Pest Analysis

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McDonalds and the fast food industry in Egypt
Introduction
‘Pull open the glass door, feel the rush of cool air, walk in, get on line, study the backlit color photographs above the counter, place your order, hand over a few dollars, watch teenagers in uniforms pushing various buttons, and moments later take hold of a plastic tray full of food wrapped in colored paper and cardboard. The whole experience of buying fast food has become so routine, so thoroughly unexceptional and mundane, that it is now taken for granted, like brushing your teeth or stopping for a red light.’ Eric Schlosser from the book “Fast Food Nation” The food that people always eat or don’t it was always determined by some economical and environmental forces. And the big growth of the Egyptian fast food market occurred according to some main changes in the Egyptian society. One of the main changes was the huge entering the women the workforce, which increased the request on some service which women usually do like cooking, cleaning, and child care. And now you can see the double income of the household which make an increase of the requested fast food. Socially, these fast food chains created many changes within the Egyptian behavioral patterns as well. Cleanliness and quality allowed families to feel safe and comfortable, permitting their children to go out on their own. A cheerful atmosphere and fun promotional items and gifts available at these chains attracted children and the younger generation began to frequent them more often, meeting friends and planning parties. It gave the Egyptian youth a safe acceptable place to go to.From here was born the concept of home delivery, a hugely profitable business today. Now, one can order virtually any consumer product by telephone for delivery and thousands of young people are employed in this sector. As consumers became frequent customers, the database developed into a very important asset. Promoting sales and keeping information classified was a must, not to mention boosting an already-escalating competitive environment. Entering the fast food market can be done in several ways that each one of them differs from the other. There are two main choices; first is acquiring a franchise license from an international-branded fast food chain, the second is to create a new brand that is developed locally and independently. Each one of them has their own advantages and disadvantages, and choosing an entry strategy heavily depends on several factors which will be analyzed in this paper. Before choosing an entry strategy the market has to be assessed extensively and to do so Porter’s Five Forces and the PEST (Political, Economical, Social & Technological) analysis models represent the perfect harmony in analyzing the heavily saturated and very competitive Egyptian fast food market. Office of government commerce, (2006) Definition of alternatives

Before proceeding with the market analysis we have to understand clearly what is meant by each one of the entry strategies to avoid any misunderstandings; According to (Treas, 1973) franchising can be defined simply as a business relationship between two entities; the seller (franchisor) and the license buyer (franchisee). The franchisee buys a royalty license from the franchisor to have the permission of doing business and opening fast food chains under the brand name of the franchisor. However, the franchisees are still independent and the chains are under full supervision and management by them but they have to abide to certain quality standards and regulations set by the franchisor to help them maintain and save the brand image of their trade mark. (Treas.1973) (Kaufmann & Dant, 2001) On the other hand, opening an independent (locally branded) fast food chain is the total opposite of franchising. Instead of buying a franchise license from a well known established brand, the founder decides to create a new novel brand enduring all of the associated costs and taking...
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