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PROJECT REPORT

ON

“EFFECT OF EXTERNAL ENVIORNMENT ON BUSINESS & Analyses of This EFFECT ON MC DONALD’S”

In partial fulfillment of the requirement

For the degree of Post Graduation in Management

UTTRAKHAND TECHNICAL UNIVERSITY

DEHRADUN

BATCH: 2010-2012

Submitted To: Submitted By:

Lt. Col. Dr. Anirudh Tomar Subhash BhattDirector (DBS) MBA 2nd Sem

Roll no. 82

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DECLERATION

I hereby declare that the Project Report entitled “EFFECT OF EXTERNAL ENVIRONMENT ON BUSINESS” written and submitted by me, under the guidance of Dr. Anirudh Tomar in my original work.

The empirical finding in the report is based on the data collected by myself while preparing the report, I have not copied anything from any sources or other project submitted for this purpose.

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ACKNOWLEDGEMENT

I am immensely thankful to God who provided me the health & ability to withstand the problem coming in my way.

I am thankful to Lt. Col. Dr. Anirudh Tomar Director, Doon Business School, for his encouragement and providing other assistance whenever required.

I wish to express my gratitude to my seniors who generously helped me to color the mosaic of this project report with the titles of their knowledge, expertise and memories.

Thanks are also due to my classmates for their cooperation during the research.

DATE: SUBHASH BHATT

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CONTENTS

PAGE NO.

INTRODUCTION 5 – 6

EXECUTIVE SUMMARY 7

MICRO ENVIORNMENT 8

COMPONENTS OF MICRO ENVIORNMENT 8 - 9

MACRO ENVIORNMENT 10

COMPONENTS OF MACRO ENVIORNMENT 10 -12

IMPORTANCE OF UNDERSTANDING THE ENVIRONMENT 13 - 15

COMPANY PROFILE / HISTORY 16 – 17

MISSION & VISION 18

CHANGE MANAGEMENT 19

EFFECT OF EXTERNAL ENVIRONMENT ON COMPANY 20 -24

SWOT ANALYSIS 25 - 26

CONCLUSION 27

REFERENCES 28

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INTRODUCTION

No business works in isolation. A business is surrounded by many things. This is calledbusiness environment. It is a combination of many forces that act on a business likepolitical, legal, social forces.

Generally speaking an environment includes the air we breathe, the water we drink, the available business, social and educational infrastructure in the locality , state and country etc. In the context of business the environment refers to the sum of internal and external forces operating on an organization. The managers must perforce recognize the elements, severity and impact of these forces on the organization. They must identify, evaluate and react to the forces triggered by the external environment.

More often than not, these forces are beyond the control of an organization and its managers. Accordingly, the factors of the environment will need to be considered as inputs in the planning and forecasting models developed by an organization.

It is quite possible that some large organizations themselves constitute a greater part of the business environment e.g. Public Sector Oil Companies in India.

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An organization operates within the larger framework of the external environment that shapes opportunities and poses threats to the organization. The external environment is a set of complex, rapidly changing and significant interacting institutions and forces that affect the organization's ability to serve its customers. External forces are not controlled by an organization, but they may be influenced or affected by that organization. It is necessary for organizations to understand the environmental conditions because they interact with strategy decisions.

The external environment has a major impact on the determination of marketing decisions. Successful organizations scan their external environment so that they can respond profitably to unmet needs and trends in the targeted markets.

Internally, an organization can be viewed as a resource conversion machine that takes inputs (labor, money, materials and equipment) from the external environment (i.e., the world outside the boundaries of the organization), converts them into useful products, goods, and services, and makes them available to customers as outputs. The organization must continuously monitor and adapt to the environment if it is to survive and prosper. Disturbances in the environment may spell profound threats or new opportunities. The successful organization will identify, appraise, and respond to the various opportunities and threats in its environment.

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Executive Summary:

Every Organisation weather big or small has to survive in the environment surrounding it. The affect of the environment varies from company to company depending open the nature & type of business. The Business environment determines the overall existence of the company over a period of time.

