Anda di halaman 1dari 28

c Y 

PROJECT REPORT

ON

|EFFECT OF EXTERNAL ENVIORNMENT ON BUSINESS & ANALYSES OF THIS EFFECT ON


MC DONALDS}

IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE DEGREE OF POST GRADUATION IN MANAGEMENT

{   
{ 

{

B  2010-2012

{M   {M   

Lt. Col. Dr. Anirudh Tomar Subhash Bhatt


Director (DBS) MBA 2nd Sem
Roll no. 82
c   


DECLERATION

I hereby declare that the Project Report entitled ³EFFECT OF EXTERNAL ENVIRONMENT
ON BUSINESS´ written and submitted by me, under the guidance of Dr. Anirudh Tomar in my
original work.

The empirical finding in the report is based on the data collected by myself while preparing the
report, I have not copied anything from any sources or other project submitted for this purpose.
c * 


ACKNOWLEDGEMENT

I am immensely thankful to God who provided me the health & ability to withstand the problem
coming in my way.

I am thankful to Lt. Col. Dr. Anirudh Tomar Director, Doon Business School, for his
encouragement and providing other assistance whenever required.

I wish to express my gratitude to my seniors who generously helped me to color the mosaic of this
project report with the titles of their knowledge, expertise and memories.

Thanks are also due to my classmates for their cooperation during the research.

DATE: SUBHASH BHATT


c † 


CONTENTS

PAGE NO.

[ INTRODUCTION 5±6

[ EXECUTIVE SUMMARY 7

[ MICRO ENVIORNMENT 8

[ COMPONENTS OF MICRO ENVIORNMENT 8-9

[ MACRO ENVIORNMENT 10

[ COMPONENTS OF MACRO ENVIORNMENT 10 -12

[ IMPORTANCE OF UNDERSTANDING THE ENVIRONMENT 13 - 15

[ COMPANY PROFILE / HISTORY 16 ± 17

[ MISSION & VISION 18

[ CHANGE MANAGEMENT 19

[ EFFECT OF EXTERNAL ENVIRONMENT ON COMPANY 20 -24

[ SWOT ANALYSIS 25 - 26

[ CONCLUSION 27

[ REFERENCES 28
c Ë 


INTRODUCTION

No business works in isolation. A business is surrounded by many things. This is called


business environment. It is a combination of many forces that act on a business like
political, legal, social forces.

Generally speaking an environment includes the air we breathe, the water we drink, the available
business, social and educational infrastructure in the locality , state and country etc. In the context
of business the environment refers to the sum of internal and external forces operating on an
organization. The managers must perforce recognize the elements, severity and impact of these
forces on the organization. They must identify, evaluate and react to the forces triggered by the
external environment.

More often than not, these forces are beyond the control of an organization and its managers.
Accordingly, the factors of the environment will need to be considered as inputs in the planning
and forecasting models developed by an organization.

It is quite possible that some large organizations themselves constitute a greater part of the
business environment e.g. Public Sector Oil Companies in India.
c ù 


An organization operates within the larger framework of the external environment that shapes
opportunities and poses threats to the organization. The external environment is a set of complex,
rapidly changing and significant interacting institutions and forces that affect the organization's
ability to serve its customers. External forces are not controlled by an organization, but they may
be influenced or affected by that organization. It is necessary for organizations to understand the
environmental conditions because they interact with strategy decisions.

The external environment has a major impact on the determination of marketing decisions.
Successful organizations scan their external environment so that they can respond profitably to
unmet needs and trends in the targeted markets.

Internally, an organization can be viewed as a resource conversion machine that takes inputs
(labor, money, materials and equipment) from the external environment (i.e., the world outside the
boundaries of the organization), converts them into useful products, goods, and services, and
makes them available to customers as outputs. The organization must continuously monitor and
adapt to the environment if it is to survive and prosper. Disturbances in the environment may spell
profound threats or new opportunities. The successful organization will identify, appraise, and
respond to the various opportunities and threats in its environment.
c  


P 
:

Every Organisation weather big or small has to survive in the environment surrounding it. The
affect of the environment varies from company to company depending open the nature & type of
business. The Business environment determines the overall existence of the company over a period
of time.

