Internal And Task Environment Analysis

The purpose of this paper is to discuss environmental factors affecting upon McDonalds management functions. And current strategy the company currently using to tackle this environmental impact. This will be achieved by exploring how McDonald’s tackle with all of the external and internal environmental factors. There are mainly three factors that were selected to outline the achievement of McDonald’s corporation.

The first factor is globalization, which is define as closer contact between different parts of the world, with increasing possibilities of personal exchange, mutual understanding and friendship between world populations. Diversity, the difference among people and cultures, is the second factor discussed in the paper. The final factor is ethics, which can be defined as a set of principles of right conduct. This paper explains how the McDonald Corporations uses the factors to conduct business around the world.

There are many different values to the dollar around the world, many issues that have occurred in many of those regions/websites, and about 120 countries served by McDonald’s that

Rely on the functions of management to succeed. Finally, short and long term strategic and tactical recommendations were outlined in order to enhance McDonald’s competitive position within the global fast-food industry. These recommendations are both realistic and well supported, based upon the evaluation of their current strategy and activities.

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1.0 Introduction

McDonald’s fast food restaurant is one of the largest franchises in the United States as well as aboard. Their top menu items include: hamburgers, cheeseburgers, McNuggets, and French fries. They are also known for one of their popular desserts: the apple pie and their breakfast sandwich: the Egg McMuffin. There are more than 32,000 McDonald’s restaurants serving in 117 countries. More than 75% of McDonald’s restaurants worldwide are owned and operated by independent owners.

McDonald’s has several ethical and social responsibility policies in place throughout their solely owned and franchised companies. These policies include placing the customer experience at the core of what they do, committing to their employees by nurturing their talent and rewarding their achievements, maintaining high standards regarding the conduct for business, and giving back to the communities in which they are established. All of these values are infiltrated through all levels of the company, which keeps McDonald’s thriving as a successful fast food chain restaurant. Moreover, as visited McDonald’s stores all over the country, it became clear to me that the drive-through business was successful priority one.

Risk management is imperative to McDonald’s. They have a risk assessment tool that they use to determine the country risk: which pertains to the specific country/region they are located in; industry risk: pertains to supplies produce; and facility risk: which is a combination of both country and risk groundwork. These factors are all part of the risk assessment tool that is used in each of their companies to help them with risk management.

Security features in McDonald’s includes their security camera systems within the facilities to continuously monitor all activity in and around the restaurants to ensure the safety for the workers as well as customers. Thus, McDonald’s use these security cameras also in regards to workers compensation claims or liability lawsuit claims from consumers. McDonald’s also monitors their computer software systems with an ACS system that monitors the technological factors of their business.

2.0 Internal and Task Environment Analysis

2.1 McDonalds Mission

The mission statement of McDonald’s fast food restaurants around the world is not much different from any restaurant chain “McDonald’s brand mission is to be our customers’ favorite place and way to eat.” McDonald’s vision is to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality policy QCSV that is a quality, cleanliness, service and value, so that we make every customer in every restaurant smile. Moreover, have provided its customers with the opportunity to dine and mingle with family and friends too.

That broad and common mission statement is more clearly defined by the McDonald’s good Values for money food to its customers and to make its product offering available to a wide customer base. Currently McDonald’s is implementing a global strategy that it calls “Play to Win,” which is designed to create a consistently excellent customer experience in McDonald’s restaurants. The five key facets of that McDonald’s experience are people, products, place, price, and promotion (4P).

Importantly, to ensure that each customer receives prompt, professional, friendly and courteous service. Additionally, to maintain a clean, comfortable and well maintained premises for its guests and staff. The price provided at fair, nutritional using only quality ingredients well prepared meals as well. Which reflects the experience those customers can expect when walking into a McDonald’s fast food restaurant no matter where it is located.

Eventually, ensure that guests and staff are treated with the respect and dignity they deserve and thanks each guest for the opportunity to serve them. By maintaining these objectives, aims to be assured of a fair profit that will allow it to contribute to the community it serve.

