McDonalds PESTLE Analysis

Published by MBA Skool Team, Last Updated: October 12, 2019

PESTLE Analysis of McDonalds analyses the brand on its business tactics. McDonalds PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.

PESTLE analysis is a framework which is imperative for companies such as McDonalds, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.

Let us start the McDonalds PESTLE Analysis:

Political Factors:

The political factors in the McDonalds PESTLE Analysis can be explained as follows:

McDonalds is a world leader in fast food. Fast food companies are always at the risk of being targeted by the government as their primary concern is the safety of the people. So, if McDonalds doesn’t comply with health and safety regulation, then the government will shut it down. Moreover, the growing concern that their food contains high sodium and sugar which leads to health issues like diabetes and hypertension. So McDonalds is now adding healthy options in its menu. Many countries are less open to western culture and foods. Iran which has some animosity with America has banned McDonalds in its country. Bermuda also banned the McDonalds as it is against the fast food.

Image: pixabay

Economic Factors:

Below are the economic factors in the PESTLE Analysis of McDonalds:

McDonalds operates in around 120 countries. It needs to source its materials internationally and due to change in currency exchanges, the price of materials keeps changing. So, it needs to constantly strategize how to procure material at low price. The recent recession in many parts of the world has decreased the demand for fast food among the people. The employment turnover rate of McDonalds is very high, that is, its employees left the job at McDonalds very frequently and McDonalds has to hire constantly. A lot of money and time are wasted to hire new people and train them.

Social Factors:

Following are the social factors impacting McDonalds PESTLE Analysis:

McDonalds is known for adapting itself according to the consumer demands. Initially it opened up its restaurants across the world by bringing the sense of ‘American way of life’. In the later years, it started serving to different countries according to its local demands. In India, a majority of Hindu population is against beef, so it replaced beef with chicken and since most of the people in India are vegetarians, it introduced veggie burger, McAloo tikki and McVeggie to woo Indians. For japan, its menu is completely different. It introduces green tea ice cream, rice burger, teriyaki burger and shrimp burgers keeping in mind the taste and preference of Japanese people. In many other countries, it tweaked its menu to give local flavour to its customers. The demand of fast food has increased significantly in developing countries with the changing lifestyle of people.

Technological Factors:

The technological factors in the PESTLE Analysis of McDonalds are mentioned below:

Keeping the pace with the today’s fast changing technologies, McDonalds is continuously introducing new technologies to improve the customer service. It has recently setup self-order kiosks across its restaurants so that the customers do not require to stand in queue at the order counter. People tend to add more items to their order when they select on their own rather than ordering at the counter. McDonalds in 2019 acquires a tech company ‘Dynamic Yield’ to better personalize menus. The electric menu of the McDonalds restaurants now show different items depending on the factors like weather, time of day or regional preferences. Through its app, people can order their favourite items and add-ons and get the food delivered at their home. Through all such technologies McDonalds is constantly enhancing the satisfaction level of its customers.

Legal Factors:

Following are the legal factors in the McDonalds PESTLE Analysis:

In India, McDonalds is facing legal issues with entrepreneur Vikram Bakshi for control of Connaught plaza restaurants. They are in joint venture which controls 185 McDonalds restaurants in north and east but after removing Vikram Bakshi as managing director of the venture in 2013, Bakshi has filed a legal suit accusing McDonalds of mismanagement. This lawsuit is helping its competitors to grow in these parts while negatively affecting McDonalds. In Quebec, McDonalds was sued for the toys it gives along with the happy meals. It was alleged that it advertises the toys to woo the children, while it is banned in Quebec to advertise products to children under 13 years of age.

Environmental Factors:

In the McDonalds PESTLE Analysis, the environmental elements affecting its business are as below:

McDonalds is continuously working towards achieving sustainability in all its activities. McDonalds has set a target to have 100% of its packaging material come from renewable or recycled sources and recycling will be done in its every restaurant by 2025.At present only 50% of packaging comes from sustainable sources while only its 10% restaurants are doing recycling. McDonalds now instead of shipping orange juice in ready to serve container, shipping frozen concentrate which helps in reducing orange juice packaging by 75 percent. McDonalds is also committed to install energy efficient kitchen equipment and led lightening in all its restaurants to save energy.

To conclude, the above McDonalds PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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