PESTEL ANALYSIS
PoliticalFactors: The policies of governments affect business of McDonald’s in various ways; in how their products are produced, promoted, and sold. Price margin regulation is the factor that McDonald’s need to focus when launching in international market
EconomicFactors: The difference exists in countries in different stages of economic development has an influence on price variations. People in different countries may have different power to spend money. Specially, in India more than half of the population have low purchasing power. The McAloo Tikki (INR 25.00) is one the examples.
Socio-CulturalFactors: Sociocultural demographic trends will also affect McDonald’s business, hence, analysis of culture and modification of menu is also important. When McDonald’s entered in India, company decided not to launch its Big Mac Burger as a result of deferring to the Hindu prohibition against beef consumption. Prepared by: Jay H. Shah, Department of Technology Management,
Technological Factors:The systematic substitution of equipment for people and the carefully planned use and positioning of technology have helped each franchise to be of the same high standard. As Soviet machinery lagged 15-20 years behind Western technology, new machinery from Holland was used to harvest potatoes.
Environmental Factors: It is very important for McDonald’s to consider the physical terrain and climate in the appraisal. The climatic conditions can affect products in foreign market. Being environment friendly is also another important factor. Environmental groups force to reduce use of plastic bags and Styrofoam packing to reduce pollution.
Legal Factors: As discussed above, political and legal forces are highly important as they cover the main aspects of the company. Legal issues occurred in many places around the world. A legal issue in Russia for McDonald’s when, in 1993, a law passed in Moscow requiring all stores to have Russian names or at least names translated into the Cyrillic alphabet. Prepared by: Jay H. Shah, Department of Technology Management