External Factors Affecting Mcdonald'S Corporation
External Factors Affecting Mcdonald'S Corporation
External Factors Affecting Mcdonald'S Corporation
ONE COMPANY AND IDENTIFY FIVE SPECIFIC EXTERNAL FORCES OR FACTORS THAT
AFFECT THE BUSINESS.
● Political Factors
● Economic Factors
● Socio-Cultural Factors
● Technological Factors
● Environmental Factors
● Stakeholders
● Customer Tastes
● Product
● Political Factors
Political factors can provide companies with both opportunities and threats.
These factors play a crucial role in their operations and performance as well. McDonald’s
has a presence across 120 countries and territories, and therefore, comes under many
rules. In some countries such as the UK and USA, health and hygiene regulations are
strict, and the restaurant must adhere to them. Two major consequences of breaching
relevant rules and regulations are the loss of money, and damages to brand reputation.
In the UK, McDonald’s was fined £200,000 for health and safety breaches in 2018. An
employee at Lakeside Retail Park branch (West Thurrock) suffered a fractured knee
when he was hit by a car while he was directing traffic in the restaurant’s drive-thru and
car park. The court found that the restaurant had not provided the staff with adequate
training to direct traffic (Liversedge, 2018). Similarly, Selyukh (2019) reports that the
restaurant agreed to pay $26 million in 2019 to settle a legal battle with California cooks
and cashiers. The lawsuit represented tens of thousands of workers who had accused
the restaurant of failing to pay them appropriately. However, it is worth noting that
McDonald’s operates in all of the largest countries in the world. Some of those countries
have very stable political environments making it easier for the restaurant to operate and
make profits. Operating in politically stable countries enables the restaurant to focus on
what it does best without any concern of immediate adaptation to changes.
● Economic Factors
It’s not only the United States’ economy that affects McDonald’s success. The
economy of each country they operate in ultimately affects their results. They must
decide whether it’s a smarter decision to purchase raw materials locally or to ship them
in. The number of tariffs for imported resources and foreign incorporation taxes plays a
vital role in this decision. In 2008, McDonald’s took a financial hit from the economic
recession. Disposable income was at an all-time low while people scrambled to find new
jobs. Since then, McDonald’s brand image has taken a hit due to an increase in health
consciousness among consumers. Many fast food restaurants are adding healthy
options to their menu while trying to shed their “junk food” image. But it’s hard — and
expensive — to change the opinions of the public. Additionally, McDonald’s should factor
in the unemployment rate of each location they’re in. The company is known for its high
turnover rate, meaning they hire and lose workers on a consistent basis. It’s a known
joke that McDonald’s is “always hiring” but this can be a glimmer of hope for locations
with high rates of unemployment.
● Socio-Cultural Factors
In the case of McDonald’s, several social forces greatly affected its
success in the US. One factor was the prevailing family structure in the US and the trend
towards a youth-orientated culture. In the 1960s and the 1970s the decision-making
role had changed to such an extent that children often made the selection of a place to
eat. McDonald’s special emphasis on children and teenagers as advertising targets was
successful largely because the strategy capitalised on these existing social trends.
● Technological Factors
● Environmental Factors
● Stakeholders
● Customer Tastes
McDonald’s is not an advocate of global marketing where this involves products
and services being treated as though the world is a single, uniform entity, thus marketing
standardised offerings in the same way everywhere. They follow an
internationalization marketing strategy which involves customising marketing
strategies (this may also include pricing strategies) for different regions of the world
according to cultural, regional and national differences in line with local needs.
Therefore, the concept of ‘think global, act local’ has been clearly adopted by
McDonald’s (Vignali, 2001). Below are some key examples of the Internationalisation
marketing strategy pursued by McDonald’s.
● Product
Consumers obsessively scrutinize what they’re putting into their bodies. We’re
seeing a rise in low-carb and low-sugar diets. People are jumping on the intermediate
fasting bandwagon. Why? Because they’re seeking ways to strengthen their bodies
without sacrificing health. Unfortunately, McDonald’s menu doesn’t comply with these
demands, making them a less desirable option for health-conscious adults. McDonald’s
is trying though. You can swap out high sugar ingredients in their drinks for a low-calorie
alternative. And, as mentioned above, they’ve recently come out with high-protein
smoothies. However, consumers are still complaining about the high sugar content in
these drinks. Overseas, fries and hamburgers don’t cut it. People in Asian countries, for
example, are used to eating their local cuisine. Although hamburgers and fries can be
nice to have once in awhile, it might not be the first choice option for international
audiences. While McDonald’s has offered localized menu options in countries like Japan
and Canada — an opportunity they should take advantage of more often — it can be a
costly endeavor for the company too. McDonald’s needs to shed its unhealthy image to
move forward with the growing food trends. It won’t be easy. But it’s necessary if they
want to survive among other fast food companies who are reshaping their menu for their
customers.
Cosmetics revolve around selling products online. Retail giants, like Amazon,
designed their business structure for internet use only. Compared to these, it doesn’t
seem McDonald’s has a strong need for technology. But that’s not true. The tech they
use is necessary to improve staff productivity, communication amongst teams, and
produce food as quickly as their customers expect. However, McDonald’s has recently
upgraded their menus with flashy television screens hanging from the ceiling behind their
cashiers. They also use their website to showcase nutritional information. In some
locations, you can order your food online, allowing you to stroll in and grab your meal
without waiting in line. They’ve also remodeled their stores as a means to rebrand their
image. Many McDonald’s now have a new set of paint, chairs, and tables to match their
fancy flat screen menu displays. They also provide free Wi-Fi to encourage more
customers to order and stay. But, as the old joke continues, their ice cream machine is
still down more than it’s ever up. McDonald’s is also active on social media. They use
Facebook and Instagram ads to nab their customers’ attention with their new or returning
offerings, like their summer hit, the McCafe Vanilla Chai Frappuccino. Although
McDonald’s is incredibly well-known (and needs a little introduction), not capitalizing on
social technology will only give their competition, like Wendy’s, known for their witty and
hilarious Twitter conversations, an advantage.
● Environmental Factors
McDonald’s has taken a number of steps to respond to environmental concerns.
For instance, it installed recycling units in over 1000 restaurants in the UK so that
consumers are able to separate cups and plastics for recycling (McDonald’s, 2020).
Likewise, it has measures in place to reduce its greenhouse gas emissions, and the
amount of paper and plastic packaging it uses daily. It is also currently working on
protecting water resources.
● Socio-Cultural Factors
● Stakeholders
● Customer Tastes
● Product
REFERENCES:
● Guest. (n.d.). Strategic management- McDonalds (1). Retrieved August 26, 2021, from
https://pdfcoffee.com/strategic-management-mcdonalds-1-pdf-free.html
● Frue, K. (2018, April 29). Pest analysis of mcdonald's: Which factors affect their future
success. Retrieved August 26, 2021, from
https://pestleanalysis.com/pest-analysis-of-mcdonalds/
● Writepass. (2013, July 04). Strategic analysis (SWOT, Pestel, Five Forces) of
McDonalds. Retrieved August 26, 2021, from
https://writepass.com/journal/2012/12/the-term-restaurant-is-an-establishment-where-foo
d-is-prepared-and-served-to-the-people-and-alwaysalmost-refers-to-any-sort-of-dine-in/#
B_Socio-Cultural_Factors
● Pratap, A. (n.d.). Pestel analysis of mcdonalds.pdf. Retrieved August 26, 2021, from
https://www.academia.edu/32432279/PESTEL_Analysis_of_McDonalds_pdf?auto=down
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