Business and Business Environment Analysis: McDonald's Report

This report provides a detailed analysis of McDonald's business environment, encompassing various aspects of its operations. It begins with an introduction to the business environment and a brief overview of McDonald's, including its founding and global presence. The report then delves into the types and purposes of different business organizations, differentiating between private, public, and voluntary sectors, with McDonald's serving as a primary example of a private organization. The report explores the size and scope of organizations like McDonald's, NHS, and Oxfam, highlighting their objectives and operational scales. It also examines the relationships between different organizational functions, such as marketing, production, human resources, and finance, and how these departments interrelate to achieve business goals. Furthermore, the report identifies the positive and negative impacts of the macro environment on McDonald's operations, using PESTEL analysis to assess political, economic, social, technological, environmental, and legal factors. The report concludes with an internal and external analysis of McDonald's, explaining how its strengths and weaknesses interact with external macro factors. The analysis covers the size, scope, and the interrelation between different organizational functions, and how the macro environment impacts business operations.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Types and Purpose of different business organisations.........................................................3
P2 Explain the size and scope of a range of different types of organisations chosen for
purpose........................................................................................................................................5
TASK 2............................................................................................................................................6
P3 Explain the relationship between different organisational functions.....................................6
TASK 3............................................................................................................................................8
P4 Identify positive and negative impacts the macro environment has upon business
operations....................................................................................................................................8
TASK 4............................................................................................................................................9
P5 Conduct internal and external analysis of specific organisations..........................................9
P6 Explain how strengths and weaknesses interrelate with external macro factors.................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
.......................................................................................................................................................14

INTRODUCTION
Business environment is determines all the internal and external factors of environment
that can affect business functions and management practices (Avramenko, 2012). Elements of
environmental factors are very dynamic and ever-changing. Internal environmental factors are
controllable while as external factors are beyond the control as well as impacts directly on
business operations. This report is based on McDonald which is a large scale fast-food
organisations. The organisation was founded in the year of 1940 by Richard and Maurice
McDonald. The organisation operates their business in around 100 countries with has approx.
36,900 outlets. This report is going to cover types and purpose of different business organisations
as well as its size or scope. It also determines relationship between different organisational
functions. For the effective analysis of business environment, it includes positive and negative
implications of macro environment. At last in includes internal environmental analysis as well as
strength and weaknesses of external environmental factors that interrelated with business
functions.
TASK 1
P1 Types and Purpose of different business organisations
In a economy different type of organisation provides their contribution to attaining
desired growth easily. These organisations can be public, private and voluntary sector as well.
All these organisations having their different objectives and aim that they want to attain by
providing quality services to targeted customers. Purpose and legal structure of these
organisations are given below as -
Private organisation
This is considered as the part of national economy which provides basic goods and
services which cannot be obtained or provided by private sector (Bovee, Thill and Raina, 2012).
It includes national and local governments,their agencies and their hired bodies. It is the sector
that can be owned and operated by the government excluding private business or individual. The
main outcome of this sector is their ratio to combine high quality management for long -term
quality. Though many of them operates in rather complex industries with durable business
cycles, they are leaders in their industries and perform better for long term than their private

squint. McDonald is a private sector organisation which provide quality substances in fast food
services.
 Purpose of McDonald
◦ To raising money by producing and selling fast food products.
◦ To develop friendly environment for customers by providing satisfying services to
them.
◦ To trim down overstuffed menu for arranging exact amount of services.
 Legal structure of private organisation
◦ Partnership: It is type of business which is owned by two or more individuals with a
common aim and objectives (Cai and Yang, 2014). The individual of partnership
firm are known as partners. They are sharing equal liability, profit and loss on the
basis of their predetermined agreement.
◦ Sole proprietorship: These kind of businesses are setup by an person with the aim of
surviving in competitive market by their business strategies. The owner of these
organisations sharing single liability towards business and they get individual profit
by their earning.
Public organisation
This is a sector through which part of national economy made up of private venture. It
includes the personal sector and corporate sector and is authorised for allot most of the resources
within an economy (Chavis, Klapper and Love, 2011). This segment of the economy is under
control of the government. This type of organizations which is in the private sector are generally
free from government control or ownership, but somehow, they choose to partner with a
government body in a private partnership to jointly deliver a service project to community. NHS
is a public sector organisation which provides health care services to their users.
 Purpose of NHS
◦ To provide medical and health care facilities to everyone.
◦ To regulate specific regulations for the small and large scale health care
organisations.
◦ Monitoring health care services and policies of different organisations for the
optimum care of patients.
 Legal structure of Public company