This report contains the analysis of McDonald’s business Environment that is how McDonald’s. came into Indian Market, analyzed the business environment tried to cope up with the Indian environment by implementing various plans & strategies.

It starts with defining the Business Environment micro and macro environments. It moves on with the explaining the macro environment as economic, technological, demography, legal, political, ethical and environmental environments of McDonalds. It also contains SWOT analysis and at last the overall conclusion of the McDonalds.

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The Business Enviornment can be divided into two categories i.e.

a) Micro Environment ( Controllable Factors)b) Macro Environment ( Uncontrollable Factors )

Micro Environment ( Controllable)

The microenvironment refers to the forces that are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets, competitors, and publics.

These micro environmental forces include the organization's market, its producer-suppliers, and its marketing intermediaries. While these are external, the organization is capable of exerting more influence over these than forces in the macro environment.

1. The Market:

Organizations closely monitor their customer markets in order to adjust to changing tastes and preferences. A market is people or organizations with wants to satisfy, money to spend, and the willingness to spend it. Each target market has distinct needs, which need to be monitored. It is imperative for an organization to know their customers, how to reach them and when customers' needs change in order to adjust its marketing efforts accordingly. The market is the focal point for all marketing decisions in an organization.

2. Suppliers

Suppliers are organizations and individuals that provide the resources needed to produce goods and services. They are critical to an organization's marketing success and an important link in its value delivery system.

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3. Marketing Intermediaries

Like suppliers, marketing intermediaries are an important part of the system used to deliver value to customers. Marketing intermediaries are independent organizations that aid in the flow of products from the marketing organization to its markets. The intermediaries between an organization and its markets constitute a channel of distribution. These include middlemen (wholesalers and retailers who buy and resell merchandise). Physical distribution firms help the organization to stock and move products from their points of origin to their destinations. Warehouses store and protect the goods before they move to the next destination. Marketing service agencies help the organization target and promote its products and include marketing research firms, advertising agencies, and media firms. Financial intermediaries help finance transactions and insure against risks and include banks, credit unions, and insurance companies.

a company and put them in the public spotlight. Local publics are neighborhood and community organizations and will also question a company’s impact on the local area and the level of responsibility of their actions. The general public can greatly affect the company as any change in their attitude, whether positive or negative, can cause sales to go up or down because the general public is often the company’s customer base. And finally those who are employed within the company and deal with the organization and construction of the company’s product.

Chart showing Stakeholders of the company

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Macro Environment ( Uncontrollable ):

The external macro environment consists of all the outside institutions and forces that have an actual or potential interest or impact on the organization's ability to achieve its objectives: competitive, economic, technological, political, legal, demographic, cultural, and ecosystem. Though noncontrollable, these forces require a response in order to keep positive actions with the targeted markets. An organization with an environmental management perspective takes aggressive actions to affect the forces in its marketing environment rather than simply watching and reacting to it.

1. Economic Environment:

The economic environment consists of factors that affect consumer purchasing power and spending patterns. Economic factors include business cycles, inflation, unemployment, interest rates, and income. Changes in major economic variables have a significant impact on the marketplace. For example, income affects consumer spending which affects sales for organizations. According to Engel's Laws, as income rises, the percentage of income spent on food decreases, while the percentage spent on housing remains constant.

2. Technological Environment

The technological environment refers to new technologies, which create new product and market opportunities. Technological developments are the most manageable uncontrollable force faced by marketers. Organizations need to be aware of new technologies in order to turn these advances into opportunities and a competitive edge. Technology has a tremendous effect on life-styles, consumption patterns, and the economy. Advances in technology can start new industries, radically alter or destroy existing industries, and stimulate entirely separate markets. The rapid rate at which technology changes has forced organizations to quickly adapt in terms of how they develop, price, distribute, and promote their products.

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3. Political and Legal Environment

Organizations must operate within a framework of governmental regulation and legislation. Government relationships with organizations encompass subsidies, tariffs, import quotas, and deregulation of industries.

