Business BTEC Level 3 Unit 1 Exploring Business Assignment 2 | Distinction A+.

Business BTEC Level 3 Unit 1 Exploring Business Assignment 2 | Distinction A+. McDonald’s is known for its fast-food franchise industry, opening its first drive-in restaurant in 1948 to eventually becoming one of the world’s biggest fast-food franchises. With “over 36,000 restaurants in the world, operating in over 100 countries and territories.” Internal, external and competitive environment on McDonalds This section will discuss the internal, external and competitive environment of McDonalds. Internal Factors Corporate Culture The corporate culture within McDonalds can be identified using “Handy’s classification of organisational culture” as role culture. Role culture in McDonalds means that there is the involvement of hierarchical bureaucracy, with people having delegated authorities within its highly defined structure. This will also mean that the power of an employee depends on their position in the business, the higher up in the hierarchy the more power they have in the business. On McDonald’s website, they claim that their culture is positive promoting “flexibility, opportunity, equality and development” in the workplace. On indeed reviews, one employee describes working at McDonalds as “hard working and fast-paced” saying that it’s a lovely place to work to meet new people and make friends.” Another employee describes it as “Bad hours, overworked & bad management” describing management as very rude and that it “destroyed his mental health.” It can be acknowledged that some employees may not be able to handle the extra stress McDonalds can bring with its fast-paced working methods. Corporate Social responsibility Corporate social responsibility is the concept used by businesses to ensure the integration of environmental and social activities within their business operations positively contributing towards society. Businesses will do this for a better reputation and become more appealing friendly brands. McDonalds is always looking for ways to “reduce, reuse and recycle” in its restaurants and business as a whole. For example, McDonalds use low energy LED light bulbs and energy-saving equipment; this avoids wasting electricity use. McDonalds also “recycle used cooking oil into biodiesel” which is then used to fuel more than half of its delivery trucks; this can be seen as environmentally friendly by not wasting its used resources. 85% of McDonald’s packaging is made from renewable resources, McDonalds recycles 89% of cardboard boxes used in its restaurants. Ethics Ethics refers to morally correct behaviour, this can relate to the ethical treatment of all stakeholders of the business, including customers, employees and government. McDonalds will have an ethical obligation to provide customers with hygienic and safe restaurants; this will also refer to using honest ethical advertisements. McDonalds also promises to provide a positive experience for its employees in its standard booklets. This regards to keeping the work environment free of harassment and violence, to maintain its positive atmosphere. An example of this is that McDonalds encourage its employees to “report misconduct without fear of retaliation.” McDonalds has also stayed ethical by responsibly sourcing from suppliers who are also up to ethical standards such as not using child labour and paying liveable wages to its employees. An example of McDonald's responsible sourcing is that 99.6% of its “primary fiber-based guest packaging was sourced from recycled or certified sources in 2020 and supported deforestation-free supply chains.” External Factors Political Politics in the UK affect McDonalds, for example, Brexit increased importing/exporting costs, this has an impact on McDonalds as they have a lot of suppliers from the UK, so it will cost more to export the supply. Similar to importing supplies into the UK for McDonalds restaurants will cost more, meaning more expense for the business. The tax rates affect McDonalds, for example, corporation tax which is paid on the profits of the business stands around 19% which is much less than the standard rate of 40% but this only affects the profits from the UK. Economical The economy of the UK will also affect McDonalds as it impacts how much people will spend, for example, low-interest rates means that people will spend more as their money isn’t making much interest staying in their bank account, this means customers will likely buy more at McDonalds increasing profits. It works alternatively when interest rates are high, people will spend less, resulting in less potential profit for McDonalds. Change in exchange rates will also affect McDonalds profits. For example, if the value of the British pound depreciates import prices will increase and export prices will decrease, which means it will be more costeffective to use more suppliers in the UK. Social Social factors in the UK such as attitudes to saving affect McDonalds, for example, covid-19 has changed people’s attitudes towards saving, showing how important it is to save, this means more people won't spend as much money on McDonalds. Trends in society will also affect McDonalds, for example, people are becoming healthier minded “green-conscious” more aware that McDonalds meals aren’t very healthy. Although there are options such as fruit and vegetable bags and fish fingers, there isn’t much variety of healthy meals on