McDonald’s has always been an iconic brand of fast food globally. Nevertheless, in the 2000s, it faced some issues with marketing and sales. In the following paper, the mentioned above problems will be investigated, and propositions of how to improve the situation will be made.
In order to study the case under consideration, it is necessary to make a PESTEL analysis that considers political, economic, social, technological, environmental and legal factors that have impact on a company. No doubt, McDonald’s is influenced by political factors in all countries where it operates. As they may be very different depending on the state, it creates issues for the corporation because it has to adapt its products and overall activity to the corresponding demands. For instance, the organization is affected by labor laws because it hires employees among the citizens of a particular country and needs to follow the relevant regulations and policies. It should also adjust to trade policies; for example, when there are limits of import or export of goods McDonald’s buys. Health policies and healthcare system can influence McDonald’s too as its foods are often unhealthy, and customers may refuse to buy them. Lastly, legislation on business activities should also be considered.
To continue, as McDonald’s operates in markets of different countries, and their economic situation has a direct impact on it. Currently, the revenue of the corporation globally is declining. In 2013, it was $28.11 billion (“Revenue of McDonald’s,” 2016). In 2014, the revenue declined to $27.44 billion, and in 2015, in decreased further and reached $25.41 billion (“Revenue of McDonald’s,” 2016). Such a trend can be explained by many factors. In the US and developed countries, it was mostly caused by the growth of competitors that offer healthier foods because taking care of health is becoming more and more important in societies. Moreover, decline in sales was also caused by the global fall in GDP that amounted to $77,825 billion in 2014, and it dropped to $73,170 billion in 2015 (“Global GDP,” 2016). Thus, this fact can explain a general decrease in the ability of consumers to buy McDonald’s products. In developing countries, this influence is higher because the corporation’s foods are more expensive there. Nevertheless, the company can increase its profits again because the global GDP is projected to grow in the nearest years (“Global GDP,” 2016).
Furthermore, various social factors should also be considered as McDonald’s offers foods to customers who are the part of their societies. For instance, eating habits form a significant social characteristic. In some countries like the US or Western European states, people prefer eating out and do it regularly. Thus, they are likely to go to McDonald’s often, including family visits. In developing countries, this trend is less common, and people prefer eating at home. Consequently, it influences the number of restaurants that can be open and profitable in a particular country. Moreover, each of them has its own common products that are usual and consumed by many customers who are used to them and like them. As a result, together with foods like Big Mac that are sold everywhere, McDonald’s adapts to local eating habits and sells several dishes that are close for citizens and can attract them, for instance, shrimp burgers in Japan, taro pies in China, beer in some European countries, Chicken McDo with Spaghetti in Philippines, etc. (Osswald, 2013). One more social factor that influences McDonald’s operation is customer’s average income as depending on it, the company sets its prices. Moreover, in poor states, eating in the fast food restaurant under consideration is not an everyday event due to high prices, but it is more customary in developed countries as it is relatively cheap. Finally, taking care of health influences the corporation, too. Commonly, its products are considered unhealthy; thus, the more common the personal healthcare in the society is, the less popular the business is likely to be there.
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Obviously, McDonald’s is a modern and dynamic company, and it uses different modern technologies to compete with other restaurants efficiently and to satisfy the customers who like using up-to-date devices. For instance, the corporation offers a mobile app available for iOS and Android that allows tracking different propositions, exclusive offers and discounts, studying menu and information on the products and nutrition facts, finding the nearest restaurant, and so on (“McDonald’s,” 2016). Speaking about new technologies available in restaurants, a few of them have been opened in large cities like New York and are called “Create Your Taste” kiosks (Johnson, 2015). There, visitors can use large and convenient touch screens to select products and buy existing menu items, as well as create their own burgers – an option that is not available in traditional restaurants (Johnson, 2015). If they have problems, a staff member helps them and when a burger is created, it is priced and, then, served by a restaurant worker. The chain of such kiosks is expected to grow (Johnson, 2015).