The political environment includes governmental and special interest groups that influence and limit various organizations and individuals in a given society. Organizations hire lobbyists to influence legislation and run advocacy ads that state their point of view on public issues. Special interest groups have grown in number and power over the last three decades, putting more constraints on marketers. The public expects organizations to be ethical and responsible. An example of response by marketers to special interests is green marketing, the use of recyclable or biodegradable packing materials as part of marketing strategy. The major purposes of business legislation include protection of companies from unfair competition, protection of consumers from unfair business practices and protection of the interests of society from unbridled business behavior. The legal environment becomes more complicated as organizations expand globally and face governmental structures quite different from those within the United States.

4. Demographic Environment

Demographics tell marketers who current and potential customers are; where they are; and how many are likely to buy what the marketer is selling. Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. Changes in the demographic environment can result in significant opportunities and threats presenting themselves to the organization. Major trends for marketers in the demographic environment include worldwide explosive population growth; a changing age, ethnic and educational mix; new types of households; and geographical shifts in population.

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5. Social / Cultural Environment

Social/cultural forces are the most difficult uncontrollable variables to predict. It is important for marketers to understand and appreciate the cultural values of the environment in which they operate. The cultural environment is made up of forces that affect society's basic values, perceptions, preferences, and behaviors. U.S. values and beliefs include equality, achievement, youthfulness, efficiency, practicality, self-actualization, freedom, humanitarianism, mastery over the environment, patriotism, individualism, religious and moral orientation, progress, materialism, social interaction, conformity, courage, and acceptance of responsibility. Changes in social/cultural environment affect customer behavior, which affects sales of products. Trends in the cultural environment include individuals changing their views of themselves, others, and the world around them and movement toward self-fulfillment, immediate gratification, and secularism.

6. Ecosystem Environment

The ecosystem refers to natural systems and its resources that are needed as inputs by marketers or that are affected by marketing activities. Green marketing or environmental concern about the physical environment has intensified in recent years. To avoid shortages in raw materials, organizations can use renewable resources (such as forests) and alternatives (such as solar and wind energy) for nonrenewable resources (such as oil and coal). Organizations can limit their energy usage by increasing efficiency. Goodwill can be built by voluntarily engaging in pollution prevention activities and natural resource.

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Importance of understanding the Environment

The manager’s job cannot be accomplished in a vacuum within the organization. There are a number of factors both internal as well as external which jointly affect managerial decision-making. It is therefore very important for the manager to understand and evaluate the impact of the business environment due to the following reasons:

Businesses may be deemed to be non starters due to restrictive business environment which may take the form of rigid government laws ( no polluting industry can ever be located in around 50 Km radius of the Taj) , state of competition ( Car manufacturing capacity presently in the country is far in excess of demand) etc.

The present and future viability of an enterprise is impacted by the environment For example no TV manufacturer can be expected to survive by making only Black &White television sets when consumer preference has clearly shifted to colour television sets.

The cost of capital and the cost of borrowing - two key financial drivers of any enterprise are impacted by the external environment . For example the ability of a business to fund its expansion plan by raising money from the stock markets depends on the prevalent public mood towards investment in stock markets.

The availability of all key inputs like skilled labour , trained managers , raw materials , electricity , transportation , fuel etc are a factor of the business environment.

Increasing public awareness of the negative aspects of certain industries like hand woven carpets ( use of child labour ) , pesticides (damage to environment in the form of chemical residues in groundwater), plastic bags (choking of sewer lines) have resulted in the slow decline of some industries.

Finally , the environment offers the opportunities for growth and profits . For example when the insurance and aviation industry was thrown open to the private sector , the new entrant could easily build on the expectations of the public.

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Changing profile of Indian economic environment

India gained independence in 1947 paving the way for national leaders of the Indian Government to build an economically independent new India. Policies between 1950-70 were implemented with a sincere belief in the efficacy of the socialist philosophy and political democracy. Heavy investment by government in Steel plants, atomic energy, hydroelectric power and irrigation projects laid the foundation of a strong industrial edifice. The non-aligned movement at a time when the world was divided into two power blocks with cold war between the Super-powers, prevented India from becoming a satellite of any other nation and enabled it to protect Its economy and the Indian Population.

