Business Economic, Political, Legal and Social Influences

Business

Economic, Political, Legal and Social Influences on McDonalds

McDonalds is a well-known fast food chain which is impacted by a wide range of macro environmental influences. To remain successful it is necessary for the firm to be able to adjust and adapt to these changes. Some of the most important factors include economic, political, legal and social issues. The aim of this paper is to assess the way in which these factors may impact on the firm and assess the way that the firm has responded and may respond in the future.

A key influence within the global economy which has impacted on many firms has been the recession. The general pattern seen in economies during a recession is a decrease in income leading to an aggregate decrease in demand (Nellis and Parker, 2006). The goods and services which are most sensitive to a decrease in demand are the non-essential goods and services bought out of discretionary spending (Nellis and Parker, 2006). McDonald's food is convenience and is not essential, so it is susceptible to a decrease in demand. The firm did see a decrease in some sales in some areas following the start of the recession. The overall results for the firm demonstrated a decreased by 3.3% in 2009, when the turnover fell to $22,745 million compared to $23,522 million in 2008 (McDonalds, 2010). However, the firm showed a smaller decrease compared to many other fast food firms and also managed to recover with a range of strategies.

The menu was adapted and the firm introduced a specific menu selection for the budget conscious; in the U.S. this was the dollar saver menu, in the UK it was the pound saver menu. This included a number of existing items highlighted as well as small specific items introduced, such as the Chicken Mayo in the UK. The firm has also tapped into the provision of alternate products competing with firms that traditionally had higher prices, benefiting from the downshifting of spending. This has included increased ranges of gourmet coffee to provide a lower cost alterative to Starbucks (Newsweek, 2010). There has also be the introduction of other premium drinks, such as smoothies, which is also credited with helping to increase sales by up to 15% in the U.S. (New York Post, 2011). This extension into related goods, which fit in with the menu, but may be seen as a value offering compared to other market suppliers appears to be a very successful strategy which may be extended. As the economy improves and more income is available this may also be a strategy which may also be used to increase the range at the upper end of the menu range.