LOVELY PROFESSIONAL UNIVERSITY

MGT-511 Business Environment PESTLE ANALYSIS COMPANY: Mc.Donald Corporation

Submitted to: Mr.Anup Chauhan

Submitted by: Manhar parmjot singh 10900912 M39B1A56

INTRODUCTION

McDonald's is the world's leading food service retailer with more than 33,000 restaurants in 118 countries serving more than 67 million customers each day. In India, McDonald's has two Indian entrepreneurs: Amit Jatia, Vice Chairman, Hardcastle Restaurants Pvt. Ltd, which has been awarded a Development Licensee status by McDonald's Corporation, U.S.A, spearheads McDonald's operations in West & South India, while McDonald's restaurants in North & East India is managed by Vikram Bakshi's Connaught Plaza Restaurants Private Limited, which is still a Joint Venture with McDonald's Corporation. For Hardcastle Restaurants Pvt. Ltd ('HRPL'), the transition to a Development Licensee implies a higher level of commitment by McDonald's Corporation as it enhances its trust in the local partner. McDonald's ensures that the evolution to a Development Licensee takes place only after the financial strength, viability, profitability and long - term sustainability of the business is assured. Celebrating over 15 years of leadership in food service retailing in India, McDonald's India now has a network of over 250 restaurants across the country. McDonald's India is a leader in the food retail space, with a presence of more than 250 restaurants serving more than 6.5 lakh customers daily in India. McDonald's India and HRPL in particular has an aggressive expansion plan - including market expansion, new customer outreach formats and menu expansion. With HRPL becoming a Development Licensee in the year 2010, there are strong and robust commitments to investments, expansion and growth. By 2014, HRPL plans to double the number of restaurants it currently has. HRPL is expanding its reach by expanding the portfolio and access points with formats like from kiosks, drive-thrus, web-delivery and petrol pumps in addition to the restaurants. In 2012, HRPL plans to open another 35-40 McDonald's restaurants in West and South India. McDonald's Corporation has headquarters in the United States, the company began in 1940 as a barbecue restaurant operated by McDonald. In 1948 they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27 percent over the three years ending in 2007 to $22.8 billion, and 9 percent growth in operating income to $3.9 billion.

McDonald's primarily sells hamburgers, cheeseburgers, chicken,French fries, breakfast items, soft drinks, milkshakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, wraps, smoothies and fruit. McDonalds is a leader in convenient foods and beverages, with over 1.6 million employees serving the customers world -wide. The company consists of the snack business of Beverages and Foods. McDonaldss success is the result of superior products, high standards of performance, distinctive competitive strategies and the high integrity of people. McDonalds is continuing to expand and introduce new alternative beverages in the market. Approximately 85% of McDonalds restaurant businesses world-wide are owned and operated by franchisees. All franchisees are independent, full-time operators. McDonalds was named Entrepreneurs Number-one franchise for 1997.Their mission is to be the world's premier consumer Products. Company focused on convenient foods and beverages. They seek to produce healthy financial rewards to investors as the company provide opportunities for growth and enrichment to its employees, business partners and the communities in which it operates. Greater variety and quality choices surprise and delight customers with the food and beverage they desire. McDonalds corp. is currently one of the most successful consumer products company in the world. McDonalds products are recognized and are most respected all around the globe. Currently, its divisions operate in all over the world in beverages, snack foods, and restaurants. The corporations increasing success has been based on high standards of performance, marketing strategies, competitiveness, determination, commitment, and the personal and professional integrity of their people, products and business practices. McDonalds believes their success depends upon the quality and value of their products by providing a safe, whole some, economically efficient and a healthy environment for their customers; and by providing a fair return to their investors while maintaining the highest standards of integrity.

PESTLE ANALYSIS
Pestle is an analysis of the external environment, in which a business operates.Pestle stands for political, economical, social, technological, legal and environmental factors.

POLITICAL FACTORS
The international operations of McDonalds are highly influenced by the individual countrys policies enforced by each government. For instance, there are certain groups in India, Europe and the United States that clamour for state actions pertaining to the health implications of eating fast food. They have indicated that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food products.

On the other hand, the company is controlled by the individual policies and regulations of operations. Specific markets focus on different areas of concern such as that of health, worker protection, and environment. All these elements are seen in the government control of the licensing of the restaurants in the respective states of the country. For instance, there is an impending legal dispute in the McDonalds franchise in India where certain infringement of rights and violation of religious laws pertaining to the contents of the food. The existence of meat in their menus in India is apparently offensive to the Hindu religion in the said market. There are also other studies those points to the infringement of McDonalds Stores with reference to the existing employment laws in the target market. Like any business venture, these McDonalds stores have to contend with the issues of employment procedures as well as their tax obligations so as to succeed in the foreign market like India.