This report contains the analysis of McDonald¶s business Environment that is how McDonald¶s.
came into Indian Market, analyzed the business environment tried to cope up with the Indian
environment by implementing various plans & strategies.

It starts with defining the Business Environment micro and macro environments. It moves on with
the explaining the macro environment as economic, technological, demography, legal,
political, ethical and environmental environments of McDonalds. It also contains
SWOT analysis and at last the overall conclusion of the McDonalds.
c  


The Business Enviornment can be divided into two categories i.e.

a) Micro Environment ( Controllable Factors)


b) Macro Environment ( Uncontrollable Factors )

M P    





The microenvironment refers to the forces that are close to the company and affect its ability to
serve its customers. It includes the company itself, its suppliers, marketing intermediaries,
customer markets, competitors, and publics.

These micro environmental forces include the organization's market, its producer-suppliers, and its
marketing intermediaries. While these are external, the organization is capable of exerting more
influence over these than forces in the macro environment.

1. ~ M


Organizations closely monitor their customer markets in order to adjust to changing tastes and
preferences. A market is people or organizations with wants to satisfy, money to spend, and the
willingness to spend it. Each target market has distinct needs, which need to be monitored. It is
imperative for an organization to know their customers, how to reach them and when customers'
needs change in order to adjust its marketing efforts accordingly. The market is the focal point for
all marketing decisions in an organization.

2.  

Suppliers are organizations and individuals that provide the resources needed to produce goods and
services. They are critical to an organization's marketing success and an important link in its value
delivery system.
c ' 


3. M
 


Like suppliers, marketing intermediaries are an important part of the system used to deliver value
to customers. Marketing intermediaries are independent organizations that aid in the flow of
products from the marketing organization to its markets. The intermediaries between an
organization and its markets constitute a channel of distribution. These include middlemen
(wholesalers and retailers who buy and resell merchandise). Physical distribution firms help the
organization to stock and move products from their points of origin to their destinations.
Warehouses store and protect the goods before they move to the next destination. Marketing
service agencies help the organization target and promote its products and include marketing
research firms, advertising agencies, and media firms. Financial intermediaries help finance
transactions and insure against risks and include banks, credit unions, and insurance companies.

a company and put them in the public spotlight. Local publics are neighborhood and community
organizations and will also question a company¶s impact on the local area and the level of
responsibility of their actions. The general public can greatly affect the company as any change in
their attitude, whether positive or negative, can cause sales to go up or down because the general
public is often the company¶s customer base. And finally those who are employed within the
company and deal with the organization and construction of the company¶s product.

Chart showing Stakeholders of the company


c Y 


M
 P    



The external macro environment consists of all the outside institutions and forces that have an
actual or potential interest or impact on the organization's ability to achieve its objectives:
competitive, economic, technological, political, legal, demographic, cultural, and ecosystem.
Though noncontrollable, these forces require a response in order to keep positive actions with the
targeted markets. An organization with an environmental management perspective takes
aggressive actions to affect the forces in its marketing environment rather than simply watching
and reacting to it.

1. Economic Environment:

The economic environment consists of factors that affect consumer purchasing power and
spending patterns. Economic factors include business cycles, inflation, unemployment, interest
rates, and income. Changes in major economic variables have a significant impact on the
marketplace. For example, income affects consumer spending which affects sales for
organizations. According to Engel's Laws, as income rises, the percentage of income spent on
food decreases, while the percentage spent on housing remains constant.

2. Technological Environment

The technological environment refers to new technologies, which create new product and
market opportunities. Technological developments are the most manageable uncontrollable
force faced by marketers. Organizations need to be aware of new technologies in order to turn
these advances into opportunities and a competitive edge. Technology has a tremendous effect
on life-styles, consumption patterns, and the economy. Advances in technology can start new
industries, radically alter or destroy existing industries, and stimulate entirely separate markets.
The rapid rate at which technology changes has forced organizations to quickly adapt in terms
of how they develop, price, distribute, and promote their products.
c YY 


3. Political and Legal Environment

Organizations must operate within a framework of governmental regulation and legislation.


Government relationships with organizations encompass subsidies, tariffs, import quotas, and
deregulation of industries.

