PEST Analysis Report: McDonald's Competitive Readiness in India

This report presents a PEST (Political, Economic, Social, and Technological) analysis of McDonald's, specifically focusing on its operations within the Indian market. The analysis begins with an introduction to environmental scanning and its importance for businesses, particularly multinational corporations like McDonald's. It then delves into each PEST factor, examining how political instability, economic conditions (including recession and taxation), social factors (such as cultural preferences and changing lifestyles), and technological advancements impact McDonald's. The report prioritizes key issues identified from the PEST analysis, emphasizing the importance of understanding customer preferences and adapting to government regulations and economic fluctuations. The report also assesses McDonald's readiness to compete in the Indian market, considering its research and development capabilities, brand image, and ability to adapt to changing market conditions. The conclusion summarizes the key findings, highlighting the value of PEST analysis in strategic decision-making for global businesses. The report also offers insights into how McDonald's can improve its competitive edge in the Indian market.

PEST ANALYSIS

Table of Contents
INTRODUCTION...........................................................................................................................1
EXTERNAL FACTOR...................................................................................................................1
PEST analysis..............................................................................................................................1
Prioritized List.............................................................................................................................3
Readiness.....................................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Environmental scanning is being regarded as the systematic study of getting information
about factors that tends to affect the operation of the company in a negative manner (Alava &
Mu, 2018). In accordance with the then given context, it can also be said that environmental
scanning is the process of gathering the information in relation to the event or the activities that
have a significant impact on the working practices of the firm. It is very essential for the manager
of enterprises that it should continually improve its knowledge about both internal and external
factors of the firm. This is due to the reason that if these are ignored then in this situation the
impact of the same can be seen on the tactical goals and objectives of enterprises.
In this report, an environmental scan of McDonald is carried out. It is a multinational fast
food company which operates its function in many nations. However, for this report, the Indian
market will be taken for analysis purpose. At first, this report will give a detail description of
PEST factors that are causing an impact on the McDonald functions. However, after assessing
the same priority list will be prepared that will entail about key issues that are identified from
each quadrant. Finally, at the end of the analysis company’s readiness to compete in the Indian
market will be evaluated.
EXTERNAL FACTOR
PEST analysis
PEST is the external environmental analysis tool that gives a description of political,
economic, social and technological factors that have an impact on the operation of McDonald in
an effectual way. In accordance with the given context, there is some PEST factor examined that
tends to have an impact on McDonald readiness to compete in the Indian market. The detail
description of the same is depicted below:
 Political: McDonald tends to operate its operation in the number of nations and thus its
activities are influenced by the political decisions which are being made by the running
government of the country. In this regard, it has been examined that the political structure
in India in the local state is unstable in nature. The given thing will have a significant
impact on any kind of decision which is being made by the cited company. On the other
hand, there are certain groups in India that run the campaigns on health implications that
are associated with fast food (LEYVA and et.al., 2018). Further, the company is also
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controlled with different rules and regulations of the country. For example, McDonald
has faced the given situation at the time when it has made an entry in the Indian market.
The company had violated religious law. Here, the company was using beef meat in its
burger. However, in Indian culture eating the beef is against the Hindu religion. Thus, the
company had faced huge violation from the side of political parties as well as citizens of
the country. Additionally, the political government of the nation also controls the interest
rate of foods. This will also have an impact on the strategy of McDonald. For instance,
the company has planned to introduce a low-cost strategy in its food. The given tactic
cannot be implemented by McDonald if the government of India will raise the interest
rates on food material. The given thing will tend to affect a firm’s effectiveness to
compete in the Indian market in an effectual way.
 Economical: It is being regarded as another factor that will also affect McDonald
readiness to compete in the Indian market. This includes factors like the rate of taxation,
recession, and inflation of country, etc. The economic condition such as recession will
tend to have a direct impact on the overall strategy of the McDonald. This is due to the
reason that the situation like recession will influence the purchasing power of buyers. In
this situation, buyers are not able to afford high price product and thus will like to use a
cheap or low-cost product. Suppose, McDonald has taken the decision to increase the
prices of its burgers. Hence, in the process of making the given decision if Indian market
is affected with recession then in this situation, it will become very much difficult for the
cited company with regard to pursue its goal of charging high prices for its product. On
the other hand, in this situation, the firm could also face difficulty in attracting a large
number of buyers towards the company. This will affect the profitability related condition
of the firm (Valencia, Cardenas & Acevedo, 2018).
 Social: It is very much essential for the McDonald that it should give preference to the
tastes and preference of the buyers where it is running its operation. India is being
regarded as the country which is considered as a blend of many types of cultures and thus
each individual has a different preference in relation to the food which they want to eat.
For example, the majority of people in India are Hindu who prefers to eat vegetarian
food. Similarly, the Muslim population of India does not eat pork. So these all given
things need to be taken into consideration by the manager of McDonald in an effectual
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manner. If not significant attention is being given to the respective aspect then profit of
firm will be impacted. In addition to this, this also includes the factor like changing
lifestyle which will also have an impact on the operation of McDonald. At present, it is
assessed that people are getting more conscious about the food they are eating. Here, they
like to prefer healthy and delicious food. Hence, the given thing also needs to be
considered by the cited firm if it really wants to gain success in the Indian market.
Otherwise, the survival of the firm in the market will become very much difficult.
