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Assignment: Strategic Environment Analysis on the Fast Foods Sector - Part I

Executive Summary

The fast foods sector is continuing to grow over the years with the emergence of new businesses into the sector. The key examples of organizations in the fast foods sector are KFC, Burger King, and McDonald’s among others.  Ask professionals to  write my essay for me. This analytical report explored the external analysis of the fast food industry through the PESTEL framework and Porter’s five forces, which were able to outline the strengths, weaknesses, internal and external factors surrounding the fast foods sector, particularly McDonald’s, a key player in the sector. The report also identified the distinctiveness of McDonald’s based on their core competences and competitive advantage within the fast food industry. The fast food industry was analyzed through the PESTEL framework what examined the external environment of the fast food industry and measured its impact on McDonald’s. In addition, the Porter’s five forces analyzed the competitors of the fast food industry and identified the threats of new market entrants, power of suppliers, power of buyers, threats of substitutes and competitive rivalry associated with the fast foods sector. The report also explored the possible opportunities and threats of the fast food industry.

As a firm, McDonald’s was analyzed internally through PESTEL and Porters’ five framework. It was analyzed to explore the core competences and competitive advantages of McDonald’s in the fast food industry. The core competences such as customer satisfaction, high quality service and competitive advantage over rivals were identified in the report and well analyzed. These key competences made the firm distinctive in the fast food industry. It was noted that the McDonald’s corporation competed with their competitors like KFC, Burger King, and Subway and attained distinctiveness with the fast food industry in United Kingdom.

To summarize, the analytical report outlined that fast food industry was growing fast and it identified the key factors that surround it; both external and internal factors. McDonald’s had competitive advantages what made them distinctive within the fast food industry.

Introduction

The fast foods industry is very popular all over the world as it serves many people with a remarkable variety of fast ready to eat foods and snacksevery day (Aguilar, 2002). McDonald’s is a key player in this industry and it has made a name for itself over the years, dominating over its competitors (Datamonitor, 2010). Its position at the top is as a result of its state of the art services, cleanliness, modern infrastructure and proper management. Buy online  dissertation writing service. It was established in 1948 in the USA and is successful from the start. Compared to other key players in the fast foods sector, McDonald’s has a unique system of management, Franchise System, which helps it maximize service efficiency. Currently, it has set up shop in 117 countries with over 32000 restaurants all over the world. (Annual Report, McDonald's Corporation 2008). However, McDonalds is also subject to factors such as criticism by nutritionists, harsh government policies and high staff turnover rates. It also faces the problem of competition by peer brands in the sector. This report analyses the factors in the fast foods business environment that affect the key players such as McDonalds. In this report, the PESTEL analysis model determines the various external factors that present opportunities or threats to the fast foods sector, with reference to both the macro and micro environment (Gillespie, 2007). In the global fast food restaurant market, McDonald’s is focused on economic and sociocultural factors. Nonetheless, the company’s success is indicative of its effective strategies to deal with all of such external factors. As the biggest fast food restaurant chain in the world, McDonald’s must keep adapting its strategies based on the conditions of its industry environment (Murphey, 1994).

This PESTEL/PESTLE analysis of McDonald’s shows that there are many opportunities and considerable threats that the firm must address to keep its viability in the rapidly changing global economy (Murphey, 1994).

Business Environment

The business environment refers to the immediate internal and external factors that interact with an organization in business. Like any other organization in the fast foods sector, McDonald’s is directly and indirectly affected by its immediate business environment (Roper, 2012). The internal factors of business fall under the Micro environment while the external under Macro environment. The external (Macro) environment analysis deals with the PESTEL analysis. The PESTEL analysis will analyze the political, economic, technological, social, legal, and environmental factors that affect the fast foods sector both directly and indirectly (Gillespie, 2007).

Macro Environmental Analysis

To begin with, every sector in the economy, whether private or public, is affected by the state policies and laws (Gillespie 2007). The government mainly focuses on license and health policies in fast foods businesses. Other issues are tax and employee laws policies. Get online  coursework writing service UK. This is to say that the fast foods companies are controlled by government policies and issues such as political instabilities, pending tax reforms and harsh health policies are most definitely bad for business (Roper, 2012). The fast foods sector is, for instance, given the opportunity to expand its business upon the government improving policies on international trade and is more likely to collapse upon introduction of harsh public health policies. For instance, in 2017, BJM was campaigning against the increasing consumption of“junk foods”, stating to the public its effects and prompting the government to buffer new public health campaigns against these foods (BBC, 2017). This would directly affect the fast foods business as more of its customers would desist from them. However, fast foods companies such as McDonald’s are still able to address these policies by making healthier foods with less calories. Generally, the PESTEL analysis presents factors and policies that outweigh the threats (Datamonitor, 2010).

Apart from political factors, economical factors are also vital in the fast foods sector. Get  assignment help online. International fast foods businesses face problems such as different tax to revenue ratios in different countries as well as tax and policy fluctuations during global distribution of products (Falshaw, 1999). Such global international factors could cause an economic shutdown which directly affects fast food businesses. Local economic factors also affect the sector. Analyst John Staszak concluded that over time, people get discouraged to spend money on expensive fast foods restaurants and turn to cheaper means. If this happens, the expensive companies such as KFC and McDonald’s are affected (Jed, 2016).

 

When it comes to the social factors, the change in the lifestyle of people affects the fast foods sector. Hire  thesis writer online at reasonable price. People of different social classes will expect different levels of service quality. For example, urban society customers will expect highest quality service and state of the art facilities. Also, religion difference is also a factor (Saaty, 1980). Hindus prefer vegetables while Muslims cannot eat pork. This wide variation in customer expectations prompts businesses in the fast foods sector to research on the market needs so as to come up with a menu that serves to satisfy everybody.

With technological factors; the various forms of technological innovation must be considered if customer satisfaction is to be achieved (Buller, 1998). The existing fast food chainsare competing in business and technological innovations such as faster payment methods, better delivery services for orders, better Wi-Fi in the restaurants among others could go a long way in increasing customer satisfaction. In a similar way, poor technological infrastructure could lead to low customer satisfaction (Delgado, 2011).

Environmental Factors are those that deal with how the business affects the environment; such as pollution. Hire  research paper writer online., For example, McDonald’s has been on several accounts criticized because of the use of non-biodegradable containers and drink glasses (Gutiérrez, 2011). Environmentalists have for years criticized McDonald’s for using polythene and Styrofoam food packaging containers and drinking cups (Gutiérrez, 2011). Such negative protrusion could be bad for business in the fast foods sector. It is therefore advocated by the government and environmentalists that fast foods companies wrap and package foods with biodegradable material such as Corn Starch (United States Department of Agriculture Economic Research Service 2015).

Legal Factors too are to be considered in the fast foods sector. Business registrations, taxes, employee laws, safety laws among others are the key examples of the legal factors that surround the fast foods sector. They are mandatory and must be followed. HirePaerfect Writer UK for online  homework help. Big fast foods companies such as KFC and McDonald’s must put serious regard to these laws or face serious consequences such as shutdown.

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