The political environment includes governmental and special interest groups that influence and
limit various organizations and individuals in a given society. Organizations hire lobbyists to
influence legislation and run advocacy ads that state their point of view on public issues.
Special interest groups have grown in number and power over the last three decades, putting
more constraints on marketers. The public expects organizations to be ethical and responsible.
An example of response by marketers to special interests is green marketing, the use of
recyclable or biodegradable packing materials as part of marketing strategy.
The major purposes of business legislation include protection of companies from unfair
competition, protection of consumers from unfair business practices and protection of the
interests of society from unbridled business behavior. The legal environment becomes more
complicated as organizations expand globally and face governmental structures quite different
from those within the United States.

4. Demographic Environment

Demographics tell marketers who current and potential customers are; where they are; and how
many are likely to buy what the marketer is selling. Demography is the study of human
populations in terms of size, density, location, age, sex, race, occupation, and other statistics.
Changes in the demographic environment can result in significant opportunities and threats
presenting themselves to the organization. Major trends for marketers in the demographic
environment include worldwide explosive population growth; a changing age, ethnic and
educational mix; new types of households; and geographical shifts in population.
c Y  


5. Social / Cultural Environment

Social/cultural forces are the most difficult uncontrollable variables to predict. It is important for
marketers to understand and appreciate the cultural values of the environment in which they
operate. The cultural environment is made up of forces that affect society's basic values,
perceptions, preferences, and behaviors. U.S. values and beliefs include equality, achievement,
youthfulness, efficiency, practicality, self-actualization, freedom, humanitarianism, mastery over
the environment, patriotism, individualism, religious and moral orientation, progress, materialism,
social interaction, conformity, courage, and acceptance of responsibility. Changes in social/cultural
environment affect customer behavior, which affects sales of products. Trends in the cultural
environment include individuals changing their views of themselves, others, and the world around
them and movement toward self-fulfillment, immediate gratification, and secularism.

6. Ecosystem Environment

The ecosystem refers to natural systems and its resources that are needed as inputs by marketers or
that are affected by marketing activities. Green marketing or environmental concern about the
physical environment has intensified in recent years. To avoid shortages in raw materials,
organizations can use renewable resources (such as forests) and alternatives (such as solar and
wind energy) for nonrenewable resources (such as oil and coal). Organizations can limit their
energy usage by increasing efficiency. Goodwill can be built by voluntarily engaging in pollution
prevention activities and natural resource.
c Y* 


  
  
 P  

The manager¶s job cannot be accomplished in a vacuum within the organization. There are a
number of factors both internal as well as external which jointly affect managerial decision-
making. It is therefore very important for the manager to understand and evaluate the impact of the
business environment due to the following reasons:

6 Businesses may be deemed to be non starters due to restrictive business environment which
may take the form of rigid government laws ( no polluting industry can ever be located in
around 50 Km radius of the Taj) , state of competition ( Car manufacturing capacity
presently in the country is far in excess of demand) etc.

6 The present and future viability of an enterprise is impacted by the environment For
example no TV manufacturer can be expected to survive by making only Black &White
television sets when consumer preference has clearly shifted to colour television sets.

6 The cost of capital and the cost of borrowing - two key financial drivers of any enterprise
are impacted by the external environment . For example the ability of a business to fund its
expansion plan by raising money from the stock markets depends on the prevalent public
mood towards investment in stock markets.

6 The availability of all key inputs like skilled labour , trained managers , raw materials ,
electricity , transportation , fuel etc are a factor of the business environment.

6 Increasing public awareness of the negative aspects of certain industries like hand woven
carpets ( use of child labour ) , pesticides (damage to environment in the form of chemical
residues in groundwater), plastic bags (choking of sewer lines) have resulted in the slow
decline of some industries.

6 Finally , the environment offers the opportunities for growth and profits . For example
when the insurance and aviation industry was thrown open to the private sector , the new
entrant could easily build on the expectations of the public.
c Y† 



  
    

India gained independence in 1947 paving the way for national leaders of the Indian
Government to build an economically independent new India. Policies between 1950-70 were
implemented with a sincere belief in the efficacy of the socialist philosophy and political
democracy. Heavy investment by government in Steel plants, atomic energy, hydroelectric
power and irrigation projects laid the foundation of a strong industrial edifice. The non-aligned
movement at a time when the world was divided into two power blocks with cold war between
the Super-powers, prevented India from becoming a satellite of any other nation and enabled it
to protect Its economy and the Indian Population.