◦ Central government: They works for identifying operational activities of public
sector organisations (Commander and Svejnar, 2011). Central and state government
has proper control on these organisations.
◦ State government: This government provides functional related facilities to public
sector organisation. Their main objective is to make control on each working division.
◦ Local government: They are basically identifying requirement of public sector
organisations for the allocation of specific service as well as funds.
Voluntary organisation
The voluntary sector is also named as community sector. This is one of the duty as a
social activity interpreted by firm's. It is a non-profitable company and non governmental which
is also called as third sector. It is what different from private sector where the contemporaries
and return of net to its owners is emphatic, money raised or earned by an organization where as
voluntary sector is normally invested back into the community or the firms itself. The motive of
this sector is to create social wealth rather than material wealth. Oxfam is a voluntary sector
organisation which is working with the aim of removing poverty from the society.
 Purposes of Oxfam
◦ To provide secure services and facilities to poor as well as needy people.
◦ To working for the removal of poverty from the society.
P2 Explain the size and scope of a range of different types of organisations chosen for purpose
In a economy public, private and voluntary sector organisation provides their effective
contribution for the quality servicing (Cuervo‐Cazurra, 2011). All these organisation are
different to each others in the terms of their size and scope which are defined below as -
McDonald:
 Size: McDonald is a largest fast food chain which operates their business in around 100
countries. The organisation basically provides their services to around 69 million
customers. In terms of revenue, organisation earn has profitability of approx. $ 22.820
billions.
 Scope: McDonald basically deals in fast food services in which they have working to
frame growth plan strategy for providing their products and services in worldwide. For
the betterment of organisational scope, firm targets youngsters and children by their
delicious services.

 Vision: To provide delicious food services around the world that move the velocity to
drive profitable growth (Gebauer, Paiola and Edvardsson, 2010).
 Mission: To be the most favourite place of the services users where they can eat and
drink on the basis of their desire.
NHS
 Size and scope: NHS is a health care public sector organisation which was founded in
the year of 1948. The organisation basically deals for medical treatment and health care
planning practices of service users.
 Objective: NHS basically planning for working in health care in which they conducts
policies, practices and services plans for the each health care services provider.
Oxfam
 Size and scope: Oxfam is a voluntary sector organisation which is works for the poverty
removal practices from the society. The organisation was founded in the year of 1942 and
the organisation now working commonly 20 different charitable firms.
 Objective – The core objective of organisation is to remove poverty from the country
therefore they provide quality services advocacy, disaster relief, policy research, poverty
eradication and health acre services as well.
TASK 2
P3 Explain the relationship between different organisational functions
In a business organisation, each and every employee provides their effective contribution
to attaining business objectives and goals effectively (Halbert and Ingulli, 2011). Management of
McDonald distinguish roles and responsibilities of employees on the basis of their skills and
abilities of employees. They manage a effective chain in organisation to producing quality
services for target customers.
The major objectives of an organizational structure are describe in detail as:
 Flexibility – These kind of activities determines flexibility in decision that depends on
higher authorities and managerial staff of employees. Main objectives of this is to
maximise efficiency of employees in McDonald for effective utilization of their
productivity. These kind of strategies aid in attaining higher growth and profitability in
firm.

