Business and the Business Environment: McDonald's Report

This report provides a comprehensive analysis of McDonald's business environment. It begins by defining the business environment and its influence on business operations. The report explores different types of organizational structures – public, private, and voluntary – and their respective purp...Read More

BUSINESS AND THE BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Different types of the organisation and there purposes........................................................1
P2 Explain the different type of organisation of the different criteria........................................2
P3 The relationship between the department of the organisation and their impact in achieving
the objective of the company......................................................................................................5
P4 PESTEL analysis of the McDonald's.....................................................................................6
P5 SWOT analysis of McDonald's..............................................................................................7
P6 The relationship of strengthen and weakness with the macro factor in the organisation......9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business Environment is basically defined as the various internal as well as external
factors that influence the business operations (Hernandez-Mendez, Faber, and Matthes, 2017).
These influence the various business operations and must be regularly monitored through
process of Environmental Scanning. McDonald's is a fast food company originated in America.
In this report, different types and various purposes of different kinds of organisational structures
along with their size and scope. Also, this report discusses the relationship between different
organisations and their link in achieving organisational objectives. Further, macro environment
and its positive as well as negative impacts on the business operations have been discussed with
special relevance to McDonald's. Lastly this report also discusses the internal as well as external
aspect of the McDonald's company identifying their strengths and weaknesses along with the
SWOT analysis of various external macro factors.
P1 Different types of the organisation and their purposes.
There are various types of the business organisation in the business environment. All the
organisation has their different characteristics, feature and legal structure. Mainly there are three
types of the business organisations -
 Public sector organization
 Private sector organization
 Voluntary organization
So now the brief discussion on the various types of the organisation done as below-
Public organization - The public sector consists of governments and all publicly controlled or
controlled by government, the company should have share capital of £50,000 or more in which
the percentage of the paid up capital should be at least 25 % before the company being trading.
The directors in the public organization needs the approval of government or board of directors
as they want to have any significant change in there operation and strategy..
Purpose- The purpose of the Public organization is providing good quality of product to the
market. PLC (Public limited companies) are required to have two directors at least and a
company secretary. The PLC used to have the high level of regulation and the reporting other
than the private company. For e.g.- BBC (British broadcasting company) is working as the
public company.
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Legal structure- As being the public organization, they are accountable to the central and the
local government. BBC is listed and traded in the London stock exchange. They have board of
directors who run the business on the behalf of the stake holders and A.G.M.
Private organization – a private organization is a company limited by shares and this
type of the company in UK cannot trade shares in public. As private company cannot offer their
shares and debentures to public but if want to raise the capital of the company, they can allot the
new shares to their existing or prospective shareholders for payment in return. The limited
company can create any number of share of any value. The limited companies of UK need not to
have authorised capital and minimum requirement of the share capital.
Purpose- The main of the organization is profit maximization. The company is considered to be
dormant and don't need to commence the public trading until they are prepared. In the private
limited company, it is mandatory to have more than one director in the company and one of
them must be an individual. Company secretory is no more obligatory in such organisation. It is
mandatory of every UK private company to address the registered office of their company. For
e.g.- McDonald's is a private company.
Legal Structure- These are the company who had there separate legal identity. The company is
run by the board of director and the chairman. It is important for them to have the memorandum
of association and the article of association.
Voluntary company- the company whose motive is to enrich and benefit the society without
having intervention of the government and profit. They work for the development and the
welfare of the society. They are usually known as the third sector or the civil society or NPO
(non profit organisation). This sector is distinguished from the remaining two sectors and work
independently from the government.
Purpose- The main purpose is to provide social services to people. They mainly work on the
huge issues of the society including the range of issuer in youth to the medical research.
Voluntary organisation tries to seek balance between the stakeholders and the motive of their
organisation e.g.- Wellcome trust is serving as voluntary organisation.
Legal structure- The company is an unincorporated association works for the social benefit of
the social. It is the non profit organisation categorised as the company limited by the guarantee.
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Trusty acts as the director. The company should have the memorandum and article of
association.
P2 Explain the different type of organisation of the different criteria.
Basis BBC McDonald's Wellcome trust
1.Background British broadcasting
corporation is one of the
oldest public broadcaster
service organization. In
1926 it was established
and was operating under
royal charter, reviewed in
every 10 years.
It an American and the
world largest fast food
chain, famous for its
hamburgers
established in the year
1948 by the McDonald
brothers.