Indian economy has made great strides in the years since independence. In 1947 the country
was poor and shattered by the violence and economic and physical disruption involved in the
partition from Pakistan. The economy had stagnated since the late nineteenth century, and
industrial development had been restrained to preserve the area as a market for British
manufacturers. In fiscal year (FY) 1950, agriculture, forestry, and fishing accounted for 58.9
percent of the gross domestic product (GDP) and for a much larger proportion of employment.
Manufacturing, which was dominated by the jute and cotton textile industries, accounted for
only 10.3 percent of GDP at that time.

India's new leaders sought to use the power of the state to direct economic growth and reduce
widespread poverty. The public sector came to dominate heavy industry, transportation, and
telecommunications. The private sector produced most consumer goods but was controlled
directly by a variety of government regulations and financial institutions that provided major
financing for large private-sector projects. Government emphasized self-sufficiency rather than
foreign trade and imposed strict controls on imports and exports. In the 1950s, there was steady
economic growth, but results in the 1960s and 1970s were less encouraging.

Beginning in the late 1970s, successive Indian governments sought to reduce state control of
the economy. Progress toward that goal was slow but steady, and many analysts attributed the
stronger growth of the 1980s to those efforts. In the late 1980s, however, India relied on
foreign borrowing to finance development plans to a greater extent than before. As a result,
when the price of oil rose sharply in August 1990, the nation faced a balance of payments
crisis. The need for emergency loans led the government to make a greater commitment to
economic liberalization than it had up to this time. In the early 1990s, India's post-
independence development pattern of strong centralized planning, regulation and control of
private enterprise, state ownership of many large units of production, trade protectionism, and
strict limits on foreign capital was increasingly questioned not only by policy makers but also
by most of the intelligentsia.

But too much of protection from the Government had its own disadvantages. Our quality
standards were not in tune with international competition. It had produced more traders than
industrialists. It was high time that Indian economy became more open and entered the
international market.
c YË 


India embarked on a series of economic reforms in 1991 in reaction to a severe foreign


exchange crisis. Those reforms have included liberalized foreign investment and exchange
regimes, significant reductions in tariffs and other trade barriers, reform and modernization of
the financial sector, and significant adjustments in government monetary and fiscal policies.

The reform process has had some very beneficial effects on the Indian economy, including
higher growth rates, lower inflation, and significant increases in foreign investment. Foreign
portfolio and direct investment flows have risen significantly since reforms began in 1991 and
have contributed to healthy foreign currency reserves ($32 billion in February 2000) and a
moderate current account deficit of about 1% (1998-99). India's economic growth is
constrained, however, by inadequate infrastructure, cumbersome bureaucratic procedures, and
high real interest rates. India will have to address these constraints in formulating its economic
policies and by pursuing the second generation reforms to maintain recent trends in economic
growth.

India's trade has increased significantly since reforms began in 1991, largely as a result of
staged tariff reductions and elimination of non-tariff barriers. The outlook for further trade
liberalization is mixed. India has agreed to eliminate quantitative restrictions on imports of
about 1,420 consumer goods by April 2001 to meet its WTO commitments. On the other hand,
the government has imposed "additional" import duties of 5% on most products plus a
surcharge of 10% over the past 2 years. The U.S. is India's largest trading partner; bilateral
trade in 1998-99 was about $10.9 billion. Principal U.S. exports to India are aircraft and parts,
advanced machinery, fertilizers, ferrous waste and scrap metal, and computer hardware. Major
U.S. imports from India include textiles and ready-made garments, agricultural and related
products, gems and jewelry, leather products, and chemicals.
Significant liberalization of its investment regime since 1991 has made India an attractive place
for foreign direct and portfolio investment. The U.S. is India's largest investment partner, with
total inflow of U.S. direct investment estimated at $2 billion (market value) in 1999. U.S.
investors also have provided an estimated 11% of the $18 billion of foreign portfolio
investment that has entered India since 1992. Proposals for direct foreign investment are
considered by the Foreign Investment Promotion Board and generally receive government
approval. Automatic approvals are available for investments involving up to 100% foreign
equity, depending on the kind of industry. Foreign investment is particularly sought after in
power generation, telecommunications, ports, roads, petroleum exploration and processing, and
mining.



