Global Business Environment Case Study McDonald’s
The Global Business Environment – McDonald’s Corporation is a fast-food international chain restaurant which incorporated on December 21, 1964 (McDonald’s, 2015). This global restaurant today operates and franchises in around 119 countries of the world. Around 4 million employees work for the company in its different restaurants and serve 70 million customers per day (Jhaveri, 2014). According to a latest survey in the year 2014, 17% of the fast food industry in the US is dominated by McDonald’s and it is the largest share in the industry. Yum! Brands (YUM) are the closest competitor with a market share of 11%.
The uniform menu of McDonald’s consist of chicken sandwiches, Big Mac, hamburgers, chic nuggets, wraps, the quarter pounder with cheese, soft drinks, desserts, and other beverages. But as the company is into international business, the menu also includes locally relevant food stuff like the black and white burger in China, gazpacho in Spain, and the Veg Pizza McPuff in India (Jhaveri, 2014). The operations of all the restaurants of McDonald’s are managed by the Company itself or by franchises. The franchises are bounded by conventional franchise agreements and foreign affiliated markets under license agreements. The whole business of McDonald’s is subdivided into geographic segments including Europe, the United States, Asia/Pacific, Africa, and Middle East (McDonald’s, 2015). In addition, it presents Other Countries and Corporate, which includes operations in Canada and Latin America, as well as corporate activities. The multifaceted global environment does not complete without competitors. There are some strong competitors of McDonald’s like Pizza Hut, KFC, Burger King etc. All these competitors possess a long business history, remarkable market share, and a good brand image. To ensure its dominating position in the fast food industry, McDonald’s have to take into consideration the power of its competitors.
Global Business Environment of McDonald’s
Every business organization is strongly affected by its business environment. In case of global business, the analysis is usually done for the global business environment. McDonald’s is a big name in the fast food industry and thus the business sometimes gets swayed by the prevailing internal and external environment. There are several diversified tools and methods to analyze the business environment, but in case of global business the most appropriate tool is PESTLE analysis (Bruce, 2014). It considers Political, Economic, Social, Technological, Environmental, and Legal factors of the organization.
The rules and regulations of the government and the policies of the state always affect the business operations of the organization. The business scenario of McDonald’s is also no different. The laws of every nation influence the business operations of McDonald’s and some of the major issues include food business norms, employee laws, license, and tax issues. The franchise business strategy of McDonald’s gets influenced by the foreign investment policies and local government policies as well.
One of the vital issues of majority of business organizations is the economic factor. Primarily, most of the organizations try their level best not to get affected by the ongoing global fiscal crisis. In different countries of the world, McDonald’s generally faces diversified kinds of revenue measurements and taxes. Owing to the fluctuations in the international currency, the company has to face tough times dealing with economic balance. Not only global, but local economic condition also affects the business operations of McDonald’s.
There has been lot of transformations in the living style of people and all these transformed demands affect the business operations of McDonald’s. Customers ask for highest quality service with all the modern facilities. Furthermore, transformations in the demands of the customers vary from nation to nation and from religion to religion. So, in order to fulfill the demands of the customers, McDonald’s has thoroughly researched the market and provided effectual food menu to all its customers.
To meet the expectations of the customers, the impact of technological advancements is also considered these days. Also, to sustain successfully in the competitive market, the company always ensured that adequate and influential technological access must be there to attract more number of customers as compared to its competitors. Some of the advanced and competent technological facilities provided by McDonald’s include customer retaining equipment, speedy and modern distribution channels, quick and easy payment options, wireless internet facility and the company is endeavored to augment more number of facilities within its stores.
To run smoothly every business operation, following legal rules and regulations is a kind of mandatory task for the company. McDonald’s follow the same by paying taxes, stuff laws, following health and safety rules. The company also food authorization rules in some Muslim countries and care about the perceptions and religious beliefs of the customers. As a giant fast food chain, the company believes that abiding legal laws will intensify their public image.
In some past incidents, McDonald’s has faced criticism for using non-biodegradable substances for its drinks glasses. Also, some environment activists have targeted the company for using Styrofoam containers for meals and packaging items based on polystyrene. It is seriously discouraged for the greater interest of environment issue.
For the last many years, McDonald’s has become the first choice of especially kids and youngsters as a fast food company. The company has responded very well to the transforming the global business environment and turned out to be a dominating market leader and a pioneer of the Quick Service Restaurant. McDonald’s has efficaciously achieved heights of success in the fast food industry. The company has always given priority to its customer service quality and listened to the choices and preferences of the customers. McDonald’s as a renowned brand has already offered and kept the company ‘ahead of the game’ in the ever-escalating competitive business industry.
Bruce Horovitz (May 18, 2014). “McDonald’s testing seasoned fries” The Global Business Environment USA Today
Jhaveri, Amit. 2014. Must-know: A Company Overview of McDonald’s and The Global Business Environment