Lovely Professional University ASSIGNMENT

ON PESTEL analysis of McDonalds

SUBMITTED TO: MS. JASCHETAN DEEP KAUR

SUBMITTED BY: HIMANK GUPTA RQ1101B28 MBA (HONS)

Introduction
McDonalds is a leader in convenient foods and beverages, with revenues of about $23
billion and over 1.6 million employees serving the customers world -wide. The
company consists of the snack business of Beverages and Foods. PepsiCo brands are
available in nearly 115 countries having more than 24,500restaurants in the world
providing 24 hour service. McDonaldss success is the result of superior products,
high standards of performance, distinctive competitive strategies and the high
integrity of our people. McDonalds is continuing to expand and introduce new
alternative beverages in the market. Approximately 85% of McDonalds restaurant
businesses world-wide are owned and operated by franchisees. All franchisees are
independent, full-time operators. McDonalds was named Entrepreneurs Number-one
franchise for 1997.Their mission is to be the world's premier consumer Products
Company focused on convenient foods and beverages. They seek to produce healthy
financial rewards to investors as the company provide opportunities for growth and
enrichment to its employees, business partners and the communities in which it
operates. Greater variety and quality choices surprise and delight customers with
the food and beverage they desire. McDonalds corp. is currently one of the most
successful consumer products company in the world with annual revenues exceeding
$23 million and has more than 1.6 million employees. McDonalds products are
recognized and are most respected all around the globe. Currently, its divisions
operate in all over the world in beverages, snack foods, and restaurants. The
corporations increasing success has been based on high standards of performance,
marketing strategies, competitiveness, determination, commitment, and the personal
and professional integrity of their people, products and business practices.
McDonalds believes their success depends upon the quality and value of their
products by providing a safe, whole some, economically efficient and a healthy
environment for their customers; and by providing a fair return to their investors
while maintaining the highest standards of integrity.

PESTEL ANALYSIS
Pestel is an analysis of the external macro and micro environment in which a
business operates. Pestel stands for political, economical, social, technological,
environmental and legal factors.
POLITICAL FACTORS
The international operations of McDonalds are highly influenced by the individual
countrys policies enforced by each government. For instance, there are certain
groups in India, Europe and the United States that clamour for state actions
pertaining to the health implications of eating fast food. 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 of the country. 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 those 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 like India.

Analysis:
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, the company can adopt a good way of establishing 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. Also
McDonalds should protect its workers by ensuring all the hiring, compensation,
training or repatriation in accordance to the Indian labour laws.
ECONOMICAL 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 McDonalds have the tendency to experience
hardship in instances where the economy of the respective countries are hit by
inflation and changes in the exchange rates, India is not an exception to it. 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
like McDonalds. 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, McDonalds tend to
import much of their raw materials into a specific countrys territories 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 country on which they operate on. The rate at
which the economy of that particular country grows determines the purchasing power
of the consumers in that country. Hence, if a franchise operates in a particularly
economically weak country, 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. However in case of India the company has been able
to maintain a constant level of prices for their products.

Analysis:
Ideally before penetrating the market, the company must carry out a well conducted
market research, especially in the movements in the economic environment which
McDonalds had done before entering the Indian market due to which the company has
been able to bear the
frequency of the shifts in the inflation rate as well as the fluctuations in the
exchange rates which affects the operations of any company.

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. It has also been noted that the company have given the markets
such as the United Kingdom and India, an option with regards to their dining needs.
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. 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. 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 which is
clearly evident in case of India as the company was quick in removing their Pork
and Mutton products from Indias menu. It is said to have a major influence on the
understanding of the prospective performance of the organisation in a particular
market.

Analysis:
McDonalds should 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 Countrys
society. 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.
Also
the company should constantly survey and learn about local culture to better
understand and design the best product for them.

TECHNOLOGICAL FACTORS
McDonalds generates a demand for its own products. The companys key tool for
marketing is by means of Online Facebook and Google ads, Collaboration with
websites like Snapdeal and Timesdeal to promote sales in India, television
advertisements, banners and hoardings. 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. Other demonstration of such a marketing strategy is apparent in the
commercials they use. They employ animated depictions of their characters like
Grimace, Ronald and Ham burglar. Other advertising operations employ popular
celebrities to promote their products. The like has become endorsers for
McDonalds worldwide Im 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 tends 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.

Analysis:
McDonalds use the internet to their advantage. The cost-effectiveness,
interactivity and realtime 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 Country. 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
The social responsibilities of McDonalds on the country are influential to the
operations of the company. These involve 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. Several civic groups in
India have made actions to make the McDonalds franchises in India aware of the
rather abundant use of Styrofoam containers and the resultant abuse of the
environment.

Analysis:
The company should find out the environmental regime that governs the operations in
every market. It should also monitor the waste disposal of the company. McDonalds
should 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
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. 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.
This was prime reason which forced McDonalds to eliminate beef, pork and Mutton out
of Indias product menu. 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.

Analysis:
As a certified fast food operator, there are many regulations and procedures that
McDonalds should follow. McDonalds should protect its integrity and consumer
confidence by ensuring all materials and process are as claimed or must followed.
Other legal requirement that the business owner should follow as stipulated in laws
are such as operating hours, business registration, tax requirement, labour and
employment laws and quality & environment certification (such as ISO) in which the
outlet has been certified. The legal requirement is important because the offenders
will be fined or have their business prohibited from operating which can be
disastrous. The company should hire local counsels to deal with the legal conflicts
in individual markets on which the company may encounter. This shall ensure the
company that the lawyers that will handle their legal affairs are more versed with
the legal regime that would ease out certain problems on their operations.

CONCLUSION
As we all know that 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 place
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
above PESTEL analysis, this could be acquired by setting a certain level of
flexibility in the organisation. This level of flexibility can basically be
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, but 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 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. References: 1.
http://www.mcdonalds.com/us/en/our_story/our_history.html 2.
http://www.mcdonalds.com/us/en/services/playplaces_parties.html 3.
http://www.mcdonalds.com/us/en/careers/training_education.html 4.
http://www.mcdonalds.com/us/en/careers/training_education.html 5.
http://www.oppapers.com/essays/Pestle-Mcdonalds-In-India/670456 6.
http://bizniaga.blogspot.in/2008/07/pestle-mcdonalds.html 7.
http://www.essayxperts.com/essay-pest-analysis-of-mcdonalds-in-india/