Discuss about the Strategic and Environmental Analysis of Macdonald.
MacDonald’s, the company has originated in California, USA in 1954 and has become one of the sensations of the fast-food chain restaurants in no time with its quality products and the variety of services for the consumers (McDonald’s Australia. 2017). The company has witnessed a great success in the last few decades since its inception, as it has established more than 30,000 stores across the world through which millions of consumers are being served each day. The company normally generated $15 billion revenues each year and also targeted to increase its sales and revenue in the succeeding years. Apart from this, MacDonald’s has also concentrated upon its brand image and adopted several strategies to incorporate a positive image in the minds of the consumers and the target markets as well (Vrontis & Pavlou, 2008). In this regard, it is studied that MacDonald’s has manifested several promotional tactics such as sponsoring world cup in 1994 and in 1996 also sponsored the Champions League football conducted in England.
In relation to its products and services, it could be realised that MacDonald’s has the habit of playing with consumer’s taste buds. As the cultural and geographical aspects are evident in the case of any business, MacDonald’s is no exception in this regard. Hence, the company has taken initiatives to introduce the new range of products in accordance with the choice and preferences of local inhabitants (Vignali et al. 2003). The products offered by MacDonald’s are cheese burgers, French fries, milk shakes, desserts, and Sunday’s, oatmeal’s and so on. Thus, currently, the company has introduced all day breakfast programmes in order to maintain and increase the competitive advantages of the company (White & Sutton, 2001). Thus, in the following sections of the study, the evaluation of internal and external environmental analysis of the company would be conducted in order to detect the issues in both the environments and deliver relevant recommendations for resolving the issues.
The external environment analysis refers to the evaluation of the external circumstances that an organisation acquired in the society it is acting in (Atighechian et al. 2016). The explanation of the external environment involves the PESTLE analysis along with the evaluation of porter’s five force model. Thus, the aspects are being explained in the following manner.
The PESTLE analysis is the presentation of the external environment of an organisation that involves political, economic, social, technological, environmental and legal aspects to be discussed. Thus, the PESTLE analysis in relation to MacDonald’s could be stated in the following manner.
Political factors: The political factor includes those aspects that are able to influence the activities of the business in a political manner and MacDonald’s has considered having great political or governmental influence in relation to its practices in the respective region. In the context of MacDonald’s, the most significant political factors are increasing trade agreements on the global platforms which could be considered as the positive sign for the business (Cabiddu & Pettinao, 2013). On the other hand, pending reform of taxes is another aspect that the Australian government has adopted in order to deliver positive ground to the company to act upon. Moreover, evolving public and employee health policies, which may create certain challenges, while but effective use of the strategic decision process could deliver efficient results in this regard. Hence, it is realised that with the improved international trade agreement, the company involves improved supply chain within its business activities. Moreover, the company is able to address the external factors in a positive manner through maintaining the quality and healthfulness of the variety of products.
Economic factors: the economic factors in this regard involve the facts related to financial stability and effectiveness of the economic level of the respective country in order to provide ample scope to the business to flourish. In the context of MacDonald’s, it is realised that the economic factor really matters for the organisation as it has delivered products and services in accordance with the economic stability of the region (Deb, 2006). As Australia is well to do from the economic perspectives the aspects could be realized in terms of the rapid growth of the economic resources, risky economies in Europe that are transforming in a steady manner, and along with this, slowing down of the Chinese economy is also evident as It could pose a threat to the global chain of the restaurant business. Thus, it could be stated that the current economic status of the region is evident in delivering a great scope to the business of the respective organisation and but MacDonald’s is prone to face difficulty due to the economic slowdown in Europe, which is able to influence the global supply chain of the company (Vrontis, 2008).
Social factors: The social factor includes the different cultural and social aspects that are inherited from the people living in the same society. As Australia is a multi-diversity country and equipped with people of the variety of culture, it is quite evident that the preferences of people would be different (Genc, 2014). Therefore, MacDonald’s has felt the immense influence of the social and cultural factors that have compelled the organisation to concentrate on the aspect of the wealth gap and MacDonald’s has set its product range in accordance with the low and medium income population which is also able to address the high-income population as well.
Technological factors: the technological factors are also evident in the case of MacDonald’s as the company has concentrated upon the technological advancements and incorporation of new technology services that would simplify the act of serving consumers for the staff. On the other hand, the technological advancements are also able to draw consumer satisfaction and competitive advantages at the same time (Genc, 2014). The technologies adopted by the organisation covers the more advanced billing process that takes nominal time for billing, and new games and activities in order to attract consumers from kids section are also involved.
Legal factors: the legal factor is also apparent to exercise its influence upon the business activities of MacDonald’s and it could be realised from the incorporated legal regulatory and legitimate framework. Thus, the company has concentrated on maintaining laws in relation to minimum wages, animal welfare, and consumer health regulation as well.
Environmental factors: lastly, the environmental factors are another important aspect in this regard as MacDonald’s has maintained a cordial relationship between the business practices and ethics. The company mainly involves biodegradable cups and plates and boxes in order protect the environment (Giacalone, 2012).
Porter’s five force model
Along with the PESTLE analysis, Porter’s five forces are evident in relation to describe the competitive landscape of the company in the following manner.
Bargaining power of suppliers: as MacDonald’s is currently working with several independent suppliers, therefore, the quality of products and raw materials vary and it is quite possible that the emergence of new independent suppliers possesses the ability to raise the act of bargaining to the company. Thus, suppliers like Coca Cola, Pepsi, Clorox Company are in the position to project bargain with the company.
