HomeCompany AnalysisMcDonald’s Corporation’s Environmental Analysis

McDonald’s Corporation’s Environmental Analysis

Topic: Company Analysis
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Table of Contents
  1. Introduction
  2. McDonald’s Background
  3. Environmental Analysis: Micro-Environmental Analysis
  4. Macro-Environmental Analysis
  5. SWOT Analysis
  6. Conclusion and Recommendations
  7. Reference List

Introduction

McDonald’s corporation has transformed how people from across the globe eat fast food. To have a large market share, it has established several outlets in different countries (McDonald’s, 2022). In addition, the growth has been due to its reputation and popularity of its brand. However, the corporation has experienced various challenges that adversely impact its performance. For example, as revealed through micro-environmental analysis, it is currently facing the issue of high employee turnover. The PESTEL evaluation indicated that McDonald’s operates in a dynamic environment. Therefore, the purpose of the report is to analyse McDonald’s micro and macro environment, identify issues affecting the corporation, and offer recommendations to address the weaknesses and threats.

McDonald’s Background

McDonald’s is a multinational company that makes and sells fast food. It has it headquarter in the US and several branch stores all over the world. The business was started in 1940 by two brothers, Mourice and Richard McDonald, as a small burger in California. The corporation now operates in more than 100 countries and has more than 38,000 restaurants worldwide (McDonald’s, 2022). To effectively serve their customers and demonstrate its amazing size, McDonald’s has employed million people and feed about 68 million people daily (McDonald’s, 2022). The company is a fast-food restaurant franchise that deals with various products to meet the needs of its diverse cultures across the globe.

The corporation has a mission and vision statement demonstrating its commitment to serving people. The vision is “feeding and empowering the communities we serve while sustaining the planet through ethical sources” (McDonald’s, 2022). This shows that the company is focused on sustainable operations. They want to feed people and ensure they engage in practices that protect the environment. On the other hand, the mission is “to make delicious feel-good moments easy for everyone” (McDonald’s, 2022). This is to ensure that its customers across the globe are happy and satisfied with its products and services. The company has a strategy supported by its vision and mission.

Environmental Analysis: Micro-Environmental Analysis

Table 1: The Analysis of Internal Factors

Internal factors Explanation
Product issues McDonald’s brand and image are greatly influenced by its products. Although the business is well renowned for its burgers, clients can get chicken and fish, desserts, and breakfast dishes, among other products (McDonald’s, 2022). However, McDonald’s products have suffered a lousy food image owing to the increasing perception that fast foods are unhealthy.
Marketing issues There are different marketing issues that McDonald’s is facing. Firstly, increased competition in the retail food industry makes it challenging for the corporation to effectively market its products (Schmid and Gombert, 2018). As a result, it reduces the market share that McDonald’s can access. Secondly, in this information age, understanding the target audience is difficult.
Management issues McDonald’s faces several management issues that hinder its performance. Firstly, the corporation finds keeping and retaining its employees challenging (Schmid and Gombert, 2018). Secondly, the management of the company is too slow to change. Thirdly, the managers are struggling with the issue of diversity and inclusion (Wiessner, 2022). Finally, its shareholders are opposed to diversity policies adopted.

Macro-Environmental Analysis

Table 2: PESTEL Analysis

External factors Description
Political Political factors play an integral role in the profitability of McDonald’s corporation. The company is affected by government policies regulating the retail food industry (Kreutzer, 2019). Due to health concerns such as rising rates of obesity among young people, the government has decided to control the market. For example, in the US, the Food Safety Modernization Act has introduced several standards that all food holding facilities are supposed to adhere to for safety purposes. Apart from this, taxes from governments where McDonald’s operates impact its performance.
Economic Economic variables are among the most crucial aspects that significantly impact McDonald’s activities. They have included a variety of aspects such as the economic situation of different markets, employment, consumer spending, competitiveness, and other considerations (Kreutzer, 2019). For example, when disposable income rises, individuals have more funds to save or spend, causing the levels of consumption to increase. In addition, the US has a high employment rate indicating that most people are employed and earn an income. For outlets in the US, this is an advantage to take and boost their performance.
Social factors Social factors have become increasingly important in international business as the public’s interest in businesses has grown, and more technological tools and channels have become available. McDonald’s needs to be more aware of how people see them and keep its market position and popularity (Kreutzer, 2019). Their social image directly affects how popular they are and how much money they make in different markets. This explains why the corporation pays attention to social responsibility and being environmentally friendly. Changes in the world’s population have also changed how businesses work. For example, millennials and Gen Z are the main target market for fast-food chains like McDonald’s.
Technological Technology is one of the most important ways to gain a competitive edge in all sectors. Organizations that want to grow their market share and have a better edge over their competitors invest in technology (Kreutzer, 2019). Even in the fast-food sector, technology is a big part of running a business profitably, managing the supply chain, marketing, sales, and other things that help customers have a better experience. For example, during the pandemic, McDonald’s retained its sales level despite declining demand in various markets and lower consumer spending.
Environmental Environmental factors have become an important consideration for businesses in the food industry. Due to the impact of climate change, consumers across the globe are becoming more conscious of the environment (Kreutzer, 2019). The government is also introducing legislation requiring businesses to reduce their carbon footprint. Based on this, McDonald’s has developed various sustainable goals and strives to track progress in various areas to enhance its long-term commitment to protecting the environment. In addition, the corporation is making its supply chain and logistic operations more ecologically sustainable to gain a customer base.
Legal Legal compliance and ethical business operations are important for the food retail sector. Standards for food safety and cleanliness are very important to McDonald’s. In addition, because it works worldwide, it has to deal with the rules and laws of many different countries (Kreutzer, 2019). Developing countries often have less strict rules than developed countries, making it appealing for McDonald’s to expand into these markets. However, more rules and paperwork can be big problems for businesses that want to grow. Therefore, the corporation needs to keep an eye on how its franchisees run their businesses in each market to ensure they follow all the local laws and rules.

