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WELCOME TO THE WORLD OF

McDonalds


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PESTLE ANALYSIS OF MCDONALDS

STRATEGIC MANAGEMENT


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GROUPPROJECTREPORT

Name of Students Roll nos

Bipin Sharma 149

Amey Chopa 159

Sachin Thomas 165

Bipin Tiwari 173

Philip Dias 174

Darian Alvares 175


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PESTLEANALYSIS

PESTLE

Political Factors

Economical

Factors

SocialFactors

TechnologicalFactors

Legal Factors

EnvironmentalFactors


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PESTLEANALYSIS

Pestle is an analysis of the external macroenvironment in which a business operates.

PEST analysis(Political, Economic, Social andTechnological analysis) describes a framework ofmacro-environmental factors used in theenvironmental scanning component of strategicmanagement.

. Some analysts added Legaland rearranged the

mnemonic to SLEPT;inserting Environmentalfactors expanded itto PESTELor PESTLE, which is popular in theUnited Kingdom.


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INTRODUCTION

McDonalds is a leader in convenient foods andbeverages, with revenues of about $23 billion andover 1.6 million employees serving the customersworld-wide.

The company consists of the snack business ofBeverages and Foods. PepsiCo brands areavailable in nearly 115countries having more than

24,500restaurants in the world providing 24 hourservice.


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COMPANYPROFILE

The modest beginnings of McDonalds in Illinois turnedout to be among the main brand names in theinternational scene.

It has been synonymous to what is widely-accepted the

fast-food concept. The company operates over thirtyone thousand stores all over the world to date.

It was one of the first to perfect the concept of fastservice in the food industry in its early days ofoperations in 1955.

Given that the products of the company are mainlywestern in character, their operation has also expandedto the Asian region.

In the rest of the globe, it operates thousands of storefranchises that functions autonomously.


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POLITICALFACTORS

There is an impending legal dispute in the McDonaldsfranchise in India where certain infringement of rightsand violation of religious laws pertaining to the contentsof the food.

The existence of meat in their menus in India isapparently offensive to the Hindu religion in the saidmarket.

. There are also other studies that points to theinfringement of McDonalds Stores with reference to theexisting employment laws in the target market.

Like any business venture, these McDonalds storeshave to contend with the issues of employmentprocedures as well as their tax obligations so as tosucceed in the foreign market.


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ANALYSISOFPOLITICALFACTORS

Since it is apparent that the company is expandingcontinuously, it is wise to deal directly with the properauthorities in the respective markets that they intend tooperate in.

This way, the company can adopt a good way of establishing

good relationship with the government. It is advisable that thecompany rests on the good graces of the government onwhich they will be penetrating.

To do this, all they have to do is accomplish all the prescribedacts and satisfy all the prerequisites for doing business. Thecompany must also be acquainted with the law in order toknow what their responsibilities and their possible liabilities.

Also McDonalds should protect its workers by ensuring all thehiring, compensation, training or repatriation in accordance tothe Indian labour laws.


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ECONOMICALFACTORS

Branches and franchises of McDonalds have the tendency toexperience hardship in instances where the economy of therespective countries are hit by inflation and changes in theexchange rates, India is not an exception to it.

The customers consequently are faced with a stalemate of goingover 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, theirproblem depends on the response of the consumers on thesefundamentals 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 countrysterritories if there is a dearth of supply. Exchange ratefluctuations will also play a significant role in the operations of thecompany.

However in case of India the company has been able to maintaina constant level of prices for their products


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ANALYSISOFECONOMICALFACTORS

Ideally before penetrating the market, thecompany must carry out a well conductedmarket research, especially in the

movements in the economic environmentwhich McDonalds had done before enteringthe Indian market.

The company has been able to bear the

frequency of the shifts in the inflation rate aswell as the fluctuations in the exchangerates which affects the operations of anycompany.


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SOCIALFACTORS

McDonalds indulge a particularvariety of consumers with definite typesof personalities. It has also been noted that the company have given themarkets such as the United Kingdom and India, an option with regards totheir dining needs.

McDonalds has launched a sensibly valued set of food that tenders a

reliable level of quality for the respective market where itoperates. Additionally, those who are aged just below the bracket ofthirty-five are said to be the most frequent consumers of McDonaldsfranchises.

In the case of McDonalds they establish a good system in determiningthe needs of the market. The company uses concepts of consumer

behaviour product personality and purchasing decisions to its advantagewhich is clearly evident in case of India as the company was quick inremoving their Pork and Mutton products from Indias menu. It is said tohave a major influence on the understanding of the prospectiveperformance of the organisation in a particular market


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ANALYSISOFSOCIALFACTORS

McDonalds should obtain the relevant informationfrom the target market in addition to the individualcustomers of the organisation.

Similarly, the company should find out the shifts inareas like the consumer behaviour and purchasingpatterns of the market.

Fundamentally, this is the key condition forexecuting a suitable customer relationship

management system.

Also, the company should constantly survey andlearn about local culture to better understand anddesign the best product for them.


