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There are 2 types of business environment, namely internal environment and external environment. Internal environment is also known as controllable environment. The internal environment of McDonald's includes the following:
The aim of McDonald's is to be the best fast service restaurant experience.
The marketing of McDonald's is very large. McDonald's was one of the eight corporate sponsors of Millennium Dome Experience. It invested £8 million in the Dome's community programme and learning experience. Besides that, McDonald's is also a major sponsor of the World Cup since 1994 and the Champions League from 1996 to 2000. McDonald's also sponsors British athletics since 1993 and formed the McDonald's Young Athletes' League to train 11 to 17 years old teenagers. Moreover, McDonald's sponsors Child Safety Week since 1994.
McDonald's also has a good management for their business. Such as, they have high recruitment standards. They care about the skills, talents and performance of their staffs. They also consider gender, marital status, disability, race and nationality when recruiting. McDonald's also provides a safe and secure working environment. All staffs will have opportunities for training and development. Moreover, McDonald's provides education of staff matters for their staffs. They have a good communication with their staffs. The pay of the staffs at McDonald's reflects their working performance. Besides that, over 40% of McDonald's managers started as hourly-paid staff members in the restaurant. McDonald's motivates their staffs by giving them free meals. They will also have paid holidays. The staffs will get free life assurance and the value is dependent upon their service. Those employees that are 19 years old or older with 3 years' service with get private health care from McDonald's. Besides that, McDonald's has a sponsorship programme for their staffs. The employees of McDonald's will also get an employee discount card. There are also service awards for those employees with 3, 5,10,15,20 and 25 years of service. All employees will also get a stakeholder pension from McDonald's.
McDonald's has their production of foods. There are five main ingredients for food, like beef, chicken, bread, potatoes and milk. The Big Mac is one the basic food offered by McDonald's. Moreover, McChicken is also known as chicken sandwich and McNuggets is also known as chicken nuggets which are products of McDonald's. McDonald's also serves desserts such as the McFlurry ice-cream.
Moving on, the following shows the external environment (uncontrollable environment) of McDonald's:
McDonald's is highly influenced by the policies set by the government of the various countries it operates in. For example, in the country of India, the local religious law restricts its residents from eating beef, thus it is considered an insult to have beef in the local McDonald's menu. In order to obtain the license to open a fast food restaurant, McDonald's has to obey the business regulations implemented by the local government. To succeed in the foreign market, McDonald's has to act according to the market's rules and regulations, and create a good relationship with the government by obeying the market's tax obligations and any environmental laws.
The market's economy has an impact on the branches and franchises of McDonald's. A weak economy would influence the customer's buying power which would in turn affect the general sales of McDonald's. McDonald's imports most of its material as the local market cannot provide materials in abundance to meet the demands of the market. Inflation or changes in the exchange rate of the market would affect the operations of the company. A rise in the exchange rate of currencies would increase the cost of purchasing.
Every country has a unique culture. McDonald's has to create a menu that is suitable to the local taste and culture. For example, the Hindu residents of India do not take beef, Muslim countries do not take pork and only consume halal food, Asian countries like to eat rice, Chinese likes to associate their meals with good fortune such as prosperity, and Americans eat big-sized meals. Additionally, the development of technology creates the need for better services and convenience for customers. For instance, McDonald's should provide wireless internet services and allow credit card payments at their stores.
McDonald's uses technological means for a variety of things. For example, television advertisements are used for marketing. Customers can order by phone for a delivery to be made. Besides that, in Singapore, McDonald's accepts EZ-link card payments as a means of convenience for customers. Moreover, the advancement in internet technologies allows McDonald's to implement web-based ordering and online payment.
McDonald's has to follow many regulations in order to be legally allowed to operate its business, for example, business registration, tax requirements, and employment laws. Besides that, McDonald's also has to acquire a halal certification in order to get Muslim customers.
As McDonald's serves millions of customers per day, it needs a large supply of materials. The large amount of animals slaughtered to create a supply for McDonald's is frequently criticised by world environmentalists. In addition, forests have been lost due to large scale plantation. Before using paper packaging, McDonald's used Styrofoam based packaging for its products, which is hard to recycle.
