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Environmental factors affecting McDonalds Corporation Report (Assessment)

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Updated: Jun 5th, 2019

Introduction

All global and domestic organizations or corporations have external factors that affect their operations. Some of the factors may be controlled by the organizations but in most cases, the organizations have no power to control most of the factors (Nicoulaud, 1989). However, they may be able to manage or influence them. These factors are what make up the business environment of every organization.

These factors always influence the domestic marketing decisions. A number of these factors that exist but all organizations have their unique set of factors that affect their operations. What affects one company may not affect the other. Examples of these include regulations, technological factors, economic factors, competition and social factors.

The McDonalds Corporation, just like any other company, faces several external factors that affect its operations. The external factors that affect this company include political factors, economic factors, socio-cultural factors, technological factors, regulatory factors (laws), demographic factors, and other environmental factors such as those touching on waste disposal (impacts to the environment).

Influence of global economic interdependence

McDonalds Corporation is dependent on the global economy and is affected by the trade practices and agreements. The global economy usually faces. This may cause the shift of demand in the market. One of the economic issues facing McDonalds is the credit crunch issue.

This meant that people had less disposable income and this means that they have less money to spend. The low Gross Domestic Product in most of the economies has also been a challenge to the corporation.

The increasing interest rates and effects of inflation have had negative impacts on the McDonalds Corporation. This mean that McDonalds would sell less than they usually do. In order to combat this issue, McDonalds has adopted an affordable menu in order to favor also the low-income earners and those affected by the global economy.

Demographics and physical infrastructure

Several demographic factors have influenced the operations of McDonalds Corporation. They include the ever-increasing population and the existence of different age groups. Others include geographic shifts in population and the presence of educational groups.

Influence of cultural differences

McDonalds Corporation has established its business in various countries in the world. This means that it comes across people from different socio-cultural backgrounds. The different cultures of people have different preferences and the organization needs to understand them all in order to fit into the economy.

Different people around the world have different types of foods and McDonalds has faced several challenges when it came to the type of food to serve its customers. One such group of people is the Muslim community. The company had to adopt the halal concept. This particularly applied to the issue of meat in the burgers.

In the Indian community, McDonalds had to do away with beef from its menu (Goyal & Singh, 2007). The Indians view the cow as being sacred and do not believe that it should be killed, let alone being eaten. This has forced the company to introduce fish and chicken for such a non-vegetarian society.

Social responsibility and ethics versus legal obligations

As much as McDonald is serving delicious meals to its customers, the health implication is wanting. It has been estimated that about 64 percent of adults are overweight and obese. This has serious economical implications. The approximate annual cost is a whopping $ 117 billion per year.

This is caused by the high fat content and calories in the foods served by McDonalds (Nicoulaud, 1989). This has led the government to intervene and try to regulate some of the ingredients that are used in making the food (legal concern). Other legal issues include those concerning operating hours, tax laws and labor.

The growing public awareness of the health risks that one subjects him or herself while consuming fast foods has negatively affected the operations of McDonalds. McDonalds has tried to combat this issue by building a good reputation. It has taken part in various different social events that allows it to give back to the society by offering good services.

Effects of political systems

Various policies and laws have affected the business operations of McDonalds. Since McDonalds has established its operations in several different countries, it has been faced with challenges dealing with the different policies and laws that govern the different countries.

The political decisions of countries are usually not static since they change over time. This means that McDonalds Corporation needs to adjust its operations with the changing political environment. Various international pressures influence political decisions.

Usually, local fast foods restaurants are not influenced by the politics of the land. This is because they do not usually hold as much public interest. However, McDonald is a global company and it holds a lot of public interest. Therefore, it has to be accustomed to the politics of the land. It has to abide by the laws and policies set.

Influence of Foreign Corrupt Practices Act of 1997

Since McDonalds Corporation has developed businesses in foreign countries, it is supposed to observe the Foreign Corrupt Practices Act (FCPA). This regulation was enacted in order to restrain companies from committing illegal and fraudulent activities in the countries where they are doing business.

In the event that the company is involved in such activities, it is liable to huge fines and sentences. Therefore, McDonalds needs to comply with such laws and other related local, national and international legislations.

Technological factors affecting McDonalds

McDonalds is a fast food restaurant and, just like any fast food restaurant, it has been faced with issues to do with the integration of technological advancements into its business. Several technologies are available for such companies. They include the use of heat regulators, general equipment and other control devises. Point-of-sale systems also need to be installed in such corporations.

Financial information and communication systems and inventory management systems are also necessary for such corporation to remain relevant in the ever-changing corporate market. All these are connected to technology and they are meant to improve the operations in the businesses.

This would give an edge to the operations of the organization. McDonalds caught up with the latest technologies since it has installed Wi-Fi systems. This allows its customers to access the internet free of charge.

Conclusion

Companies face several environmental factors that affect their marketing decisions. Some of these factors are easily controlled and managed by the companies but many of them are uncontrollable. McDonalds also faced several of these challenges and it has managed to control some.

However, some of them are beyond its capability and the company has struggled to live with them successfully. This explains why the McDonalds Corporation is one of the world’s leading in business.

References

Goyal, A., & Singh, N. (2007). Consumer perception about fast food in India: An exploratory study. British Food Journal, 109(2), 182-195.

Nicoulaud, B. (1989). Problems and strategies in the international marketing of services. European Journal of Marketing, 23(6), 55-66.

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