In today's fast growing business environment, the managers should be capable to come across into a few aspects that influences the business environment and what are the steps taken by the managers to control the business environment to lessen the dependency risk. Business environment mainly covers the political, economic, social, technology, legal and environment, which is better known as the PESTLE. "Each analysis needs to be guided by what is relevant for that particular organization. However it may be useful to begin the process with a checklist often called- PEST analysis."(Lynch, 1997).
INDUSTRY OVERVIEW - MACDONALD
McDonalds is one of the world largest fast food restaurant based on their market share conquered. The birth of McDonalds began at the year of 1955, with Raymond Albert Kroc. Today, there are more than 30,000 McDonald's restaurants serving 47 million customers each day in over 100 countries. McDonalds has its brand mission statement, which is "to be our customers' favorite place and way to eat". (Anonyms n.d), and "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile." (Anonyms n.d).
SWOT ANALYSIS OF MACDONALDS
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SWOT Analysis, is a strategic planning tool used to evaluate the strengths, weakness, opportunities and threats concerned in a project or in a business risk. The aim of any SWOT analysis is to recognize and identify the key internal and external factors that are significant to attain the objectives. SWOT analysis groups key pieces of information into two main categories: Internal factors- the strengths and weakness internal to the organization. External factors- the opportunities and threats presented by the external environment. The internal factors may be view as strength or weakness depending upon their impact on the organizations objective.
MacDonald's has been a successful and winning in the fast food industry since the year of 1955, this can be seen through where 20 of the top 50 corporate staff employees started their job as a restaurant level employee, moreover, almost 67, 000 managers and assistant managers of MacDonald's restaurants were promoted from restaurant level employee.( Dr. Jill Novak, University of Phoenix, Texas A&M University). When employees are satisfied and treated well, they aim to provide career opportunities for people to achieve their potential to manage their customers, it could be one of the advantages for both internal and external parties
McDonald's has been always excellent in offering their products and managed giving their services at a very minimum time, and these are also one of the greatest strengths of MacDonald's. McDonald's has trained its employees to be speed enough to execute operations where they need to give the best service which include speed up the process when requested by customers. Speed actually benefits their restaurants. McDonald applies speed inside the operation, where speed reduces inventories- by makes sure their staffs are multi-skilled and fit for the fastest performance and speed reduce risks, where all the operation will be plan first before applying it. By this, they can prevent from any kind of danger, for example, using the professional high pressure cooker. Their employee will be trained to use it first as fast as possible (speed) before being applied in daily operations, normally when there high volume of customers during peak time.
However, MacDonald's also having its own weakness. This occurs when, customers are tired of trying the same product and they tend to change to another fast food restaurant, for instance KFC which is one of the MacDonald's competitors. "Moreover people see MacDonald's everywhere and this over exposure might also be a reason for abstinence". (Vijayarani n.d).
MacDonald's have the ability to add healthier lines of food. For instance, their meals are delicious because they use ingredients of the highest quality, ensuring customer get only the best and the freshest. Not only that, McDonald follows the strictest food safety and preparation standards at every McDonald's restaurants around the World. They worked closely with the Malaysian Government as well as with the world's top expert to make certain McDonald's has the most effective, most advanced programmes and policies that prevent their food safety standards from being compromised.
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There are many competitors in this fast food industry, such as KFC, Burger King, Subway, Wendy's, Pizza- Hut and Dominos. Most of them try to represent a healthier and better image. In order to compete and win the customer's heart, MacDonald's have to provide a healthier food and make sure they express it on the advertising campaign.
PESTLE ANALYSIS OF MACDONALDS
A PEST analysis is a framework which consists of environmental influences as, political, economic, social and technological powers. Sometimes, additional two factors, environmental and legal, will be added to make a PESTLE analysis.
As all of us know, consuming too much of fast foods can cause all sorts of health problems like obesity, cholesterol, diabetes, heart trouble and many more. The fast food's industry's operations such as Macdonald's have given a deep impact regarding to this issues, and government have came up with their own guiding principle or strategy and system on the fast food operation where the government intends to control the marketing of the fast food restaurants. In addition, "governments also control the license given for open the fast food restaurant and other business regulation need to follow such as for a franchise business". (Anonymous n.d).
In studying the macro environment as an industry, it is an essential for Macdonald's to recognize the factors such as the economics environment which affects the profits of the organization. For instance, "Macdonald's should be aware on the global supply and currencies exchange". (Anonymous n.d). They should circumspectly deal when it comes to global or international supplying for materials, since the Macdonald's in some countries like Malaysia, depends most of its raw material due to local market cannot make available or contribute to meet the demand of its product, which may give an impact on its cost of purchase. Additionally, McDonalds should be able to obey the government's system and regulations of each country when they work on the local country, where they must pay tax using the profits of the company which is gained by them through their operations and also pay a certain amount of the revenue to the parent company in United States as well, in order to continue their company's operation.
