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Pestle analysis


PESTLE analysis is tool that can aid organizations making strategies by helping them understand the external environment in which they operate now and will operate in the future. It is a method of examining the many different external factors affecting an organization the outside influences on success or failure.

Pestle is an analysis of the external macro environment in which a business operates. According to(2008), pestle stands for political, economic, social, technology, and environmental factors.

Political Factors

McDonald's started international operations through which it inclined by the individual state policy imposed by the government. For example: In (2001) there was an issue of health implication of eating fast foods at certain groups in Europe and United States. In (2005) they had another issue that the fast foods contain harmful ingredient like cholesterol and adverse effects as compare to obesity.

McDonald's has it different policies rules and regulations, and because of that it has its own license of restaurants which is controlled by the government for health, workers protection, and environment. Even then there was some quarrel in the McDonald's franchise in India. There where some violation of religious laws pertaining to the contents of food. According to them the meat used by them in their foods was completely hateful to the Hindu religion in the said market. And also same situation were faced in Pakistan for using ham and pork in there foods because using this content are not accepted by the peoples as it is in opposition to Muslim religion. So, this is also one type of political factor faced by McDonald's.

Economic Factors

Even in food industries there are distributes and troubles even McDonalds's also have it own problems they are also involved in economic factor. Branches and franchises of fast food chain like McDonald's has to face many problems due to economic factors such as inflation, exchange rates, recessions, income and interest rates. For example: In (2004) McDonald's was economically affected by the response of the costumers and through there general sales. At that short of time the food company's like McDonald's started to import lots of raw materials into an important area where there is shortage of supply.

Through this we can say that if the organization economic is week then the price of the product will be high as comparable to the other organization product. Then it will be necessary to take certain step to improve the economical level.

Socio-Cultural Factors

McDonald's is becoming a multi-faced character of business For example: in (2005) the peoples who were below 35 age were the most frequent customer as a food was like by them, and as there was a free gifts for the children's so they were the next high customers. In different country there are different type of advertise to make people there customers. In many cultural festivals they provide different cultural advert and services For example: During New Year they have different ways of attracting the customers such as many offers.

The main intention of the company it's to earn profit and it is possible through the more numbers of customer's .across the world. It does not only serve the peoples but also bring changes in people's way of living, faction and tradition.

Technological Factors

McDonald's uses very low technology but uses its idea to generate demand for their products. In (2006) the company made television as a tool for marketing and they succeed and there are few more clams for what McDonald's are inclined to interest the younger populations more. . They employ animated depictions of their characters like Grimace and Ham burglar. Other advertising operations employ popular celebrities to promote their products. The integration of technology in the operations of McDonalds tends to add value to their products. Basically, this is manifested in the improvements on its value chain. The improvement of the inventory system as well as its supply chain allows the company to operate in an international context.

Legal Factors

There are many competitor manly to the food industries thus the McDonald's has to be more careful with their own responsibilities for this reason legal factor affect McDonald's as per the responsibilities concern MacDonald's has to provide their customers the relevant data that they need with reference to the nutritional substances of their products. .In (2005) there was an issue regarding consumption McDonald's food it result in obesity through this the customer can have more options towards the various product of the McDonald's

This is tied up with the socio-cultural attributes of the market on which they operate. For instance, operations in predominantly Muslim countries require their meat to conform to theHalalrequirements of the law. In the same regard, those that operate in countries in the European Union should conform to the existing laws banning the use of genetically modified meat products in their food. Other legal concepts like tax obligations, employment standards, and quality requirements are only a few of important elements on which the company has to take into consideration. Otherwise, smooth operations shall be hard to achieve.


Market never remain stable because it's always goes on changing depend on the type of product produced in the business. So there for business has to gain or lose customers some of the reasons of changing market are as follow:

So McDonald's has to change its food product as per the change in taste of the customers. For example: before few years there were no chicken burgers were served in India but now a days they started because it is like by the people most. In (1997) several local groups in Hong Kong have made actions to make the McDonald's franchises in Hong Kong even having knowledge of the rather abundant make use of Styrofoam containers and the resultant mistreatment of the environment. In (1997) additional indicated that in (1995), McDonald's Hong Kong went over the Styrofoam used by both Australia and the United State together.


