The Impact Of Economic And Social Environments Commerce Essay


Economic factor is one of the significant external environmental factors that influence all business future trends. Business organization not only affected by the national economic factors but also by the global economic factors. For example, the interest rate nationally and globally has been set to comply with the economic conditions. The environment of the economy directs what will be consumers, supplier's behaviour and other organisational stakeholders, for instance, suppliers and creditors will behave within the certain economic environment (Web 1).

Economic factors affect both the business organization and its consumers and customer irrespectively. Increase of interest rate affects a firms cost of capital; exchange rate affects the cost of exporting goods and supply and price of imported goods in an economy. Inflation may provoke higher wage demands from employees and cost. Business will need to understand how to cope with the changes of economical factors.

McDonalds collaborates with suppliers to obtain fresh, high quality ingredient for their products and at the same time reducing the cost of food. So dealing with the international suppliers the McDonalds face a lot of economic variables such as currency exchange.

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During economical recession business organization will experience high unemployment rate, insignificant investment as well as will appear low stakeholder confidence. On contrary, a 'thriving' economy will reduce unemployment, increase investing power and stimulate stakeholder's confidence (Web-2).

In recent years fast food industry has experienced a fatal affect due to the credit crunch, and we can see the reflection on changing of the menu price. Also the minimum wages of hourly paid employee has been increased which increase the company cost. In the case of McDonald's corporation changing the economical factors could not affect the company

Strategy. The company that is more recession resistant. They served an extra two million customers a month in 2008 compared with last year. They also offer 4000 new job in these tougher trading time.

The UK inflation Rate

Annual inflation rates - 12 month percentage change

The figure above shows the in UK the inflation rate in June, at 1.8 per cent in 2009. We can see that there was also a large downward pressure from restaurants and hotels where prices rose by less than a year ago.

In 2008 the global comparable sales increase 6.9%, revenues increased to a record $23.5 billion, and earnings per share rose 17 and 15 percent respectively. In 2009 global comparable sales growth t 3.8%, earning per share rose by 9% respectively. This scenario proves that the company has achieved a satisfactory level success because of better menus, extending the opening hours, renovate restaurants and technology.

The economical growth indicates that the recession does not affect the sales growth of McDonald because of their product pricing strategy and the focus on customer needs.

Social factors

The changes of social factors demand to change the management strategy of the company. Population changes are the one of the vital factors which has a direct impact on organizations. Birth rate, rising or falling affects the supply and demand of goods and services within an economy which is significant. In that case, the business organizations have to aim to benefit consumers according to their lifestyles and behaviour. Otherwise, they will lose the demand for their product and cannot survive in their target market (Web-3).

Social culture like values, attitudes, and believes differ from country to country even within the same geographical area can be varied. Social forces affect our attitudes, interests and opinions. For instance, recently people in the UK has become more health conscious therefore increase number of people are joining in the joining fitness clubs and a tremendous demand for organic food (Web-4).

Last year McDonalds was alleged by socially. McDonalds is food is critically commenting because of obesity among the young and children. And other diseases like cardiovascular and cholesterol. The obesity of young people has become a social problem. They add some new food in their menu like, salad, premium salad, fruit beg, and carrot sticks.

Considering the future of the business the company and the convenience of customers McDonalds Corporation has taken some initiatives for putting nutritional information for all menu items on the reverse of their tray liners and printing nutritional labelling on the packaging of its food items. The McDonalds Happy meals contain less than 35 percent of calories from fat and 600 calories.


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To illustrate the question the Part-B we need to understand and emphasis on several thing which help to make a strong business strategy like market research. Market research can provide authentic the information which will be present strength for the organization and help to avoid future environmental threat.

As a massive fast food business organization McDonald's corporations has to compete with other business organization as well as with the external forces.

The role of market research is to find out those factors and predicts they will affect customer's buying behaviour in future. It can be the psychological factors or product itself. As we know that the external factors especially economic and social forces influence to change the customer buying patterns that is why McDonald's Corporation does the market research and identify the whether the numbers of targeted customers are rising or shrinking and whether their buying habits will be changed in the future. Market research help to identify the passion of business in the business market and it's strength and weakness as well. Through marketing advertisement McDonald's Corporation has able to establish a distinguished standard in the fast food world globally (Web-5).