After the death of Sir
Henry Wellcome, the
instruction is there
to support the past of
the medicine and allied
medicine. It has the
astonishing medicine
collection.
2.Product/service The international
broadcaster, it serves the
BBC news, Sky sports, ,
ITV.
Being in food
industry, McDonald
serves in the fast food
product like
hamburgers, potato
chips cold drinks etc.
It works to improve
the health of people
with new ideas by
research and
development in the
low income countries.
3. Market size Around 38000 employees
are working with BBC in
46 locations around the
world (BBC, 2019). The
growth of 2.2% in the
revenue with retained
earnings of 1.2 billion in
the year 2018.
McDonald operates in
120 countries serving
68 million customers
every day with 210
thousand employees in
37855 restaurants. The
company has the
growth of 2.9 %
having the retained
earnings of 9 million .
The company has the
£25.9 billion of
portfolio management
2018. 2057 employees
with 800 head offices
is working upon the
major projects.
4.scope Being the on the The company is To have major
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international level of
broadcasting, there is lot
of scope with company to
move in more different
languages. Scope of BBC
is really wide..
marking out new 200
outlets in the south
countries in the
upcoming 2 years
research and
development centres in
the different countries
especially the low and
middle income
countries through
support and
collaboration (Stolic
and Primorac, 2015).
5.vision To be the most creative
organisation in the world.
They believe if they work
together, something great
will happen.
The vision of the
McDonald's is to be
the best quick service
in the restaurant
industry by providing
the outstanding quality
and service.
To perform the global
health research to meet
the health challenges
of the world by
supporting the low and
middle income level
countries through
collaborations.
6.mission With their programmes
and service, they want to
enrich and educate the
lives of the people.
The business focus on
being the best place
for their customer in
the way they want to
eat and drink.
High quality of
research and the
promotion of health
and advocacy summed
up from the research.
7.Business
objective.
The main objective of the
BBC is to delight and
enrich the life of all age
and income people with
their educative
programmes and
telecasting services on
TV/radio.
Aim to be the social
responsible company
by proving quality
food in fun loving
environment (Stolic
and Primorac, 2015).
To strength the
backbone of the
medical science of
Africa at the global
level through research
and development.
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9.Stakeholders. Shareholders, government
and its agencies, trade
unions, creditors and the
directors are the
stakeholders.
Creditors, employees,
suppliers, unions,
directors are the major
stakeholders of the
company.
Employees,
volunteers,
beneficiaries, donors,
local community and
trusty.
P3 The relationship between the department of the organisation and their impact in achieving the
objective of the company.
There is significance relationship between the various department in the organisation
which help the company to achieve its objective and the goals. The objective of the McDonald is
to be the social responsible company in the food and beverage industry by proving the best
quality of the product and service to their customers. McDonald's have a flat structure in their
organisation in which it is very easy to the employees to interact with another employee of the
other department.
The department of the marketing and the finance are the two important pillars which
impacts the growth and profit of the McDonald's. To achieve the mission, the company has to
integrate both the functions. So the marketing function includes the sales and advertising for the
promotion of the product and the finance department provide them finance to complete the task.
On the other hand, marketing department will generate the revenue to provide strength to the
finance department for the further investment. Due the flat structure there is easy and beneficiary
relationship between the employee of the both department. This increases the efficiency in the
employees and help in becoming a social company.
Production department will look after the production of various product of the company.
This department will ask for the rectification from the R&D department about the complication
or the failure of the product. The R&D department will help the production department to
improvement of the product through the product specification This relationship helps the
McDonald to achieve objective of quality of product and the flat structure increases the speed of
communication and coordination.
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Figure 1: organisation structure
(Source: different organisations and their structure and culture, 2015)
(Figure 2:Source: different organisations and their structure and culture, 2015)
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(Figure 3:Source: different organisations and their structure and culture, 2015)
Human resource and marketing department are interlinked to each other in the company.
Marketing department needs quality of the sales man or the human resource for the development
of product. So the human resource department will hire the quality of the sales person as
required by the marketing department. The marketing department convey requirement of the
workforce by analysing the demand forecasting to the HR department. So the recruitment
process can be maintained by the HR. In flat structure, the excess layers of the management is
removed and increases the speed of the communication between both the department. Due to
this, McDonald's moves one step forward to achieve its objective (Perkasa, Agrippina, and
Wiraningtyas, 2017).
.
