Pest Analysis of Mcdonald

MKT 204 Principle of Marketing 2 Individual Assignment Fast food industry Swot Analysis Name: Ting Ze Kai ID: I11008551 Section: 5K1 Lecturer: Mr CHEAH SIN CHYE Table of Contents Company Background| 3| PEST Analysis | 4-9| 4Ps Strategies| 10-11| References| 12-13| Appendix| 14| Company Background McDonald is a largest chain of hamburger fast food restaurants in the world. Approximately 68 million customers in 119 countries daily are served. The birth of McDonald began with Raymond Albert Kroc.He found two brothers (Richard and Maurice McDonald) who run a hamburger restaurant and acquired the franchising right from them to run McDonald’s restaurant. In 1955, McDonald’s Corporation was founded by Ray Kroc and opened the first restaurant in Des Plaines, Illinois. In 1980, GOLDEN ARHCES RESTAURANTS SDN BHD gets the license to operate McDonald’s restaurant in Malaysia from McDonald’s Corporation USA in 1980. The first restaurant McDonald’s Malaysia opene d at Jalan Bukit Bintang, Kuala Lumpur. Now, it has more than 200 restaurants operated in Malaysia. PEST Analysis- McDonaldPolitical * Raising retirement age * Healthy Issue * Taxation| Economic * Exchange currencies * Economic growth * Interest rate| Social * Seek to better quality * Technology with teenagers | Technology * Online advertising * Mobile CRM * New technology | Political Raising retirement age According to the V. SHANKAR GANESH and EUNICE AU (2012), they stated that the retirement age for the public sector has already been raised to 60 by government. It can be a huge impact for the company. Normally, company paid high salary for the old workers which contain high skill and experience.For saving cost, company will recruit new worker which paid low salary to cover worker near retirement age. But, the retirement age has been increase and old worker still with high salary. It will lead the cost of labour increasing to the company. Healthy Issue According to the Audrey Edwa rds (2012), he stated that 35 major food and beverage(F&B) producer and fast food has been asked by the government to reduce the sugar and salt content in their product. It implies government will start to enhance the standard of requirement of the food and request fast food company emphasis on more healthy food.Therefore company should readjustment the standard of their food to reach the government requirement. It might affect the taste of their product and losing their customers. Taxation Prime Minister Dato Seri Najib in Budget 2012 announced franchise fee is now tax deductible in Malaysia. Those fees for franchise business they paid are allowable for tax deduction (NBC, 2011). It is good news for those franchise companies. Normally, a rise in corporation tax has the same effect as increase cost. Company will pass some of this tax on to consumer with higher price.Whereas, franchise business can use those fees they paid to deduce the tax from company. Therefore, the cost will be d ecrease and they can provide more value meal for their customer. Furthermore, they have more capital to find a new market such as hot drinks market, healthy food market and so on Economic Exchange currencies According to the The Star (2012), it mentioned that the ringgit climbed 3. 7% to 3. 0598, the biggest gain since the third quarter of 2010. A head of treasury at Bangkok Bank Bhd said that the currency is on a strengthening trend and could test 3. 3 to the dollar in the near term (The Star, 2012). It means that the exchange currency maintains at the high level and it will be increasing in the following. McDonald always imports most of its raw material such as beef and potatoes due to local market cannot supply in abundant to meet the demand of its products. Therefore, the strengthening of ringgit makes company cost of purchase decrease. Then, company is able to lower their product price and diversify their promotion tools to offer more value meal to attract customer.Economic gro wth According to The Star (2012), it mentioned that Malaysia’s economic growth remains strong and is at a comfortable level when compared with that of the global economy and the central bank has projected the Malaysian economy would grow at a steady 4%-5% this year anchored by resilient domestic demand. As the food slightly above normal foods, not many people will have the income range to consume the products. Moreover If the economy is bad and their income is affected, the demand of McDonald product will certainly going down.But Malaysia’s economic remains strong means Malaysian have more disposable income and they can spend more and more expensive food at fast food restaurant. Interest rate Malaysian interest rates currently at three per cent have remained accommodative (The Star, 2012). It could be a dangerous for the company. Businesses often need to take out short term loan to make up for shortfall in expenses, so higher interest rate makes such shortfalls more co stly, since the business will have to more interest back to lenders. Company also frequently take out longer term debt for improvement and infrastructure.The higher interest rate, they should face more costly on their debt. Therefore, they should lower their cost of production by using different way and strengthen their marketing strategies to gain more profit to overcome. Social Seek to better quality Malaysian quality of life index increased from 100 points for the base year 2000 to 111. 9 points in 2010 (The Star, 2012). When their quality of life is improved, they have higher expectation. They will start to want have quality in services and more conveniences that can differentiate one restaurant from another.All these needs should be considered by the company. If company haven’t noticed it yet, it will be difficult to gain competitive advantage in the market. Technology with teenagers According to the Joy Lee (2012), he mentioned that technology has no doubt brought about the luxury of convenience. Nowadays, even a toddler or kid is in tune with technology. It means that technology is changing the life style. Teenagers want technology in their life and facilities such as credit card payment, wireless internet and other attraction for their hangout and eating.So all these need should be considered by McDonald Company. Technology Online advertising During the height of the tech boom, online business is getting normal nowadays. It brings convenient to the customer and company. According to the Jack Komperday (2003), McDonald’s sat on the internet advertising side