2.2 McDonalds Objectives

A marketing plan must be created to meet clear objectives. Objectives guide marketing actions and are used to measure how well a plan is working. These can be related to market share, sales, and goals, reaching the target audience and creating awareness in the marketplace. The objectives communicate what marketers want to achieve. Long-term objectives are broken down into shorter-term measurable targets, which McDonald’s uses as milestones along the way. Results can be analyzed regularly to see whether objectives are being met. This type of feedback allows the company to change plans. It gives flexibility. Once marketing objectives are set the next stage is to define how they will be achieved. The marketing strategy is the statement of how objectives will be delivered. It explains what marketing actions and resources will be used and how they will work together.

However, wish to provide tasty foods and drink we sell meets the highest standards of quality, freshness, seasonality, combines both modern-creative and traditional southern styles of cooking for their customers. “Making Money” is the main objective of any business and without it the company would go bust. To consistently provide customers with impeccable service by demonstrating warmth, graciousness, efficiency, knowledge, professionalism and integrity in its work. To have every customer who comes through its doors leave impressed by McDonalds and excited to come back again.

Most people can find a McDonald’s in any metropolitan city anywhere in the world. McDonald’s global success can be attributed to company objectives. When consumers are aware of McDonald’s objectives, they better understood the value of such a large, global franchise in helping people find employment and in offering a cheap, sustainable product to their consumers. To create and maintain a restaurant that is comprehensive and exceptional in its attention to every detail of operation.

Moreover, can provide all who work with them a friendly, cooperative and rewarding environment which encourages long- term, satisfying, growth employment so simple to able make their customers happy. They also need and have trained staff who are “supposed to” put a smile on the customers faces and who deal with the business side of the company e.g. profits etc. Additionally to provide a consistent and steady source of revenue and income for its shareholders and all related stakeholders. Besides, also to be a responsible corporate citizen and to be an exemplary corporate member in the countries in which it operates.

2.3 McDonalds Social Responsibility

Being aware of and act on its responsibilities as a good corporate citizen. McDonald’s firmly believes in giving back to the communities in. We love to provide support and encouragement to the people who need it the most. All our restaurants approach to charities and sponsorships. We believe these help inspire the people of Pakistan, especially the underprivileged ones, to live a better life. We are dedicated to delivering great experiences through our ongoing community support programs. Undertake meaningful involvement of McDonalds restaurants in selected charitable activities in its community and region. As supported a school activity recently for Compass-a school for the under privileged children also extended support by providing free food for students at the carnival arranged by the school.

All McDonalds products shall be of the highest quality and value, be healthy, nutritious and provided with outstanding personal services at the lowest possible prices consistent with a fair return on investment for shareholders, job enhancement/security for employees and a level of community involvement by everyone connected with its business. Therefore, all products and services shall be delivered consistently and measured one satisfied customer at a time, whether by company-owned or franchised operations, in superior, clean, convenient, fun and friendly neighborhood environments. Eventually, and make McDonalds the best place to eat and the best place to work.

To make people realize that the world’s natural resources are fast diminishing and something must be done about it, McDonald’s has created a public awareness program called ‘McSaviors’.’McSaviors’ has certainly helped in bringing about a sense of awareness in adults that Pakistan faces a shortage of water and electricity and that good care must be taken of these precious resources. All school children are eligible to join ‘McSaviors’. They can become members by visiting any McDonald’s Restaurant and filling out the registration form. It is also planned to seek the support of schools in further promoting the program.

Question 2

Investigate the external environment factors in which this organization is operating. (E.g. using PESTLED tools to analyses the external environment.)

3.0 External Environment Analysis

The PESTLE Analysis is a framework used to scan the organization’s external environment factor. PESTLE stands for Political, Economical, Social, Technological, Legal and Environmental.

3.1. PESTEL Analysis and Environmental Impact Matrix (Macro Environment)

A PESTLE analysis should feed into a SWOT analysis as it helps to determine the threats and opportunities represented by macro-environment forces that the organization usually cannot control. Hence, below table provides an analysis of the external international marketing environment as well as the threats and opportunities of each factor of the fast-food industry.