P4 PESTEL analysis of the McDonald's
 Political factors – In more than 100 countries, McDonald's operates so there is a
lot of exposure across the borders. Like any another company, McDonald's tries to run
parallel to the government rules and regulation along with the health and hygiene policy
of the company. Fast food industry is majorly pressurized by UK government around the
globe as the these industries have been identified as the reason of increasing obesity,
high cholesterol and cardiovascular difficulties because of the junk food they serve. Due
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to these political factors, the company has to change the norms according to different
government which results in the downfall in sales.
 Economic factor- as the McDonald's is operating in more than 100 countries, so
there are more important decision which effect the operation function. There are the
major decision such as import duty on the raw material and the foreign corporation tax
rate. The unemployment rate in the UK and the other fiscal policy of the government(Li
and et.al., 2017). Due to all these economic factor, the price of the product increase
which results in reduction of sale and efficiencies of the organisation.
 Socio cultural factors- every country has its own life style which effect the sale
performance. McDonald's used to be famous for hamburgers and fried potatoes which
are now no more special. Due to the change in trend, people want more sophisticated fare
when they eat out. Due to different culture, the company has to modify the product
according to preference of culture of UK. This somewhere add the point to the good will
of the company.
 Technological factors- there is very limited role of the technology in the fast
food industry. McDonald's uses the best technology equipment to reduce the wastage of
time and resource and serving the healthy and hygiene food to the customers. In the
technological advancement, it helps the company in the promotion of the product in least
expensive and effective way to the customer. Online service in fast food industry is also
possible due to technological advancement only.
 Environmental factors – Nowadays the companies are more aware of the
environmental stability. They think upon all the decision factor about the company which
effect the natural environment. Keeping this in mind, McDonald's had taken the decision
over the abolition to the use polystyrene packaging that thy were using in there
sandwiches. The company has started using the paper packaging the replacement. Due to
this decision a major step towards environmental stability.
 Legal factors-For every company, legal requirement are the major concern for
the stability in the particular country. The McDonald's have look upon the various legal
issue such as the labour and the employment law, the tax requirement and the corporate
norms. The company has to keep in mind about all the legal factors so that the efficient
working of the organisation can take place.
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P5 SWOT analysis of McDonald's
Strength
 Huge brand recognition- the company has a strong brand name, image and brand
equity. It is the world largest food chain in the worlds serving through more than 31000
restaurants in more than 120 countries. The McDonald's have the recognised brand
everywhere. It comes in the top 10 brands of the world with coca cola, Apple and GM
(General Motors)
 Market share- the McDonald's have the largest market share in size around the globe.
With the downfall of the Wendy's and Burger king, McDonald's grasp the market share
in 2006. Holding 19% of the market share is another milestone of the company (Perkasa,
Agrippina and Wiraningtyas, 2017)
Weakness
 Image of unhealthy food- The company product has been recognised as the junk food
which are said to be the root cause of leading obesity, cardiovascular heart issue and
many more. A documentary by Morgan Spurlock name as 'Supersize Me' has contributed
the obesity of the society to McDonald and other fast food companies. They also
contributed that the product of McDonald's only a large amount of calories and no
nutrition (Sugito, Lubis, Rini, and Absah, 2018)
 Employee turnover- The company has very skill full managers but still the employees
turnover ratio is very high. Due to the lack of training and management, many of the
employees are fired out of the restaurant. Moreover, the employees have more work but
getting low salaries.
Opportunities
 Globalization-as the company is serving in more than 120 countries with 31000
restaurants in which 12000 are itself in the UK. So the company needs to expand in more
other countries like South Africa, Australia and many more. with accepting their culture
and values through the modification in the products offered by the company. The
company should start targeting the potential market.
 Health trend-as people nowadays are more concerned with the health trend and the
company has the image of junk food. So the company has the opportunities to develop
the new healthy product according to the trend of the market.
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Threat
 Economic recession- as the revenue pattern of the company is diversified but due to the
length of the recession cycle, there will be the impact on the retail sales of the company.
As the effect of the recession, the household budget of the families gets tighten as it
impact the sales of the company (Kurniati and Nurcahyo 2018).
 Intensity of competition- there are many competitors in the fast food industry, like
Wendy's and Burger King, although the market share of these companies are lower than
the McDonald's, but the company has to take care of all the steps' organisation. A single
mistake can lead to the downfall.
SWOT analyses of BBC company
Strength
 It is most trusted brand and serving in
many nations.
