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1.3.2.

1 External factors (analysed using key PESTEL factors) PESTEL analysis helps us to understand the overall picture of the operation of an industry.

A. Political Factors
The operations of any organisation are heavily influenced by the individual state policies enforced by each government and McDonalds is no exception. For instance, there are certain groups in Europe and the United States that protest to the state pertaining to the health implications of consuming fast food. They claim that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food. There are other factors such as the tax law, employment law and related trade restrictions. Tax rates could affect the growth of the organisation. In a diverse working environment employment restrictions like working hours regulation require the organisation to employ more staff. Amendments like this increase the overall cost involved. Certain restriction has very strong influence in the operation of the organisation. Certain laws penetrate so deep that they even constrain the content of the food.

Economic Factors
Organisations like McDonalds which have global presence are affected by the changes in inflation and the exchange rates. Hence, these chains may have to adapt to the issues and the effects of the economic environment. The economic factors also determine the supply and demand relationship of the raw materials within the organisation. Other economic factors that impact the organisation are inflation rate, wage rate, and cost of living (Ivythesis, 2011).

B. Socio-Cultural Factors
International strategies of McDonalds seem to act on several fields to guarantee lucrative returns for the organisation. To illustrate, the organisation improves on establishing a positive mind-set from their core consumers. McDonalds have understood its customers based on their characteristics. A recent survey has proved that McDonalds most frequent customers are below the age of thirty-five (Ivythesis, 2011).

C. Technological Factors
The Companys key tool for marketing is by means of television advertisements. Elements like the inventory system and the management of the value chain of the company allows for easy payments for theirs. The integration of technology in the operations of McDonalds tends to add value to their products. The improvement of the inventory system as well as its supply chain allows the company to operate in an international context (Ivythesis, 2011).

D. Environment

The social responsibility of McDonalds on a region is influenced by the operations of the company in that specific region. These entail accusations of environmental damage. Among the reasons why the company is charged with such claims is the employment of nonbiodegradable substances for the glasses and Styrofoam coffers, which is offered for the meals (Ivythesis, 2011)

E. Legal Factors
Legal aspects like tax obligations, employment standards, and quality requirements are only a few among the other equally important legal factors on which the company has to take into consideration (Ivythesis, 2011). PESTLE ANALYSIS

Pestle is an analysis of the external macro environment in which a business operates. According to (2008), pestle stands for political, economic, social, technology, and

environmental factors.

A.

Political Factors

The international operations of McDonalds are highly influenced by the individual state policies enforced by each government. (2001, 705) For instance, there are certain groups in Europe and the United States that clamor for state actions pertaining to the health implications of eating fast food. (2005) They have indicated that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food products. On the other hand, the company is controlled by the individual policies and regulations of operations. Specific markets focus on different areas of concern such as that of health,

worker protection, and environment. All these elements are seen in the government control of the licensing of the restaurants in the respective states. For instance, there is an impending legal dispute in the McDonalds franchise in India where certain infringement of rights and violation of religious laws pertaining to the contents of the food. The existence of meat in their menus in India is apparently offensive to the Hindu religion in the said market. There are also other studies that points to the infringement of McDonalds Stores with reference to the existing employment laws in the target market. Like any business venture, these McDonalds stores have to contend with the issues of employment procedures as well as their tax obligations so as to succeed in the foreign market.

B.

Economic Factors

Organisations in the fast food industry are not excused from any disputes and troubles. Specifically, they do have their individual concerns involving economic factors. Branches and franchises of fast food chains like McDonalds has the tendency to experience hardship in instances where the economy of the respective states is hit by inflation and changes in the exchange rates. The customers consequently are faced with a stalemate of going over their individual budgets whether or not they should use up more on these foreign fast food chains. (2004) Hence, these chains may have to put up with the issues of the effects of the economic environment. Particularly, their problem depends on the response of the consumers on these fundamentals and how it could influence their general sales. In regarding the operations of the company, food chains like McDonalds tend to import much of their raw materials into a specific territory if there is a dearth of supply. Exchange rate fluctuations will also play a significant role in the operations of the company. As stated in the paragraph above, McDonald stores have to take a great deal of consideration with reference to their microenvironment. The companys international supply

as well as the existing exchange rates is merely a part of the overall components needed to guarantee success for the foreign operations of McDonalds. Moreover, it is imperative that the company be cognizant of the existing tax requirements needed by the individual governments on which they operate. This basically ensures the smooth operations of the McDonalds franchises. In the same regard, the company will also have to consider the economic standing of the state on which they operate on. The rate at which the economy of that particular state grows determines the purchasing power of the consumers in that country. Hence, if a franchise operates in a particularly economically weak state, hence their products shall cost higher than the other existing products in the market, then these franchises must take on certain adjustments to maintain the economies of scale.