3.1.1 Political

Alarmed by links between poor diet and disease, as well as striking increases in obesity, policymakers, the public, and health professionals have challenged food industry practices. Although many forces contribute to obesity and poor diet, food industry behaviors such as marketing unhealthy foods to children, promoting large portions and between-meal snacks, and exploiting schools for commercial gain have raised calls for government regulation and paved the path for actions such as requiring calorie labeling in restaurants. The menu of McDonald in the pass do not label the nutritions of the food. Hence customers do not aware unhealthy food of fast food that provided by cDonald. Starting in 2006, the fast food behemoth promises to place nutrition information on the packaging of most menu items(R1). Recently, While millions of Americans working low-paying jobs, President Barack Obama’s call for a $9 minimum hourly wage were successful in February 2013 (R2). This regulation makes McDonald not happy because it would reduce revenue of the company and it is a threat to McDonald business.

3.1.2 Economical

McDonald’s, the world’s largest fast-food chain, reported a decline in an important global sales figure, the first such drop in almost a decade by November 2012(R3). It is an unexpected sharp drop in sales which some restaurant’s sales fell 2.2 percent in the United States and Europe and declined 2.4 percent in the Asia Pacific, Africa and Middle East regions (R3). However, Global Fast Food Restaurants global market research report provides the latest industry statistics and industry trends, major fast food retailers have responded by expanding the number of healthy options on their menus, the general trend toward health awareness has hurt demand for the typically greasy food provided by the these restaurants.

However, the industry experienced steady and growing demand from emerging economies, which boosted the industry’s overall performance. Over the five years to 2012, industry revenue will grow at an average annual rate of 2.2% to $499.5 billion(R4). Therefore,the industry report identifies the leading companies globally and offers strategic industry analysis of the key factors influencing the market. Furthermore the unemployment rate of McDonald is decreasing over the five years to 2012 (R5) and the figure is shown in Appendix. Hence, McDonald’s is going on a hiring blitz for thousands of jobs in Canada has been announced on 9th April 2013(R6).

3.1.3 Social

In the last few decades the number of so-called civilization diseases has dramatically increased. Research has proved that the main cause for these diseases is the change in way of life, including rising stress in a fast paced world and a lack of attention to physical activity and good nutrition. Nutrition and bad dietary habits have the greatest influence on weight gain and obesity, which are serious public health problems because the increased risk of premature death and civilization diseases like heart diseases, high blood pressure and diabetes. The state of health in the European countries was examined, with special focus on Hungary, regarding public health indicators and nutrition habits (R7). The fast-food industry is a favour restaurant for nowadays peoples and has been criticised for providing unhealthy food to consumers and caused obesity in the country.

3.1.4 Technological

McDonalds has adopted the use of technology in delivering its fast food to their consumers. The most recent McDonald’s technology development has been installing WI-FI hotspots in most of their restaurants globally (R8). This model is made to introduce more young and tech-people into the restaurants creating some what of a starbucks feel, which by the way is free. Besides, Mcdonalds uses a 100% biodiesel technology (R8). Doing this has helped reduce carbon emissions with the truck making the deliveries. Moreover, McDonald’s uses Nintendo DS system as a e-learning training tool for their new recruit staff in over 3,000 of their restaurants. These gaming systems train the recruits and grade them on their performance, in which they can compare with other colleagues and view their progress.

There are many types of information systems used in McDonalds too such as Transaction Processing System (TPS), Decision support system (DSS), Management Information Systems (MIS), “Made for you” system, POS system ” Scale of Point system ” and Hyperactive Bob system(R9). Transaction system is important to answer routine questions, and it helps to conduct business such as payroll, employee record keeping or paying an employee. Decision support system is used to model data and make quality decision based on the data , making the right decision is usually based on the quality of the data and one’s ability to analyze the data. Management information system is a system that provides information needed to manage organizations effectively.