The influence of Macro environment especially on global business organizations is significant to change its business strategy and the change of its operations. Macro environment also hold the control of future business decision making. The influences of economic and social environment are the major factor for a business organisation to

change its business infrastructure. In recent years the fast food industry has faced a fatal an economic recession and still it has an impact on some business organisation. The overall sales goes down worldwide, some organization could not create new job opportunity at all. If we look at the history of McDonald's Corporation's we will find that that in 2008 the global comparable sales increase 6.9%, revenues increased to a record $23.5 billion, and earnings per share rose 17 and 15 percent respectively. During the time of recession the company was operating their business successfully. Also they created 4000 new job opportunity where as other company has to cut down their employee to reduce their cost. For example, McDonald's retained a 33% stake in the Pret A Manger.

Economy is the vital factor for technological advancement of a country. If the country is economically stable than they invent new technology an introduce it to facilitate the business activities internally and externally. McDonald's corporation is economically table and doing their business in developed countries and the choice of the customer of those countries, taste and life style, behaviour has been considered consciously to reach the success of the business. The organization has already used technology on till operation and production. In UK restaurant handheld communication devices are already being used to take orders and minimise the queuing times in 500 of McDonald's UK restaurants.

They have a plan to use in some 561 drive-thru restaurants BT Open zone Wi-Fi hotspots to attract travelling business people. In the US, wireless communication system in 400 restaurants in four cities attracted new, mainly older users. Touch screen TVs will be piloted in 10 restaurants during the first quarter in 2008. Internet terminals and PlayStations are likely to be introduced this year.

McDonald's corporation introduce the modern technology to create more customers and uphold their branding image even in the fatal recession time. To create a more stable position in business market In January 2008, McDonald's started verifying its prices across the country depending on local economic conditions. In this the company increased some food prices in order to compensate for higher wholesale food costs.

McDonalds Corporation is also socially concern. As their business operation is linked each other they can focus on local customer choice. To attract the customer and make McDonalds more appealing they are refurbishing and decorating its restaurants. Considering the local tastes they have redesigned 2000 restaurant with casual dining and coffee shop. New staff uniforms are being introduced in 2008, designed by Bruce Oldfield. The refurbishment and creating new image of McDonalds has been possible because of good turnover of business.

McDonalds is most popular recognised brand in fast food world. When they intrude in a new business market in new country they must comply with the government policy, keep pace with the political unrest and other political barriers.

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As McDonald's business strategy is to focus on customer needs and satisfy their needs, they try to provide their best service according to the taste, choice of the people of the country. They also consider the religious value norms and customer attitudes of the customer. For example, in some Muslim country they serve Halal food to the customer.

McDonald's void the plastic condiments beg and committed to use environment friendly packaging and recycle it is good decision to protect the balance of environment. In 2008, McDonalds announced that of its Sheffield restaurants have been using a biomass trial that had cut its waste and carbon footprint by half in the area. In addition, in Europe, McDonalds has been recycling vegetable grease by converting it fuel for their diesel trucks.


The influence of Macro Environment in a specific business organisation is a continuous matter and thus it is obvious that McDonald's restaurant is within its effect in marketing decision making. Despite this tough environment, McDonald's delivered another exceptional of growth, posting strong sales and increased market share around the world. In 2009, global comparable sales increased 3.8 percent. Earnings per share for the year increased 9 percent to $41.11, while consolidated operating income increased 6 percent. According

The CEO of McDonald's corporation gladly said there is nothing profound about our plan to win. It essentially identifies the five core divers of our industry-leading owner/ operators, world-class suppliers and talented, experienced employees around initiatives that drive results.

Following the marketing strategy of McDonald's it is highly visible that economical and social factors played significant role among the other Macro environmental components. McDonald's has successfully overcome the economic recession and social obligation and gained technological advancement.

Though recently government has become strict to provide permission the marketing of fast food restaurant because of the health related issues but McDonalds Corporation has overcome those issues and boost their business in the competitive business market.


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Robert J. Chapman. (2006) Simple Tools and Techniques of Enterprise Risk Management. John Wiley & Sons.

Kew, J and Stredwick, J.(2008) Business Environment: Managing In A Strategic Context. 2nd Edition. London: Chartered Institute of Personnel and Development.

Gerry Johnson, Kevan Scholes, Richard Whittington, (2007) Exploring Corporate Strategy. 8th edition. Financial Times/ Prentice Hall.