environment analysis Essay

Submitted By MENG222
Words: 1254
Pages: 6


McDonald's has been targeting on both children and adults who like 'good value' fast food - consistent quality, good and fast services, clean and pleasant venues and relatively low price - Kroc's QSCV vision.

Although McDonald's has focused on fast food, an industry to be seen as cheap and cheerful, it is a household name. According to the case study, McDonald's has become the world most recognised brand. It is one of the world biggest fast food chains.

McDonald's has been innovative in product design, marketing, promotions and store location. They are the leader in the fast food industry. Hence, putting McDonald's at point1 does not seen to be suitable.

Students are likely to suggest a position somewhere between 2 and 3.

(B) McDonald's environment
Broad environment

Social-cultural factor
Nowadays people are living a busy life. Most of us like convenience. Fast food has fit the fast paced life style. Also, McDonald's stores are often located at convenient places, such as high streets, shopping centres, motorway service stations, airports and train stations in where customers require fast and convenient services.

The decreasing family size in most developed countries enables families to spend more on their children. Under the media and peer influence, a lot of young people like fast food, such as those provided by McDonald's.

Economic factor
The recent economic recessions have suppressed household's disposable income. Nonetheless, McDonald's products are considered as good value. Reasonably good standard of service, store layout and cleanliness have all added further value to McDonald's products. They have helped the company to stand out from the crowd and sail through the recessions.

In many emerging markets, children and young people are keen to try out western brands and food like McDonald's which is well recognised across the world.

Environmental and social responsibility factors (also related to political/legal factors)
McDonald's has been criticised for increasing portion sizes which lead to over consumption of fast food at any one time and obesity. The salt and fat contents of their products have also been subject to adverse criticism. The recent trend of healthy diets has put McDonald's and other fast food chains under the spot light.

The fast food industry has been requested to disclose more nutritious information to help consumers make informed choices. Fast food chains are pushed to be more innovative in their products to help the society tackle obesity problems. For example, McDonald's has now offered healthier options, such as salads and fruits. They have also disclosed more nutrition information of their products.

Industry environment

The power of buyers and threat of substitution
As is stated in the broad environment, nowadays people are living a busy life. Most of us like convenience and fast food has fit the fast paced life style.

However, consumers have lots of choice and there is a high risk of substitution for McDonald's products (especially under the healthy living trend - Subway has become one of the key competitor who offers healthier food). There is no switching cost for the consumers. Because of the threats, McDonald's has invested heavily on marketing, promotion and store in order to differentiate themselves from the key competitors such as Burger King and KFC.

McDonald's has followed a simple business formula and it has worked consistently in different parts of the world. All stores offer similar products together with local dishes. Standardisation of products and restaurants to ensure high and consistent quality at relatively low cost can be achieved. Consumers know what they can expect from McDonald's. Many consumers are happy with the good value products that McDonald's offer.

McDonald's has been criticised for increasing portion sizes which lead to over consumption of fast food at any