the McDonalds menu. This may cause fewer customers for McDonalds over time if they don’t introduce healthier meals, such as vegan-friendly meals. Technological New technologies have had an impact on McDonalds as well, for example, McDonalds introducing selfservice kiosks for customers to order meals themselves, this has cut down waiting time and resulted in more customers over time as it doesn’t take as long to order meals. Another example of technology that has affected McDonalds is their mobile payment option, which is useful for cutting the downtime it takes for customers to order at McDonalds waiting in a queue. Customers will have the option to order their meal from their smartphone and collect it from the restaurant when it is ready. The popularity of food delivery service apps such as “Uber Eats” and “Postmates” has made it easier for consumers to order from fast-food restaurants such as McDonalds. This means more sales revenue for the business as people are more likely to order meals. Legal Legal factors can also affect McDonalds as they have to abide by certain laws and regulations which can slow down certain processes. For example, the “Health & Safety Act 1974” states that “Employers must protect the 'health, safety and welfare' at work of all their employees, as well as others on their premises, including temps, casual workers, the self-employed, clients, visitors and the general public.” This means McDonalds restaurants have to put additional staff training to make sure health and safety are up to legal standards, McDonalds has regular checks to ensure its restaurants’ “safety systems are operating effectively.” Another example of a law McDonalds is affected by is “The competition Act 1998” prohibiting anti-competitive behaviour agreements between businesses. This means that McDonalds cannot make agreements with other competitors such as “KFC” or “Burger King” to become less competitive making profits much easier for the businesses. They will not be able to fix increased prices on their menus, limit production to reduce the competition as well as share out markets and information for the businesses to all makes steady profits. Environmental As people have become more aware of the importance of recycling, large businesses such as McDonalds need to try their best not to contribute towards the increase in carbon emissions and pollution to follow certain ethical standards as to not damage the reputation of the company. This means McDonalds has made certain changes to show itself as “an environmentally responsible business.” McDonalds has made efforts to “minimise waste production” with proper disposal of solid waste and recycling “used cooking oil” into biodiesel, to then use in more than half of their delivery trucks. McDonalds has also made an effort to minimise the waste of electricity by using “low energy LED light bulbs” and using other energy-saving equipment. It was also decided for plastic straws to be replaced with recyclable paper straws in all McDonalds restaurants to enable more opportunities for recycling. Competitive environment Mcdonalds is greatly affected by the competitive environment that it has to operate in. Competition in business can be defined as the “rivalry among sellers where each seller tries to increase sales, profits and market share by varying the marketing mix of price, product, distribution and promotion.” McDonalds is a business that competes internationally with “34,000 restaurants in 118 countries and territories” so the company is bound to have a lot of competition with local restaurants as well as other international businesses. To compete with other businesses, McDonalds need to have a competitive advantage; competitive advantage means “A condition or circumstance that puts a company in a favourable or superior business position.” This will be McDonald’s added value that gives them a ‘unique selling point’ to stand out from other businesses. Several factors can influence McDonald’s competitive advantage over others. McDonalds uses cost leadership, a method of competitive advantage, to stand out from the competition with relatively cheap and quick meals. To strip down costs McDonalds has made use of automation services such as self-ordering kiosks so fewer restaurant staff are required and making it easier for customers to order meals. McDonalds can also save costs by being energy efficient, an example of this is their “low energy LED light bulbs.” This will also gain praise on the business’s brand name as they are being environmentally friendly which can make customers feel more comfortable buying from an ethical business instead of competitors that might not be as environmentally friendly. Because McDonalds is known for its consistently affordable prices, customers will always expect the same positive experience they have had in its restaurants before. McDonalds understand the importance to establish its added value from other businesses so customers will choose their business to buy from. The longer McDonalds maintain their competitive advantage, the stronger their brand will become differentiated from other brands. McDonalds take advantage of being known as an ethical business, proudly promoting on their website and in advertisements that they source ingredients from ethical suppliers whilst still selling quick and affordable meals. This is the main strategy McDonalds has used to stand out from other competitors.