Indian economy has made great strides in the years since independence. In 1947 the country was poor and shattered by the violence and economic and physical disruption involved in the partition from Pakistan. The economy had stagnated since the late nineteenth century, and industrial development had been restrained to preserve the area as a market for British manufacturers. In fiscal year (FY) 1950, agriculture, forestry, and fishing accounted for 58.9 percent of the gross domestic product (GDP) and for a much larger proportion of employment. Manufacturing, which was dominated by the jute and cotton textile industries, accounted for only 10.3 percent of GDP at that time.

India's new leaders sought to use the power of the state to direct economic growth and reduce widespread poverty. The public sector came to dominate heavy industry, transportation, and telecommunications. The private sector produced most consumer goods but was controlled directly by a variety of government regulations and financial institutions that provided major financing for large private-sector projects. Government emphasized self-sufficiency rather than foreign trade and imposed strict controls on imports and exports. In the 1950s, there was steady economic growth, but results in the 1960s and 1970s were less encouraging.

Beginning in the late 1970s, successive Indian governments sought to reduce state control of the economy. Progress toward that goal was slow but steady, and many analysts attributed the stronger growth of the 1980s to those efforts. In the late 1980s, however, India relied on foreign borrowing to finance development plans to a greater extent than before. As a result, when the price of oil rose sharply in August 1990, the nation faced a balance of payments crisis. The need for emergency loans led the government to make a greater commitment to economic liberalization than it had up to this time. In the early 1990s, India's post-independence development pattern of strong centralized planning, regulation and control of private enterprise, state ownership of many large units of production, trade protectionism, and strict limits on foreign capital was increasingly questioned not only by policy makers but also by most of the intelligentsia.

But too much of protection from the Government had its own disadvantages. Our quality standards were not in tune with international competition. It had produced more traders than

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industrialists. It was high time that Indian economy became more open and entered the international market.

India embarked on a series of economic reforms in 1991 in reaction to a severe foreign exchange crisis. Those reforms have included liberalized foreign investment and exchange regimes, significant reductions in tariffs and other trade barriers, reform and modernization of the financial sector, and significant adjustments in government monetary and fiscal policies.

The reform process has had some very beneficial effects on the Indian economy, including higher growth rates, lower inflation, and significant increases in foreign investment. Foreign portfolio and direct investment flows have risen significantly since reforms began in 1991 and have contributed to healthy foreign currency reserves ($32 billion in February 2000) and a moderate current account deficit of about 1% (1998-99). India's economic growth is constrained, however, by inadequate infrastructure, cumbersome bureaucratic procedures, and high real interest rates. India will have to address these constraints in formulating its economic policies and by pursuing the second generation reforms to maintain recent trends in economic growth.

India's trade has increased significantly since reforms began in 1991, largely as a result of staged tariff reductions and elimination of non-tariff barriers. The outlook for further trade liberalization is mixed. India has agreed to eliminate quantitative restrictions on imports of about 1,420 consumer goods by April 2001 to meet its WTO commitments. On the other hand, the government has imposed "additional" import duties of 5% on most products plus a surcharge of 10% over the past 2 years. The U.S. is India's largest trading partner; bilateral trade in 1998-99 was about $10.9 billion. Principal U.S. exports to India are aircraft and parts, advanced machinery, fertilizers, ferrous waste and scrap metal, and computer hardware. Major U.S. imports from India include textiles and ready-made garments, agricultural and related products, gems and jewelry, leather products, and chemicals. Significant liberalization of its investment regime since 1991 has made India an attractive place for foreign direct and portfolio investment. The U.S. is India's largest investment partner, with total inflow of U.S. direct investment estimated at $2 billion (market value) in 1999. U.S. investors also have provided an estimated 11% of the $18 billion of foreign portfolio investment that has entered India since 1992. Proposals for direct foreign investment are considered by the Foreign Investment Promotion Board and generally receive government approval. Automatic approvals are available for investments involving up to 100% foreign equity, depending on the kind of industry. Foreign investment is particularly sought after in power generation, telecommunications, ports, roads, petroleum exploration and processing, and mining.