In “Made for you” system when a customer places an order , the sandwich item will immediately appears in the computer monitor in the kitchen and a tone sound to alert the kitchen staff . ” Point of scale system ” to ensure fast and accurate order , because this system is used to speed the business process, it can track massive amounts of data in seconds. The Hyperactive Bob system used computers and rooftop cameras to monitor traffic entering a restaurant’s parking lot and drive-thru. All these technologies used by McDonald are helping in daily business and ensure the business delivers smooth to customers.

3.1.5 Legal

McDonald’s has been involved in certain of lawsuits and other legal cases in their fast food business. Defamation in the McLibel case was an English lawsuit happened by McDonald’s Corporation against environmental activists Helen Steel and David over a pamphlet critical of the company(R10). McDonald was won in the English court. McDonald has been sued a restaurant MacJoy in Phillipines for using a similar restaurant name with McDonald(R11). This is to keep the name of McDonald as their company trademark and copyright in the regulation.

McDonald complies with the global operators regulation which are opening hours, taxation and employment in all business country such as real case happened between McDonald and Coalition of Immokalee workers in US (R11). Besides, all global countries are required to meet national food standards such as the requirements set out by the Malaysia Ministry of Health, McDonald food must Halal in Malaysia(R12). Advertisement of McDonald must honour and cannot mislead the consumers (R11). Furthermore, health and safety law is important to ensure workers are working in the safe working environment, McDonald restaurant (R11).

3.1.6 Environmental

Environmental activists are promoting go green as well as it is encouraged by most countries governments so McDonald has been introduced go green program such as REDUCE, RE-USE, RECYCLE, DISPOSE. It’s better to recycle trash than to throw it away, better to re-use a bottle or bag directly than to recycle it, and best of all to reduce garbage by not generating it in the first place. McDonald’s has been whittling away at the thickness of its polystyrene burger containers, straws, and cold drink lids, reducing them on average by 12 percents (R13). McDonald is welcome in every step toward environmental responsibility such as above organized program.

4.0 McDonald’s Internal and External Analysis

The following framework identifies McDonald’s review of the Corrective Action System. For SWOT steps and flow.

STRENGHS

1.Ranks very high on the Forture Magazine’s food service companies that are most admired list.

2.One of the best brand recognition in the world,the golden arches and Ronald McDonald.

3.Global operations all over the world.

4.Cultural diversity in the foods that are provided based on location of the restaurant.

5.Excellent locations in theme parks,airports,Wal-Mart store,and along most well traveled

roads.

6.Efficient operating guidelines in the assembly line fashion.

7.Food safety guidelines are strictly adhered to.

WEAKNESSES

1.Failing pizza test market thus limiting their ability to complete with fast food pizza

providers.

2.Training costs are elevated due to high

3.Very minimal concentration on providing organic foods.

4.Large fluctuations in their net and operating profits making impacts on the investors.

5.Not much variation in seasonal products that are affered.

6.Quality concerns due to franchised operations.

7.Focus on burgers and grease fried foods and not on healthier option for their customers.

OPPORTUNITIES

1.Opening more joint ventures with several different retailers.

2.Being more responsive to the social changes to healthier options.

3.advertising the capabilities of Wifi internet services in the branches.

4.Expanding on the advertising in regards to being more socially responsible in the

environment.

5.Expansions of business into newly developed parts of the world.

6.Open product up to allergen free options such as peanut free and gluten free foods.

7.Continue to venture into more enticing beverage choices.

THREATS

1.Their marketing strategies that entice people from small children all the way to adults

and the criticism that they take beause of it.

2.Lawsuts for offering unhealthy foods that have alleged addictive additives.

3.Contamination risks that include the threat of e-coli containments.

4.The vast amount of eat in fast food restaurants that are open as competition.

5.Social changes to a more balanced meal in cluding fruits and vegetables in servings of

five per day.

6.Focus on healthier dieting by consumers.

7.Down turn in economy affecting the ability to eat out as much.

