Business and Business Environment Report: McDonald's Case Study

This report provides a comprehensive analysis of McDonald's business environment, examining various organizational types such as public, private, and voluntary organizations, with a specific focus on McDonald's as a case study. It delves into the size and scope of these organizations, highlighting their market share, growth, and sustainability. The report explores the inter-relationship between organizational functions, such as marketing, human resources, finance, and production, and their connection to organizational structure. Furthermore, it conducts a PESTLE analysis to assess the positive and negative impacts of political, economic, social, technological, legal, and environmental factors on McDonald's. The report also evaluates McDonald's strengths and weaknesses, considering both internal and external macro factors, and concludes with an overview of the findings.

Business and the Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Various types of organisation and their purposes...................................................................1
P2 Size and scope of different types of organisations................................................................3
LO2..................................................................................................................................................5
P3 Inter-relation between organisational function and association with organizational structure
.....................................................................................................................................................5
LO3..................................................................................................................................................6
P4.Positive and Negative impact of PESTLE on McDonald's's..................................................6
LO4................................................................................................................................................10
P5.Strengths and Weakness of McDonald's's............................................................................10
P4.Strengths and Weakness inter-related external macro factors..............................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is the mixture of various factors whether internal or external
that affects the functioning of company operating under dynamic environment. Analysing the
business environment is of utmost importance for the organizations to survive in this cut-
throat competition and gaining competitive advantage. This report provides a brief about the
different types of organizations and their varied purposes, Size and other attributes those
organisations, Inter-relationship between the different organizational functions and their
linkage with organizational structure, macro environment's positive and negative impact,
internal & external assessment of organizations and the association of strength and weakness
with external macro factors.
LO1
P1 Various types of organisation and their purposes.
Public company
A public company is a company whose securities and stocks are in the possession of
general public and are traded by them.
Example National health service (NHS) is a healthcare organization in England under the
capitalization of government established mainly for the welfare of the English residents (Akter
and et.al., 2016).
The main purpose of this organization is to serve the wide range of patients without
charging any cost for the services. It offers a comprehensive array of services and respond to
varied needs of the mass population. The major aim of NHS encompasses the continuous
effort to enhance the quality and reliability of their services and reduce the errors.
The legal structure of NHS is governed by National health service act 2006. NHS is
under the control of government of UK through department of Health and social care.
Funding for NHS is governed by department of health. Various laws of parliament and the
government affects the NHS like EU law. Procurement within the NHS comes under public
contracts regulations 2006 (Sodeyfi, 2016). It supplies health careservices to the needed
person and take care of their health conditions.
Private company
Unlike public company, a private company is a corporation whose securities and share
are not dispersed among the public for subscriptions. These are exchanged privately.
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Example McDonald's is a privately owned as the super market chain for the fast food industry
operating in UK. It was founded and became one of the leading grocery retailer around the
world. The company is having the royalty over the business having the feature of chicken
products, breakfast items soft drinks with milkshakes, wrap and deserts which is response of
changing the taste of consumers.
McDonald's believes in being customer oriented and work toward strengthen their core
values and purpose which emphasises on providing good food at the reasonable prices. Its
main objective is to displaying the transparency to their suppliers and stakeholders. Besides
this, It aims to become the most trusted market leader in the eyes feature of chicken products,
breakfast items soft drinks with milkshakes, wrap and deserts which is response of changing
the taste of consumers. of consumers.
Comprising a 15.9% share in the retail sector, the ownership of McDonald's has a
complex structure where it is a part of major holding and assets companies Being in the
merger with one of the well-known companies would provide them with the overall 31.4%
market share.
Voluntary organization
A voluntary organization is an association comprising the group of individuals who
are devoted for the welfare of human beings and society as a whole. It is not regulated by any
state or external force but rather their own members.
Example Oxfam is one of the well known NGO and charitable non profit organisation led by
some social activists and academics. It was established in 1942 in England and now has
flourished with its widespread operations(Gavurova and et.al., 2017).
