MPU3223 Entrepreneurship Assignment: McDonalds' Environmental Analysis

This report analyzes McDonald's, a global fast-food chain, focusing on its micro and macro environments. The microenvironment analysis covers customers, competitors, suppliers, employees, shareholders, and the media, highlighting their influence on the company's operations. The macroenvironment section examines political, economic, social, technological, legal, and environmental factors affecting McDonald's, such as government regulations, economic fluctuations, changing consumer preferences, technological advancements, legal compliance, and environmental sustainability. The report discusses how these factors impact McDonald's strategies and performance, including the company's responses to health concerns, economic recessions, and technological innovations. Furthermore, the report provides recommendations for improving the management of the macro environment, suggesting strategies to adapt to political changes, economic conditions, social trends, technological advancements, legal requirements, and environmental concerns. The analysis aims to provide a comprehensive understanding of the external forces shaping McDonald's business and offer insights for strategic decision-making.

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Contents
TASK 1.................................................................................................................................................2
The description of the selected organization......................................................................................2
The description of the general microenvironment elements..............................................................2
Identification and discussion on elements of macro-environment affecting organisation..................4
Recommendations to improve management of the macro environment in the organization..............6
TASK 2.................................................................................................................................................9
Reflective report................................................................................................................................9
References...........................................................................................................................................10

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TASK 1
The description of the selected organization
McDonalds is an American multinational organization. McDonalds was established in
1940 as a restaurant. Later on the company turned into franchisee in 1953. Initially the
company introduced a few items on the menu such as fries, burgers, and beverages. It enabled
company to concentrate on both quality and fast service. McDonalds was established with the
aim of constructing a restaurant system that would be famed for offering food of reliably
great quality and constant methods of preparation. The company promoted the slogan “In
business for yourself, but not by yourself”. The viewpoint of the company relied on a
principle comprising franchisees, suppliers, and employees.
McDonalds is having over 35,000 restaurants in more than 100 nations. The company
hires more than 4 million people. McDonalds obliges 70 million customers on a daily basis.
The menu of McDonalds comprises Big Mac, fries, chicken sandwiches, hamburgers,
chicken nuggets, salads, desserts, wraps, and more beverages. The company also offers local
food menus in order to meet the requirements of the international market. For instance,
McDonalds serve gazpacho in Spain, Veg McPuff in India and black and white burger in
China. The competitors of McDonalds identified in US are Wendy’s and Burger King.
McDonald’s accesses by the exchange-traded funds (ETFs) such as PowerShares
Dynamic Leisure and Entertainment and PowerShares Dynamic Food & Industry use several
approaches to distinguish from the rivalry. The company conveys experience to the
customers by quality, service, trademark, cleanliness, and values. The plan to win strategy is
used by the company to reinforce its principles. It is an initiative to concentrate on the
customer experience by 5 PS, people, place, product, promotion, and price. McDonalds stand
on the support of operators, suppliers and the employees. The company serves almost 1% of
the globe’s population.
The description of the general microenvironment elements
The microenvironment of a company contains the elements which are regulated by the
management. The microenvironment affects all the companies in a different way due to the
difference in size, competences, capacity, and strategies. For instance, the suppliers of the
raw materials offer more concessions to large size organizations. Although, they do not offer

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same concessions to small organizations (Thornton & Kavanagh, 2016). The competitors do
not bother for the rival company if it is small, but the competitor will be conscious if the
rivalry is large. The microenvironment elements are more interlinked with the macro-
environmental factors. The microenvironment elements given below are commonly found in
most of the organizations.
Customers: The main aim of the organization is to satisfy the needs and desires of the
customers. So the organizations keep eye to earn profits by satisfying customers. The
ultimate aim of an organization is considered to offer the best products to the customers at the
appropriate prices. Failure in offering best quality products ultimately results in failure of the
organization. It has become important nowadays to progressively listen to the customers and
value their feedback. This is the reason consumer surveys have gained importance in today’s
market (McDonald, et al. 2017).
Competitors: Both big and small organizations are having competition and competitors. So
the companies are liable to keep a close eye on the competitors on a regular basis. The
companies should make sure that the products have a USP which makes them different and
unique in the marketplace (Rebmann, Efendic & Mickiewicz, 2016). It is also ensured that
the products offered are of better and cheap in prices than the competitors.
Suppliers: According to the suppliers, a company can think of availing the necessitated
material or labor as per the manufacturing program. The company can even adopt a
purchasing policy that offers bargaining power. The association between the suppliers and the