 It offers wide range of services such as
radio, online, web portals etc.
 News and radio announcement is done
multiple languages.
Weakness
 Operating cost of BBC is very high.
 Still using old technologies
Opportunities
 Enter into new markets can be
opportunity for business.
 International events, raising demand of
entertainment create opportunity for
firm.
Threats
 High competition
 Legal restrictions
P6 The relationship of strengthen and weakness with the macro factor in the organisation.
The macro factors in the organisation will some will somewhere have relationship with
the strength and the weakness of the company. There are the major factors that affect the
relationship such as the company has the largest market share which is somewhere the impact of
the political and the economic factor of the country. Due the lenient economic factor, there is the
widespread control on the market by the company. Same as the company has brand equity and
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goodwill in the market may be the reason of the liberal political factors. If the country has the
liberal policy, then there is more opportunity for the company to expand in the particular country
with the various outlets. The weakness of the company is that the product has been identified as
the junk food which is the root cause to the various health issues. The country social cultural
factors are more important to the citizens of the country. They are more aware of the trends and
the health benefits. This somewhere leads to the weakness of the company. So there is the
relationship between the strength and the weakness and the macro factors of the company
Strong brand recognition is the major strength of McDonalds which is related with
political factors. As McDonalds is operating in many countries but it has to follow legal
guidelines , sometimes political restrictions create issue for the firm to sustain in that market for
longer duration. Furthermore, it is also related with social factor, as if it fails to offer hygienic
goods to consumers as per the needs of buyers then it may impact on brand image of business
unit. Weakness of McDonalds is that it has image of unhealthy food firm which is related to
legal factor, government has made guidelines such as HACCP etc. which ensures that each
restaurants and related firms have to provide high quality material to its buyers. This may
support in meeting the industry standards and offering same quality material to consumers.
BBC is the public firm which has strength that it is trusted brand, this is related with
economic factor. Sometimes inflation, deflation impact on investment strategy hence BBC may
get fail to broadcast all the international events. Part from this, it has weakness of using old
technologies, this is related with technological factor. If entity use advance technologies, then it
will be beneficial in raising its productivity and profitability as well.
CONCLUSION
After going through the research, it can be concluded that the environment surrounding
the operating environment of business affect the various activities of a business in major way.
Companies have to look upon their internal and external business environment so that it can
form its strategies effectively and can sustain in the market for longer duration. Political,
economic and technological factors influence the overall working of organisation hence firm has
to make suitable strategies so that it can deal with such problems. There is significant
relationship between strength of the firm and external factors , this relationship help in smooth
functioning of enterprise and accomplishing its goal successfully.
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REFERENCES
Books and Journals
Hernandez-Mendez, A., Faber, A. and Matthes, F., 2017, September. Towards a Data Science
Environment for Modeling Business Ecosystems: The Connected Mobility Case. In
European Conference on Advances in Databases and Information Systems(pp. 324-
330). Springer, Cham.
Jones, P. M. and Lumens, C.E., Red Hat Inc, 2017.Offline debugging using a replicated
operating environment. U.S. Patent 9,720,808.
Kurniati, A. and Nurcahyo, R., 2018, January. Business Strategy with Uncertainty and
Performance in Freight Fowarding Industry. In8th International Conference on
Industrial Engineering and Operations Management, IEOM 2018(pp. 1856-1860).
IEOM Society.
Perkasa, M., Agrippina, A. and Wiraningtyas, W., 2017. Sustainable Chemistry Oriented on
Chemistry Learning to Increase Student Awareness to the Environment.Sainsmat.6(2).
Stan, S. N. and Amalia-Gianina, S., 2019. Crisis and Opportunities at the Intersection Between
Food, Agri-Bussiness and Health.Annals” Valahia” University of Targoviste-
Agriculture.13(1). pp.50-56.
Stolic, S. and Primorac, D., 2015. BIG DATA AS A NEW APPROACH FOR BETTER
SOCIAL IMPACTS OF BUSSINESS DECISIONS.Economic and Social Development
(Book of Proceedings), 5th Eastern European Economic and Social Development. p.13.
Sugito, S. and et.al., 2018. Influence of reference group indicators to the image of modern retail
(case in Indonesia).
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BBC. 2019. [Online]. Available through <https://craft.co/bbc>
different organisations and their structure and culture. 2015. [Online]. Available through <
https://nishahmed1502.wordpress.com/2015/03/26/different-organisations-and-their-
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