C.

Socio-Cultural Factors

Articles on the international strategies of McDonalds seem to function on several fields to guarantee lucrative returns for the organisation. To illustrate, the organisation improves on establishing a positive mind-set from their core consumers. McDonalds indulge a particular variety of consumers with definite types of personalities. ( 1994) It has also been noted that the company have given the markets such as the United Kingdom, an option with regards to their dining needs. (2005) pointed out that McDonalds has launched a sensibly valued set of food that tenders a reliable level of quality for the respective market where it operates. Additionally, those who are aged just below the bracket of thirty-five are said to be the most frequent consumers of McDonalds franchises. ( 2005)

The multifaceted character of business nowadays is reflected in the harsh significance of the information on the subject of the existing market. This procedure is essentially identified

in the field as market research. (1997) Information with regards to the appeal and potential fields of the market would double as obstructions to the success of the company if this area of the operations is neglected. In the case of McDonalds they establish a good system in determining the needs of the market. The company uses concepts of consumer behaviour product personality and purchasing decisions to its advantage. ( 1998) It is said to have a major influence on the understanding of the prospective performance of the organisation in a particular market. (2000)

D. Technological Factors

McDonalds generates a demand for their own products. (2006) The companys key tool for marketing is by means of television advertisements. There are similarly some claims that McDonalds are inclined to interest the younger populations more. The existence of play spots as well as toys in meals offered by the company shows this actuality. ( 1995) Other demonstration of such a marketing strategy is apparent in the commercials of they use. They employ animated depictions of their characters like Grimace and Hamburglar. Other advertising operations employ popular celebrities to promote their products. The like has become endorsers for McDonalds worldwide loving it campaign. Moreover, the

operations of McDonalds have significantly been infused with new technology. Elements like the inventory system and the management of the value chain of the company allows for easy payments for their suppliers and other vendors which the individual stores in respective markets deal with. The integration of technology in the operations of McDonalds tend to add value to their products. Basically, this is manifested in the improvements on its value chain. The improvement of the inventory system as well as its supply chain allows the company to operate in an international context.

E.

Legal Factors

There has been the recurrent bellowing in opposition to the fast food industry. This has similarly made McDonalds apply a more careful consideration on their corporate social responsibilities. On the whole, this addressed the need of the company to form its corporate reputation to a more positive one and a more socially responsible company. ( 2005) The reputation of McDonalds is apparently a huge matter. Seen on the website of the company, it seems that they have acquired strides to take in hand the key social censures that they have been berating them in the past decades. The company has provided their customers the relevant data that they need with reference to the nutritional substances of their products. This is to attend to the arguments of obesity charged against the products of the company. In the same way, the consumers provided freedom in choosing whether or not they want to purchase their meals. This is tied up with the socio-cultural attributes of the market on which they operate. For instance, operations in predominantly Muslim countries require their meat to conform to the Halal requirements of the law. In the same regard, those that operate in countries in the European Union should conform to the existing laws banning the use of genetically modified meat products in their food. Other legal concepts like tax obligations, employment standards, and quality requirements are only a few of important elements on which the company has to take into consideration. Otherwise, smooth operations shall be hard to achieve.

F.

Environment

The social responsibilities of McDonalds on the state are influential to the operations of the company. These entail accusations of environmental damage. Among the reasons why

they are charged with such claims is the employ of non-biodegradable substances for their drinks glasses and Styrofoam coffers for the meals. (1997) Several civic groups in Hong Kong have made actions to make the McDonalds franchises in Hong Kong aware of the rather copious use of Styrofoam containers and the resultant abuse of the environment. (1997) further indicated that in 1995, McDonalds Hong Kong went over the Styrofoam used by both Australia and the United States combined.

IV.

CONCLUSION

Debatably, the most significant contribution of this generation is the combination of globalization and internationalization in the businesses sector. Developments in the international setting have an effect on the more particular factors in the operations in individual organisations. Alterations could take placer and require intense modifications to the operations such that it could have an adverse effect on the entire structure of the company. However, as indicated in the arguments and comments in this paper, this could be acquired by setting a certain level of flexibility in the organisation. This level of flexibility is basically acquired through the acquaintance of both the internal and external environment of the company.