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Company Profile of Mc Donald’s

McDonald's Logo used from 1968 to 2003. It still exists at some restaurants.

"Speedee", the former mascot of McDonald's before his replacement by Ronald McDonald

History of McDonald's

The business began in 1940, with a restaurant opened by brothers Richard and Maurice McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee." Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs.

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McDonald's first filed for a U.S. trademark on the name McDonald's on May 4, 1961, with the description "Drive-In Restaurant Services," which continues to be renewed through the end of December 2009. In the same year, on September 13, 1961, the company filed a logo trademark on an overlapping, double arched "M" symbol. The overlapping double arched "M" symbol logo was temporarily disfavored by September 6, 1962, when a trademark was filed for a single arch, shaped over many of the early McDonald's restaurants in the early years. The famous double arched "M" symbol in use today did not appear until November 18, 1968, when the company filed a U.S. trademark.

The first McDonald's restaurants opened in the United States, Canada, Costa Rica, Panama, Japan, the Netherlands, Germany, Australia, France, El Salvador and Sweden, in order of openings.

The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois, on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion, and the company became listed on the public stock markets in 1965. Kroc was also noted for aggressive business practices, compelling the McDonald brothers to leave the fast food industry. The McDonald brothers and Kroc feuded over control of the business, as documented in both Kroc's autobiography and in the McDonald brothers' autobiography. The site of the McDonald brothers' original restaurant is now a monument.

With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility.

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Mission & Vision of the Company

Mission:

"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."

Vision:

“McDonald's mission statement is that they strive to be the best quick service experience. In order to be the best they will give outstanding quality, service, cleanliness and value. This should make every customer smile”

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Change Management

Change is ever persistent. Changes occur due to the situations, events etc. Some of thereasons for changes are technology, customer choice, Competition, Economy etc.Organisations have to cope with the changes. Change could be negative or positive. Theyshould be able to manage changes. Change management is the approach which deals withthe change systematically. It is about how an organisation can gain sustained success andremain competitive for a long time.

McDonalds is focusing on the Asian markets as there is much scope for growth.

McDonald's opened its first drive-through restaurant outside Beijing as part of the tie-upthat the world's biggest restaurant operator hopes will power its expansion in China.

McDonald's already has about 785 outlets up and running in China and plans to have1,000 restaurants selling its brand of American food by the 2008 Beijing Olympics. Overhalf of that potential market is represented by the dominant economies of Asia Japan,China and India where the prospects for McDonald's look especially strong in the decadeahead.

One critical task for McDonald's is finding new menu items that not only thrive in onemarket but can be exported to others around the company's global system. For instance,spicy chicken fillet, onion and garlic mayonnaise sandwich that debuted in the MiddleEast a few years back is now popular in Malaysia and South Africa.

To help make that happen, McDonald's last year opened a food studio in Hong Kong runby a chef and a team of nutritionists to dream up new products.In the first quarter of 2007, McDonald's is launching a menu item in Australia aimed atkids called Pasta Zoo, in which the pasta is shaped like little animals. The Hong Kongfood lab is working on pasta dishes targeted at adults.Whether it's new menu items such as these in Australia, or gas-station- and-restaurantcombinations in China, Mickey D's is pulling out all the stops to keep its momentumgoing in Asia.

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Effect of External Environment on Mc Donald’s

Economic Change and its impact:

A business is affected by the economy of the country of operation. For example as recession griped the whole world into its clutches most of the business suffered loss. Same is true for McDonalds. As unemployment increased during recession its sales also went down in October 2009 in USA. People have reduced their visits to fast food restaurants as a result of decreased earnings. It sales dipped in late 2009 but in January it global sales according to reports was not slowing down as compared to other businesses.