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organization exemplifies power equivalence between them. It relies on the industry
conditions and the extent to which each of them is reliant on the other (Read, et al. 2016).
The suppliers are in the form of individuals or business houses. The suppliers offer the
resources required by an organization. The companies necessarily go for advancing
specifications, probing for the capable suppliers, recognizing and analyzing suppliers and to
select the suppliers who offer best mix of quality, credit, delivery, consistency, warranties
and finally low cost (Venkataraman, 2019).
Employees: trained employees can have a great role in attaining organizational goals and
objectives. It is because trained employees are enriched with the expertise to assist
organization in attaining success. It initiates the hiring procedure and endures by the steady
and timely training and development sessions. For instance, if an organization has low
inspiration and less skilled workers then the trade will surely suffer as the workers will be
least encouraged for the sales (Namkung & Jang, 2017).
Shareholders: The shareholders of the company has influence as the investors have role in
taking decision for increasing money by buoyant on the stock market. It means flowing to the
public from private ownership (Rains, et al. 2019). Such change can force the company as the
public shareholders pursue proceeds on their investment.
For instance, the demand for the shareholders raises profit and influences the accomplishment
of an organization in the long run. Consequently, it is significant for the top management to
maintain robust and improved relations with the shareholders in order to have an efficient
business on the long term basis (Onwezen, et al. 2019).
Media: The way media deeds for an organization can make or break it. The organizations are
required to maintain a good association with the media as it influences the business directly.
The media representing positive aspects results in increasing the trade of a company and vice
versa. The organizations sustain a PR department to maintain good affairs with the media on
behalf of the organization.
Identification and discussion on elements of macro-environment affecting organisation
The macro-environment affecting McDonald's is possible to understand with the
following points.

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Political factors: The workers and the candidates are nominated, educated, endorsed and
trained by the McDonald on the basis of their pertinent skills, talent and performance. The
factors like race, color, nationality, gender, ethnicity, and disability are totally ignored. The
company is even having a strategy on sexual and racial harassment. The restaurants of
McDonald operate as per the standards to meet guidelines for health and safety regulations.
For example, McDonald is affected by significant political factors like growing global trade
agreements, government strategies for diet and health and progressing public health
strategies. McDonald is subjected to the effects of the products on the customer’s health. The
company is liable to respond to the political laws in more than hundred nations. McDonald is
required to comply with health and hygiene regulations (Peterson, et al. 2019).
Economic factors: The economy of the host country affects the success of the company is a
multinational brand. McDonald’s success is affected by the economy in which it operates.
The decision of importing raw materials or buying locally is an important economic factor for
McDonalds and another one is tax rates. For instance, McDonalds was affected by 2008
economic recession because of its impact in USA and Europe. It resulted in increase in
redundancy, fall in disposable income and wage inaction. The accomplishment of McDonald
depends on the robust economy with low rates of unemployment. The dropping sales
contribute to the changing taste of the customers along with the enhanced competition in the
food industry. McDonalds is also affected by the exchange rates as weaker dollar empowers
an improved exchange rate and consequently financial reporting (Lunardo, Roux & Chaney,
2016).
Social factors: The changing lifestyle of the customers has generally effect on the sales
performance of McDonalds. The development of the coffee industry has caused the company
to advance a McCafe menu to offer a substitute to Starbucks. The varying perceptions like
augmented emphasis on the health necessitated McDonalds to cater to such or loose sales.
The variation in the customer demographics reflects McDonalds to encounter the varying
demands like health and price consciousness of the millennial. For example, for the sake of
increasing sales, the company is required to add menu choices comprising low-fat choices
(Boessen, et al. 2018). The concern of obesity has been also taken into account by the
company by offering healthier choices, especially for the children. There is another example
of the restaurant representing social factors like it offers localized food menu for the nations
like Canada and Japan. Although it is an expensive endeavor for the organization. The

