Mcdonald’s Corporation - Pest Analysis

Topics: Fast food restaurant, Fast food, Hamburger Pages: 10 (2846 words) Published: November 6, 2008
On this report, I will analyse the main forces of the external environment that affect and influence McDonald’s stakeholders and therefore their objectives, performance and their immediate surroundings.

Established in 1955, the McDonald's Corporation is the world's largest and best-known fast food service retailing chain mainly operated by franchises. The company has a leading share in global brand recognition and its products are sold in over 30,000 restaurants in over 121 countries, it also employs approximately 465,000 people. The company operates under the McDonald’s brand name but also uses 'The Boston Market' and Donatos Pizzeria. It has a small ownership in Prét A Manger, which collectively generate approximately $1 billion in annual sales (McDonald’s Corporation, 2007). The company’s net profit was $3,544.2 million in fiscal year 2006, an increase of 36.2% over 2005 (Marketline, 2007).

A stakeholder is anyone who has interest in McDonald’s and can affect its business performance or objectives. They can be shareholders that stop investing in the company, driving down the value of the stock or customers who take their money in and buy McDonald’s meals. The management team who wants to reduce costs and increase net profit, and employees who want to get paid as much as possible. Also, stakeholders can be health care professionals, especially nutritionists, as their analysis of fast food effect can influence public perceptions, therefore affecting sales.

I will examine how McDonald’s has responded to or anticipated future events that have impacted its market and stakeholders using the PEST analysis as a tool.

The analysis consists of situational and uncontrollable Political, Economic, Social and Technological forces within the macro environment as a means of indentifying the opportunities and threats that will affect the organisation plans and outcomes (Brassington & Pettitt, 2005).

Political

The Political environment has a huge influence over the regulation of McDonald’s and the spending power of its consumers which is mainly controlled by governments. Some political forces regarding environmental positions and regulation rules concerning ‘’green’’ aspects of products have the force of the law, while others are voluntary, like advertising codes of practice. These are the results of socio-cultural influences pressurising the legislation and regulators (Brassington & Pettitt, 2005).

McDonald’s is under examination from different parties, countries, governments and pressure groups. Issues like the stability of political environment, government policy on the economy, trading agreements, public behaviour and government attempts to influence market structure have to be constantly scanned and analysed (Worthington & Britton, 2006). McDonald’s needs to take care of such forces that greatly affect customers’ decisions to eat there therefore the company objectives and manager’s plans.

Current examples of impacts in the political environment incorporate intensified regulation on fast food promotions. In recent years most governments such as the EU and lobby groups are reinforcing their posture against fast food producers that target children in their advertisements. One of the reasons for that is the pester power some children have over their parents to influence the purchase of what they want, but are yet too vulnerable to realise the disadvantages. Those against advertising to children also claim that it does not contribute to the domestic business, as they stifle competition and increase demand for branded toys. In Sweden for example, advertisement at children under 12 is banned, making it difficult for McDonald’s to influence one of its target audiences (Brassington, 2005).

In order to maintain brand favouritism and customer loyalty, McDonald’s spends a huge amount of money on TV advertisements; in 2007 the company spent around $1.6bn (McDonald’s Corporation, 2008, The Guardian, 2007a)....

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