 Coordinating the components – In a business organisation, employees needs to build
coordination with their senior employees as well as co-workers (Hamilton and Webster,
2015). Through this, they can resolve their issues and conflicts properly. These are the
requiired factors that assist to managing in arranging the employees according to business
and ist working environment. These kind of activities can be beneficial for McDonald in
order to attaining target objectives and goals effectively.
The interrelation between the different departments are as:
 Marketing and Production department – In McDonald, marketing and production
department are interrelated with each others. Marketing employees of firm are always
gathering information and data that is based on customer's requirement and need. After
this, they provides proper information to production department for manufacturing
quality services to provide higher satisfaction to organisational users. These both
divisions are interrelated to each other that assist in maximising profitability and growth
of business. Marketing division of McDonald also provide promotional services to
business by conducting advertisement practices. Through this, they provides informations
to their customers about new product, its features and benefits as well. These kind of
activities aid to improve business sell.
 Human resource and Finance – In a business organisation, Human resource division
works for business management practices (Hilton and Platt, 2013). Their main objective
is to enhance business capabilities and efficiency. For this, they usually hire capable and
skilled employees who will provide their quality services to business functional practices.
For this, they also conducts training and development session to enhance capabilities of
employees for business growth and success. On the other hand, finance division works to
provides funds and capital to HR division for conducting professional development
sessions for their employees. The interrelationship between these divisions assist in
attaining target objectives of a firm in effective manner.
 Finance and Production department – Finance department of McDonald manage funds
and provides financially services to each division for effective management. They
basically considering their attention towards production services of firm for the effective
management of resources, raw materials and manpower as well. Main objective of this
division is to providing quality products and services to customers to satisfying their

needs as well as demand. McDonald is fast food chain which needs to implement quality
changes in their products as well as taste so that they can build long term relation with
them easily.
TASK 3
P4 Identify positive and negative impacts the macro environment has upon business operations
Macro environment factor are the external elements of business environment which gives
wide impact in positive as well as negative both manner in McDonald's. This task is going to
conduct PESTEL analysis for identifying negative as well as positive impact of macro
environmental factor on operation of business. This analysis helps in ascertaining impacts of
external factors upon business operations in McDonald's and are understood by following points:
Political and Legal factors:
It refers to the policies of government which involves legal and economic both aspects.
When these political factors get change it give wide impact on business operations in
McDonald's (Klapper, Lewin and Delgado, 2011). Legal issues are related to laws and legislation
as well as legal procedure that McDonald's has to undergo while doing business in any nation. Positive impact: Political factor of European Union modify rarely and expansion in such
country is good for McDonald's which gives a positive impact on its operations.
Modification in legal factors give wide impact on operation of same organisation such as
it includes factors related to environment such as global warming, greenhouse effect,
natural calamities and etc.
 Negative impact: If McDonald's plans to expand there business roots in several other
countries also in this changing government policies of other nation affect operation of
respective organisation in negative manner (Osterwalder and Pigneur, 2010). Legal
factors also make negative impact that several countries have their own corporate policies
due to which McDonald's have to tailor their operations and setted policies as per
particular nation's legal policies. Thus, McDonald's have to conduct a research to know
about overall expansion system before taking permanent step.
Economical and social factors:
Economic factor mainly exhibit modification in taxation, inflation in growth of economy,
rate of exchange as well as rate of interest whereas social factor highlights changing trends in

society and its impact on McDonald's. These factors give positive as well as negative impact on
operation of McDonald's. Positive impact: Such factors are determinants of economy's performance which directly
affects on business operations of McDonald's and have long term effects (Pikka, Iskanius
and Page, 2011). Company is affected by rivals and competitors discounted pricing. The
company mainly focus on higher quality that can led towards short term loss and
customers are attracted to value based quality products. Although trends in social factors
affects the demand of products and services by McDonald's for which company has to
make proper changes as per their customers needs and wants for satisfying them.
 Negative impact: Negative effect has been emerges in economy due of money effect of
Brexit and continuous changing trends give negative impact on operations of McDonald's
because they have to launch new offers, products, services and others as per current
requirement of customers which is a time taking and costly process for company.
Technological Factors:
These factors are based on implications of technologies in a business organisation for the
betterment of services. Technological factors has both positive and negative impacts on
McDonald as - Positive impact: Whereas due to advancement is technology in McDonald's, customers
are getting more comfortable services just on click as well as use of ozone-friendly
packaging and cutlery make their customers satisfied.
 Negative impact: Advancement of technology and its development effect on McDonald's
as well as its customers as latest technologies are expensive and for companies it is not
easy to implement these technologies in business easily (Prajogo, 2016).
TASK 4
P5 Conduct internal and external analysis of specific organisations
Swot analysis of McDonald's:
Strengths: Strong global brand: McDonald's is a most recognizable brands in the world. The foods
provided by them are offered according to the location of restaurant (Pulver, 2012). It is
dealing with the world's successful largest fast food restaurant. This company provides

