THE UNIVERSITY OF CAMBODIA

The Tony Fernandes School of Business

Undergraduate Special Individual Assignment

Course Code : BUS 404 Morning

Course’s Title : Strategic Management and Policy
Instructor’s Name : HENG CHAKRYA

Topic: External Environmental Scanning

Student’s Name : CHHUN Bunhong

Student’s ID : UC 90181071
Term : 5

Date: May 18, 2020

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Content
Page
I. Introduction ……………………………………………………………. 3

II. Literature……………………………………………………………….. 3

III. Case Study……………………………………………………………… 4

IV. External environment…………………………………………………… 5

Political
Economic
Social
Technological
Environmental
Legal factor

V. Conclusion……………………………………………………………… 9

VI. References……………………………………………………………… 10

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Introduction

For today, the external environment analysis of business activities takes a really important
place within the development of any organization. This is often because of the actual fact that
the trendy external environment of enterprises is characterized by a particularly high degree of
dynamism, complexity, and uncertainty. Additionally, one of the best conditions in business,
yet as in other areas of life, is the ability of the organization to adapt to external changes
within the macro environment. There’s no denying that the food industry is one of the
strongest within the world in spite of everything, everyone has to eat! Indeed, there are some
interesting dynamics at play during this space, like rising labor costs, which make it unclear
just how profitable food businesses will still be. we'll add that any organization exists and
functions in conjunction with many factors. These factors have a unique impact on
organization and have a really significant impact on the organization’s capabilities, its
perspectives and strategy. The mix of interaction factors is taken into account as a company
environment in management.

Literature

Currently, in management and marketing, there are many thoughts about the role of assorted
methods of research. The present methods currently available for exploring the macro
environment were analyzed during this article Numerous methods for assessing the factors of
the external market functioning provides a good opportunity to develop possible options for
market entry strategies. In business studies, all students have learned the concept of PESTEL
analysis, which stands for Political (P), Economic (E), Social (S) and Technological (T),
Environment (E) and Legal factors (L) analysis on the external business environment; it's
administered by businesses to support their strategic analysis activity. Pestle Analysis could
be a good technique to search out opportunities and threats within the External environment of
a business. Once having an entire picture of the external environment factors which will affect
the business, a business owner can take decisions in line with the case .For example, you're a
restaurant business owner, you may have internal environment factors which are controllable,
for instance, salaries, employees, financials, recipes, furniture. On the opposite hand, external
environmental factors are uncontrollable, for instance, safety guidelines, tax reforms,
consumers taste and income, technology, etc. In particular, we’ll take a look at how both
restaurateurs and food distributors could be stricken by current trends

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Overview

The restaurant industry is the hottest and highly profitable business. may be a place where
food is ready and served to people and it works around the clock. There are different types of
restaurants starting from the easy dining places to the expensive and spacious restaurant,
where you'll be able to enjoy along with your friends and family. The easy restaurant is best
for single people or for the tourists, who rummage around for the food at a reasonable price.
The restaurants have different menus and that they charge from the clients in step with their
menu. The system of the restaurant is different from country to country because the eating
habits of the people are changed. The change of the products and recipes of the food can bring
change within the pricing of the foods. Now various alimentation restaurants also are
developed, where people come to enjoy with their family.
There are a pair of primary examples for the case study and to be literally evidence like
Macdonald and KFC which both of those companies are very well-known and leading
alimentation over the planet. On one hand, McDonalds has made an excellent comeback after
having performed poorly for the last several years. For the last several years its financial
performance had been below expectations. The McDonald's story started reversing. Now, the
alimentation brand’s performance is back on the right track and moving fast. On the opposite
hand, KFC also experiences challenges which face many critical external challenges that
shape its growth and success. As a result, PESTEL analysis of Macdonald and KFC will
reveal a close description of every factor that plays a serious role in both companies' how they
run smoothly concepts during this modern technology era.

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External environment scanning ( PESTLE )

➢ Political factor

The political factors have a great impact on the restaurant industry and the
government. wants to own influence over the business and that they announce various
regulations from time to time taking care of the health of the people. they have to test
the quality of cleanliness within the restaurants and follow the principles like tax rates
and also the following of labor laws). the govt. wants to test the standard of the food
and ingredients, which are employed in preparation of food because cholesterol can
affect health of individuals and that they can suffer from obesity and other stomach
issues. Most of the restaurants aren't sure of their kitchen, where they cook food and
wash the dishes. The food preservation is additionally necessary by keeping the place
clean and tidy . the govt. imposes some employment laws for safety of employees, and
environmental regulations to stick with the environmental policy and follow the trade
restrictions together with tariffs and political stability to keep up the quality of food.
Current policies push for the general public to be more conscious when buying foods.
As an example, as a part of the Health Menu Choices Act, food services with over 20
locations in Ontario, Canada, must now post the number of calories for food and
drinks openly. A change like this might affect purchases of foods (and the
importing/exporting of ingredients) for his or her country. Fast food chains also show
calories, but not as openly. MacDonald’s reveals calorie and nutritional information on
their website. But they, and other victuals chains, face criticism for his or her lack of
healthy options on their menus. The general public health policies encourage
consumers to create healthier choices and McDonald’s isn’t a necessary (or healthy)
choice. Still, with their funds and global power, McDonald’s can strive to incorporate
healthier food options to keep at bay against the criticism. McDonald’s targets low to
medium income families. With improved international trade, McDonald’s expands its
global supply chain to similar families everywhere the globe. they need the funding
necessary to use strategic planning so as to lower taxation impact without violating
political laws.