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company has found way to survive by growing with progressive food trends (Luca, Hibbert
& McDonald, 2016).
Technological factors: technology plays an important role in the food industry. The
advanced technology assists organizations in enhancing their management and productivity
along with reducing wasted time and resources. The technology is quite helpful in order,
scheduling, forecasting sales and in easing payment for the food. The technology is also used
by McDonalds in the form of inexpensive advertising on the internet and offering Wi-Fi to
content customers. The company is having a strong requirement of the technology to enhance
staff productivity, communication among the teams and manufacture food quickly (Bernaert,
et al. 2019). For example, the restaurant is able to upgrade its menu with the flashy television
screens hanged on the ceiling behind the cashiers at the restaurant. The restaurant even makes
use of its website to showcase nutritional information available on the products. The
customers can even order food online and can have food without waiting in the long queues.
Legal factors: The regulations are deliberated to be a great concern for the McDonalds. The
company adheres to several regulations like corporate law, labor and employment law, and
tax requirements. The regulatory framework puts main impact on the success of an
organization. The higher levels of the regulations can suppress the growth of the business
whereas minor levels can empower organisation to make profits. The employment laws to be
followed by the restaurant comprises minimum wage, holiday and sick pay increases the cost
for the organization. Another important law followed by the restaurant is for example, using
more of zero-hour contracts in UK to attain more supple working employees. It is specifically
convenient for the food industry which generally functions twenty-four hours a day. The
bureaucracy and red-tapism are also another example to be used by McDonalds in creating
tough conditions for the restaurant to operate profitably. The restaurant functions in some of
the public health inspection system in concern to the food producers like UK (Liu, et al.
2018).
Environmental factors: The government nowadays if focusing more on environmental
defence. The environmental focus is more on sustainability which is a modification over the
long term impact. The emphasis has been made not just on the brands but on the supply
chains as well. McDonalds has enabled concentration on environment-friendly and
sustainable supply chains. Whenever McDonalds ignored environmental liability, it resulted
in the loss of reputation. For example McDonalds has enabled a well-developed CSR policy

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to tackle its environmental concerns. The company also frames the policies which are
environmentally friendly. The restaurant also undertakes the air and water pollution concerns
along with the effects of the packaging on the environment (Park, Song & Lee, 2017).
Recommendations to improve management of the macro environment in the
organization
Political factors: McDonalds is recommended to expand its international trade on the basis
of enhanced global trade. It can improve the international supply chains of the restaurant. The
restaurant needs to identify the governmental plans for the diet and health as a threat and
opportunity for the business. McDonalds is recommended to revolve around public health
policies. The political external factor is considered threat as it puts strain on McDonalds and
is subject to the criticism concerning health of the customers. But this external factor can be
used by McDonalds as an opportunity to enhance products. The corresponding changes
taking place can be guided by the generic competitive strategy and intensive growth
strategies. McDonalds is suggested to improve business by offering healthier options to
customers like salad.
Economic factors: McDonalds is recommended to increase the chain of restaurants in
developed countries with slow but stable growth. The restaurant should factor in the
unemployment rate of each location where it is located. McDonalds is known for hiring and
losing working on a regular basis. So the restaurant should work on retaining employees. It
can assist company in saving costs concerning the recruitment and training of the employees
(Koh, et al. 2018). The restaurant should offer good wages with better working conditions. It
can influence the revenue of the organization. The increased cost of materials is also an
economic risk factor that is required to be identifying by the restaurant, as it can negatively
affect the performance of the organization. McDonalds is needed to be aware of the exchange
rates, general government regulations, and hyperinflation. It is required to proactively
recognize and monitor conditions that can support the economic risk management strategy
(DeGrasse, 2016).
Social factors: McDonalds is suggested to grow on the basis of rising disposable incomes.
The company is recommended to use more low-carb and low-sugar diets. McDonalds is
recommended to identify the sociocultural fluctuations in the remote environment. The social
situations are required to be identified which limits the business. McDonalds should manage
the regulations aimed at reducing unhealthy meals. The initiatives should be taken for