McDonald's is a fast food franchising company and its success comes from its various franchisees all over the world. About 70% of McDonald's worldwide restaurants are run by independent businessmen and businesswomen. A franchise is a business licensed to use the name, logo and expertise of an existing, well-known business (123helpme.com n.d.). McDonald's provides licenses to the market's local operators to start a McDonald's restaurant. McDonald's may take away the license if the franchisee fails to meet the franchise agreement or requirement.
All of McDonald's restaurants have a flat structure. A manager controls all the employees and makes all the decisions. This allows the staffs to only carry out their simple routine works such as selling and serving customers. On the other hand, the McDonald's corporation has a tall and complex structure. The corporation is highly formalized, has a limited information network, is centralised and has extensive departmentalisation. The departmentalisation of McDonald's is structured along functional lines. The various departments in McDonald's are operations, development, finance, marketing, and human resource.
The operations department of McDonald's controls the equipment and franchising of restaurants. They ensure that the franchisees are following the agreements set by the McDonald's corporation. They provide support for the franchisees in all aspects of the business. All in all, they make certain that the business of McDonald's runs smoothly.
The development department plans and manufactures products. They ensure that the products made are up to the qualities set by the corporation. Besides that, they also develop new products for McDonald's.
The finance department keeps record of the profits of the company. They keep account on all the transactions done by the company. They also pay the salaries of the employees. They keep track of how the business is doing.
The main role of the marketing department is to attract new customers. They organise advertisements and promotions. Moreover, they cooperate with the development department to ensure that the design, quality and price of a product are what the consumer wants.
The human resource department recruits and appoints all new staffs. They handle the affairs of all employees which include retirement, dismissal and etc. They employ quality staffs and motivate them to do their best.
Culture in Society
Cultures in societies are affecting the organization. An organization will change its way or structure to adapt to the culture in the society. It might also change the communication style with its customers in order to stay in business. In other words, McDonald's must understand that they must make their organization structure compatible with the various cultures in societies. Otherwise, the amount of customers will reduce when the organization does not adapt to the market's culture, or goes against it. When there are less customers, McDonald's will not have enough income and motivation to continue running their business.
Culture of Religion
'Halal is a term designating any object or an action which is permissible to use or engage in, according to Islamic law.'(wikipedia)
When someone wants to operate a McDonald's restaurant, they have to consider about religion issues such as "Halal" in certain countries, for example Islamic countries like Malaysia, Pakistan, Iran, Sri Langka and so on. McDonald's have to comply with the regulations given by the government and the culture of the residents. Therefore in these Islamic countries, McDonald's have to provide Halal food due to the large population of Muslim and Arab people to run the business successfully. However, Halal issues are not only applicable in Islamic countries, there is also an exceptionally large number of Muslims and Arabs in non-Muslim countries like in Dearborn (Michigan, United States). McDonald's have introduced Halal chicken nuggets there.
Culture of Food
Different countries might have different food cultures. It will affect the food menu of McDonald's as well. In order to expand the business, or to increase the income, McDonald's has to do research on the food culture of the market's residents. Only foods that adhere to their food culture are able to attract more local customers. For example, at German, McDonald's serves beer. In India, there is no Big Mac because Indians do not consume beef. However, they do have a Maharaja Mac which contains lamb or chicken meat instead of beef. They also provide a vegetarian burger named McAloo Tikki, since a certain amount of Indians are vegetarians. Besides that, for rice-loving Chinese in countries like Hong Kong, Taiwan and Singapore, McDonald's introduced rice burger. In other words, McDonald's will modify their menu according to the food culture of the local customers so that they would be able to earn more customers as well as income.
Culture of Social
Women are also affecting the income of McDonald's. As there are more and more women that work nowadays, most of them will have less time to spend in the kitchen to cook for their family. The job of preparing a meal will fall onto their parents or even their husband, but they often choose to eat fast food. Therefore, McDonald's has become one of the places for these families to have their meal. This has directly increased the income of McDonald's.
There are many more cultures in societies that affect McDonald's, it must clearly know the change of the culture in order to keep its business updated. If there are no customers due to the structure of the organization which is against the customer's culture, McDonald's will not have the motivation to run its business in that market.
The reason McDonald's run successfully is because it able to adapt with the local culture of the market. It also structures its internal environment well and has a good reaction to the external environments.