The vision statement of McDonald forms the values which are made by all managerial and corporate decisions. These values reveal all the aspects of business for an instance from social responsibility and assortment to training and policies.

McDonald's brother (Dick and Mac) had built the first McDonald's in (1940). And both brothers had appointed the first franchise name Ray Kroc in San Bernardino, California. The first restaurant was opened by Ray Kroc in Des Plaines, Illinois (Near Chicago). And through this hamburger university was opened. McDonald's is one of the largest organizations which have more numbers of employees. In September (2004) company in UK owned employees 43,491 people: 40,699 hourly paid restaurant employees 2,292 restaurant management and 500 office staff. McDonald's franchisees employed a further 25,000 people. McDonald's is one of the world's largest and fastest growing global restaurant chains.

Every business has it good reputation if it provides good quality and reasonable price. High quality products need high quality people to create design, produce and deliver them. So for that high quality employees are required to maintain its reputation. For any business offering a large element of personal service, an ability to recruit, train and retain high quality staff is particularly vital.

This report will discuss the different macro or external factors impacts on the organization with the help of PESTLE analysis and compare the internal and external factors that influence a company, considering the aspects of the business process including globalization, Information technology and social demographic trends.

Formalization, specialization and standardization all tend to be greater in large organizations because they are necessary to control activities within the organization.

For an instance, all the larger organizations are more liable to use written policies, procedures, rules, documentation and detailed job descriptions than to depend on personal supervision by the manager. The processes needs to be more standardized and formalized where there is more relationships that have to be managed. Similarly, McDonald's has several dimensions that depict how to make all its products, how to greet customers, how to maintain the facilities, and so on. No matter where a restaurant is located, McDonald sustains the same quality of product with the help of the level of standardization, formalization, and specialization. This is the evidence of a lack of standardization. Decision making at lower levels is the key factor due to formalization and specialization in the large organizations.

The operation of the McDonald's is been guided by the organizational culture. The four values which operate the McDonald's are quality, service, convenience, and values. In other countries organizational cultural is a part of knowledge and information transmitted by McDonald's to the franchise. As apart of organizational culture it has to delivery of uniform quality of food and services where ever the branch is located. McDonald's is providing excellent services no matter in which branch people eat is the marketing strategy of McDonald's. It has standardized the freedom for innovation by allowing all branches to modernize the culture into food and service to cover and increase the market share.

The design scope of structure should be endorsed, is the approaches and goals of the organization. A plan must be created to meet clear objectives. These can be related to goals, target audience, sales and market share.

To achieve the goals easily, the long term goals are splits into the short term which McDonald's uses as a target. Thus, results are analyzed on regular basis whether the objectives are being met. If not, than the gap between the standard and present are fulfilled with the various alternatives. McDonalds has the Decentralized to the corporate efforts and to their business model. They have provided a global agenda of guidelines, policies, and common goals embedded in their core values. Moreover, within this agenda, all the individual branches have the freedom to improve performance and develop programs according to the local conditions. They observe this as a source of their potency.

One of the important thing which affects the organization's productivity and efficiency is Technology. It has created a number of marketing opportunities and new markets. There are lots of technological trends that should be monitored by marketers; these include:

The fast rate of change - There are lots of rivals and the competition in today's business world. And due to this, an organization needs to cope up with the change in the market otherwise there is a threat to loose the market share. A recent example of fast-food companies keeping up with technology is McDonald's installing EFTPOS (Electronic Fund Transfer at Point of Sale) machines in their stores, this additional service provided by McDonald's increases the value of the experience to the consumer.

Normally the fast-food industry would not spend as much on Research and Development as the other business sector. Perhaps McDonald starting out more funds spent on improving the various techniques. However these days the techniques for producing the products and also the service has been perfected.