Even though McDonalds may have been deemed as demigod in the fast food business in the international scene, what it preserves as revealed in its processes is the need for flexibility. The slight changes that take place in the market have an effect on the operations of the business in any case. This denotes that having the information on the effects of these alterations swiftly provides these fast food industry giants to take fine-tuning actions on their acts and still preserve their market position. As implied in the introduction of this paper, the markets of nowadays manifest a cutthroat rivalry with the individual competitors, recognized brands or otherwise. Hence, any business in spite of the muscle of the brand name or the size of its reserves could not afford any failures in their individual markets.

V.

RECOMMENDATION

The following recommendations shall be based on the conclusions and arguments above.

Political Factors

Since it is apparent that the company is expanding continuously, it is wise to deal directly with the proper authorities in the respective markets that they intend to operate in. This way, a good way of establishes good relationship with the government. It is advisable that the company rests on the good graces of the government on which they will be penetrating. To do this, all they have to do is accomplish all the prescribed acts and satisfy all the prerequisites for doing business. The company must also be acquainted with the law in order to know what their responsibilities and their possible liabilities.

Economic Factors

Before penetrating the market, the company must carry out a well conducted market research, especially in the movements in the economic environment. The frequency of the shifts in the inflation rate as well as the fluctuations in the exchange rate affects the operations of the company.

Socio-cultural Factors

Obtain the relevant information from the target market in addition to the individual customers of the organisation. It is imperative that before a franchise is granted to a particular market, a well drafted and comprehensive market research should be conducted initially so as to establish the acts that would conform to good customs, public policies, and morals of the said state. Similarly, the company should find out the shifts in areas like the consumer behaviour and purchasing patterns of the market. Fundamentally, this is the key condition for executing a suitable customer relationship management system.

Technological Factors

Use the internet to their advantage. The cost-effectiveness, interactivity and real-time effects of the communications are a good way to find suppliers. It is also a good way to correspond with the respective McDonalds headquarters in every state. The company must also look into the use of IT to enhance their inventory operations. As the operations in its inbound and outbound logistics improve, the company will expect significant savings and reduction of costs in the operations.

Environmental Factors

Find out the environmental regime that governs the operations in every market. Monitor the waste disposal of the company. Minimize the use of Styrofoam materials and plastic cups. Constant updating of the social corporate responsibility is imperative. This should also entail that the headquarters should take in hand a manner of internal control of those that would infringe upon this company objective. Sanctions such as revoking of the franchise license or a particularly high fine should be installed to serve as a deterrent to infringement.

Legal Factors

Hire local counsels to deal with the legal conflicts in individual markets on which the company may encounter. This is shall ensure the company that the lawyers that will handle their legal affairs are more versed with the legal regime that would iron out certain creases on their operations.

PEST

ANALYSIS

OF

MCDONALDS

Political

The political/ legal environment facing McDonalds can be characterized by institutional stability for the various markets globally. McDonalds is successfully catering to all major markets. McDonalds should also take interest in new markets and offer new products with respect to the market.

McDonalds must deal with the distribution of its services since it franchises out many of its restaurants globally. In

order to get more customers McDonalds has entered into the price wars. They have specials and also try to keep the price of their meals inexpensive. The interest rates of different countries also affect McDonalds. If the interest rates go up then the price of supplies will also rise. McDonald will try to find the cheapest way to get its services to the customer in order to keep prices low.

They also just had stock split which would make it easier for people to buy stock in the company. McDonalds must also watch the stock markets of the world. They have restaurants all over the world so they must watch the economies of all the countries. McDonalds is also expanding all over the world. They realize that in order to keep their edge in the fast food business that they must grow and reach new markets first. The use of new computers for ordering and for preparation of food is being developed for McDonalds.(Susan Arch 2008)

Economic

There are many different forces that affect McDonalds in the general and task environments. One of the forces that affect them in the general environment is economic forces. Disposable income is one of the most influential decisions that McDonalds deals with on a daily basis. Interest rates are another part of the economic forces that McDonalds must deal with. The interest rate affects how much money people will invest in McDonalds and its stock. McDonalds must also deal with global forces. The stock markets of the world affect the stock of McDonalds but it also affects its suppliers. If the price of beef goes up in Argentina, that will affect the price of burgers in all of McDonald's restaurants.

Social

McDonalds must keep growing if it wants to keep its number one status in the fast food industry. In order to do this, they must expand in the United States and also in countries across the globe. The different traditions and eating habits of people across the globe is a sociocultural force that McDonalds deals with as it expands across the globe. McDonalds must deal with problems in the task environment as well as in the general environment. McDonalds being the number one fast food chain must always be watching its competitors. If it does not watch them they will gladly

take over its reigning position. The suppliers of McDonalds must also be dealt with. The suppliers of its food products must be kept happy and must also be able to handle the large amount of supplies that McDonalds needs to run its business.