In modern business world, most companies that want to become famous and respected and, thus, have higher sales take care of the surroundings because the environmental issues are getting more and more important. McDonald’s is not an exception, and it has several programs in this direction. For example, coffee sustainability program is aimed to buy only verified coffee beans that means that the corporation uses beans that are grown under Rainforest Alliance Program that prevents illegal logging to cultivate coffee plants (“Coffee Sustainability Program,” n.d.). Moreover, McDonald’s provides educational and technical assistance to farmers (“Coffee Sustainability Program,” n.d.). The company also has sourcing program and purchases palm oil, fish and other products from suppliers who follow the environmental norms (“Good Sourcing,” n.d.). Lastly, the business aims to make its foods healthier and use energy-efficient technologies (“Sustainability,” n.d.).
Concerning the last element of the PESTEL analysis, in each country where McDonald’s is present, it should follow particular laws and regulations which is important because it guarantees successful operation and growth. Despite the fact that the company does everything possible to follow the legislative norms, there were some cases of lawsuits against it. For example, in the US, it had some legal issues with franchising agreements and, as a result, franchisees had problems with operating their restaurants (Daley, 2015). It is well known that McDonald’s also had issues concerning the incompliance with labor laws in some countries. For instance, in Brazil in 2015, it paid less than the minimum wage to its employees prohibited them to take breaks (Lewis, 2015). At present, McDonald’s should cope with such legal problems to improve its reputation.
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One can see that although the company is successful, some problems still exist. In general, McDonald’s seems to have several main marketing challenges, and the most important one is related to its failure to introduce more of healthy products to its menu. Many competitors had done that, and the corporation copied them later when its sales declined, and it was blamed for unhealthy foods. It is especially noticeable in European countries where more and more people are facing the problem of being overweight and other health issues related to unhealthy eating that has led to the organization having serious problems in the market there. In the US, the issues are different: too many restaurants have been opened, and they have problems with sales because they compete with each other instead of cooperating to increase profits. The company has failed to cope with the challenges completely. It has introduced some healthy foods and advertised them, but, overall, its dishes are still considered harmful, and sales in the US and Europe continue declining. Thus, it is necessary for the firm to introduce a new philosophy of satisfying customers in all markets because the old one does not seem to work.
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There are several options to overcome the challenge of declining sales in the US and worldwide. Obviously, this problem has been caused by the growing number of rivals that offer similar foods. Nevertheless, serious competition comes from those that focus on the healthy products. The harm of the company’s dishes has been proven and reported about many times. Consequently, McDonald’s has introduced some useful foods, for instance, fruit bags for children that has helped to improve sales, but the problem still remains unsolved. Thus, it can be recommended for the corporation to continue making efforts in providing healthy dishes in order to attract more customers and increase profits. It is especially important in the states where people eat out regularly, and where McDonald’s is often visited by families, in particular, the US and developed countries. In the developing countries, citizens visit McDonald’s occasionally, and they may not take care of healthy foods there because eating rarely may not do harm. Fruit bags are a good idea, but it is used only in the US and the developed countries, while remaining too expensive for the developing ones. This leads to the conclusion that it is necessary for McDonald’s not only to introduce a wider choice of healthy products but also make them affordable. They can include, for example, fruit dishes, smoothies, healthy cocktails, etc. Additionally, one can turn common foods like fries and burgers into healthier, in particular, by reducing their fat and salt. New healthy products should be promoted via TV, printed ads, Internet and social media to attract customers, and a creative promotion campaign should be developed.
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Furthermore, as McDonald’s has problems with sales in the US due to the large number of restaurants, it is necessary to reorganize them. If the profits are not enough, it is necessary to close some restaurants, or to open new ones in other locations. Actually, as the company introduces healthier products, it is likely that the revenue will grow because taking care of health is in trend now. However, if the sales in the US remain low because of tight competition, it will be necessary for the corporation to shift its operations to the developing countries where it can introduce and promote price declining strategy to attract customers and increase sales. Additionally, it can introduce specific foods that are common for a particular region. Moreover, it is possible to implement sourcing programs aimed to use more of local products that will allow making prices lower because these ingredients are cheaper than the imported ones. If it is promoted among people, they are likely to become more loyal to McDonald’s and visit it more often.
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In conclusion, McDonald’s is a successful global company, but it has some problems related to unhealthy foods and declining sales. In order to overcome them, the company should introduce and promote a wider choice of healthy foods, become more competitive, and focus on the developing countries to grow.