PESTEL Analysis of McDonald [PDF]

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PESTEL Analysis of McDonald’s Political Factors McDonald’s operates in over 100 countries, so its political exposure is all over the board. Generally, McDonald’s, like any other restaurant, has to comply with government regulations pertaining to health and hygiene. Some governments have been pressuring the fast food industry, because fast food has increasingly been seen as junk food, leading to obesity, cardiovascular difficulties and high cholesterol. Moreover, the current tumult in relations between the United States and Russia may threaten McDonald’s ability to function and turn a profit in the Russian Federation. Economic Factors Economic factors are of paramount importance to McDonald’s, especially considering that it operates in over 100 countries. The decision whether to import raw materials or buy them locally is one important factor; another is tax rates. How much are tariffs on imported raw materials? How much are foreign corporations taxed? What is the unemployment rate, and how much are unemployment taxes in a given country? How much severance pay must an employer pay an employee upon termination? Socio-Cultural Factors Evolving lifestyles can have an effect on sales performance. People increasingly are seeking more sophisticated fare when they eat out. Hamburgers and fried potatoes are not as special as they once were. Moreover, while people in western countries such as the United States may enjoy hamburgers and French fries, people in Asian countries, for example, prefer rice. A few years back, McDonald’s promoted a rice burger in China; it is now promoting rice for dinner in that nation. Technological Factors While technology may seem to play a very limited role in the fast food industry, nothing could be further from the truth. In fact, high technology helps organizations improve their management and productivity, while reducing wasted time and resources. It can help with scheduling, ordering, forecasting sales and foot traffic, and easy customer payment for food. Technology can also be used for easy, inexpensive advertising on the Internet, providing Wi-Fi and even computing devices to satisfy customer needs. Environmental Factors Today more than ever, people care about protecting the environment. They care about problems such as air and water pollution, and the effects waste packing are having on the environment. A few years ago, McDonald’s found itself in the



crosshairs of environmentalist wrath over the polystyrene packaging it was using for its sandwiches. With over 60 million people buying food from McDonald’s daily, that was a great deal of polystyrene waste packaging finding its way into landfills. McDonald’s responded to criticism by phasing out polystyrene in favor of paperbased packaging, which breaks down into organic ingredients much more quickly in the environment. Legal Factors Regulation is always the biggest concern to a company. As a company in the fast food industry, McDonald’s must adhere to many legal requirements, such as the labor and employment law, corporate law and tax requirements, to name a few.