The Interrelationship Between Business and the External Environment

Topics: Fast food, Nutrition, Fast food restaurant Pages: 7 (2000 words) Published: April 1, 2011
The Business Environment: The Interrelationship Between Business and the External Environment

A study of the Fast Food Industry

1. Adapt or Die

The consumer is king! An old adage I know, but it is truer today than it ever has been. Consumers are demanding more and businesses are having to respond or get left behind.
The winds of change are certainly blowing through the empire of fast food. People are no longer prepared to sacrifice other considerations at the alter of price and convenience. Adaptation is key if this industry is to continue to thrive in a changing market.

This report looks at the political, economic, social, and technological trends and their impact on the fast food retail sector. I have created a PEST analysis and considered the implications. Each one affects the industry as a macro-environment. I have identified three significant trends that will sum up every factor, formulate the implications they will have and how the industry has responded to them. I have also considered future aspects of these trends in order to provide my own advice as to how the sector could handle ramifications to come.

2. P.E.S.T

Health and Safety Guidelines
Animal rights campaigns
Bovine Spongiform Encephalopathy (BSE)
The ‘Cheeseburger Bill’

Low set up costs
Support from major supplier
Perceived value for money
Franchising facilitates set ups
Growing market
Increasing disposable income

Increased Vegetarianism
Social Activities
Busy Lifestyles
Heathy Eating and Lifestyle

Receiving and recording customer feedback
Computer ordering: placing orders online, till system
Investment in technological innovations


I have identified and selected three significant trends for consideration within this report:
Increasing health consciousness.
A demand for higher quality food.
A demand for better consumer experience.

3.2 Health

More and more of the world’s population are becoming health conscious. This is particularly true in the developed countries. There is a movement towards healthier lifestyles which is being reflected in an increasing demand for healthier foods. This is evidenced by the rise in organic farming, produce and organic food outlets. Obesity has become a significant issue in the developed world. According to the World Health Organisation a global shift in diet towards the intake of fatty foods was the cause of at least 400 million adults being obese in 2005. They project that by 2015 approximately 2.3 billion adults will be overweight and more than 700 million will be obese. (World Health Organisation article) [online]. Against this backdrop, people are becoming increasingly health conscious around both their diet and lifestyle. Increasing health costs are also forcing governments to become involved and have resulted in programs such as the UK’s Change4Life.

Unless the fast food industry responds to these important issues of obesity and serious associated health problems, there is likely to be a backlash against these types of foods, and their market will shrink. Indeed as the cost to the health service spirals the sector could be exposed to potential political pressures similar to those experienced by the tobacco industry. These included a ban on...
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