4.1 Internal Analysis

4.1.1 Resources and Capabilities

A firm’s resources and capabilities can be measured through identifying its tangible andintangible resources and capabilities within. Tangible and intangible resources aresignificant in implementing firm’s strategies. It ranges from financial, physical,technological and organizational; while intangible can be human, innovation andreputational assets. Incase of Macdonald’s, is the world’s largest chain of hamburger’sfast food restaurants, serving nearly 47 million customers daily.The restaurants arefound in 119 countries and territories around the world. McDonald’s operates over 31,000restaurants worldwide, employing more than 1.5 million people. Looking at theincreasing popularity especially in South-Asian region it is predicted Macdonald’s wouldexpand even further in new countries and unexplored territories.

4.2 External Analysis

McDonald’s has many opportunities in the external environment due to an increase in eating out, and growth of the hot drinks market. During the recession, McDonald’s Informal Eating Out (IEO) market share increased to a record high of 11.5% and a quarter of surveyed teenagers said they purchase fast-food at least once a week (Mintel, 2011).

They are a global company operating more than 23,500 restaurants in 109 countries. By being spread out in different regions, this gives them the ability to weather economic fluctuations which are localized by country. They can also operate effectively in an economic downturn due to the social need to seek out comfort foods.

Health consciousness trends are a global threat, as McDonald’s has been traditionally perceived as offering only fatty food. Recently, some healthier options have been introduced, i.e. salads and wraps, in efforts to shift their position in the consumer eye. However, the brand is still perceived as ‘unhealthy’ and this poses a continual threat.

McDonald’s uses only 100% pure USDA inspected beef, no fillers or additives. Additionally the produce is farm fresh. McDonald’s serves 100% farm raised chicken no fillers or additives and only grade-A eggs. McDonald’s foods are purchased from only certified and inspected suppliers. McDonalds works closely with ranchers, growers and suppliers to ensure food quality and freshness.

5.0 Recommendations

Strategic and tactical recommendations for McDonald’s.

The following table outlines the strategic and tactical recommendations for the future success:

Short term (6 months- 1 year)

Long-term (1- 5 Years)

Developing and expanding business in developing countries with the middle classes

Promoting recycling and environmentally friendly program in the internal working environment

Adapting the foods according to the cultural and regional taste as well as provide healthy food

Encourage social responsibility program for health awareness

Loyalty program such as provide discount in happy hour and give free items with loyalty sticker or card

Expand business with other healthy food brand

5.1 Short Term Recommendations (6 months – 1 year)

Growing middle classes in developing country give an opportunity for expanding the business since many western markets are saturated. Besides, McDonald has been focused on the taste of the food according to regional and emerging economies offer multiple opportunities for product adaptation. For example, pastry options in Brazil and cheese products in India could increase sales. Further adaptation of meal size and price will cater for a larger market demographic as well as introduce healthy food in all franchises since health awareness is strictly important around the world. A loyalty program could be used to increase frequency of a customer’s purchasing. This could be introduced discounts in certain happy hours, or given free items with loyalty sticker or card when over a purchase limit to encourage more purchase.

5.2 Long Term Recommendations (1 – 5 years)

Awareness of environment, environmentally-friendly and ethically-sourced packaging are activated by most global countries. This encourages McDonald provides this knowledge among the workers in a working environment to show difference McDonald culture compare to their competitors. Although McDonald’s every year supports social responsibility in ophanant houses, old folks, blind houses in various charities to help weak peoples, further emphasis on charitable work could positively alter customers’ perception of the brand. Besides, promote health awareness to them with McDonald’s products. Expanding the health-conscious fast-food market under the guise of a different brand would secure a larger market share and diversify their business, spreading the risk of failure.

6.0 Conclusion

It is argued that effective marketing strategies and tactics cannot be developed withoutfirstly analysing the environment in which the company operates. A number of uncontrollable elements affect McDonald’s international marketing strategy and tacticalimplementation. These groups of elements include the PESTLE (political, economic,social, technological, legal and environmental), structure of the market and competition being faced (Porter’s (1980) five forces analysis) as well as analysis of its stakeholders,customers and product adaptation within its internationalisation strategy. All of theseaspects are crucial to a company’s strategic decision making. The level of understandingthat exists in these relationships will determine the success of a company.

