Q1. a).

Positive thinking can help create a successful enterprise by fostering a mindset that
embraces challenges as opportunities, encourages resilience in the face of setbacks, and
cultivates a culture of innovation and continuous improvement

b). An entrepreneur can use the following forms and sources of power:

Coercive Power: The ability to enforce actions through penalties or threats.

Persuasive Power: The capacity to influence others through communication and charisma.

Authoritative Power: The recognition of one’s position or expertise that commands respect and
compliance

c) Benefits of enterprise networking include:

 Improved communication and collaboration.

 Access to new business opportunities.
 Enhanced knowledge sharing and innovation

d) Statutory obligations of an enterprise may include:

 Registration with relevant authorities.

 Tax compliance and filings.
 Adherence to labor laws and regulations.
 Compliance with health and safety standards.
 Environmental protection and sustainability practices

Q2. i. PESTLE analysis is a strategic tool used to understand the macro-environmental

factors that can impact a business. It includes analyzing political, economic, social,
technological, legal, and environmental aspects. In the economic environment, factors like
inflation, interest rates, exchange rates, unemployment, and indirect taxes are considered to
assess their potential impact on the business.
ii. Porter’s 5 force model helps businesses understand the competitive forces in their
industry, including the threat of new entrants, bargaining power of suppliers and buyers, the
threat of substitute products or services, and the intensity of competitive rivalry
 iii. SWOT analysis is a framework for identifying and analyzing a company’s internal
strengths and weaknesses, as well as external opportunities and threats, to inform strategic
planning
iv. Value chain analysis examines the activities involved in creating a product or service,
identifying where value is added and how it can be maximized. It helps businesses
understand their competitive advantage and areas for improvement
strategic management since that time (Kotler et al., 2013). It is, as Ghazinoory, Abdi and Azadegan-Mehr
(2011) comment, a systematic framework which helps

managers to develop their business strategies by appraising the internal and external determinants of
their organisation’s performance. Internal

environmental factors include leadership talent, human resource capabilities, the company’s culture as
well as the effectiveness of its policies and

procedures. In contrast, external factors include competition, government legislation, changing trends,
and social expectations (Johnson, Scholes and

Whittington, 2008).

The SWOT analysis framework involves analysing the strengths (S) and weaknesses (W) of the business’s
internal factors, and the opportunities (O) and

threats (T) of its external factors of performance (Ghazinoory, Abdi and Azadegan-Mehr, 2011). Through
this analysis, the weaknesses and strengths within a
company can correspond to the opportunities and threats in the business environment so that effective
strategies can be developed (Helms and Nixon, 2010).

It follows from this, therefore, that an organisation can derive an effective strategy by taking advantage
of its opportunities by using its strengths and

neutralise its threats by minimising the impact of its weaknesses. Moreover, SWOT analysis can be
applied to both a whole company as well as a specific

project within a company in order to identify new company strategies and appraise project feasibility.

Hollensen (2010) asserts that the strengths and weaknesses of a company relate to its internal elements
such as resources, operational programmes and

departments such as sales, marketing and distribution. More specifically, a strength is an advantageous
– or even unique – skill, competency,

product, or service that a business or project possesses that allows it to create competitive advantages.
This may include abstract concepts, such as its

possession of strong research and development capabilities. A weakness on the other hand is a strategic
disadvantage, such as a skill that the business or

project lacks which limits it and creates potential risks in negative economic conditions. Achieving a
balance between such positives and negatives is
therefore a necessary pre-requisite for any company and it is also imperative that a company continues
to review its strengths and weaknesses to take

account for changes in its internal environment (Kotler et al., 2013).

An opportunity is, as Henry (2011) comments, a desirable condition which can be exploited to
consolidate and strengthen a strategic position. Examples of

this phenomenon would include growing demand for a trendy new product which it could consider
selling, such as that announced by Burger King relating to

the introduction of a black cheeseburger (Molloy, 2014). A threat on the other hand, is a condition that
creates uncertainties which could potentially

damage an organisation’s performance or market share (Henry, 2011). Threats include the introduction
of new competing products or services, foreign

competition, technological advancements, and new regulations. Examples of the fear of such external
factors can be noted in the comments of companies

planning to relocate their headquarters and registration bases from Scotland to England in the event of
a ‘yes’ vote in the Scottish referendum
in September 2014 (Wright, Titcombe and Spence, 2014). Therefore, a company needs to develop
strategies to overcome these threats in order to prevent the

loss of its market share, reputation, or profit. It must be noted, however, that opportunities and threats
exist in the environment and therefore are often

beyond the control of the organisation – but they do offer suggestions for strategic direction. SWOT
analysis, as a result, demands a great deal of

research into an organisation’s present and future position (Johnson, Scholes and Whittington, 2008).
The results of SWOT analysis provide a useful

source of information from which an organisation can go on to develop policies and practices which
allow it to build upon its strengths, diminish its

weaknesses, seize its opportunities, and make contingency plans or measures to eradicate or curtail
threats, as Kotler et al. (2013) observe.

