External analysis of threats and opportunities for McDonald's Company

External Analysis

Strategic Management: External Analysis

External analysis in organization is important since it examines the threats and opportunities existing within an environment. The only way of differentiating strength or weaknesses from opportunity or threat is to ask whether the issue exist if companies failed to exist. And if it is true, then this is considered as external to firm. Opportunities is a favorable conditions within the environment and it may produce rewards for most organizations, in short, they are the situations that may exist, however they should be acted upon if firms benefits from them. Threats on the other hand, are barriers that prevent firms from meeting their objectives. External analysis is significant for success of every company (Samuels & Perry, 2005). This paper examines the major threats and opportunities in improving the ability of the McDonalds Company to meet the needs of its stakeholders and make their vision and mission to come about respectively.

Threats

Threats to the company refer to the conditions that are preventing the firms from reaching their objectives. Threats are external to business and it relate to changes in environment which impact the business. Threats reduce the ability of the company to serve its stakeholders well hence failing to make most missions a reality. Factors that lead to threats to McDonalds Company may include the shifts of consumer taste away from the products of the company. In every organization, customers are the key success or failure of the business. When consumer tastes changes a way from a certain commodity, the McDonalds Company will definitely lose its customers leading to a lower profit as the demand for commodities decreases (Samuels & Perry, 2005).

Emergence of the substitute goods

The emergence of substitute goods is also a major threat to that may affect McDonalds Company's ability to serve its stakeholders well. When there are substitute goods for another commodity, consumers tends to switch to the new product. This may be as a result that, the price of the substitute product tends to be lower than the price of the existing product. Consumers will assume that the substitute good will serve the same purpose hence would rather go for it (Ratnasingam, 2005). The fast food industry is always on the move trying to repackage and substitute foods and additional pieces included so as to make it more attractive then the competitions' food, this will mean McDonald will face this as a threat and will have to find means of coping with it.

Political factors

Other factors like political factors are also threats to the McDonalds Company's ability to serve its stakeholders and make its mission a reality. The government has got policies of intervention by finding out what exact foods they want to provide to the economy and to what extent will be the goods believed to have subsidized firms (Ratnasingam, 2005). Its is true that there are a number stringent guidelines that are within the food industry and most of them cost a lot of money to comply with hence increasing the expenditures of McDonald.

Environmental factors

Environmental factors are also threats to businesses which include the climatic changes such as temperature changes that may impact on almost all industries. Some products tend to do well in areas with seasonal rainfall while others need rainfall throughout their lifecycle. Too much rain will affect the products lowering the productivity, however too much droughts also make the crops to wither up making the McDonalds Company to lack what they may take to the market for their consumers. This change in climatic conditions usually mean a change in prices, yet McDonald does not want to make rampant changes of their prices up and down as the climatic conditions fluctuate, meaning they have to suffer some overheads when prices are not favorable in the market (Ratnasingam, 2006).

Technology

Technology changes everyday. Because of this, McDonalds Company has the ability of improving the needs of the stakeholders and making their vision comes true. New technology always creates new products as well as, new processes. Most businesses are today transacted online. Therefore, McDonald's Company should be in a position of implementing systems that will allow them to advertise their products online by creating that opportunity. Technology improves the quality, it reduces costs, and it also leads to innovation. The development tends to benefit the consumers and organizations providing products (Marketing Teacher, 2012).

Other opportunities that McDonalds Company should try to capture for its success include taking an advantage to a situation where the government encourages the local businesses by expanding business sector with future opportunities for success, loosening of the regulations, and removal of the trade barriers internationally.