lines. This will get closer with their target market because teenagers get in touch with technology more. Compare with TV advertising, online advertising is more effective and cheaper. Furthermore, company are easier to spread their new products and news through their official website such as www.Mcdonal. com. my. Customer also can take order easily through their official websites. Mobi le CRM According to the Chantal Tode (2012), Mcdonald’s will introduce a mobile CRM program with the goal of rewarding customer and driving loyalty. The program involves using the Mowingo mobile application to notify customer about regional promotions and store-specific coupons that are exclusive to the app and the store issuing them such as they can get a free coffee or other through the app (Chantal Tode, 2012). This will lead cost saving for the company and attract more customers. New TechnologyTimes have changed and evolution of technology in the fast food industry is picking up the pace. According to the Kerry Pipes (n. d. ), touch-screen kiosks and self-checkout lanes will happen in fast food restaurants such as McDonald, Burger King and so on. These contactless payment kiosks often included colourful, animated touch-screen menus that give customer the option to browse through the entire menu, customize their order, and then pay with cash a credit card Kerry Pipes (n. d . ). It is very fantastic system for McDonald which is a fast food industry provide fast services.They give customer more freedom and convenient. It will increase the speed of service and ease long lines. Company also can cut their labour costs due to the machine has replaced labour work. 4P Strategies deal with issue Product For dealing the health issue, company can come up new menu with healthy food. McDonald’s specialise product is burger so they can come out a healthy hamburger, add salad and fruit with set meal or organic food. It will meet the requirement from government and open new market to attract healthy conscious customer.Furthermore, Malaysia’s economic is growing, Malaysian has more steady and disposable income and they will choose more expensive and quality food to satisfy them. Therefore, McDonald can adapt better raw material to produce products with high price and high quality such as triple burger, high quality beef burger and so on to satisfy custom er’s taste. Price In marketing mix, price is very important for a product. Due to the franchise fee is now tax deduction in Malaysia, McDonald are able to use more pricing strategies to position their products such as promotion price, value price, price skimming.But for the vegetarian burger and high quality beef burger, company can use pricing skimming method to set initial high price with them into market because they adapt high quality and healthy material to make it and then slowly lowers the price to make the product available to a wider market. It will position the healthy burger with high price high quality in people’s mind. In addition, exchange currencies issues bring the cost of production decrease and hence they can earn more profit. Promotion For the new launching of product, company can advertise new product with bar code.Customer scan the barcode with their smartphone, they can get free drinks with new product. Online advertising is getting normal nowaday s. Therefore, company can use various form of online marketing techniques such as banner advertisements, videos or social medial to promote their product. In addition, McDonald, social responsible company so they can expand their online advertising related with social responsible. It can build a positive image in the market. Furthermore, using CRM program maintains customer relationship and loyalty.McDonald has opportunity cooperate with mobile cooperation to wider their range of customers such as customer will get free coupons when they purchase certain brands mobile. Place Malaysians are starting to seek to better quality now. McDonald should increase their outlets nearby work place, bus station, and airport. Furthermore, they should increase their location of deliver service and provide training for their employee to build a faster and better service for their customer. For the new launching product such as high quality beef burger, they initially can only available few outlets w hich located upper middle class area.References * V. SHANKAR GANESH and EUNICE AU, 2012. Raising retirement age. Available at: http://www. nst. com. my/top-news/raising-retirement-age-1. 94353#. [Accessed on 19 June 2012] * Audery Edwards, 2012. Passion for food feeds disease. Available at: http://thestar. com. my/news/story. asp? file=/2012/4/15/nation/11069279&sec=nation. [Accessed on 19 June 2012] * The Star, 2012. Asian currencies complete quarterly gain. Available at: http://thestar. com. my/news/story. asp? file=/2012/4/15/nation/11069279&sec=nation [Accessed on 19 June 2012] * The Star, 2012.Minister: Economic growth stays strong. Available at: http://biz. thestar. com. my/news/story. asp? file=/2012/3/26/business/10986390&sec=business [Accessed on 19 June 2012] * The Star, 2012. Interest rates remain accommodative. Available at: http://biz. thestar. com. my/news/story. asp? file=/2012/3/21/business/20120321195459&sec=business [Accessed on 19 June 2012] * Joy Lee, 2012. Today ’s toddlers and kids are in tune with technology. Available at: http://thestar. com. my/metro/story. asp? file=%2F2012%2F6%2F2%2Fcentral%2F11395408&sec=central#.T8nYyO-wHmE. facebook [Accessed on 19 June 2012] * The Star, 2012. Report shows better quality of life in 2000-2010. Available at: http://thestar. com. my/news/story. asp? file=/2012/6/11/nation/20120611220429&sec=nation. [Accessed on 19 June 2012] * Tan Cheng Li, 2012. Malaysians do their part to protect the environment. Available at: http://thestar. com. my/lifestyle/story. asp? file=/2011/4/22/lifefocus/8485754&sec=lifefocus. [Accessed on 19 June 2012] * NBC, 2012. Franchisee fee is now tax deductible in Malaysia.Available at: http://www. nbc. com. my/blog/franchise-fee-tax-deductible-in-malaysia/. [Accessed on 19 June 2012] * Jack Komperda, 2003. Buying Time Online. Available at: http://www. usnews. com/usnews/culture/articles/031006/6ads. htm. [Accessed on 19 June 2012] * Chantal Tode, 2012. Mcdonald’s bit es into mobile CRM at over 500 locations this summer. Available at: http://www. mobilecommercedaily. com/2012/05/18/mcdonald%E2%80%99s-bites-into-mobile-crm-at-over-500-locations-this-summer. [Accessed on 19 June 2012] Appendix