Bargaining power of consumers: due to the current situation in which market saturation has become the biggest threat to the companies, consumers could easily shift their choices to one company to another (Kotler, 2012). MacDonald’s is also no exception in this regard as due to high edge competition in the fast food industry consumer could easily raise demands to MacDonald’s and change their choices of restaurants.
Threats of new entrants: as the fast-food industry is continuously evolving it is quite evident that new companies are manifesting their services to attract consumers. Thus, MacDonald’s has the threat of losing competitive advantages to the new entrants and new rules must be set to make the entries difficult and enhance qualities.
The threat of substitutes: along with the other aspects of the competitive landscape the threat of substitute is also evident as there are tons of substitute products in the market that could replace MacDonald’s in no time (Manrai, 2017). Thus, in order to prevent it, the company must add some additional offers or business ideas to its practices.
Rivals: in the case of rivals it is realised that MacDonald’s possesses a high-end competition in the fast food industry as there are other renowned organisations such as KFC, Burger King, Pizza hut, Dominos that are able to give tough competition to the organisation.
Thus, from the above evaluation, it could be stated that the PESTLE analysis and Porter’s 5 force model has evidently delivered insight regarding the external environmental influences and the competitive landscape of MacDonald’s (Vrontis, 2008). Thus, it could be stated that the respective organisation needs to develop an effective and strong strategic framework that could provide the ability survive in the tough competition and serve the consumers with efficient practices at the same time.
The internal analysis of the organisation could be delivered through the effective incorporation of the SWOT analysis. Through SWOT analysis the internal strengths, weaknesses, threats and opportunities could be realised in this regard. Thus, the SWOT analysis is presented in the following manner.
|
Strengths |
Weaknesses |
|
· Strong brand image and advertisements goals. · Business collaboration with Coca Cola · Clear and attract environment ideal for kids to play. · Staff provided with professional training. · Skilled team work of employees. · Competitive price. · Consumer friendly staff (Mjøset, 2006). |
· Poor image to public due to its involvement in raising obesity to t he public health. · Poor employee turnover as the company records a frequent employee firing and fails to make employee retain for a longer period of time. · The increasing growth of new entrants in the market as they are able to provide more modified and healthy diet based foods to consumers such as Wahaca (McDonalds in BIND exploitation, 2001). |
|
Opportunity |
Threats |
|
· New technology innovation those are able to keep the company at the forefront. · The growing industries in the fast food chains. · Entries in the international markets with effective presence. · Involving new green energies and environment friendly packaging. |
· The economic instability in the regions possesses a great threat to the organisation. · The increasing global warming instigates the global issues which evidently influences the organisational activity. · Growing public health crisis die to obesity and other health problems. |
Thus, from the above evaluation of the internal environment of MacDonald’s, it could be realised that though the organisation has quite a popularity among its target market and the consumers, it lacks in several areas which need immediate attention in order to survive in the tough competition. On the other hand, it beholds a lot of opportunities that would be able to provide a prominent place in the fast-food industry and also deliver future strength to the organisation to enhance its service quality and effective practices (Radley & Chamberlain, 2011). Moreover, focus on incorporating healthy diet based food items addressing the healthy living aspects of the society (Stein, 2017). Hence, it could be summarised that the organisation must develop new practices in relation to the employees which would help in retaining staff for the longest time and the employee relation should also be the review in this regard.
It is an evident fact that effective marketing strategies and organisational strategic planning could not be performed without analysing the external and internal environment of an organisation. From the evaluation of MacDonald’s, it could be realised that the organisation lacks in several aspects instead of its rapid expansion in the international market and popularity among the existing consumer base (Schlegelmilch et al. 2003). The key issues detected in this regard could be stated in the following manner.Ø The political issues those are not so strong in relation to employee wages.
The legal issues that, the company lacks concentration upon public health and due to this the negative image of the company is being preached.
In the case of the competitive landscape, it is also realised the new entrants have posses a big difficulty for the organisation as it offers more modified version of diet foods.
Along with this, the issues regarding employee turnover is also evident as it could severely impact upon the resources of the organisation (Vrontis and Vronti, 2004).
Thus, in order to deliver relevant suggestion to the organisation in respect of resolving the issues, it could be cited that, the organisation firstly concentrate upon strengthening the legal regulations regarding employee wages in order to avoid job dissatisfaction among employees (Ahluwalia, 2012). On the other hand, include more testified and saturated fat food items in the menu in order to remove the bad impression from the minds of the consumers which would eventually improve the competitive advantages. Apart from this, the strategic decision-making process should also be modified and enhanced in regards to quality of services so that the organisation could develop effective marketing and brand strategies in relation to maintain its competitive advantages in a competitive environment (Daniels and Radebaugh, 2011). Thus, it is quite evident that without the proper analysis of both the environments, the organisation would not be able to incorporate an effective strategic practice and in order to enhance the market presence and delivery of services to the existing and new consumers (Alexander, 2010). With the detected issues and recommendations it could be realised that the organisation may have improved its functionalities for better services and goods presentation.
Conclusion
In conclusion, it is imperative to state that MacDonald’s is the largest fast food chain in the world which has evidently set its foot in the international market as well. Thus, from the evaluation of both external and internal environment, the facts and issues have been detected in terms of the issues in employee retention, public image, high edge competition and legal issues which could be handled by the organisation through concentrating upon the facts of incorporating relevant employee relation strategies, and modified food items. Hence, the recommendation would be able to resolve the detected issues in the strategic decision which would eventually help to gain competitive advantages in the future course of action.
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