Pestel Analysis Of Mcdonalds

Topics: Economics

Globalization has made the globe considerably smaller. States lines have turned into practically a divider separating certain regions of a massive unitary community. Businesses are the one that are highly affected by this occurrence. The virtual closeness of states has made trade and commerce an international event. Together with these advances, the key standards of business are similarly taken into account. Macdonald

McDonald’s is one of the world’s most well-known and valuable brands and holds a leading share in the globally branded quick service restaurant segment of the informal eating-out market in virtually every country and the leading global foodservice retailer with more than 30,000 local restaurants serving more than 58 million people in more than 119 countries each day.

A McDonald’s restaurant is operated by a franchisee, an affiliate, or the corporation itself. The corporation’s revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants.

McDonald’s Vision McDonald’s vision is to be the world’s best quick service restaurant experience.

McDonald’s Culture McDonald’s culture is the love towards McDonald’s brand and the respecting the company values imbibed in its rich history. McDonald’s Culture McDonald’s culture is the love towards McDonald’s brand and the respecting the company values imbibed in its rich history. History of McDonald’s * Started in 1940, when two brothers, Dick and Mac McDonald opened the first McDonald’s restaurant in California. In 1954, an entrepreneur and milkshake-mixer salesman, Ray Kroc, acquired the franchise of McDonald’s * In 1961, Kroc convinced the McDonald brothers to sell the business rights to him for a sum .

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* In 1963, the mascot Ronald McDonald was born as a part of a marketing strategy in US. Happy Meal was introduced in US in 1979. * The year 1984 was marked by the death of Ray Kroc. * In 1994, McDonald’s bagged the Catalyst Award for its program for ‘fostering leadership development in women’. * In 1996, the first INDIAN Restaurant was opened. In 1998, the first Macdonald’s was opened in PAKISTAN * In 2003, the company launched the ‘I’m lovin’ it’ campaign. McDonalds Practices There were three factors that were chosen to outline the success of McDonald’s corporation. The first factor is globalization, which is define as closer contact between different parts of the world, with increasing possibilities of personal exchange, mutual understanding and friendship between “world citizens”. Diversity, the difference among people and cultures, is the second factor discussed in the paper.

The final factor is ethics, which can be defined as a set of principles of right conduct. This paper explains how the McDonald Corporations uses the factors to conduct business around the world. McDonald’s in Globalization Globalization has affected almost every aspect of life in almost every nation. From economic to social to culture, this widespread exchange of goods, services and ideas have influenced changes around the world. Even though the cultural influence in globalization is of slight significance to policy makers, its power has tremendous consequences to the nations involved and its people.

Food is an important element in defining culture. “Food is the oldest global carrier of culture. ” Any changes in the foods that we eat, in its preparation, the way it is served and consumed diminishes the traditional beliefs of the people. External factors and Strategies Political Factors The international operations of McDonald’s are highly influenced by the individual state policies enforced by each government. 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. 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 the meat issue in India. Therefore, McDonalds 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. So Mcdonald’s transforms its menu in different countries but the core menu remains the same. Economic factors Branches and franchises of fast food chains like McDonald’s 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. 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 McDonald’s 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. 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.

So, McDonalds, before penetrating the market, the company 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 McDonald’s indulge a particular variety of consumers with definite types of personalities. 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.

It’s been pointed out that McDonald’s 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 McDonald’s franchises. The multifaceted character of business nowadays is reflected in the harsh significance of the information on the subject of the existing market. In the case of McDonald’s 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. Before a franchise is granted to a particular market, a well drafted and comprehensive market research is conducted initially so as to establish the acts that would conform to good customs, public policies, and morals of the said state. Similarly, the McDonalds 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

McDonald’s generates a demand for their own products. (2006) The company’s key tool for marketing is by means of television advertisements. There are similarly some claims that McDonald’s 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 McDonald’s worldwide “loving’ it” campaign. Moreover, the operations of McDonald’s 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 nventory system as well as its supply chain allows the company to operate in an international context. McDonalds Use the internet to their advantage. The cost-effectiveness, interactivity and real-time effects of the communications are a way to find suppliers. It is also a good way to correspond with the respective McDonald’s headquarters in every state. The company also looks 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. Legal Factors

There has been the recurrent bellowing in opposition to the fast food industry. This has similarly made McDonald’s 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. 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.

