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 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
| ||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.|
Table 2: PESTEL Analysis
| ||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.|
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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.
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