SWOT analysis is widely used by managers because of its simplicity (Hollensen, 2010). It is used as a
planning tool that can be adapted to a range of

situations and projects. Whilst it is not the only technique available to managers, it can often be the
most effective if used properly (Henry, 2011). The

basis for a SWOT analysis is usually drawn from an audit review as well as from independently carried
out interviews with staff and customers. Data is then
analysed to arrive at a list of issues which can be categorised into strengths, weaknesses, opportunities,
and threats. The key issues and company

activities are then reassessed through protracted discussions between managers and reduced further to
identify the most important issues and the potential

impact that they could have on the organisation. If too many issues are included in the analysis, there
will be a lack of focus in the development of a new

company strategy and thus it is important to ensure that such discussions focus on a limited number of
factors (Ghazinoory, Abdi and Azadegan-Mehr, 2011).

Additionally, the issues considered should be made in view of customer opinions and perceptions, which
would therefore require objectivity. Ideally, a

company should carry out a SWOT analysis on a regular basis in order to assess its situation against its
competitors in a constantly evolving market

environment (Fernie and Moore, 2013). According to Stalk, Evans and Schulman (1992, p. 62), “the
essence of strategy is not the structure of a

company’s products and markets but the dynamics of its behaviour”.

It is also recommended that an organisation should develop and undertake SWOT analysis on its
competitors so that it is able to take into account consumer

perceptions and determinants of their buying behaviour. This is particularly the case with issues such as
quality, in which perceptions may be more

powerful than reality (Kaplan and Norton, 2008). In today’s highly competitive and fast changing market
environment, managers may make a grave error

when evaluating their company’s resources; that is, not to assess them relative to the competition
(Kotler et al., 2013). A competitive analysis as

part of the SWOT framework is always necessary in order to determine an organisation’s position in the
wider market. Thus, for example, if a project

or business strength is the amount of capital it has to invest in improved IT functionality, this may not be
the case if its competitor is investing double

this amount to improve its own IT functionality. Thus, it is no longer a strength but rather a weakness for
the company. The same competitive analysis

should also be taken into account when assessing opportunities and threats, as it depends on the
relative situation of the competing businesses (Johnson,

Scholes and Whittington, 2008).

McDonald (1989, p. 16) states that the “SWOT device… whilst potentially a very powerful, analytical
device, is rarely used effectively”,

and recommends using a summary from a marketing audit to arrive at a sound SWOT analysis; the
analysis must be conducted rigorously so that it prioritises

the issues of paramount importance. Further, McDonald suggests keeping it focused on critical factors
only and to maintain a list of differential strengths

and weaknesses in comparison to competitors, concentrating mainly on competitive advantages.

Additionally, only critical external opportunities and threats

should be listed with a focus on the real issues. Finally, according to McDonald (1989), the reader of the
SWOT analysis should be left with the main

issues encompassing the business to the extent that they are able to derive and develop marketing
objectives from them. At the end of the analysis, the

organisation is left with reasons behind their choices as well as their potential impacts, which provides
them with a stronger basis from which to form

future strategic decisions.

Example of a SWOT analysis of the McDonald’s Corporation

Strengths

Open door policy to the press

Ceres guidance and co-ordination and active CSR

Selective supply chain strategy

Rigorous food safety standards

Affordable prices and high quality products

Nutritional information on packaging

Decentralised yet connected system

Innovative excellence programme

Promoting ethical conduct

Profitable

Weaknesses

Inflexible to changes in market trends

Difficult to find and retain employees

Drive for achieving shareholder value may counter CSR

Promote unhealthy food

Promoted CSR meat imports in error

Opportunities

Attractive and flexible employment

Positive environmental commitments

Higher standards demanded from suppliers

Corporate responsibility committee

Honest and real brand image

Threats

Fabricated stories about the quality of chicken

Unhealthy foods for children

Health concerns surrounding beef, poultry, and fish

Labour exploitation in China

CSR at the risk of profit loss

Contributor to global warming

Local fast food restaurants

Political instability (e.g. Russia)

Strengths

Open door policy to the press

At times of wider national food scandals, for instance those related to BSE, McDonald’s operated an
open door policy, allowing the press into a

limited number its restaurants and suppliers (Vrontis and Pavlou, 2008). This was done as a deliberate
measure to reassure the public of the safety of

McDonald’s.
Ceres guidance and co-ordination, and active CSR

McDonald’s, as Valax (2012) notes, co-ordinates with employees, investors, environmental and
corporate social responsibility (CSR) organisations,

such as Ceres, to improve its social and environmental programmes. As a result of such policies,
McDonald’s can be seen to be continually updating

its profile to take account of changes in consumer preferences – keeping the firm relevant and allied to
the desires of its customers.

