Thepurpose of this paper is to study McDonalds Company describing theelements that make up its business environment. Some of the elementsof the business environment that will be studied include legal,social, and economic factors. The paper will also study the company’smanagement structure, operational issues, financial issues, and someof the changes that have taken place including the role of technologyin the change process.
Elementsof McDonald’s Business Environment
Overviewof McDonald`s company shows that the business is the leading retailerof food service, having over 36,000 units around the world. Most ofthe company`s units are operated by franchisees, making up to nearly80% of all the restaurants. The long-term success of the enterprisecan be attributed to its dedicated suppliers and franchisees, whowork hard to ensure that consumers get the best services. Thebusiness environment of an organization refers to all the factorsthat can influence the operations of the firm either internally orexternally. Each of the aforementioned factors can affect theactivities of business, either negatively or positively.
Thelegal environment of the company refers to the current or potentiallaws that have the capability of impacting on the decisions andactivities of the company. For a business to operate effectively, itmust prepare for the effects of a new law if it is established. Thesuccess of McDonalds is as a result of following all legalrequirements put in place by the relevant authorities. One of thesignificant legal requirements is the decision by the government toincrease the legal minimum wages. Such a law means that the companywill have to part with more money to pay worker a move that has ahigh likelihood of increasing the company`s operational costs. Havinghigh operational costs means that the company will have to raiseprices on its products, which in turn may scare customers. Localhealth regulations also need to be followed to the latter to ensuresmooth operation of the business [ CITATION Jua051 l 1033 ].
Socioculturalchanges in the market can also affect the operations of the business.Hence, McDonalds must be aware of the social conditions that canfavor or limit activities. One of the social issues in the businessenvironment is the widening wealth gap, which can present anopportunity since more people will have disposable income hence,purchase more products. Healthy lifestyle trends can affect thebusiness negatively as more people are abandoning fast foods forhealthier foods. Increased cultural diversity is another socialcondition that can be exploited by the firm [ CITATION Fra061 l 1033 ].
McDonald`sindustry environment is influenced by economic changes in the UnitedStates and, also, around the world. The stable growth of the UnitedStates economy presents an opportunity for the business as consumerspurchasing power can increase. European economies are also stablehence, providing McDonalds with a chance to expand its operationsworldwide. Investing in other economies is a risky affair thus, thecompany needs to conduct a research that will enable them to identifyeconomies with less risk.
ManagementStructure at McDonald’s
Thegovernance structure at McDonald`s is divided into top-levelexecutives, finance, marketing, sales departments, and restaurantmanagers. Top level executives perform tasks such as makingdecisions, setting overall goals for the company, and ensuring thatall operations of the business run smoothly. They include the chiefexecutive officer, board coordinator, head of a finance department,operations manager, marketing, and sales managers.
Thefinance department is headed by the chief finance officer, and ithandles all financial matters for the company. The department isfurther made up of branch finance managers, accounts managers, andclerks. The marketing department is headed by the marketing managerand it handles the matters related to marketing and advertising. Itis made up of country head of marketing, marketing executives, andbranch managers. The sales department is headed by the sales managerand it is tasked with making sure that the sales are conductedsmoothly. Restaurant executives ensure effective day to day runningof the company`s affairs. They are headed by the restaurant managers,and they are made up of staff members, chefs, bakers, cleaners, andcooks [ CITATION Asl061 l 1033 ].
Thecompany, mainly, operates its units around the world throughfranchisees, people who pay to use the company resources such asbrand name, marketing, and advertising resources. Such a move hasenabled the company to operate in many countries around the worldsuccessfully since its authority is not centralized in the UnitedStates. Each unit has the independence of making its own decisions aslong as they are in line with the overall goals of the company. Thecompany’s overall management understands that each area has unitchallenges thus, restaurant managers need to be given the freedom tohandle such challenges.
Afinancial analysis of the company shows that McDonalds is in a soundfinancial position, mostly, due to the continued growth ininternational markets that were not explored before. The sales andmarketing departments of the company also seem to be working overtimeto ensure that McDonalds remains the leading food retailing companyin the world.
ChangeFactors and the Role of Technology
McDonaldshas made a lot of changes as a way of attracting more customersespecially the younger generation. Technology appears to play atremendous performance in the changes including the introduction ofwireless networking in most of the units, free internet and Wi-Fiterminals, smart television screens placed strategically, and videogames. Such changes are meant to make the McDonald restaurants moreappealing and relevant to the younger generation [ CITATION Fra061 l 1033 ].
Demirguc-Kunt, A. (2006). Business environment and the incorporation decision. Journal of Banking & Finance, 2967–2993.
Nicolau, J. L. (2005). Valuing the business environment on a daily basis. European Journal of Operational Research, 217-224.
Ruff, F. (2006). Broadband network with enterprise wireless communication method for residential and business environment. International Journal of Technology Management, 1741-5276