In 2008 when whole world was worst hit by recession it continued to grow its sales andmade robust earning the early part of the year. Thought sales in USA, the country of itsorigin was not as high as international sales but still its performance was better.

In 2007, its growth was according to expectations. It kept making progress in theAsia/Pacific, Middle East and Africa group. It global sales was up by 7%. Thus it plannedto open many new restaurants in these areas. Similarly in 2006 and 2005 its performancewas unto mark.

For growth it makes strategy for its existing restaurants, opening new restaurants andimproving international profitability. It tries to achieve economies of scale in individualmarkets to increase the profitability. It keeps adding the new restaurants through franchisee.

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Technological Change and its impact:

Technology plays very important role in the success of a business. As technologychanges and become advances organisations has to adapt that otherwise they can belagged behind by competitors. Right form supply of raw material, manufacturing andmarketing it has big role for organisation.

If we talk about McDonalds technology has improved the efficiency and sales of company. Technology makes order processing faster. It facilitates faster and hygienic packing. Technology also makes supply chain efficient by easy management of inventory and easy payments for their suppliers and other vendors.

When lot of orders comes at peak times then every second counts. Technology has madeit more accurate and faster to process orders with new technology such as digital wirelessheadsets, customer order displays, and timer systems. This helps to detect the any mistakein order before it reaches the customer. The computer checks the missing items in theorder quickly which enables it to increase the customer satisfaction. Weighing the orderchecks that an item is missing in it. Thus technology helps to improve the accuracy andcustomer satisfaction.

Other important use of technology is in marketing the products. Their key tool formarketing is advertising on televisions of its products. Adopting the new technology isalways costly affair, but there are many benefits of it.

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Socio Cultural Environment and its impact:

Since this company is form food industry it relates to the food habits of society. The foodhabits of the population where it operates influence the business very much. It has toadapt according to the society and its culture.

When it was started in USA it has image of serving American style hamburgers. There itbecame very popular. Then with time it moved to other countries. For example when itopened its restaurant in Japan it didn’t do well in beginning. The reason was the food itwas serving. Initially it had the same menu as it was serving in America. The staple foodfor Japanese is Rice. They didn’t feel fully satisfied until they have rice in their meal. So, later on it added dishes like fired rice, rice burger, and fried egg burgers to its menu in Japan. Other cultural difference was like customers were expected to stand in the restaurant which they didn’t like. The first restaurant in Japan didn’t have the tables and chairs but in later ones they added tables and chairs where customers could sit.

Like in India when it opened its restaurant it removed beef and pork form its dishes. Itused two separate kitchens for vegetarian and non vegetarian food. As 40 percent of thepopulation is vegetarian it introduced vegetarian burger in the menu.

So, above two examples explain that it has to change the menu and serving styleaccording to culture and society.

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Demography and impact due to Demographic Changes:

Demographics are the characteristic of the population like literacy rate, average age,income, gender, race etc. demographics influences because that decides the buyingbehaviour of customer. A company has to decide the target market which is muchaffected by the demographics.

McDonalds target market is young people and children. This is reflected by strategy ofserving toys with the meal. About income, it targets the middle income people who arenot able to spend a lot on the food and also don’t want to compromise with the taste. This helped it a lot in recession.

Demographics are different for different countries. For example in most of the developedcountries age structure is changing i.e. birth rate is decreasing. This is making morepeople in population old. This means McDonalds have to make its strategy according tothese changes. One of the step in this direction is it has started offering free tea and coffeeto 60 plus age group. This will attract more customers of old age. Earlier it had the imageof serving food for young people like to eat quickly, but as more population growing oldit is changing according to that.

Anther example of impact demographic changes is about the income of the people.McDonalds is growing faster in developing countries where income of people isincreasing as economy is developing. There more young people in the population andearning more, which enables them to spend on fast food and eating out more often.