 Technological: There are lots of technological development is being seen in the process
of delivering food to the respective buyers of the company. In accordance with the given
context, it can be said that wireless internet facility, quick payment and online delivery of
food are being regarded as some developments that have happened in the field of
information technology. Thus, it is very much important for the McDonald that it should
also comply with these all given developments. This is because; if they are not followed
then in this situation it will become quite difficult for the enterprise with regard to
surviving its functions in the highly competitive business environment. Overall, it can be
said that these are some major environmental factors that need to be given consideration
(Tryjanowski and et.al., 2018).
Prioritized List
The key issues that are being assessed from the conducted PEST analysis are being
addressed. However, these are addressed on the basis of priority. In this regard, it can be said that
a very first priority is being given to the social factor. This is because; it is related to the
customers of the firm. However, for any firm, it is very much essential that it should make an
effort in terms of maintaining the satisfaction level of its buyers. In relation to the social factor,
the main issue that McDonald is facing is to get the idea about the tastes and preference of the
customer. In this regard, the Carnegie and et.al (2018) have depicted that it is very much
important for the company that it should always conduct the evaluation of the market where it is
running its operation. It is by complying with such type of activity the only manager of
McDonald is able to get the information about its respective customers. Thus, on the basis of
their preference McDonald should change its products and services. It is through this way only
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the manager of McDonald is able to establish its competitiveness in an Indian market in an
effectual way.
Besides this, it can also be depicted that second priority should be given to political
factor. Here, the main issue that McDonald is facing is unstable Indian government. However,
with an aim to work in the given circumstances the firm should always prefer back up plan for
each of its implemented strategies. Suppose, the manager of McDonald has decided to use the
low pricing tactics for its burger and from that movement interest rates of food raw material will
be increased by the Indian government. Then in this situation, the firm should have back up plan
with an aim to maintain low pricing tactic of the firm. Here, this can be made possible if
McDonald will change its raw material supply sources. It is through this way only firm can
maintain itself on the promise which is being made by it (Cameron and et.al., 2018).
Third priority is given to the economic factor. In relation to the given PEST factor, the
recession is being regarded as one of a major issue. However, the given issue can be handled by
offering different discounts to the customers on burgers. Further, the firm also introduced combo
packs that also work well in attracting people towards McDonald in the situation like a recession.
Thus, it is through this way only the issue of recession can be addressed.
Finally, the last priority will be given to technological factor. Here, the major issue that is
related to the same is that ongoing development in information technology. Thus, it is very much
important for the McDonald that it should develop a team of individual who will constantly look
into the changes that are happening in the technological environment. It is through this way only
firm can change its operation as per new technology. Thus, it can assure its success in a highly
competitive business environment.
Readiness
McDonald readiness to compete in the business environment of India is evaluated. In this
regard, from the SWOT analysis of McDonald, it is assessed that the firm has a team of highly
skilled research and development team. The main aim of a given team is to perform a thorough
analysis of a firm’s business environment and make changes in the operation of the firm. Thus,
with the help of the respective team, manager of McDonald can get idea or information about all
the factors that are mentioned above. Thus, it is on the basis of given information only
McDonald can draft an effective strategy with an aim to deal with the same. This will help in the
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process of improving the profitability related condition of McDonald in a highly competitive
environment (Newton, Stolle & Zmerli, 2018).
In addition to this, it can also be said that the cited company also has strength in its good
brand image. The given thing will assist the firm in a poor economic condition. This is because,
with the help of its brand image, McDonald is able to attract a large number of buyers towards
the company in an effectual manner. However, it is to be critically evaluated that along with the
brand image the firm should also make changes in its burger prices in the economic environment
like a recession. This is due to the fact that if not done then it will become quite difficult for the
firm to attract customers towards the firm (Jokisch, 2019). Thus, the given thing entails that
McDonald is quite ready to deal with different circumstances that are waiting for it in the
external environment. It is through this way only a firm is able to establish its remarkable image
in a global environment.
CONCLUSION
From the whole study, it can be concluded that by getting the idea about the external
environmental factor manager of McDonald can draft an effective strategy with an aim to deal
with the same. Further, it is by performing such type of analysis the only manager of a firm is
able to assess its competitiveness in the market. In addition to this, the PEST analysis will also
guide the firm in the process of making different types of changes in a firm’s operation. Thus,
these all types of activities help in the task of improving the sales and profitability related
condition of company.
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REFERENCES
Alava, R. P., & Mu, J. M. (2018). PEST Analysis Based on A Case Study for. Neutrosophic Sets
and Systems, 84.
Cameron, N., Wardlaw, T., Venn, T., Carnegie, A., & Lawson, S. (2018). Costs and benefits of a
leaf beetle Integrated Pest Management (IPM) program II. Cost-benefit
analysis. Australian forestry, 81(1), 53-59.
Carnegie, A. J., Venn, T., Lawson, S., Nagel, M., Wardlaw, T., Cameron, N., & Last, I. (2018).
An analysis of pest risk and potential economic impact of pine wilt disease to Pinus
plantations in Australia. Australian forestry, 81(1), 24-36.
Jokisch, B. (2019). Socio-political factor of qadá’in eighth/fourteenth century Syria. Al-
Qanṭara, 20(2), 503.
LEYVA, M., HECHAVARRIA, J., BATISTA, N., ALARCON, J. A., & GOMEZ, O. (2018). A
framework for PEST analysis based on fuzzy decision maps. Revista ESPACIOS, 39(16).
Newton, K., Stolle, D., & Zmerli, S. (2018). Social and political trust. The Oxford handbook of
social and political trust, 37.
Tryjanowski, P., Sparks, T. H., Blecharczyk, A., Małecka-Jankowiak, I., Switek, S., & Sawinska,
Z. (2018). Changing phenology of potato and of the treatment for its major pest
(Colorado potato beetle)–a long-term analysis. American journal of potato
research, 95(1), 26-32.
Valencia, G. E., Cardenas, Y. D., & Acevedo, C. H. (2018, November). PEST analysis of wind
energy in the world: From the worldwide boom to the emergent in Colombia. In Journal
of Physics: Conference Series (Vol. 1126, No. 1, p. 012019). IOP Publishing.
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