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unprocessed and organic foods as concern of obesity is growing (Huda, et al. 2019). A
slighter menu with the low categories can make company more general among the customers.
The customers now days do not prefer to have heavy burgers or colas. The company is even
suggested to target the right divisions in society. The target market of McDonalds is
essentially made of young people from the middle class.
Technological factors: McDonalds need to develop a personal app as it has a great role in
attracting the customers along with the sales. The company can use app as a unique tool to
offer exclusive customer service. The company should engage customers with more online
campaigns. To develop a more advanced menu, McDonalds should invest in research and
development activities. It is even helpful to the company in enhancing business effectiveness
and efficiency. Add on, McDonalds can enhance mobile services in order to reach more
customers through mobile devices. The company can expect increase in sales by mobile
channels. The technological advancement is a better opportunity to grow in the fast-food
industry. The website of McDonalds can also be enhanced by offering more nutrition
information online. The advancement in technology can rebrand the image of the
organization. Add on services can be offered to encourage customers to order and stay like
free Wi-Fi (Cho, et al. 2018).
Legal factors: McDonalds need to consider employment laws on an urgent basis such as
minimum wage. It has been noticed that the retention rate of the company is quite low. The
company needs to offer good wage along with good working conditions in order to engage
employees for a long time. McDonalds is recommended to make use of zero-hour contracts in
an appropriate manner. So that flexible working force can result in more production (Gulati,
et al. 2017). The criticisms concerning flexible working hours like preventing employees
from taking holidays and sick pay should be taken seriously by the company. On the other
side, McDonalds should contract with the health agency to enable employees food hygiene
training on a regular basis. The rigorous standards should be followed as model in the daily
working by the company (Dedeoğlu, Balikçioğlu Dedeoğlu & Küçükergin, 2018).
Environmental factors: The environmental factors have a great role in concentrating on
resource protection in the coming years. So McDonalds is required to deliberate its impacts
by advancing CSR (Corporate Social Responsibility). The company is recommended to
enable environmental friendly supply chain. The change in the climate conditions in some

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regions should be kept in mind. McDonalds is even suggested to increase interest in corporate
environmental programs (Lipset, 2018).

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TASK 2
Reflective report
I have learned the basics of entrepreneurship from the report of McDonalds. The
course helped me in comprehending that the microenvironment affects the companies in
several ways due to differences in size, capabilities, capacity, and strategies. I understood the
role of the political, economic, social, technological, legal and environmental factors in the
conduct of the company. These factors influence the working of working up to a great extent.
McDonalds is leading smoothly by proactively identifying and monitoring circumstances that
can assist in the economic risk management strategy. I came to know that regulatory
framework puts major impact on the success of a company. The higher levels of the
regulations can conquer the growth of the business whereas lower levels can enable
organisation to generate profits.
My learning experience throughout the course will definitely help me in the future as I
already know that advance technology assists companies in improving their management and
productivity. It is also effective in reducing waste time and resources. I came to know
throughout the course that the focus on environment-friendly and sustainable supply chains
can result in gaining reputation. A well-developed CSR policy to be enabled in an
organization can manage the environmental concerns.
The learning quality of the course can be improved by adding more tools like porter’s
five forces. As it can help in finding out the competitive forces along with the buying
tendency of the customers. It is equally supportive in finding out the power of the suppliers
along with the subsidiaries available. The SWOT analysis can also be helpful in
understanding the strength and opportunities of the organization which could be enabled
more to minimize the weaknesses and threats to be faced by the organization. Introducing to
weaknesses and threats assist in finding out the possible solution. Add on, learning quality
can also be improved by focusing more on the micro environment in entrepreneurship and its
association with the selected organization. Other than this, more details can also be taken on
the factors like social and technical. The constant quality improvement procedure should also
be accelerated in the course.

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