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TECHNOLOGICALFACTORS McDonalds generates a demand forits own products. The companys key

tool for marketing is by means of Online Facebook and Google ads,Collaboration with websites like Snap deal and Times deal to promote salesin India, television advertisements, banners and hoardings.

There are similarly some claims that McDonalds are inclined to interest theyounger populations more.

The existence of play spots as well as toys in meals offered by thecompany shows this actuality. Other demonstration of such a marketingstrategy is apparent in the commercials they use.

The likehas become endorsers for McDonalds worldwide Im loving itcampaign. Moreover, the operations of McDonaldshave significantly beeninfused with new technology.

Elements like the inventory system and the management of the value chainof the company allows for easy payments for their suppliers and othervendors which the individual stores in respective markets deal with.


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ANALYSISOFTECHNOLOGICALFACTORS

McDonalds use the internet to their advantage. Thecost-effectiveness, interactivity and real-time effectsof the communications are a good way to findsuppliers.

It is also a good way to correspond with therespective McDonalds headquarters in everyCountry.

The company must also look into the use of IT toenhance their inventory operations.

As the operations units inbound and outboundlogistics improve, the company will expectsignificant savings and reduction of costs in theoperations.


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LEGALFACTORS

There has been the recurrent bellowing in opposition tothe fast food industry which has made McDonalds applya more careful consideration on their corporate socialresponsibilities.

The company has provided their customers the relevant

data that they need with reference to the nutritionalsubstances of their products. This is to attend to thearguments of obesity charged against the products ofthe company.

In the same way, the consumers provided freedom inchoosing whether or not they want to purchase their

meals. This is tied up with the socio-cultural attributes ofthe market on which they operate.

This was prime reason which forced McDonalds toeliminate beef, pork and Mutton out of Indias productmenu.


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ANALYSISOFLEGALFACTORS

As a certified fast food operator, there are many regulations andprocedures that McDonalds should follow. McDonalds should protect itsintegrity and consumer confidence by ensuring all materials and processare 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, taxrequirement, labour and employment laws and quality & environmentcertification (such as ISO) in which the outlet has been certified.

The legal requirement is important because the offenders will be fined orhave their business prohibited from operating which can be disastrous.

The company should hire local counsels to deal with the legal conflicts inindividual markets on which the company may encounter. This shallensure the company that the lawyers that will handle their legal affairsare more versed with the legal regime that would ease out certainproblems on their operations.


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ENVIRONMENTALFACTORS

The social responsibilities of McDonalds on thecountry are influential to the operations of thecompany.

These involve accusations of environmentaldamage.

Several civic groups in India have made actions tomake the McDonalds franchises in India aware of

the rather abundant use of Styrofoam containers

and the resultant abuse of the environment.


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ANALYSISOFENVIRONMENTALFACTORS

The company should find out the environmental regime thatgoverns the operations in every market. It should also monitorthe waste disposal of the company.

McDonalds should minimize the use of Styrofoam materials

and plastic cups.

Constant updating of the social corporate responsibility isimperative. This should also entail that the headquartersshould 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 aparticularly high fine should be installed to serve as adeterrent to infringement.


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CONCLUSION

As we all know that the most significant contribution of thisgeneration is the combination of globalization andinternationalization in the businesses sector.

Developments in the international setting have an effect onthe more particular factors in the operations in individualorganisations.

Even though McDonalds may have been deemed as demigodin the fast food business in the international scene, but what itpreserves as revealed in its processes is the need forflexibility.

The slight changes that take place in the market have aneffect on the operations of the business in any case.

Hence, any business in spite of the muscle of the brand nameor the size of its reserves could not afford any failures in theirindividual markets.

As implied the markets of nowadays manifest a cut throatrivalry with the individual competitors, recognized brands orotherwise.


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RECOMMENDATION

To do this, all they have to do is accomplish all the prescribed acts andsatisfy all the prerequisites for doing business. The company must alsobe acquainted with the law in order to know what their responsibilitiesand their possible liabilities.

Before penetrating the market, the company must carry out a wellconducted market research, especially in the movements in theeconomic environment. The frequency of the shifts in the inflation rate aswell as the fluctuations in the exchange rate affects the operations of thecompany.

It is imperative that before a franchise is granted to a particular market, awell drafted and comprehensive market research should be conductedinitially so as to establish the acts that would conform to good customs,public policies, and morals of the said state.

The company must also look into the use of IT to enhance their inventoryoperations. As the operations in its inbound and outbound logisticsimprove, the company will expect significant savings and reduction ofcosts in the operations.


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RECOMMENDATION

Find out the environmental regime that governs theoperations in every market. Monitor the wastedisposal of the company. Minimize the use ofStyrofoam materials and plastic cups. Constant

updating of the social corporate responsibility isimperative.

Hire local counsels to deal with the legal conflicts inindividual markets on which the company may

encounter. This is shall ensure the company thatthe lawyers that will handle their legal affairs aremore versed with the legal regime that would ironout certain creases on their operations.


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THANKYOU

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