c Yù 



 
   M 




   

        

  !" 
#" 
 #$%



×  M 
 

The business began in 1940, with a restaurant opened by brothers Richard and Maurice McDonald
in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948
established the principles of the modern fast-food restaurant. The original mascot of McDonald's
was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee."
Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a
U.S. trademark on a clown shaped man having puffed out costume legs.
c Y 

McDonald's first filed for a U.S. trademark on the name McDonald's on May 4, 1961, with the
description "Drive-In Restaurant Services," which continues to be renewed through the end of
December 2009. In the same year, on September 13, 1961, the company filed a logo trademark on
an overlapping, double arched "M" symbol. The overlapping double arched "M" symbol logo was
temporarily disfavored by September 6, 1962, when a trademark was filed for a single arch, shaped
over many of the early McDonald's restaurants in the early years. The famous double arched "M"
symbol in use today did not appear until November 18, 1968, when the company filed a U.S.
trademark.

The first McDonald's restaurants opened in the United States, Canada, Costa Rica, Panama, Japan,
the Netherlands, Germany, Australia, France, El Salvador and Sweden, in order of openings.

The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc,
in Des Plaines, Illinois, on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later
purchased the McDonald brothers' equity in the company and led its worldwide expansion, and the
company became listed on the public stock markets in 1965. Kroc was also noted for aggressive
business practices, compelling the McDonald brothers to leave the fast food industry. The
McDonald brothers and Kroc feuded over control of the business, as documented in both Kroc's
autobiography and in the McDonald brothers' autobiography. The site of the McDonald brothers'
original restaurant is now a monument.

With the expansion of McDonald's into many international markets, the company has become a
symbol of globalization and the spread of the American way of life. Its prominence has also made
it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility.


c Y 

M !"    
 

Mission:

"McDonald's vision is to be the world's best quick service restaurant experience.


Being the best means providing outstanding quality, service, cleanliness, and value,
so that we make every customer in every restaurant smile."

Vision:

³McDonald's mission statement is that they strive to be the best quick service
experience. In order to be the best they will give outstanding quality, service,
cleanliness and value. This should make every customer smile´
c Y' 


Change Management

6 Change is ever persistent. Changes occur due to the situations, events etc. Some of the
reasons for changes are technology, customer choice, Competition, Economy etc.
Organisations have to cope with the changes. Change could be negative or positive. They
should be able to manage changes. Change management is the approach which deals with
the change systematically. It is about how an organisation can gain sustained success and
remain competitive for a long time.

6 McDonalds is focusing on the Asian markets as there is much scope for


growth.
McDonald's opened its first drive-through restaurant outside Beijing as part of the tie-up
that the world's biggest restaurant operator hopes will power its expansion in China.

6 McDonald's already has about 785 outlets up and running in China and plans to have
1,000 restaurants selling its brand of American food by the 2008 Beijing Olympics. Over
half of that potential market is represented by the dominant economies of Asia Japan,
China and India where the prospects for McDonald's look especially strong in the decade
ahead.

6 One critical task for McDonald's is finding new menu items that not only thrive in one
market but can be exported to others around the company's global system. For instance,
spicy chicken fillet, onion and garlic mayonnaise sandwich that debuted in the Middle
East a few years back is now popular in Malaysia and South Africa.

6 To help make that happen, McDonald's last year opened a food studio in Hong Kong run
by a chef and a team of nutritionists to dream up new products.
In the first quarter of 2007, McDonald's is launching a menu item in Australia aimed at
kids called Pasta Zoo, in which the pasta is shaped like little animals. The Hong Kong
food lab is working on pasta dishes targeted at adults.
Whether it's new menu items such as these in Australia, or gas-station- and-restaurant
combinations in China, Mickey D's is pulling out all the stops to keep its momentum
going in Asia.
c   


P P  
P   M 



P  

 


A business is affected by the economy of the country of operation. For example as


recession griped the whole world into its clutches most of the business suffered loss. Same is
true for McDonalds. As unemployment increased during recession its sales also went down in
October 2009 in USA. People have reduced their visits to fast food restaurants as a result of
decreased earnings. It sales dipped in late 2009 but in January it global sales according to reports
was not slowing down as compared to other businesses.

