International Business

Bank loans and finance companies are very important for McDonald’s investments and for other purposes. When there is a high interest rate the amount the company has to repay as a loan will be higher and this will reduce the company’s investments and finances for fixed assets. This will have same effect for McDonalds. As McDonalds sell their shares in stock market and allow people to invest in their business, interest rates will affect how much money people invest in McDonalds and its stock.

1. UNEMPLOYMENT RATE When the unemployment rate of a country is relatively low, it means that there are more people who are working thereby generating more income. This leads consumers to have a higher disposable income thus increasing the sales of McDonald’s products and their revenue and vice versa. In January 2010, the fast-food giant reported that their sales figures slipped. Analysts said that it was mainly due to the unemployment rate in U.S There is also a benefit for McDonalds when one of their franchise countries when unemployment rises. When unemployment rises, McDonalds can hire staffs at a cheaper wages.

1. INFLATION Inflation is the rate at which the general level of prices for goods & services is rising and subsequently purchasing power is falling. By the definition when the raw materials or core ingredients prices of McDonalds rises, it will affect their cost of production and thus rise in the final price of the product. This will have a negative effect on company as it will lose its customers due to high prices and reducing their net income. This will also reduce their shares in global market & Vice versa. In April 2011, McDonalds warned about higher food inflation. Shares fell 1.5 percent after McDonalds said it planned to offset some, but not all, of its higher food costs, with small price increases throughout the year.

1. GROSS DOMESTIC PRODUCT (GDP) GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country's standard of living. As mentioned, when a country’s GDP is high, the standard of living of people will be higher, thus households have higher spending power. This will increase the sales and revenues of McDonalds in that country. A high GDP will also interest investors to invest in the company and will be better market to sell its shares at the best price. And vice versa.

Task environment or can be called as specific environment is an external circumstances that a company has to deal with. The environment can be changed as the time goes by so this will directly impact to the decisions making and the actions the manager will take and eventually have an impact on the company’s ability to achieve goals. Each company has their own unique task environment as they have different target markets so they have to consider with different factors. The elements of McDonald’s task environment are considered as: customers, suppliers, competitors, pressure groups, employees and government agency. From the above mentioned elements suppliers and competitors which have high effects on the success of McDonalds will be discussed.

1. SUPPLIERS Suppliers from the word of supply which mean make (something needed or wanted) available to someone, provide. The plural form of supply is supplies which mean a stock or amount of something supplied or available for use and suppliers is the person or the company that initiated the supply. For the company, suppliers are one of the most important parts as they are who keep the needs of the company flown in continuously, not only goods but they also provide financial and labor inputs. By knowing the important role of suppliers, McDonalds put their suppliers as “The Three-Legged Stool”.

“The Three-Legged Stool” is the way McDonalds makes a strong foundation for their business. Those McDonalds’s three important pillars are their employees, their franchisees and their suppliers. Now, we focused on McDonalds’s supplier which providing food, packaging and other products and services. Let’s say we take Burger King as an example to show how McDonalds overcome this company. Table 1 above shows the difference between McDonalds and one of the closest direct competitors that McDonalds is facing, Burger King. In terms of cost for both companies, McDonalds is just as reasonable compared to Burger King. McDonalds has plenty of promotions compared to Burger King which do have promotions but not as many as McDonalds. This is a marketing strategy that McDonalds uses to overcome their competitors.

Speaking on franchise/outlets and customer service, McDonalds overcome the competitors with worldwide franchise and outlets everywhere, ensuring good customer service which makes the company even more successful. No matter wherever customers are, there are always McDonalds everywhere even though customers are outstation; they can enjoy anywhere, anytime. Therefore, it shows the numbers of McDonalds around the world. McDonalds also places great value on its employees which is the reason why McDonalds is consistently known as one of the top companies to work.

It is clear that McDonalds faces many competitors at the same time able to overcome them and produce a prestigious fast food company. Thereby McDonalds have competitive advantage over their rivals. McDonalds has a high requirement for their suppliers. As they want a great quality to provide a great taste for their foods, McDonalds needs the finest and freshest ingredients. So, to achieve the standard their suppliers have to fulfill few requirements such as the food safety policy, have a standardize preparation, high social, environmental and animal welfare standards and namely leading company. Some of McDonald’s suppliers are given below.