McDonald’s is not making a one-time standardised global choice but it is striking tofind a balance. This is not a straightforward task, as identifying the balance betweenstandardisation and adaptation is a challenge and very difficult to achieve. The goals of reducing costs and complexity lead McDonald’s to consider standardisation, whilecustomer orientation sways it towards adaptation. It is evident through the analysis thatMcDonald’s is adapting its marketing mix elements in order to go in line with the externalenvironment. At the same time, it should be noted that the company is also standardisingwhen and where possible in its desire to achieve economies of scale and global uniformityand image.With respect to McDonald’s internationalisation strategy, the company’s effectivenessand profitability is obviously well supported by their strong competitive position andmarket share in their primary product market.

Its’ international success is achieved by thecompany’s strategy and tactics, which complement each other and work in harmony, providing the optimum return bounded by efficiency. The company is thriving as it is botheffective (doing things right) and efficient (doing the right thing).McDonald’s portfolio of products is well managed and ensures the best fit between thecompany’s strengths and weaknesses and for offsetting the threats found in its competitiveenvironment. In considering the strong competitive position of the firm in a highlyattractive market, it is suggested that McDonald’s should protect its position (Mckinseymatrix). This can be achieved by concentrating efforts on maintaining its existing strength by investing to grow at maximum digestible rate.

It is recommended that McDonald’s continue this approach, that is: simultaneouslyfocus its attention on aspects of the business that require global standardisation and aspectsthat demand local responsiveness. When appropriate, processes should be standardised,however, operation in local markets necessitates the maintenance of the appropriate localflexibility.McDonald’s is adopting differentiation and cost leadership strategies (genericstrategies). In terms of differentiation, the firm attempts to be diverse from its competitors by adding something to its product that will provide a unique value to its customers.

7.0 References

1) http://www.commondreams.org/views05/1103-23.htm. Last accessed on 12/04/2012

2) http://money.msn.com/now/post.aspx?post=d184c64e-c231-426c-bb2e-8935ebd3ee06. Last

accessed on 12/03/2012

3)http://www.nytimes.com/2012/11/09/business/mcdonalds-reports-global-decline-in-sales.html?ref=mcdonaldscorporation. Last accessed on 12/03/2012

4) http://www.ibisworld.com/industry/global/global-fast-food-restaurants.html. Last accessed on

12/03/2012

5) http://research.stlouisfed.org/fred2/series/MOMCDO9URN. Last accessed on 13/03/2012

6) http://www.chch.com/home/item/12412-mcdonalds-hiring-day. Last accessed on 13/03/2012

7) http://ageconsearch.umn.edu/bitstream/44325/2/460.pdf. Last accessed on 13/03/2012

8) http://mcdonaldsteam3.blogspot.com/2010/05/mcdonalds-corp.html. Last accessed on

13/03/2012

9) http://mcdonaldsmis.blogspot.com/p/mcdonalds-is_04.html. Last accessed on 14/03/2012

10) http://en.wikipedia.org/wiki/McLibel_Case. Last accessed on 14/03/2012

11) http://en.wikipedia.org/wiki/McDonald’s_legal_cases. Last accessed on 14/03/2012

12) http://www.mcdonalds.com.my/abtus/CSR.pdf. Last accessed on 15/03/2012

13) http://www.sustainer.org/dhm_archive/index.php?display_article=vn304mcdonaldsed

8.0 Bibliography

http://www.aboutmcdonalds.com/mcd/our_company/mission_and_values.html.Last accessed on 8/04/2012

http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/McDonald-s-Restaurants-Mission-Statement.htm. Last accessed on 8/04/2012

http://wiki.answers.com/Q/What_are_the_aims_and_objectives_of_McDonalds.Last accessed on 10/04/2012

http://businesscasestudies.co.uk/mcdonalds-restaurants/the-marketing-process/marketing-objectives.html#axzz2Prg92Wds. Last accessed on 10/04/2012

http://www.mcdonalds.com.pk/page/corporate-social-responsibility. Last accessed on 10/04/2012

http://www.mcdonalds.com.pk/page/corporate-social-resp