also take use of social media such as Facebook and
Instagram for having customer attention with their new offerings like their summer hits McCafe
Vanilla Chai Frappuccino. The McDonald take the use of mobile phone strategy which benefited
in lowering waiting time, average order value, lowering cost of staff and increased the accuracy
of orders.
Political environment considerations affect McDonald Restaurant
This involves the factors of laws, agencies and groups that impact an organisation and
individual in society. This involves the government attitudes to foreign markets, stability and
financial policies of country and government bureaucracy. The government intervention
determines the rate and path of business development. The industry is affected by government
policy as whole by regulatory bodies. In political factor the McDonald's have opportunity of
expanding its multinational business based on improving international trade that enhances global
supply chains. The governmental guidelines regrading diet and health is identified which can be
an threat and opportunity for restaurant (Maksimov, and et.al., 2019). The McDonald is leading
fast food brand in entire world which is hit by government with the prime concern for population
safety. It is required for restaurant to comply with health and safety regulations. There is also an
increase concern that food comprises of high sugar and sodium which can cause to several health
problems like hypertension and diabetes. In their menu presently company is offering healthy
choices. It is an international brand, and different countries is less open to western foods and
cultures. The company was banned by Bermuda as it was not in favour of consuming fast foods.
For instance, Iran had some haters with US that banned McDonald in nation.
In the organization, legal aspects refer to the impact of rules and regulations. Legislative
changes and new laws are shaping the remote or macro business environment with new
requirements. In Maskau, a law was enacted in 1993 obliging all shops to have only Russian
names or to be translated into the Cyrillic alphabet (Wu and Ang, 2020). This means that the
company has to translate its brand name. It also occurred in Japan, where the pronunciation of
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the name was changed to MaKudonaldo. Moreover, the rules in Russia represent that at least ¾
majority of vote is required for making an important decisions. Henceforth, the representative of
brand and city council that approves decisions otherwise the opportunities can be hampered. The
content of promotion is regulated by government regulations and restrictions. The promotional
activities is also required to be changed by depending on country involved and legal systems that
is taking place. The price regulation is an another factor that company needs to have look before
establishing into internationalization as in some countries, government might control the prices
which is set for products. (Ruël, H., 2020).
The company face some legal problems with business person in India. The Vikram
Bakshi for control of connaught plaza restaurant. With 185 outlets it is venturing its business in
north and east. Mr. Bakshi field a law suit after removing businessman as MD of venture for
their mismanagement. The legal lawsuit supported company competitors for growing in such
parts which affected brand.
Ecological considerations affect McDonald Restaurant
The important environmental conditions are climate and physical terrain of country that
puts an significant impact on demand and type of product that is made available. The McDonald
is required to consider physical terrain and climate in appraise before entering into new market.
There are some climatic conditions which can affect products in foreign market are altitude,
temperatures and humidity. The ecological defines to trends which is linked to natural
environment . The environmental program in McDonald's can be improved and have stability of
strengthening the brand and business performance. This provides an opportunity to McDonald in
having business stability and potential growth. The brand was forced by environmental group to
reduce the use of plastic packaging. The company regularly works on sustainability in all
business functions (Shoham, A., 2021). The brand's goal was to have 100% packaging material
that comes from recycled and renewable sources and this will be included in all points of sale in
2025. In addition, it is also beginning to offer orange juice in ready-to-serve containers and to
distribute frozen concentrate, helping to reduce orange juice packaging by approximately 75%.
In order to save the energy in all openings, one has committed to place enough energy with
kitchen appliances and LED lighting. The brand can attract a large customer base by making its
supply chain, logistics and operations more environmentally sustainable. The McDonald has
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opportunity for positioning itself as brand that duly fulfils corporate social responsibility
(Tolstoy, D., 2019).
CONCLUSION
It has been concluded from the above case study of McDonald that international business
defines to trade among cross borders. While performing business in international market several
factors of business environment are considered which majorly have impact on business. From
this report, numerous factors of macro environment is discussed such as political, social, legal,
ecological, technological and economic factors. The political factor has dealing with country
rules and regulations, trade barriers, tax policies and more. Economic factor considers several
aspects of economy which deals with growth rates, disposable income that decides to make
purchase of product or not. Social factor is related to cultural and demographic trends of society
and determines consumer behaviour. It has dealing with customer purchasing patterns, beliefs or
attitudes which helps in determining shopping pattern. The technological factor is linked with
innovation that delivers ease in business functioning and operations by involving factors of
automation, technological incentives. Environmental factor impacts business ecological which is
required for business to adapt changes with change in environment. Legal factor includes law
and legislations which must be imposed by company for smooth business functioning.
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References:
Books and Journals
Bolívar, and et.al., 2019. Global foreign direct investment: A network perspective. International
Business Review, 28(4), pp.696-712.
Budhwar, and et.al., 2019. Indian business: Understanding a rapidly emerging economy.
Routledge.
Cepeda, and Arias-Pérez, 2019. Information technology capabilities and organizational agility:
the mediating effects of open innovation capabilities. Multinational Business Review.
Maksimov, and et.al., 2019. Global connectedness and dynamic green capabilities in
MNEs. Journal of International Business Studies, pp.1-18.
Ruël, H., 2020. Multinational corporations as diplomatic actors: An exploration of the concept of
business diplomacy. Diplomatica, 2(1), pp.1-12.
Shoham, A., 2021. Standardization of international strategy and export performance: a meta-
analysis. In Strategic Global Marketing: Issues and Trends (pp. 97-120). Routledge.
Tolstoy, D., 2019. The proactive initiation of SMEs’ foreign business relationships. European
Management Review, 16(4), pp.1159-1173.
Wu, and Ang, 2020. Network complementaries in the international expansion of emerging
market firms. Journal of World Business, 55(2), p.101045.
Zhong, and et.al., 2019. Does politician turnover affect foreign subsidiary performance?
Evidence in China. Journal of International Business Studies, 50(7), pp.1184-1212.
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