Oxfam work towards addressing the issues of poverty and injustice among the
individuals. It provides a helping hand to the vulnerable females and men with an aim to end
the race of injustice and poverty. Its main purpose is to alleviate the powerlessness and help
the underdeveloped areas facing the survival problems.
Oxfam is the international alliance of 20 organizations operating in 94 countries &
working in collaboration to mitigate the global poverty. Its major donors are UN and EU
government, fundraising sops and corporations. The board of trustees are elected by the
members itself who are involved in raising various campaigns and fundraising.
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P2 Size and scope of different types of organisations.
There is huge difference between micro, small, and large companies. Small companies
generate limited profit and amount generated by the firm are able to live daily life of owner.
Whereas medium size companies earn the amount that can recover their all investments
whereas large firms are able to generate huge funds and they operate their business across the
world.
Public company- NHS
Size
The huge majority of staff in NHS includes 1.1 million of full time doctors and nurses
working in hospital and community services. Apart from this, around 18000 staff is appointed
as local commissioner in health services. 19000 ambulance staff and 132673 technical staff
comprises the huge workforce of NHS.
Scope
NHS cross the world has launched a model called Holistic worker under which the
health and social workers are extensively trained and developed to meet the sudden crisis. A
large number of services that were under the consideration include upgrading the quality of
people suffering from congenital heart disease, extending the support to the families of
patients who have been the victim of poor intervention of heart surgery.
Market share
The market share of NHS has reached a milestone from past few years. The
government expenditure on health care of the people has risen more than 2.5 times of the GDP
which has eventually made the figures of NHS high, equating around 30.1% of its annual
profit and has grown exponentially.
Growth
NHS has not only grown in case of its financial performance but also in delivering the
services. More than half of the millions are now receiving the emergency care and life
expectancy as geared up by 5 hours per day. Besides this, the number of staff has increased up
to 8000 including doctors and nurses.
Sustainability
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The sustainability and transformational plans of NHS was evolved during 2016 as a
way to address the environmental problems. The NHS sustainable development unit is
constantly working to alleviate carbon di oxide emission in UK as well as researching on the
aspect of how healthcare services can be designed to become environmentally sustainable.
Private Company- McDonald's
Size
McDonald'ssince 2009 has increased its number of staff and has reached a number of
178000. Besides this, McDonald's has three divisions namely McDonald's supermarket,
McDonald's bank, McDonald's Argos. With the growth of its structure, it has grown its
presence in various sectors like McDonald's cafe, fuels, energy, online etc.
Scope
McDonald'swill assess whether the merger with other companies would result in worst
output for the shoppers. Moreover, they have invested in a three year programme to upgrade
more than 2000 of their own brand.
Market share
McDonald'sis one among the large supermarket chains capturing a market of 16.3% .
Its expansion in major sectors across the world has risen their sale to 1.8% and has accelerated
their performance leaving behind their major competitors The top
10 competitors in McDonald's competitive set are KFC, Burger King, Subway, Starbucks,
Dunkin' Brands, Pizza Hut, Wendy's, Domino's Pizza, Jack in the Box and Tim Hortons.
The major shareholder of McDonald's has 21.99% of its holdings which has given it a firm
position in market. McDonald's believes in being customer oriented and work toward
strengthen their core values and purpose which emphasises on providing good food at the
reasonable prices.
Growth
McDonald'shas its demand and supply chain in 13 regional distribution centres.
Initially, It started its business in supermarket but with its growth, it has expanded its branding
and advertising in various fields. It is now exploring the opportunities in general
merchandising and clothing sector.
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Sustainability
McDonald'sis always concerned about the nature and remains compliant with various
laws Besides this, It is focussing on reducing the carbon emission and the weight of the
packaging by adopting sustainable techniques.
