Pestle Analysis of Mcdonalds Company

PESTLE Analysis

Political

1. International Trade Agreements

2. Inevitable Tax Increases

3. Development of Public Health Policies

4. Changes to Laws in over 150 countries

1. This is an opportunity as it will allow for McDonalds to open shops in more locations around the world.

2. Every country is affected by Tax differently, therefore McDonalds has to work out prices based on the local economy of each country it is placed in.

3. Governments are starting to implement new health policies which aim to reduce the amounts of sugar, fats and carbohydrates used in fast food restaurants. This is a threat to McDonalds because of their known unhealthy menu. And it may lead to major loss of customers and income if they are only allowed to use a certain quota of ingredients.

4. Operating in over 150 countries means that McDonalds has to comply with different labour and business laws at every location. This is a difficult task, but it is non negotiable because if they are found to be violating any laws they will be closed down.

Physical

1. Natural Disasters

2. Security Risks

3. Health and Safety of Worker and Customers

1. Natural disasters such as floods, fires, hurricanes can occur at any moment. They are a constant threat to the businesses productivity, profitability and consumer’s health.

2. Security refers to the measures taken by restaurants in order to protect merchandise from being stolen or destroyed. Depending on the level of crime and location of the outlet, various security measures must be taken. This is an opportunity for the business to make sure it is a safe place for customers to sit and eat. It is also a threat in that the business is a t risk of being robbed.

3. The business has an obligation by law to ensure that the employees working environments are safe and sanitary. It is also imperative that the structural soundness of all McDonalds restaurants is up to par and complies with basic health and safety requirements.

Economic

1. Slow & Stable growth of US economy (opportunity)

2. Risky European economies (threat)

3. Slowing down of Chinese economy (threat)

4. Different Currencies for each operating country (threat). Must decide whether it is cheaper to purchase raw materials locally or import.

5. Recession causes job loss, less spending money = loss of income (threat)

1. McDonalds has an opportunity to grow even in its local American Economy. This is because McDonalds biggest market is in America and because it is on home ground, it is much easier to constantly grow and develop the strong market to become even stronger.

2. European economies are stable but risky to foreign businesses like McDonalds. Various European economic decisions threaten the prices of materials and thus the prices of foods at their European stores.

3. China’s economy is slowing down, it is a major producer and supplier of McDonalds and if the Chinese economy fails and there is a problem with supply. McDonalds could take a major hit.

4. Every country uses a different currency that works out at a different exchange rate. This is a constant threat to McDonalds because if there is a dip in the economy and the exchange rate increases, those outlets who import their raw materials will have to pay a higher price which will in turn mean an increase in menu prices, which can all lead to customer dissatisfaction and even profit loss.

Ethical

1. Religious and cultural beliefs

1. Because McDonalds has to operate in so many different and diverse countries, it has to take into account the ethical beliefs of certain populations when opening its restaurants overseas. For example Hindu’s in India cannot eat beef and Muslims cannot eat pork. This is not a threat it as an opportunity for McDonalds to expand its target market. For example; McDonalds has had to address such issues by providing Lamb and vegetarian options in certain areas. Allowing more people to eat their food and in turn increasing profit.

Social

1. Widening wealth gap (opportunity)

2. Increasing Cultural Diversity (opportunity)

3. Move towards healthy lifestyle trend (threat & opportunity)

1. Because of the widening wealth gap McDonalds has the opportunity to grow as a result of their low prices and appeal to the low and medium income households.

2. International consumers are not used to foreign cuisine, they want more local menu items. This creates an opportunity for good publicity and market growth. It does this through providing the world with an interesting topic of conversation regarding McDonalds in foreign countries and growth due to expanding of market to reach new consumers. This is expensive to maintain, but it will improve McDonalds as a whole in the long run.

3. More and more people are starting to watch what they eat, making sure they keep healthy. McDonalds has not jumped on the bandwagon and their unhealthy menu does not agree with the new health trends. McDonalds is falling behind on this front and losing customers.

Technological

1. Research and development (opportunity)

2. Business automation (opportunity)

3. Mobile marketing (opportunity)

4. Mobile sales (opportunity)

1. McDonalds has the opportunity to invest in research and development in order to make the business more efficient and increase productivity.

2. Technological development has brought about new automated equipment which provides an opportunity to aid businesses production capabilities and lower production costs while selling price stays the same. Using tv screens for menus behind the counter is a good way of using technology. But can also be problematic in event of power failure.

3. The advances in technology give rise to huge opportunity for McDonalds to extend its advertising and reach more potential customers. Businesses can market their brand on social media platforms such as Facebook, Twitter and Instagram. They can also show TV commercials and pop up adverts on websites.

4. Another major opportunity brought about as a result of tech development is the opportunity for online sales, mobile phone applications and websites make ordering food even easier and further expands McDonalds market penetration.

Legal

1. Minimum Wage laws

2. Animal Welfare Regulation

3. Health and safety regulations in the workplace

4. Lawsuits

1. Every country sets minimum wage laws. Increases in these wage laws results in higher costs for raw materials as well as an increase in prices. Increases of any kind are always a threat to McDonalds due to their main aim of trying to keep prices as low as possible.

2. McDonalds works mainly with meat, meaning animals. With animal rights and welfare now a major part of society, there are laws regarding the treatment and slaughter of animals. McDonalds has the opportunity to make sure all of its meat producers work ethically and in line with laws of animal welfare. This is a major selling point for McDonalds as many people search for animal friendly food outlets.

3. Laws regarding basic health requirements in restaurants can be a major threat to the business. If McDonalds was found to be violating hygiene laws, they would be at risk of being shut down and could even face major lawsuits if anyone was made sick as a result of the negligence.

4. McDonalds has had many legal issues in the past, where many businesses have copied its name and logo. The business has then gone to court with many of these trademark associated cases. It has also been involved in several cases about workers rights.

Environmental

1. CSR (opportunity)

2. Climate change

3. Sustainable Business strategies

1. Implementation of Corporate Social Responsibility programs provides McDonalds with the opportunity to give back to the communities around where it operates. It also ensures that the business is run as sustainably as possible.

2. Climate change is a major world issue. Pollution is destroying our planet and businesses like McDonalds need to make sure they are not contributing to this destruction. it provides McDonalds with the opportunity to invest in eco friendly energy sources and reduce its carbon emissions. This may inspire other businesses to follow in their footsteps and will help end climate change.

3. Sustainability is key to a businesses success and therefore it is important that McDonalds runs all of its businesses with the environment, its workers and its customers in mind. McDonalds creates vast amounts of waste, therefore they have to make their products as environmentally friendly as possible. Therefore Packaging must be recyclable or reusable and their practice must not harm the communities or natural world around them.