PESTEL ANALYSIS
External factors to Factors affected within my Importance to
consider industry
POLITICAL Political stability Changes in government
Health and Nutrition policies or political
Policies instability in key markets
Trade Policies affect the operations and
International expansion plans
Conflict Affect the menu offerings
and changes in consumer
behavior
Affect the cost of
importing and exporting
goods, including
ingredients, packaging
materials, and equipment.
Implement policies and
regulations that directly
affect the operations
including the changes in
taxation, import/export
restrictions, or even
nationalizations in extreme
cases
organization
Political stability is
crucial for fostering
investor confidence,
ensuring sustainable
economic growth,
and maintaining a
conducive
environment for
businesses to thrive.
McDonald's must
comply with food
safety standards set
by governments to
ensure the safety and
quality of its menu
items.
Importance of trade
policies to
McDonald's lies in
their pivotal role in
shaping the global
fast-food giant's
supply chain
dynamics, cost
structure, market
access conditions,
and competitive
positioning,
influencing
everything from
ingredient sourcing to
pricing strategies and
international
expansion
opportunities.
ECONOMIC Economic conditions The country GDP growth
Exchange Rates rates, inflation rates, and
consumer spending levels
can affect consumer
discretionary spending and
impact the sales.
Changes in exchange rates
can impact revenue,
profitability, and financial
reporting, particularly in
markets.
SOCIAL Consumer Increasing awareness of
Preference health issues affect the
Demographic Trends menu offerings
Cultural influences Changes in population
demographics can affect
target markets and store
locations
Menus and marketing
strategies to suit local
cultural preferences and
dietary habits in different
countries
TECHNOLOGY Automation Automatic food
Innovation preparation
Disruptive Ordering processes using
technologies Social technology
networking Use of robotics in service
Upgrades Robotics Using AI for customer
Artificial service
Intelligence Security Using AI for data analysis
Economic conditions
and exchange rates
directly influence
McDonald's
profitability and
global expansion
efforts, shaping
consumer spending
patterns and
impacting the
company's financial
performance.
Consumer
preferences,
demographic trends,
and cultural
influences are pivotal
for McDonald's,
guiding menu
innovations,
marketing strategies,
and store location
decisions to resonate
with diverse customer
needs and preferences
worldwide.
Technology is really
important for making
things work better,
like how McDonald's
runs its restaurants.
They use it to make
sure everything goes
smoothly, like taking
orders faster and
making sure
customers are happy
when they order
through apps or at the
drive-thru. It also
 helps them keep track
of all the inventory
they need to make
products so they don't
run out. For
McDonald's to stay
ahead and keep
people liking their
food, they have to
always come up with
new ideas and ways
to use technology to
make things even
better for their
customers.
LEGAL Employment law Compliance with For McDonald's,
Common law Local employment laws following the rules is
labour law Health regarding: very important to
and safety Wages avoid problems. This
regulations Working hours means they need to
Health and safety do everything the law
regulations in food says, like making
preparation and serving sure they treat their
Comply with local labor workers and
laws in various countries customers well and
of operation. keep everything safe.
If they don't follow
the rules, they can get
in big trouble and it
will affect their
image, also having to
pay fines or getting
sued. Plus, people
might start thinking
bad things about
McDonald's if they
hear they're not doing
what they're supposed
to. So, it's important
for McDonald's to
 always do the right
thing and follow the
law.
ENVIRONMENTAL Environmental Compliance with Compliance with
restrictions imposed environmental regulations environmental
by in-country regarding: regulations is super
governments Waste management important for
Sustainable Energy consumption McDonald's because
resources CSR Adoption of sustainable it helps them keep
(Corporate social practices in using our planet healthy.
responsibility) ingredients and packaging When McDonald's
Ethical sourcing Changes in environmental follows these rules
Transportation laws in other countries. about things like
Procurement Supply waste and energy,
chain management they reduce their
Future pandemics impact on the
environment. This
means they can help
prevent pollution and
conserve precious
resources like water
and energy. By doing
this, McDonald's
shows that they care
about the Earth and
the communities they
serve. Plus, it builds
trust with customers
who want to support
businesses that are
responsible and eco-
friendly. So, sticking
to environmental
compliance isn't just
good for the planet,
it's also good for
McDonald's
reputation and the
people who enjoyed
their products.
Threat of New Entrants:

The threat of new entrants into the fast-food industry, particularly against
McDonald's, appears to be low to medium. This is primarily due to the high capital
requirements and economies of scale associated with competing against a
behemoth like McDonald's. Significant financial resources would be needed to
establish a presence and compete effectively in the market. However, entering the
business itself is relatively easy, as there are no significant barriers preventing new
players from entering the industry. Additionally, low brand loyalty among
consumers, who frequently patronize various food outlets, further contributes to
the moderate threat of new entrants.
Power of Buyer:
The powers of buyers are high because of different factors that come into play. The
customers who buy from McDonald’s only buy small to medium quantities of
food, depending on how many people they come with. They have a lot of locations
around the world, with some considering them number 1 in store locations
worldwide. When their price changes, their demand then becomes affected highly,
as McDonald’s food is a luxury for a considerable amount of people. Because of
this, buyers are also quick to change where they buy their food from, which
doesn’t cost them much.

Threat of Substitutes:
The threat of substitutes in the fast-food industry is high, posing a challenge to
McDonald's. Consumers have access to a wide array of cuisines, even within the
fast-food segment, and cheaper alternatives are readily available. This abundance
of substitute options increases the likelihood of consumers choosing alternatives
over McDonald's, thereby intensifying competitive pressure.
Power of Supplier:
The power of suppliers to McDonald's is assessed as medium to low. While there is
a considerable number of suppliers available to McDonald's due to its longstanding
presence and industry leadership, the company's reputation and relationships allow
it to maintain multiple supplier options. Moreover, suppliers typically offer similar
products, granting McDonald's some leverage in negotiating terms. Overall, while
suppliers hold some power, it is not as significant as in other industries.
Competitive Rivalry:
Competitive rivalry within the fast-food industry, particularly against McDonald's,
is high. Both domestic and international rivals pose strong competition across
various menu items. However, McDonald's has solidified its position and carved
out a distinct niche in the market, making it the dominant player with unparalleled
brand recognition and market share. Despite facing formidable competition,
McDonald's remains a standout force in the fast-food landscape.
Reference:
https://www.linkedin.com/pulse/food-beverage-business-environment-chiranjib-
chatterjee