Voluntary organization- Oxfam
Size
Oxfam is an international alliance of 20 organizations operating in more than 92
countries. Spread in the wide geographies, it has over 10230 staff and 47097 volunteers
managing the societal issues. Being a global organization, it has now influenced the people
by growing its staff all over the world.
Scope
Oxfam is constantly making the greater changes and is now focussing to find the
practical and creative way of uplifting the deprived areas and rebuilding the awareness against
sexual misconduct.
Market share
Due to the alliance of organizations, its market share has increased to 8% of the total
profit and has now reached to 51.5. The various sectors of Oxfam like online, books, shops
have contributed at large in improving its market performance
Growth
Oxfam has opened its shops across the world and sell various detonated items. As of
now, It has over 1200 shops globally. It has extended its branches in major countries like
Australia, America, Belgium, Canada.
Sustainability
Every project and activity of Oxfam is designed considering its impact on
environment. Oxfam emphasises on direct use of non renewable fuels and carbon gases for the
transportation of passengers. With the collaboration of other organization, it is involved in
disposal of harmful waste.
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LO2
P3 Inter-relation between organisational function and association with organizational structure
Marketing with Human resource
The HR of McDonald's is responsible for hiring and selecting the candidates for the
stores and advertising the vacancy for the shop floor sales. After having the right candidate,
the marketing department of McDonald's communicate the branding message and products to
the customers. For example, as McDonald's ideal in having the favourite fast to people to
enjoy the amazing taste to their preference which is helped by hands of Marketing
department(Vinichenko and et.al., 2016).
Marketing with Finance department
The finance department of McDonald's addresses the issue of finalizing the overall
budget and expenses to be spent on different assets and departments. For example McDonald's
operates in online services therefore the finance department decides how much resources to
allocate in promoting the online services for the food delivery. Marketing department then
utilizes that resources to advertise the grocery products(Stacey, 2016).
Marketing with production department
McDonald's focuses on production where each and every employee is involved in
monitoring the quantity of the products. It oversees the customer requirements and demands
regarding the various products like grocery product, cafe essentials. Marketing department
then fulfils the customer requirement by advertising the products produced by the production
department (Appelbaum and et.al., 2017).
Link to Organizational structure
The organizational structure of McDonald's is highly complex where the regional
manager after conducting extensive research in the regional market about the product and
customer direct the area manager who analyses the requirement of that area. They in turn
direct the production department about the quantity required in that area. That production
department directs the shop manager of McDonald's about the quantity produced and resource
used. Finally, after reaching the finished product from warehouse to the store, shop staff sell
the products and services (Schaltegger and Burritt, 2018).
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LO3
P4.Positive and Negative impact of PESTLE on McDonald's's
PESTLE analyses is the method which helps companies in analysing its macro or
external environmental taking correct strategies that may help in sustaining in market for
longer duration.
Political Factor:
It is the factor which is directly affecting company by the government rules and
policies. These factors influences company's economy. This factors include government
policies, foreign trade policies and tax policies of government and the political stability (Fan,
Lau and Zhao, 2015).
Positive Impact:
Political factors are also beneficial for retail sector because changes in political
conditions influence entire industry. If government of UK foreign trade and tax policies are
stable than company can easily sustain in market and also expand import and export with
other countries. It will enhance growth conditions for organization and economy of country
(Zhao, Fan and Yan, 2016).
Negative Impact:
Political factors also have some negative impact on retail sector. That will affect the
company trade. If government impose high taxation on foreign trade policies of company than
it become very costly for McDonald's's to provide their products and services from one place
to another. It will increase the cost of products and may also reduce the customers’ demands
from another country.
Economic Factor:
These factors have important impact on how an organization run their business and
how much profitable they are. These factors may include growth of economy, interest and
exchange rates, inflations, available income of consumers and business (Laursen and
Thorlund, 2016).
Positive Impact:
If GDP rate is high then industry will get benefit of high return on investment which
will give indirect benefit to McDonald's.