The economic plays significant roles in a country, where the demand need to meet the customer's needs and requirement since not all the consumers are afford to pay high price above than the normal price. McDonald's have more than 177 restaurants nationwide. They plan to franchise up to 25 restaurants over the next 3 years, and this can't be achieved by MacDonald's if the economics of the country is affected by the Gross Domestic product(GDP) and the Income per capita. Therefore, the demand for the MacDonald's product would eventually decrease and the price will increase, where consumers might pay slightly higher than the normal price.
Consumers nowadays are willing to pay higher price to consume the fast food, and they have a high expectations on the quality and value provided by the fast food outlets. The social element is mainly influenced by the demand and the taste. Everyone has different taste and wants according to their cultural, and this need to be take into considerations, where MacDonald's has taken steps to learn about the cultural in each country which it outlets operate to know what are their wants and needs and provide them with better service quality. At McDonald's, they believe great taste comes from great quality. Their meals are delicious because they use ingredients of the highest quality, ensuring customer get only the best and the freshest. Not only that, McDonald follows the strictest food safety and preparation standards at every McDonald's restaurants around the World.
Technology is used for the formation of competitive advantage and it could provide a useful input, in both manufacturing and service industry as well. It is not an essential for fast food restaurants to use the technology since it doesn't affect or give an impact towards its industry, but on the other hand, Macdonald's should be using technology in order to compete with its competitors and differentiate its company. Every consumer wants technology in their life with good facilities, for instance, Macdonald's is now served with wifi free assessed. (Anonyms n.d)
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Moreover, customers are given the flexibility to make order by present physically to McDonald's stores, request for home delivery and via phone calls and drive - thru services as well where consumers feel easy to make orders and get their meals in a quick time without causing any lateness.
Macdonald's has been successful in the fast food industry, and there are numbers of terms and regulations which is needed to be followed by them. For instance, most of the Muslim consumers are very much concerned when it comes to food, and they consume only "halal" foods. Macdonald's should be able to provide "halal" foods in their outlets which is strictly required by the government and legally approved.
"Before using paper packaging, Macdonald's also had been criticized for being insentive to pollution because using polystyrene based packaging for its foods. (Anonymous n.d). This may affect the surrounding environments when consumers throw away those polystyrenes after they are done with their meals. Since our world is getting concern on environment issues, those business organization like MacDonald's should also be careful and use resources safely without harming the surrounding environments as well.
PORTER'S FIVE FORCE MODEL OF MACDONALDS
Porter's 5 forces ananlysis mainly deals with factors outside an industry that control or manipulate the environment of competition inside it, the forces inside the industry which is known as the microenviroment that control the way in which firms compete, and so the industry's like profitability is conducted in porter's five forces model. The main five forces are, the rivalry among existing competitors, threats of new entrance, threats of substitutes, bargaining power of suppliers and bargaining power of buyers as well.
Rivalry among existing competitors which assist to conclude the level to which the value is formed by an industry will be degenerate through-to- head competition among theemselves. For instance, "Some brands like McDonald's and Burger King are going after each other's market shares, with having nearly the same product offerings". (Anonymous n.d).
New entrants increase a high competition in any industry. There are some important considerations which is need to be looked into, economics of scale, product differentiation, including branding, switching costs, governments policies to create or remove entry barriers, access to distribution channels and access to sources of critical inputs as well.(Viljoen & Dann, 2000). There will be a lot of competitors who will be trying to conquer the market, for instance, this can be seen clearly when MacDonald's brand has grabbed the 8th place in Business Weeks Scoreboard, where the brands KFC and Pizza Hut represented at the 61th and 63 places on the scoreboard. (Anonymous n.d). The conclusion here is that a big numbers of consumer first choice to the global brands, and would generate to some extent of a barrier for new entrants.
Threats that substitutes products create to an industry's profitability depends on the relative price to show a certain amount of percentage of the different types of products or services to which customers can turn to persuade the equivalent basic need. The threat of substitute products is mostly found in the frozen food section in the supermarket. For instance, the frozen foods which can be reheatable and prepared food present a well-built competitive potency in opposition to usual take away fast food.
Normally, different suppliers have a different bargaining power of suppliers in this fast food industry. For instance, the soft drink industry Coca - Cola and Pepsi are the only suppliers who the ability to fulfill the needs of the global fast food chains, like MacDonald's. The power of a few suppliers like Coke - Cola and Pepsi in an industry with more customers locates a high bargaining power for the suppliers.
In the fast food industry, the buyers are defined as the one who visits the fast food restaurants and the one who consume the fast food as their main choice. The power of a buyers starts when the consumer actually choose a place to buy the fast food, where the buyers are able to buy the fast food in any fast food outlets since there are many offering the same products. For instance, MacDonald's and Burger King offers burgers. Consumers might just choose MacDonald's since it is famous for its burger, instead of visiting Burger King to get the same burger.
The conclusion is, to lessen the dependency risk in the fast food industry, the managers should be able to work together to reduce its product line and have more variety items to satisfy its loyal customers. Besides that, they should also be able to provide a better and a quick service, for instance, MacDonald's has been always excellent in offering their products and managed giving their services at a very minimum time. McDonald's has trained its employees to be speed enough to execute operations where they need to give the best service which include speed up the process when requested by customers. Speed actually benefits their restaurants.