Evaluation Of The Changing Business Environment Commerce Essay


Business environment plays a vital role in an organizations growth as well as its failure. This research primarily deals about important factors of macro and micro environments of dynamic business environment and this research discusses about the global fast food chain of McDonald's restaurants. The micro and macro environmental factors which influence the organisation and with appropriate business models applied to the organisation results in a outcome which sheds a light of insight about the organisation and its functions and in conclusion the research recommends certain actions that the organisation should perceive in order to serve and provide the consumers a good service.

2. Introduction:

In this ever changing world running a business successfully has never been so hard. In this sophisticated dynamic business world there are factors which enable a business either to fall or rise within a brink of time. There is an important factor which influence a business - The Business Environment, where the business is established and this dynamic entity influences the business in such a way that it can catapult a business into greater heights are to the valley of death. The business environment is categorized into two broad wings namely - Micro and Macro environments. The factors that impact the organisation internally are known as micro environmental factors, these factors are the primary factors of the organisation namely, consumers, suppliers, distributors, competitors, share holders and general public. These are the factors that influence the organisation directly. So it plays an important role in business decision making of an organisation. Similarly the factors which influences the planning and performance is know as macro environment and factors such as political, economical, social, technological, demographics and nature are known as macro environmental factor of which the organisation has no control over it. With the substantial knowledge about these environments and applying certain business models to them can lead us to acquiring knowledge about the organizations position and where the organisation is headed to in the future. This research deals about the position of McDonald's fast food chain and many of its challenges and problem it faced during the past five years. By applying appropriate business models to this organisation with the help of secondary data the resultant outcome will draw a wider picture of the organizations achievements and management skills in terms of business.

3. Organizational Background:

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Today every little kid almost every part of the world knows about Happy Meal! So much is the influence of this organisation - McDonald's restaurants. With a humble beginning in late 1950's McDonalds have grown into a massive fast food restaurant giant in terms of sales and services. This organisation is the pioneer in fast food industry, actually these are the people who introduced the concept of fast food they named it "Speedee Service System". The Golden Arches metaphor for McDonalds specially given by the consumers in order to keep the children away from mentioning the "M" word for which they will become excited! There main menu is the hamburger which sells around 47 million pieces each year. Apart from hamburger they have lot of other food varieties which in recent times have become talk of the town due to the fact that they are the primary cause of obesity among kids and teens in the USA. McDonalds is the one of the biggest fast food chain in the world with over 31,000 restaurants in over 119 countries with a work force of more than 1.5 million employees all over the world. In the recent times McDonalds have came across lot of difficulties as well as uplifting moments but the key issue here is how the management forecasted and challenged these issues in order to over come the pressures from its rivals and the dynamic business environment.

4. McDonalds Business environment:

McDonald's restaurant has been successful for more than 50 years and there successful story comes with a price of proper management skills, advertisement and marketing campaigns and last but not least the position in which the restaurants are situated. The key to their success is the positioning; each restaurant is positioned where there are cluster of children and family group present. McDonald's focuses upon the family groups and children as a worthy target group. This enables to plan strategically targeting the specific group with a little focus upon the adult consumers. To get a clear insight about the organisation advancements applying the PESTEL analysis will dismantle the external business environment into specific groups which will lead us ultimately into the various pressures and sensitive areas of the business.

(a) Political Factors:

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McDonald's have been in the news for being the main cause of obesity in different parts of the world especially in the USA. In certain places like Santa Carla County, California McDonald's has been banned happy meals where the activists stress that the kids are lured into their bait by the toy gifts made of plastic generally known by the activists as CPC (Cheap Plastic Crap). Government has also enforced strict policies to the restaurants where promotion of health hazard foods with high cholesterol and fatty acids must be reduced. But the well wishers blame the parents for over feeding their children with junk foods. Since the chains of restaurants were spread all over the world they have more policies to adhere in order to run a successful business, so there is a constant friction between the policies of government and the organisation.