Selective supply chain strategy

McDonald’s works to ensure that its suppliers meet or exceed safety and quality standards as well as
complying with best practice with reference to a

sustainable food supply and animal welfare (Deng, 2009). Indeed, its recent advertisement campaigns
have laid a premium on the traceability of products

used.

Rigorous food safety standards

McDonald’s, as Vrontis and Pavlou (2008) observe, works hard to ensure that high food safety standards
are met through training, food, safety and

quality and menu development in each restaurant. This filters through to its partners, ensuring that they
operate ethically and meet social responsibility

standards. The high training required can also be noted by reference to its endorsement of specific
qualifications and training for staff – thereby

adding value to its workforce (Valax, 2012).

Affordable prices and high quality products

McDonald’s is an efficient provider of high quality foodstuffs and always seeks to offer the best value to
its customers, as noted by its 99p

‘value’ range (Harnack et al., 2008).

Nutritional information available on packaging

McDonald’s was one of the first fast food restaurants to disclose nutritional information on its packaging
and continues to seek new ways in which it

can provide nutrition and balanced active lifestyles for its customers (Harnack et al., 2008). Indeed,
there are sections of the corporate website
specifically tailored to this data.

Decentralised yet connected system

McDonald’s provides a core system of values, principles and standards which managers adhere to in
combination with its “Freedom within the

Framework” programme, which provides them with the flexibility to respond to the diversity of its
customers and local markets (McDonald’s

Corporation, 2013).

Innovative excellence programme

McDonald’s employs an array of mystery shoppers who visit premises pretending to be customers. They
inspect the premises as customers and rate them

accordingly. Many restaurants provide customer comment contact numbers and employee satisfaction
surveys. It may also be noted, though anecdotally, that

the firm responds quickly to mistakes and problems raised with area managers.

Promoting ethical conduct

McDonald’s works hard to maintain its integrity with its shareholders through open channels of
communication (McDonald’s, 2013).

Profitable

McDonald’s is profitable, as Wallop (2014) comments, with sufficient capital. This allows it to grow and
realise gains on its investments. Thus,

McDonald’s is able to offer help to charities as well as itself when in need.

Weaknesses

Inflexible to changes in market trends

If customer trends move towards eating in a more eco-friendly or organically-oriented manner,

McDonald’s would be unable to follow this trend without

changing suppliers and incurring significant financial losses (Wallop, 2014). McDonald’s could consider
the introduction of new products with the aid

of market research, in coming years, to prepare them for such potential change.

Difficult to find and retain employees

McDonald’s has had hostile relationships with unions and, although this has been controlled, the
company does find it difficult to find and retain

good employees (Valax, 2012). The company can build on its reputation for developing top level
managers by further increasing its graduate recruitment

portfolio.

Drive for achieving shareholder value may counter CSR

When McDonald’s profits fall, its stock price often falls as well; as a consequence, it is often forced to
take drastic action to resolve the

problem. (Wallop, 2014) This often relates to issues of social and environmental responsibility.
McDonald’s could be more proactive in finding more

long-term CSR suppliers and processes that provide lower costs and higher profit margins, rather than
being reactive.

Promotion of unhealthy food

Despite providing healthier product varieties, McDonald’s continues to sell burgers that have 850
calories in them. . This could continue to harm its
reputation as an unhealthy fast food provider. McDonald’s could research ways to reduce the calories in
its products whilst still maintaining their

taste, or at the least provide low calorie burger options. Much progress has been made in this arena –
but it is suggested that more needs to be done

(Harnack et al., 2008).

Promoted CSR meat imports in error

McDonald’s claimed to provide meat from socially and environmentally responsible sources, but a court
case found that meat had been imported from

Latin America, where rainforests were cleared to create green fields for cattle (Deng, 2009). Where
McDonald’s carries out CSR processes or

investments, it may wish to consider carrying out random checks to ensure their standards are
continually met, to minimise embarrassing press.

