External Environment

We will analysis the external environment of McDonald’s, but first, what is external environment? According to Williams & McWilliams (2010, pp37), “External environments are all events outside a company that have the potential to influence or affect it.”

External environments include general environment and specific environment, in this article we only discuss about general environments which include four trends: economic, technological, sociocultural and political trends. These trends indirectly affect all organizations, including McDonald’s.

First is economy, the current economy of a country would affect every organization doing business there and it affects purchasing power and spending patterns. As we know, McDonald’s is a worldwide chain and it has to cater for every economy of the country, otherwise people would not consume its products and services. For example, in foreign markets

with low economic development, McDonald’s should set a lower price so it would be more popular, since there’re other cheap substitutions which compete with McDonald’s.

Second is technology, it is the knowledge , tools and techniques used to transform inputs (raw materials ,information and so on) into outputs(products and services).In order to ensure that all the products and services in different regions have the same high standard McDonald’s tend to use new technology in cooking to reduce the fats and cholesterol of products , and use more machines to reduce the preparing time and mistakes in cooking , therefore the efficiency of production increases.

Third is sociocultural trend, it refers to the demographic characteristic, general behavior, attitudes and beliefs of people in a particular society. Since McDonald’s operates in many different regions, it has to consider the local traditions and habits. For example, there has rice in Chinese menu. Also, McDonald’s special emphasis on children and teenagers as

main targets is successful since it suits the current social trends. For example, in the 1960s and the 1970s the decision-making role had changed to such an extent that children often selected a place to eat. A survey has proved that McDonald’s most frequent customers are below the age of thirty-five .Therefore the youth-orientated culture of McDonald’s has its advantage.

The last one is political trend, Williams & McWilliams (2010, pp41) state that, “the political component includes the legislation, regulations and court decisions the govern and regulate business behavior .New laws and regulations continue to impose additional responsibilities on companies.” For example, there are certain groups in Europe and the United States protest McDonald’s for its harmful elements in products such as cholesterol and adverse effects like obesity. Also, tax is an important factor that affects the growth of McDonald’s. The legal systems in different countries, so McDonald’s has to change the activities and the ways it operates. For example, a legal issue occurred in Russia for McDonald’s in 1993, a law was passed requiring all stores to have Russian names, this made McDonald’s translated its name into Russian, same thing happened in Japan where the pronunciation of its name was changed to MaKudonaldo.