Environmental Factors The social responsibilities of McDonald’s 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 McDonald’s 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, McDonald’s Hong Kong went over the Styrofoam used by both Australia and the United States combined. McDonald Monitor the waste disposal of the company. They are trying to 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.

Transformation of menu Important strategic decisions are a key factor to their success with consideration for both internal and external factors. When considering the foreign market, companies need to consider there are risks. There must be local marketing to appeal to the local consumers and also to build relationships and trust (Bateman & Scott, 2004). Therefore, the strategic planning for marketing has to be effective The globalization of McDonald’s has raised many debates on both sides of the issue. The pro- globalization belief is that it enhances culture rather than adulterate.

Radley Balko (2003), states that “In most communities, in fact, the McDonald’s has conformed to the local culture not the other way around. The McDonald’s corporation notes that most of its overseas franchises are locally owned, and thus make efforts to buy from local communities. McDonald’s also alters its regional menus to conform to local taste. ” There has been a loss of traditional values with the introduction of non traditional food into the culture of foreign countries. The types of foods are symbolic to particular regions, religions and mores.

In India, to the Hindu people, the cow is considered to be sacred as part of its religion. According to the AsianInfo. org (2007), “Diversity can be found in India’s food as well as its culture, geography and climate. ” “Although a number of religions exist in India, the two cultures that have influenced Indian cooking and food habits are the Hindu and the Muslim tradition. ” With the introduction of non traditional foods into this society, as with many others, there are adverse effects on the traditions it tries to uphold.

These are just some of the concerns which affect the issue of food culture and globalization. Many more arise as a result of the introduction of fast food restaurants like McDonald’s into diverse cultures around the world. Some changes are embraced by the population while others are seen as a threat to the way of life that has been established for centuries. Some are adverse to the idea of globalization as a hold and perceive McDonald’s as a representation of this ideal and as a result hold them responsible.

The question arises; does the globalization of McDonald’s adversely or positively affect the culture of different nations? Even though there has been many changes in the eating habits of the nations influenced by the introduction of McDonald’s there has been many positive aspects. With the advancement of technology and communication the world itself seem to be moving at a faster pace. The advent of fast food into foreign cultures allows the opportunity to keep up with this fast pace.

Culture is ever changing and thus McDonald’s marks another step in the evolution of culture with the changes in has brought about. The menu has given people a new choice over the traditional foods eaten in the past. The McDonaldized institution has really spread across continents giving rise to a number of indigenous fast food chains. There is also the case of Asianization where Asian cuisine such as Fried rice is rapidly spreading all over the world. Unemployed youth are taking advantage of the McDonaldized institution to set up fast food businesses on the streets.

This can be called fast food-street food. There are good and bad sides to this phenomenon therefore we need to find out the bad sides and improve upon them. Some traditional foods may also come with problems especially in terms of health so while we criticize fast food we should also analyze some traditional food at least for their nutritional importance. Each country implements the core McDonald’s menu to which in-country management is free to add localized menu items, e. g. , the “Croque McDo” in France, the “Chicken Maharaja Mac” in India and salads in many parts of the world.

Internal Factors and Strategies McDonald’s training programs McDonald’s training programs are delivered in up to 40 languages, with the primary languages being Chinese (Simplified and Traditional), English (both International/Commonwealth and U. S. ), French, German, Italian, Japanese, Portuguese and Spanish for the top markets. The training materials consist of two elements: * core content – which applies globally for maintaining consistent food quality and services worldwide, and * locale-specific content based on local menu items, food safety regulations and labor practices, etc.

The company continues to invest and support initiatives to adapt its products and services to different locales to ensure its global brand. Fully globalized, right? Unique decisions to each country McDonald’s caters its menu in other countries to the cultures of the regions. For example, in India, the non-vegetarian menu includes chicken and fish items only (Welcome, n. d. ). Beef is not on the menu in India because are considered sacred. Global marketing decisions are no different than those made domestically but the decisions are unique to each country (Sister & Sister, 2005).