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➢ Economic factor

The government fiscal policies can affect the business of this industry. If they impose
taxes on the buyer items, then restaurants will enhance the speed of the food items.
The change within the inflation rates can even affect the business because the prices of
the ingredients will be increased and resultantly, the restaurants will must increase the
speed of their food items, which may minimize their margin of profit. When economic
changes happen in other countries, it can have a foul impact on the restaurants, which
have outlets in various countries. The slow and stable growth within the economy of
the country and risky economic markets will be an excellent threat for this industry. If
the economy of any country is robust then this industry can flourish there quite
rapidly. The business of the multinational food chain is becoming strong in Europe
because the economic situation is now becoming stable there.

➢ Social factor

In the social sector, people are now becoming educated and that they are now health
conscious about the food products. they give the impression of being for quality food
and therefore the increase rate is that the major factor of this business like the rise in
population, the quantity of restaurants is additionally increased. Now people have
become tuned in to the food products and that they also check the food products,
which are accustomed to prepare the food. within the health-conscious market, the
restaurants offer healthy foods to the people but where people look for high fat food,
the restaurants prepare food in line with their choice.
Currently, McDonalds’ Menu is so complex and fabricated from such fat recipes that
its franchisees have grown frustrated. A low calories item in a slimmer menu can make
McDonalds more attractive among the millennial consumers. Health could be an

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important factor that any food brand needs to consider. Within the last decade, because
of growing obesity round the world, the society’s focus has been on a low-calorie diet.
They are doing not want calorie heavy burgers or colas. except for its McDonalds

should target the correct segments within the society. Its target market is principally
fabricated from the teenagers from the center class.

➢ Technological factor

Whether it's marketing, advertising, sales or maybe customer service, all told aspects
technology accelerates the brand’s performance. Customers place orders and make
payments online. They also track their orders online and make payments from their
smartphones. Companies have developed smart apps that customers can use to buy
from their favorite brands. Apps became especially famous among the businesses to
draw in customers and sales. They need also become a good tool to supply
extraordinary customer service. Any brand can reach many customers and have them
using social media. The brands like McDonalds have a large line of fans and followers
that follow it on social media. Other big brands have also developed great social media
strategies to interact with their customers. These strategies play a significant role at
attracting the millennial customers. Automation has also made these brands more
efficient with customer service and repair delivery. Not just this, technology is
additionally getting used within the area of research and development to grow a brand
and its number of followers.

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➢ Environmental factor

All round the globe, governments are now that specialize in environmental protection.
The main focus is now on sustainability. it's not just a trend but a change with an
extended term impact. The main focus isn't just on brands but on their supply chains
too. Brands like Starbucks and McDonalds are that specialize in having environment
friendly and sustainable supply chains. KFC may be a major contributor to the
environment KFC’s paper supplier is linked in many cases with deforestation,
destruction of wildlife, and endangering the environment. Again, an increasing number
of health-conscious individuals value more highly to pull away from KFC because of
reasons like this. The restaurant has to adopt more environmentally friendly practices
to scale back waste and consumption.

➢ Legal factor

There are various government agencies, which are working for the regular supply and
quality of the food products. They have implemented some specific rules and
regulations to regulate the provision and provision of food products within the market.
The restaurants should face the regulations not only about food but also wages and
welfare of their employees. they need to follow these rules in order that they will
create the lawful atmosphere within the specific area. they need to stay the standard of
their food high, which might be healthful for the people and be sure of the welfare of
their employees.

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Conclusion and Recommendation

This PESTLE analysis of the food industry is certainly a stimulating one. It’s a combination
of positives, negatives, and uncertainties. In the meantime, consumers willing to spend on
nourishment and advance innovation can cut down the costs. On the other hand, the space is
carefully controlled and labor costs are expanding What’s more, eaters’ diets have become
increasingly more specific. Of course, the food industry is here to remain, but it seems those
that prevail will must understand what consumers really need to be eating within the 21st
century. There are many business growth opportunities enumerated during this
PESTEL/PESTLE analysis of McDonald’s Corporation. it's recommended that the
corporation increase its penetration in high-growth markets. For instance, rising the amount of
McDonald’s restaurant situations in significant rise developing nations in Asia can put up to
whole extension. This suggestions also deals with the opportunities to expand supported rising
obtainable profit in alternative markets in the global. to handle the opportunities that include
ecological trends, it's recommended that McDonald’s expand its corporate social
responsibility programs. The strategic goal should include developing the environmental
effect of the commercials, while building up the brand and consumer recognition about the
brand.

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References

Roberta Greenspan (2015), McDonald's PESTELPESTLE Analysis & Recommendations,

available at http://panmore.com
mcdonalds-pestel-pestle-analysis-recommendations

UK Esseys(2015), PESTEL Analysis of McDonalds and the food industry, available at

https://www.ukessays.com/essays /marketing/pestel-analysis-of-mcdonalds-and-the-food-
industry-marketing-essay.php

Rodrigo (2012) , Strategic Analysis (SWOT, PESTEL, Five Forces) of McDonalds,

available at http://writepass.com/journal /2012/12/the-term-restaurant-is-an-establishment-
where-food-is-prepared-and-served-to-the-people-and-alwaysalmost- refers-to-any-sort-of-
dine-in/

Wendel Clark (2012), Restaurant Pest Analysis, available at

http://www.ehow.com/info_7911098_restaurant-pest-
analysis.html UK Essays (2015), SWOT and PESTEL Analysis of a Seafood Restaurant,
available at https://www.ukessays.com/essays
/marketing/swot-and-pestel-analysis-of-a-seafood-restaurant-marketing-essay.php

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