Opportunities

Attractive and flexible employment

McDonald’s offers a variety of job opportunities and is proud to say that 42% of its top managers first
started by serving customers (McDonalds,
2013). That the company offers a selection of different shift patterns as well as employee benefits can be
seen as further reasons as to why

McDonald’s attracts employees.

Positive environmental commitments

McDonald’s incorporates environmental commitments in its daily operations, from the use of
environmentally friendly products in maintaining daily

‘drive-thru’ cleaning, to providing sustainable fish sources, to using recycled packaging (McDonald’s,
2013). It was also a pioneer of

using bio-diesel and recycling fat from its fryers into a form of fuel.

Higher standards demanded from suppliers

McDonald’s sets the standards it demands from suppliers for low cost high quality, socially responsible
supplies, in return for a long-term business

commitment (Yuece, 2012).

Corporate Responsibility Committee

McDonald’s has a standing Corporate Responsibility Committee that acts as an advisor to its Board of
Directors (McDonald’s, 2013).

Honest and real brand image

McDonald’s has built and maintains a trusting relationship with its shareholders and customers through
truthful marketing and communications (Harnack

et al., 2008).

Threats

Fabricated stories about the quality of chicken

Emails and websites have published fabricated information that McDonald’s is using ‘monster-chickens’
in its products. McDonald’s

could build on its open door policy with the press and apply it to the web, to combat false distribution of
information (Kaplan and Norton, 2008).

Unhealthy foods for children

If competitors begin to offer premium healthy alternatives for children with small gifts to encourage
them to eat healthy, this would be a significant
threat to McDonald’s (Kotler et al., 2013). McDonald’s positive strategy to provide a range of healthy
products could include further healthy

products for children in addition to its present offering of carrot sticks.

Health concerns surrounding beef, poultry, and fish

There are various initiatives working against hormone induced cows and other issues such as bird flu
epidemics and heavy metal levels in fish that could

reduce McDonald’s sales and cause profits and its share price to fall (Johnson, Scholes and Whittington,
2008). McDonald’s could use its

purchasing power to its advantage to source supplies that have proven health benefits. McDonald’s
greater work with local farmers in the UK with

regard to the sourcing of beef and eggs can be seen as a step in the right direction in this regard.

Labour exploitation in China

Chinese manufacturers exploit labour in their production of ‘Happy Meal’ toys (Valax, 2012).
McDonald’s could use its purchasing power to

its advantage to demand that manufacturers provide toys without exploiting labour.
CSR at the risk of profit loss

If share prices and profitability are under pressure, managers will inevitably seek to resolve it at the risk
of a CSR issue (Ceres, n.d.).

Contributor to global warming

McDonald’s is the largest consumer of beef in the world. Greenfields used to supply this beef comes at
the expense of rainforests, heavy use of

chemicals, fertilisers and pesticides (Ceres, n.d.). McDonald’s could use its purchasing power to its
advantage to source CSR suppliers.

Local fast food restaurants

Local restaurants which are less environmentally threatening than McDonald’s and have less purchasing
power may have better reputations with local

suppliers and customers (Wallop, 2014).

Political instability
Political instability can be a threat to the secure and continued operation of a business. Even if local staff
are employed, a tense political situation

can cause areas of operation to be closed, in the short- or long-term. An example of this relates to
McDonald’s in the Crimea and in Russia; for the

foreseeable future, McDonald’s restaurants are closed in the Crimea as a result of the Russian invasion.
In retaliation, Russia has temporarily

closed a number of McDonald’s restaurants in Russia (Wallop, 2014).

From the above SWOT of McDonald’s and the summary that follows it, it can be seen how, by
highlighting its position, an organisation can identify

areas that could be strengthened, seize opportunities, minimise threats and diminish or eliminate
weaknesses.

In summary, a SWOT analysis provides a systematic framework for appraising an organisation’s internal
and external position. It is a useful tool but

it must be constantly updated to enable the company to keep abreast of developments and change its
strategies accordingly. Whilst it may be difficult for

management to resolve all of the weaknesses and threats highlighted, the company is at least made
aware of them through the conducting of a SWOT analysis
and can refer to them when implementing future strategies. The McDonald’s SWOT analysis case study
highlighted several CSR threats and weaknesses

whilst simultaneously highlighting strengths, such as its strong purchasing power which could potentially
be used to demand more socially responsible

production techniques from its Chinese manufacturers and meat suppliers. It also showed how a more
proactive and longer-term approach to its strategies can

help it to anticipate changing consumer tastes and demands (Yuece, 2012).

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