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Legal and Political Environment and its impact :

A business has to work according to the government policies and rules. As it is operatingin 119 countries policies in every country are different rules and regulations. Thesepolicies might be related to business, food, hygiene etc. For example, McDonalds has tofollow the hygiene and cleanliness rules established by government in all countries.McDonald’s business is influenced by government policies according to fast foodregulations.

The political environment influence according to factors like political stability of country,policies for business for foreign companies, flexibility in rules for international tradingetc. This affects the profitability of the company. There are different rate of tax in everycountry and different types of taxes imposed. These days most of the government arecontrolling the fast food business due to related health problems.

If McDonalds is earning profits, government also expect benefits like tax andemployment. There are rules for the employing people for example in United Kingdom itis about minimum wages. All the restaurants operating in UK has to pay minimum wagesdecided by government to its employees. It should be able to protect its workers bygiving genuine compensation expected by the employees to become successful.

Ethical and Green Environment

McDonalds is always been criticised due to unhealthy image of fast food. It also copeswith the ethical issues like ill treatment of animals, exploitation of children, anddestruction of rainforests. It ruins the image of its business. There many researches whichsays that fast food is not healthy especially for the children and lead to obesity and otherheart diseases. It suffered loss due to these issues many times. For example in 2002 itwent under crisis. Its share price declined and profits went down by 70 percent.

On the other side it is also participate in the conservation activities of environment. Ituses the environmental friendly fuel and methods for its products. McDonalds alsocreated a task force with the help of anther non profit organisation working forenvironment to protect it. It works for reducing and recycling the waste.

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McDonalds SWOT Analysis

The anther theory which analyses the environment of a business is SWOT analysis.SWOT stands for Strengths, Weaknesses, opportunities and threats. Strengths andweaknesses are related to internal environment whereas opportunities and threats arerelated to external environment. Any business before launching new product or movingto new area must do this analysis to predict the success.

Strengths:

• McDonalds is a strong brand name. It is easily recognised by everyone. It has firm position in the market and is global brand.

• One of its strengths is that it is huge company with 31, 00 restaurants all over the world.

• Being big its profits are also high and have good scope of experimenting with new strategies.

• According to Forbes Magazines it one of the most liked food service organisations.

Weaknesses:

• There is lot of price competition in the market for food products.

• There are many competitors coming up due to large profits and are lowering its position.

• Its earning is mainly dependent on the disposable income. If the budget itthreatened, people use their money elsewhere. It has been accused of servingunhealthy food.

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Opportunities:

• It keeps lunching innovative products like ‘Supersize’.

• It is using its environmental activities as marketing strategy. For example it isadvertising with its green packaging solutions.

• It can introduce healthy and low calorie burger for heath conscious customers.It can provide more upscale restaurants with more facilities and entertainment whichattract more people.

Threats:

• More dining restaurants are forcing it to decrease the price of its burger as they havestarted to offer the burgers.

• Society is becoming more and more health conscious and avoiding fast food. It hasbeen sued many times for unhealthy food and spreading obesity in America.

• Competitors like Taco Bell, KFC, Starbucks and Burger king.

• Other threats are related to the economic situations like current recession which hasaffected the revenues of this company.

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Conclusion:

McDonalds is growing at a fast pace in spite of many hurdles in its path. Beginningwith one small restaurant in USA it has become a multinational company. This is due toits well formed strategy and ability to implement the strategy. It keeps coming up withnew ideas to attract the customers. It also adapt according to the social and culturalchange in the society.

Thus business has to work in its internal and external environment. To make progress andsustained success it has to clearly understand and analyze both the environments.

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References:

The information / data has been taken from the below mentioned web links.

http://www.businessweek.com/magazine/content/09_47/b4156032714278.htm http://seekingalpha.com/article/116480-what-recession-mcdonald-s-continues-its-global- growth http://bucknellorgtheory09.wordpress.com/2009/ 05/07/mcdonalds-in-beijing/ http://bucknellorgtheory09.wordpress.com/2009/05/07/cultural-differences-mcdonalds- in- japan/ http://www.bignerds.com/papers/22822/Mcdonalds-Swot