consistent food items with same taste everywhere. They are adding a supplemental
changes in each region.
 Diversified income: It is a fastest growing fast food services company. As McDonald's is
a diversified company has single source of earning income. Its total earning tends to
counterbalance one another. It has locations about 120 countries by this sales are
slumping. This company has a steady growth which increases dividend each year.
Weakness:
 Unbalance meals & problems to health issues: McDonald tries to update their healthy
criteria but still the meals provided are unbalanced. The amount of fruits and vegetables
is not much. This company services trans with fat, oil in their food. Their effects came on
health issues. Fat occur in body may have some kind of cancer.
 High employee turnover: Mostly employees who are working in McDonald's Are
unskilled and low wage earner and this may lead to lower performance which again can
be hurdle in the path of inaugurating new product. Employees take their job seriously and
only do for the short period of time. They are provided high training facilities and costs,
pressuring on the company's bottom line.
Opportunities:
 Upgraded menu: This company makes plan to offer premium to customers on products
at different locations. McDonald introduces artisan chicken and sirloin burger in its
menu. The position of this company strengthen are high margined in beverages
industries. They are dealing with competitive prices of food. Mc cafe includes fruits
smoothies as for the heath conscious consumers.
 Expansion plans: Their main focus on expansion plan is to lookout its expanded market
share (Reed and et. al., 2013). There gaining opportunities are underdeveloped nations.
McDonald's company announced that it is going to re-franchise restaurants. The
company allows streamlined, lower costs and most stable for the organization.
Threats:
 Competition: McDonald's is facing competition in national, international, local retailers
of food products. In this it is concerned with the product quality in which a management
is working on (Reinhardt and Stavins, 2010). They are increasing their quality and natural

products preferences. It lies in competition in the basis of price, convenience, product
quality and menu variety.
 More health-conscious customers: In this many of the customers are trying to eat
healthier diets. According to the demand there is popularity in fresh fruits, organic
products, natural ingredients etc. this company is facing concerns with younger ones.
Shift in the strategy formulation is made which hurt on the results. McDonald's
considered a strict quality control for food. Customers are not exactly going to McDonald
for free range of foods.
P6 Explain how strengths and weaknesses interrelate with external macro factors
For McDonald it is required to identify impact of external environmental factors that can
be a strength and weakness for the firm.
Political and Legal factor -
 Strength – Government of UK paid their maximum attention towards the internation
expertises of different business. Therefore it can be a strengthen term for McDonald for
the effective support in expansion of different countries.
 Weaknesses – Dynamic in government policies and procedure can affect business
strategy of McDonald for the easy expansion in different countries. Some of the
legislations can also affect negatively on McDonald due to different corporate policies as
for this it is required analyse legal structure of different countries properly for easy
expansion.
Economic and social factor -
 Strength - Business operations of McDonald's have a long term effects on economy
development practices of UK. Therefore, government of the country provides maximum
opportunities to such organisations (Savrul, Incekara and Sener, 2014). On the other
hand, McDonald serve long term loyalty to their customers for getting desired growth on
the basis of their quality products and services.
 Weaknesses – Money related issues that has arsed after Brexit impacts negatively on
some business organisations. As well as continuous changing trends and customers
demand can be a weak term for McDonald.
Technological factor

 Strength – Implementation of advance technology assist in providing quality as well as
easy services to customer's of McDonald. Major benefits of technology has easy
payment, quick services and instant delivery options (Shigang, 2010).
 Weaknesses – Rapid changes in technology can impacts negatively on firm as it can be a
expansive mode that can maximise cost and prices of organisational products.
CONCLUSION
From the above report it has been summarised that Business environment is a wide
concept that can affect operational and functional practices each business. The report describes
purpose, size and legal structure of public, private and voluntary sector organisation. It will also
determined interrelation between different organisational functions as human resource, finance
and marketing that are working to attaining business objectives. It also determine impacts of
internal and external environmental factors upon operational and functional practices of firm.

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