Diverse workforce In the United States alone, McDonald’s has won numerous awards and received national recognition for diversity. Furthermore, operating on a global scale allows a company’s employees to experience working in different cultural environments. This is a good marketing strategy for recruiting employees. McDonald’s has a global core curriculum for its restaurant management (McDonald’s, 2004). Paula Doherty, a general manager states, “I’ve had incredible experience in different countries and…cultures…as a trainee manager – from Poland to Israel to the Philippines and more.

Doing the job successfully has given me a real sense of achievement” . This business strategy speaks to their commitment to a diverse workforce. McDonald’s commitment to diversity is established on the foundational belief that diversity is not just a moral and ethical issue, but also a business issue (McDonald’s, 2005). Due to the global expanse of McDonald’s business, diversity has become an integral part of the internal company culture. McDonald’s has over 30,000 restaurants around the world, which means franchise owner/operators, employees, and customers represent just about every culture, religion or ethnicity on earth.

In addition, McDonald’s promotes the use of local suppliers and based on their policies of diversity, expects and retains suppliers that have a similar diversity culture. Knowing and understanding the local customs and traditions of the communities where McDonald’s has established businesses, integrating people from these communities into the company, and adapting locally to the tastes and cuisines of the community, has made McDonald’s the leader in their industry. McDonald’s realizes that having diversity as an asset greatly enhances the profitability of the company.

Diversity is a direct reflection of a company’s interpersonal relationships. These relationships, if positive, result in a rewarding venture. Conversely, if the relationships are negative, the company’s morale declines and if not addressed, leads to the deterioration of the company. This deterioration directly impacts the company’s income and the community’s acceptance of the business. However, McDonald’s leadership encourages diversity through their policies and programs. McDonald’s proven success with leveraging the advantages of diversity can be attributed to their core value of ethics. Ethics

McDonald’s success is built on the foundation of personal and professional integrity. From the beginning, McDonald’s has based its reputation on trust and dependability, and their commitment to the community made them a household name. Founder Ray Kroc, believed in giving something back to the community in order to make the world a better place. Throughout the 1970’s, McDonald’s became involved with a lot of charity work. In 1974 established a charity called Ronald McDonald House. The purpose of this program was to provide temporary housing for the families of seriously ill children receiving treatment at nearby hospitals.

Since the 70s, more than 10 million families around the world benefited from the comfort provided by Ronald McDonald Houses. Innovative programs In addition to their community involvement, McDonald’s has a long-standing commitment to environmental protection. Restaurants around the world have innovative programs for recycling, resource conservation, and waste reduction. The environmental achievements of this corporation have been recognized by organizations such as the Audubon Society, Conservation International, Keep America Beautiful, the National Recycling Coalition, and the U. S. Environmental Protection Agency.

People focus McDonald’s is also an equal opportunity employer. As an equal opportunity employer McDonald’s ensures that employees and job applicants are selected, trained, and promoted without discrimination to race, gender, sexual orientation, age or disability. The company promotes their employees based on their relevant skill, talents, and performance. In support of this McDonald’s promotes and sustains a working environment, which is free from unlawful discrimination, harassment and bullying. Employees are regarded as members of a team where everyone’s opinion is valued and respected.

The Human Resources department monitors the effectiveness of the discrimination policies at regular intervals. Employees who feel that they have been treated unfairly are encouraged to use the remedies outlined in the Company’s handbooks. McDonald’s ethical standards, as well as their strategies for globalization and diversity are instrumental to the overall success of the company. Here external and internal factors were discussed above that have affected McDonald’s. This was achieved by explaining what the factors are where and how McDonald’s dealt with each of the external and internal factors.

The factors discussed were globalization, diversity, and ethics. The assignment illustrates how globalization is necessary for success and survival of McDonalds in the worldwide market. The paper also shows how diversity integrated people from different communities into the company, and adapted tastes and cuisines of the community. McDonalds showed ethics by being an active leader in the communities. There are many different values to the dollar around the world, many issues that have occurred in many of those regions/websites, and about 119 countries served by McDonald’s that rely on the functions of management to succeed.

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Pestel Analysis Of Mcdonalds
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