In 2008 when whole world was worst hit by recession it continued to grow its sales and
made robust earning the early part of the year. Thought sales in USA, the country of its
origin was not as high as international sales but still its performance was better.

In 2007, its growth was according to expectations. It kept making progress in the
Asia/Pacific, Middle East and Africa group. It global sales was up by 7%. Thus it planned
to open many new restaurants in these areas. Similarly in 2006 and 2005 its performance
was unto mark.

For growth it makes strategy for its existing restaurants, opening new restaurants and
improving international profitability. It tries to achieve economies of scale in individual
markets to increase the profitability. It keeps adding the new restaurants
through franchisee.
c  Y 


~   


 



Technology plays very important role in the success of a business. As technology


changes and become advances organisations has to adapt that otherwise they can be
lagged behind by competitors. Right form supply of raw material, manufacturing and
marketing it has big role for organisation.

If we talk about McDonalds technology has improved the efficiency and sales of company.
Technology makes order processing faster. It facilitates faster and hygienic packing.
Technology also makes supply chain efficient by easy management of inventory and easy
payments for their suppliers and other vendors.

When lot of orders comes at peak times then every second counts. Technology has made
it more accurate and faster to process orders with new technology such as digital wireless
headsets, customer order displays, and timer systems. This helps to detect the any mistake
in order before it reaches the customer. The computer checks the missing items in the
order quickly which enables it to increase the customer satisfaction. Weighing the order
checks that an item is missing in it. Thus technology helps to improve the accuracy and
customer satisfaction.

Other important use of technology is in marketing the products. Their key tool for
marketing is advertising on televisions of its products. Adopting the new technology is
always costly affair, but there are many benefits of it.
c   





  
P  
 


Since this company is form food industry it relates to the food habits of society. The food
habits of the population where it operates influence the business very much. It has to
adapt according to the society and its culture.

When it was started in USA it has image of serving American style hamburgers. There it
became very popular. Then with time it moved to other countries. For example when it
opened its restaurant in Japan it didn¶t do well in beginning. The reason was the food it
was serving. Initially it had the same menu as it was serving in America. The staple food
for Japanese is Rice. They didn¶t feel fully satisfied until they have rice in their meal.
So, later on it added dishes like fired rice, rice burger, and fried egg burgers to its menu in
Japan. Other cultural difference was like customers were expected to stand in the restaurant which
they didn¶t like. The first restaurant in Japan didn¶t have the tables and chairs but in later ones they
added tables and chairs where customers could sit.

Like in India when it opened its restaurant it removed beef and pork form its dishes. It
used two separate kitchens for vegetarian and non vegetarian food. As 40 percent of the
population is vegetarian it introduced vegetarian burger in the menu.

So, above two examples explain that it has to change the menu and serving style
according to culture and society.
c  * 



 
 
 
  
 


Demographics are the characteristic of the population like literacy rate, average age,
income, gender, race etc. demographics influences because that decides the buying
behaviour of customer. A company has to decide the target market which is much
affected by the demographics.

McDonalds target market is young people and children. This is reflected by strategy of
serving toys with the meal. About income, it targets the middle income people who are
not able to spend a lot on the food and also don¶t want to compromise with the taste.
This helped it a lot in recession.

Demographics are different for different countries. For example in most of the developed
countries age structure is changing i.e. birth rate is decreasing. This is making more
people in population old. This means McDonalds have to make its strategy according to
these changes. One of the step in this direction is it has started offering free tea and coffee
to 60 plus age group. This will attract more customers of old age. Earlier it had the image
of serving food for young people like to eat quickly, but as more population growing old
it is changing according to that.

