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PESTEL Analysis of McDonalds

Political Factors
McDonalds operates in over 100 countries, so its political exposure is all over the
board. Generally, McDonalds, like any other restaurant, has to comply with
government regulations pertaining to health and hygiene. Some governments have
been pressuring the fast food industry, because fast food has increasingly been
seen as junk food, leading to obesity, cardiovascular difficulties and high
cholesterol. Moreover, the current tumult in relations between the United States and
Russia may threaten McDonalds ability to function and turn a profit in the Russian
Economic Factors
Economic factors are of paramount importance to McDonalds, especially
considering that it operates in over 100 countries. The decision whether to import
raw materials or buy them locally is one important factor; another is tax rates. How
much are tariffs on imported raw materials? How much are foreign corporations
taxed? What is the unemployment rate, and how much are unemployment taxes in
a given country? How much severance pay must an employer pay an employee
upon termination?
Socio-Cultural Factors
Evolving lifestyles can have an effect on sales performance. People increasingly are
seeking more sophisticated fare when they eat out. Hamburgers and fried potatoes
are not as special as they once were. Moreover, while people in western countries
such as the United States may enjoy hamburgers and French fries, people in Asian
countries, for example, prefer rice. A few years back, McDonalds promoted a rice
burger in China; it is now promoting rice for dinner in that nation.
Technological Factors
While technology may seem to play a very limited role in the fast food industry,
nothing could be further from the truth. In fact, high technology helps organizations
improve their management and productivity, while reducing wasted time and
resources. It can help with scheduling, ordering, forecasting sales and foot traffic,
and easy customer payment for food. Technology can also be used for easy,
inexpensive advertising on the Internet, providing Wi-Fi and even computing devices
to satisfy customer needs.
Environmental Factors
Today more than ever, people care about protecting the environment. They care
about problems such as air and water pollution, and the effects waste packing are
having on the environment. A few years ago, McDonalds found itself in the

crosshairs of environmentalist wrath over the polystyrene packaging it was using for
its sandwiches. With over 60 million people buying food from McDonalds daily, that
was a great deal of polystyrene waste packaging finding its way into landfills.
McDonalds responded to criticism by phasing out polystyrene in favor of paperbased packaging, which breaks down into organic ingredients much more quickly in
the environment.
Legal Factors
Regulation is always the biggest concern to a company. As a company in the fast
food industry, McDonalds must adhere to many legal requirements, such as the
labor and employment law, corporate law and tax requirements, to name a few.