(b) Economical Factors:

The organisation has its presence throughout the world so the global economy has its turn when the dollar rate rises and falls since the organizations primary economy runs on the dollar each cent counts and due the fact that almost all of it raw materials and meat are imported from other countries due to the higher degree of consumption. The inventory must match the demand in order to sustain without paying in additional cost for the meat storage which is considered to be highly perishable. There are other factors such as benefits for the employees and pay offs. With a down turn in the economy maintaining such a big organisation with global presence it is essential to keep the prices of individual products according to the exchange rates in that part of the economy. For example - if a franchise is situated in a country with a high exchange rate then obviously the rates of the products must be increased in order to sustain the business. In conclusion the economical factors play a vital role in the macro environment of the business

(c) Social Factors:

Due to the fact that the organisation is widely spread all around the world the cultural and ethical factors are to be considered as sensitive issues. This is due to the fact that in late 90's when McDonald's ventured into the Middle East without prior knowledge about the cultural barriers failed to process their meats by using the halal processing method, which caused a wild fire and all the sales dropped in the middle east and after recognizing the problems they introduced the halal meat processing method which in turn helped the organisation to gain its market share in the middle east. Similarly in India in 2002 the Hindus and Buddhist sued the organisation for portraying that the French fries that they used to sell is pure vegetarian and the oil in which they fried is 100 % vegetable oil which it failed to follow. McDonald's have a bad reputation among a few groups of people who blame the organisation for the cause of obesity among the younger generation but McDonald's ruled out that they have little influence in this issue.

(d) Technological Factors:

Since McDonald's is a traditional organisation it has not implemented any drastic measure in technology to sustain its business but they have implemented certain advanced inventory control methods in order to have a perfect inventory in the organisation. In terms of marketing and advertisements the organisation has implemented animated adverts in order to attract the younger and the potential consumers.

(e) Environmental Factors:

In the recent times McDonald's have been in troubled waters due to the fact that the organisation is using non-biodegradable products such as Styrofoam for its packaging. This in turn created a friction among the environmentalist and made a negative prospect in the consumer market so they came up with the plan to clear there name by implementing the three R's - Reduce, reuse and recycle. This has proven to be effective but not to the maximum. But on the brighter side McDonald's is committed not to use products made through destroying rainforests and meat from places where the cattle was produced by deforesting. These are some of the key issues that McDonald's face in its macro business environment.

(f) Legal Factors:

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McDonald's have a follow very strict rules in keeping up the word that they promise for its consumers but in some cases they failed to do so and ended up paying back and loosing its important asset - Good will. By ignoring the halal processing it not only hurt the cultural values in the Middle East but ignored the laws that emphasized in keeping with the government standards of food processing. In china it introduced whale meat burger which caused a great uproar among environmentalist and green peace activists because the whales were considered to be at the verge of extinction. This created a huge impact among the people as well as the government. The organisation in it early years tried to introduce McDonalds land which had similarity with another tv program which made the original creators to sue the McDonalds and they won over one million us dollars. Other than these issues they have major set backs of paying wages that are under the government's minimum pay level and the working hours are higher than usual. These issues overshadow the organizations positive aspects but McDonald's overcomes all these issues by providing solutions for the problems concerning the legal issues.

5. Conclusion:

The key issues that McDonald's faced in the past few years have made the organisation see some though times through environmentalist who stood against the organisation for using non-biodegradable materials, many countries protested the use McDonald's products due to the fact that the organisation was being insensitive to their culture and religion and people blaming McDonald's for making the kids and teens obese. But through all these trails and tribulations McDonald's with its excellent business management skills has come up with strategic planning by using lesser amount of resources and recycling its products and boycotting the use of products from deforestation of rain forests and it also helped the community by providing scholarship, literacy programs, supporting senior citizen groups, safety awareness programs and so on. This in turn helped the McDonald's to keep its position as number one in the fast food restaurant business.

6. Recommendation:

Since the organisation has faced certain issues that is beyond the control of the organisation but the cause of the problem is either directly or indirectly related to the organizations work culture. The research recommends that in order to be more productive and regain the customers who have been lost the organisation must take some drastic measure regarding the use of it's non-biodegradable packaging, it must help to improve the environment by providing funds for keeping the clean as possible and it must implement technical advancement in its organisation to over come the packaging difficulties and use of automated inventory control in order to keep the warehouses filled with the right amount of stock. The company must provide good customer relationship programs in order to keep any frictions between the customers In order to do that the organisation must provide good communication and skill development programs to it's employees and it must take care of its own employees by reducing the work time by recruiting more members for its chain of restaurants and job pay of the employees must be paid at least the governments basic pay and must provide certain health and safety benefits for the employees in order to keep them satisfied so they might perform effectively. The outcome of the research concludes that there are many factors and issues surrounding the micro and macro environments of the organisation but with proper strategic planning and good customer relationship measures the organisation will sustain its position as the number one restaurant chain for years to come.