SWOT Analysis

Strengths Weaknesses
  • McDonald’s has a global presence due to its outlets in different countries. Tien et al. (2020) posit that McDonald’s exists worldwide. It has more than 38,000 restaurants in about 119 countries. They stated that a global business strategy is one of the drivers of the corporation’s success.
  • The corporation has a strong brand due to its focus on customer service, response to competition, and marketing techniques. According to Rajawat et al. (2020), McDonald’s has become one of the most successful fast-food chains in most countries across the globe due to its reputation and huge brand recognition.
  • McDonald’s is known for its delicious variety of food products offered in the market. McDonald’s fries are often among the greatest in the fast-food sector. Apart from the current menu, it continually expands by introducing new products such as coffees, milkshakes, and Angus Burgers.
  • Chia et al. (2020) stated that high employee turnover is among the challenges McDonald’s is currently facing. Although it has more than 21,000 people working, many still leave their jobs. The primary reasons for this turnover are low wages and the absence of career development programs.
  • McDonald’s is one of the most well-known fast-food chains in the world. As a result of having the busiest food chain, the company is forced to restrict the number of food items available at any given time. These disruptions lead to an increase in operating expenses, leading to a decrease in earnings.
Opportunities Threats
  • McDonald’s is one of those businesses that have the chance to grow. Since it is very popular in the US, the company should make a plan to grow in Asian markets.
  • McDonald’s can focus on rebuilding its brand as a healthy fast-food chain to win back the trust of its customers at this time when everyone is focusing more on health and avoiding fast food (McDonald’s, 2022). This is because it is perceived as junk food, and other fast-food units have financial difficulties marketing the product.
  • McDonald’s has to deal with tough competition from national, international, and even local food retailers such as Burger King, KFC and many more.
  • Due to the Covid wave, more and more people have started eating healthier. This change in how people eat can affect how much money the business makes. Therefore, if McDonald’s wants to keep its market share, it must develop healthier food options.

Conclusion and Recommendations

McDonald’s has the potential to succeed in the market due to its reputation and brand image. The organization has become a happy place for all food lovers. As one of the world’s most valuable brands, it is still the leader in the fast-food world. McDonald’s has several outlets in countries across the globe, which has increased its market share. To remain relevant and competitive in the fast-food industry, the company has implemented sustainability initiatives based on food quality, supply chain, and marketing. However, the corporation is facing intense competition from its main competitors. Therefore, with the resilience to succeed, McDonald’s can achieve its goals amidst challenges.

McDonald’s should consider using strategic approaches to handle the identified weaknesses and threats. Firstly, to solve the issue of high employee turnover, the corporation should provide growth opportunities. This will assist motivate workers to enhance their overall job performance. Secondly, supply chain disruption for some products should be mitigated by having a good relationship with suppliers from across the globe. Thirdly, intense competition should be addressed by focusing on customers’ needs. Fourthly, the demand for healthy food can be mitigated by making food preparation open to the public to foster trust.

Reference List

Rajawat, A., Kee, D.M.H., Malik, M.Z.B.A., Yassin, M.A.Q.B.M., Shaffie, M.S.I.B.A., Fuaat, M.H.B., AlDosari, N. and Santoso, M.E.J. (2020) ‘Factors: responsible for McDonald’s performance’, Journal of the Community Development in Asia (JCDA), 3(2), pp.11-17. Web.

Chia, X.R., Kee, D.M.H., Khor, S.T., Chin, K.Y., Lok, T.X., Almutairi, H.A., Quttainah, M.A., Balakrishnan, H. and Kulkarni, S. (2020) ‘Contributing Factors to Organizational Success: A Case Study of McDonald’s’, International Journal of Tourism and Hospitality in the Asia Pacific (IJTHAP), 3(2), pp.38-47. Web.

Kreutzer, R.T. (2019) Toolbox for marketing and management. Springer, Cham.

McDonald’s. (2022) Who we are. Web.

Schmid, S. Oesterle, M. Wolf, J. and Macharzina, K. (Eds) (2018) Internationalization of Business. Springer, Cham.

Tien, N.H., Dana, L.P., Jose, R.J.S., Van Dat, N. and Duc, P.M. (2020) ‘Analysis of Mcdonald’s entry strategy into the Vietnam market’, International journal of advanced research and development, 5(3), pp.23-29. Web.

Wiessner, D. (2022) McDonald’s and others could face shareholder suits over diversity policies. Reuters. Web.