ECONOMICAL FACTORS
Organisations in the fast food industry are not excused from any disputes and troubles. Specifically, they do have their individual concerns involving economic factors. Branches and franchises of McDonalds have the tendency to experience hardship in instances where the economy of the respective countries are hit by inflation and changes in the exchange rates, India is not an exception to it. The customers consequently are faced with a stalemate of going over their individual budgets whether or not they should use up more on these foreign fast food chains like McDonalds. Hence, these chains may have to put up with the issues of the effects of the economic environment. Particularly, their problem depends on the response of the consumers on these fundamentals and how it could influence their general sales. In regarding the operations of the company, McDonalds tend to import much of their raw materials into a specific countrys territories if there is a dearth of supply. Exchange rate fluctuations will also play a significant role in the operations of the company. As stated in the paragraph above, McDonald stores have to take a great deal of consideration with reference to their microenvironment. The companys international supply as well as the existing exchange rates is merely a part of the overall components needed to guarantee success for the foreign operations of McDonalds. Moreover, it is imperative that the company be cognizant of the existing tax requirements needed by the individual governments on which they operate. This basically ensures the smooth operations of the McDonalds franchises. In the same regard, the company will also have to consider the economic standing of the country on which they operate on. The rate at which the economy of that particular country grows determines the purchasing power of the consumers in that country. Hence, if a franchise operates in a particularly economically weak country, their products shall cost higher than the other existing products in the market, then these franchises must take on certain adjustments to maintain the

economies of scale. However in case of India the company has been able to maintain a constant level of prices for their products.

SOCIO-CULTURAL FACTORS
Articles on the international strategies of McDonalds seem to function on several fields to guarantee lucrative returns for the organisation. To illustrate, the organisation improves on establishing a positive mind-set from their core consumers. McDonalds indulge a particular variety of consumers with definite types of personalities. It has also been noted that the company have given the markets such as the United Kingdom and India, an option with regards to their dining needs. McDonalds has launched a sensibly valued set of food that tenders a reliable level of quality for the respective market where it operates. Additionally, those who are aged just below the bracket of thirty-five are said to be the most frequent consumers of McDonalds franchises. The multifaceted character of business nowadays is reflected in the harsh significance of the information on the subject of the existing market. This procedure is essentially identified in the field as market research. Information with regards to the appeal and potential fields of the market would double as obstructions to the success of the company if this area of the operations is neglected. In the case of McDonalds they establish a good system in determining the needs of the market. The company uses concepts of consumer behaviour product personality and purchasing decisions to its advantage which is clearly evident in case of India as the company was quick in removing their Pork and Mutton products from Indias menu. It is said to have a major influence on the understanding of the prospective performance of the organisation in a particular market.

TECHNOLOGICAL FACTORS
McDonalds generates a demand for its own products. The companys key tool for marketing is by means of Online Facebook and Google ads, Collaboration with websites like Snapdeal and Timesdeal to promote sales in India, television advertisements, banners and hoardings. There are similarly some claims that McDonalds are inclined to interest the younger populations more. The existence of play spots as well as toys in meals offered by the company shows this actuality. Other demonstration of such a marketing strategy is apparent in the commercials they use. They employ animated depictions of their characters like Grimace, Ronald and Ham burglar. Other advertising operations employ popular celebrities to promote their products. The like has become endorsers for McDonalds worldwide Im loving it campaign. Moreover, the operations of McDonalds have significantly been infused with new technology. Elements like

the inventory system and the management of the value chain of the company allows for easy payments for their suppliers and other vendors which the individual stores in respective markets deal with. The integration of technology in the operations of McDonalds tends to add value to their products. Basically, this is manifested in the improvements on its value chain. The improvement of the inventory system as well as its supply chain allows the company to operate in an international context.

LEGAL FACTORS
There has been the recurrent bellowing in opposition to the fast food industry. This has similarly made McDonalds apply a more careful consideration on their corporate social responsibilities. On the whole, this addressed the need of the company to form its corporate reputation to a more positive one and a more socially responsible company. The reputation of McDonalds is apparently a huge matter. They have acquired strides to take in hand the key social censures that they have been berating them in the past decades. The company has provided their customers the relevant data that they need with reference to the nutritional substances of their products. This is to attend to the arguments of obesity charged against the products of the company. In the same way, the consumers provided freedom in choosing whether or not they want to purchase their meals. This is tied up with the socio-cultural attributes of the market on which they operate. For instance, operations in predominantly Muslim countries require their meat to conform to the Halal requirements of the law. In the same regard, those that operate in countries in the European Union should conform to the existing laws banning the use of genetically modified meat products in their food. This was prime reason which forced McDonalds to eliminate beef, pork and Mutton out of Indias product menu. Other legal concepts like tax obligations, employment standards, and quality requirements are only a few of important elements on which the company has to take into consideration. Otherwise, smooth operations shall be hard to achieve.

ENVIRONMENTAL FACTORS
The social responsibilities of McDonalds on the country are influential to the operations of the company. These involve accusations of environmental damage. Among the reasons why they are charged with such claims is the employ of non-biodegradable substances for their drinks glasses and Styrofoam coffers for the meals. Several civic groups in India have made actions to make the McDonalds franchises in India aware of the rather abundant use of Styrofoam containers and the resultant abuse of the environment.

References
1. http://www.mcdonalds.com/us/en/our_story/our_history.html 2. http://www.mcdonalds.com/us/en/services/playplaces_parties.html 3. http://www.mcdonalds.com/us/en/careers/training_education.html 4. http://www.mcdonalds.com/us/en/careers/training_education.html