Anther example of impact demographic changes is about the income of the people.
McDonalds is growing faster in developing countries where income of people is
increasing as economy is developing. There more young people in the population and
earning more, which enables them to spend on fast food and eating out more often.
c  † 




 
P  
 
:

A business has to work according to the government policies and rules. As it is operating
in 119 countries policies in every country are different rules and regulations. These
policies might be related to business, food, hygiene etc. For example, McDonalds has to
follow the hygiene and cleanliness rules established by government in all countries.
McDonald¶s business is influenced by government policies according to fast food
regulations.

The political environment influence according to factors like political stability of country,
policies for business for foreign companies, flexibility in rules for international trading
etc. This affects the profitability of the company. There are different rate of tax in every
country and different types of taxes imposed. These days most of the government are
controlling the fast food business due to related health problems.

If McDonalds is earning profits, government also expect benefits like tax and
employment. There are rules for the employing people for example in United Kingdom it
is about minimum wages. All the restaurants operating in UK has to pay minimum wages
decided by government to its employees. It should be able to protect its workers by
giving genuine compensation expected by the employees to become successful.

P 

# P  


McDonalds is always been criticised due to unhealthy image of fast food. It also copes
with the ethical issues like ill treatment of animals, exploitation of children, and
destruction of rainforests. It ruins the image of its business. There many researches which
says that fast food is not healthy especially for the children and lead to obesity and other
heart diseases. It suffered loss due to these issues many times. For example in 2002 it
went under crisis. Its share price declined and profits went down by 70 percent.

On the other side it is also participate in the conservation activities of environment. It


uses the environmental friendly fuel and methods for its products. McDonalds also
created a task force with the help of anther non profit organisation working for
environment to protect it. It works for reducing and recycling the waste.


c  Ë 

M 
$%~&
 

The anther theory which analyses the environment of a business is SWOT analysis.
SWOT stands for Strengths, Weaknesses, opportunities and threats. Strengths and
weaknesses are related to internal environment whereas opportunities and threats are
related to external environment. Any business before launching new product or moving
to new area must do this analysis to predict the success.

  

‡ McDonalds is a strong brand name. It is easily recognised by everyone. It has firm
position in the market and is global brand.

‡ One of its strengths is that it is huge company with 31, 00 restaurants all over the
world.

‡ Being big its profits are also high and have good scope of experimenting with new
strategies.

‡ According to Forbes Magazines it one of the most liked food service organisations.


$


‡ There is lot of price competition in the market for food products.

‡ There are many competitors coming up due to large profits and are lowering its
position.

‡ Its earning is mainly dependent on the disposable income. If the budget it


threatened, people use their money elsewhere. It has been accused of serving
unhealthy food.
c  ù 


% 

‡ It keeps lunching innovative products like µSupersize¶.

‡ It is using its environmental activities as marketing strategy. For example it is


advertising with its green packaging solutions.

‡ It can introduce healthy and low calorie burger for heath conscious customers.
It can provide more upscale restaurants with more facilities and entertainment which
attract more people.

~ 


‡ More dining restaurants are forcing it to decrease the price of its burger as they have
started to offer the burgers.

‡ Society is becoming more and more health conscious and avoiding fast food. It has
been sued many times for unhealthy food and spreading obesity in America.

‡ Competitors like Taco Bell, KFC, Starbucks and Burger king.

‡ Other threats are related to the economic situations like current recession which has
affected the revenues of this company.
c   




  

McDonalds is growing at a fast pace in spite of many hurdles in its path. Beginning
with one small restaurant in USA it has become a multinational company. This is due to
its well formed strategy and ability to implement the strategy. It keeps coming up with
new ideas to attract the customers. It also adapt according to the social and cultural
change in the society.

Thus business has to work in its internal and external environment. To make progress and
sustained success it has to clearly understand and analyze both the environments.
c   


 :

The information / data has been taken from the below mentioned web links.

6 http://www.businessweek.com/magazine/content/09_47/b4156032714278.htm
6 http://seekingalpha.com/article/116480-what-recession-mcdonald-s-continues-its-global-
6 growth
6 http://bucknellorgtheory09.wordpress.com/2009/ 05/07/mcdonalds-in-beijing/
6 http://bucknellorgtheory09.wordpress.com/2009/05/07/cultural-differences-mcdonalds-
6 in- japan/
6 http://www.bignerds.com/papers/22822/Mcdonalds-Swot

Anda mungkin juga menyukai