Mcdonalds: Marketing Management

Coursework on

MANAGING MARKET

Coursework Title

MACRO ENVIRONMENT

&

MARKETING MIX

1. INTRODUCTION

In the year 1937, two brothers named Richaard and Murice in California started the operation of McDonald's as a drive in retaurant (Scribd, 2009). At present, McDonlads is serving fifty four million people each day among one hundred and twenty countries trhough its thiry thousands local restaurants. According to The Times 100 (2009), during the year 2008 McDonalds operated 31,667 restaurants over 120 countries which can be divided into sex segments. Those are: United States, United Kingdom, Asia Pacific, Africa, Canada, Middle East and Latin America. At Present, McDonalds is the number eight famous brand around the world (Datamonitor, 2009).

Resturant and franchisee resturants operated under the direct and indircet supervision of McDonalds company are the main source of McDonalds' revenue. (Scribd, 2009). Around eight thousands resturants of McDonalds are monitored by the company itself, franchisees operate around eighteen resturants of McDonalds (Abdullah, 2009). Apart from that, all other McDonalds resturants are being operated just by using McDonalds affiliation. The revenue of McDonalds are generated from mainly two sources: 1) from the sale of McDonalds directly controlled restaurants and 2) rent and fees from affiliates and franchisees of McDonalds.

The mission of McDonalds is "be our customers' favorite place and way to eat" (McDonalds, 2009). The vision of McDonalds is to create a net benefit for the employees of McDoanlds, for the community of McDoanlds as well as for the biodiversity and the environmnet. McDoanlds is fulfilling their vision by by maintaining a supply system that yields high quality as well as high profits (McDoanlds, 2009)

2. McDONALDS: MACRO ENVIRONMENT

According to Business Dictionary (2009), Organization's decision making and performance and strategies are sometimes affected by some external factors. Those factors are the elements of macro environment. According to Blythe (1998), Armstrong, Saunders & Wong (1996) and Hollensen (2007), macro environmental factors could include several factors like political, technological, natural, economical, regional, religious, social, natural forces.

The most common methods used for macro economic environment analysis is PEST analysis. PEST anlayis do the environmental analysis from the following points of view:

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Source: Marketing Model, 2009.

2. A. Political factors

Political factor mainly refers to government policy. For example, the degree of government's intervention in an economy is a good example of political factor.

According to Oxford University Press (2009) political factors mainly deals with the following issues:

Good and Services for which Govt would give business permission.

The extend at which Government would subsidising firms.

Government's priority in terms of business support.

McDonalds are operating their business around 120 countries. Each of the country has its own government policies regarding business operation. McDonald's operations are always influence and affected by the state policies of each of the country (Abdullah, 2009).

Recently the regulation on business especially on food business has been increased all over the world. Apart from that, the introduction of GST in European country may affect the business of McDonalds (Scribd, 2009). In order to get rid from this problem, McDonalds should give more priority on their service. McDonalds need to differentiate themselves to reduce the effect of this political issue (Scribd, 2009).

The ethical concept among people varies from country to country which has a direct impact on political and legal environment. For example, the issue of Halal and Haram is common among the Muslim people and to the Muslim oriented countries like Middle East (Abdullah, 2009). McDonalds need to change their supply chain and distributor in order to cope with this.

2. B. Economical Factors

Interest rate, tax rate, economic growth, exchange rate, those are the factors related to economic environment. (Hollensen, 2007).

As the McDonalds primary target market is upper and middle upper class that are less sensitive to price while the target market may respond to the price (Scribd, 2009).

Reduction is the sales volume of McDonalds can be a good example of depression in the European Market.

Yoke (2008) recommended that McDonalds would be able to get rid from recent economic depression by taking some initiative. Those initiatives include proper monitoring of interest and unemployment rate, developing good relations with consumers. Yoke (2008) also concluded that McDonalds can use the current economic forces in order to estimate the future sales rates. Because it would help McDonalds to plan for their internal strength, for example planning about employee numbers.

As McDonald is dependent of truck for moving their raw materials from the warehouses to the outlets and offering of the Mc delivery service, the cost of fuel is also important factor for McDonald's business. Fuel price fluctuation and fuel crisis in near future need to be considered in the strategic marketing planning of McDonalds.

Bryson (2008) reports that the financial crisis of 2008 has affected the plans of McDonald's Corp. to introduce coffee bars in its 14,000 restaurants in April, 2009. The company is unable to obtain financing for the construction from its bank, Bank of America. The problem may delay the introduction of the coffee bars until the summer of 2009 at the earliest. Although the McDonalds stock price has held up relatively well amid a global recession, company officials are preparing for a more difficult economic climate (Janet, 2009)

2. C. Social factors

Social environment deals with the issues like cultural aspect, health and safety issues, trend or population growth and their age distribution, people's