Negative Impact:
7

If there is high unemployment rate then consumer spending power will get decrease
which will reduce profit of company.
Social Factor:
These factor are known for as social values, belief and attitude of peoples. That factors
examine the social environment and culture of market, also determine demography and
population. It may include age, sex, religion, health, career etc.
Positive Impact:
Social factors of UK are directly influencing the McDonald's's market. If in social
environment have young and stylish crowd, then company can manufacture the products as
per the quality and demand of customers. Population of country plays vital role for the growth
of company. As per social culture of country McDonald's's can expand their business in
different countries.
Negative Impact:
Social factors also have negative impact in the growth of McDonald's's, because is a
retail store (Um, 2017).
Technological Factor:
These factors refer to invention in technology that may directly affect the trading
operations of firm and market effectiveness and ineffectiveness. It refers to mechanization, the
amount of technology consciousness and research and development (Huang-Horowitz, 2015).
Positive Impact:
Technical changes are very beneficial for McDonald's's firm. By the new technology
adoptions the firm can enhance the quality of products, it can also improve firm productions in
short time. New technology can save the time of employees of company that can be use in
some other-way.
Negative Impact:
Technological changes are not always profitable for firm; some time it has diverse
effect on McDonald's's. Adoption of new technology in organization, its very cost effective
concepts. It may also expensive for providing training to employees for work upon new
machineries. So many times employees also resist. So it can be very costly for McDonald's's.
Legal Factor:
8

Legal factors are those factors which includes health and safety, rights of consumers
and laws, products safety and labelling etc. it is very important for company to consider all
these rules and laws in firm.
Positive Impact:
If legal laws are favourable for McDonald's's than company can easily follow them. It
will help company for improving the quality of products, image and goodwill of firm in
market. By following legal laws company also enhance their market in another country,
increase numbers of customers and earn high rate of profit.
Negative Impact:
Changes in tax laws create problem for business because it reduces net profit of the
firm.
Environment Factor:
These factors include all those things which are influence or determine by environment
(Stott, Stone and Fae, 2016).
Positive Impact:
Environmental factor affect the McDonald's's, if company follows environmental laws
than company can grow in market and environmental also become healthy and pollutions free.
Negative Impact:
The increasing global warming in the environment has impacted McDonald's in a
negative way. Apart from this, the bad climatic conditions make it hard for the company to
operate in the environment. Due to these adverse situation, the intensity of rainfall decreases
which worsen the McDonald's positions as it is dependent on the water supply for its
operation (Begg, Van der Woerd and Levy, 2018).
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Caption: Illustration 1: PESTLE analysis
[Source: PESTLE analysis, 2018]
LO4
P5.Strengths and Weakness of McDonald's's
This is a systematic and strategic planning to find out the weakness and strengths of
the business. Strengths and weakness are inter-related with each other.
Strength of McDonald's's:
Sainsbury's one of the largest supermarket in United Kingdom which provides their
products and services in different countries. The company has extremely trained and
experienced leadership team, helps the firm how deals with competitors in market. Firm also
use unique techniques to promote their products in market i.e. TV's, print advertising and
online websites. Company also have a research team which provide them actual demand and
need of customers. McDonald's's manufacture food products as per the market demand and
for the customer's satisfaction which develop strong image of company. The company is also
listed in New York Stock Exchange.
Weakness of McDonald's's:
Many analytics represent that products price of McDonald's's is higher than any other
similar products of company or its competitors in markets. Technical problem is also
hindering the business of company. In 2008 there is a technical fault in company website,
which suspend the online services of company for 2 days which affect 10000 online food
store of company. Company also closed its 16 stores and there has been a loss in sales. The
main reason behind this deficiency of advertising(Saleem, 2017).
Threat
 High completion create pressure on business.
 Fluctuating laws create complex situation for firm.
Opportunities
 High economy condition create opportunity for business
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