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Q NO.1. What is the purpose of conducting an external environment analysis? What are the general environment forces that could influence or have influenced McDonald’s development in china?
Ans : First of all before describing the purpose of external environment analysis we should come to know what external environment actually is? External environment include all that factors that influences the activities and operations of an organization. Actually it determines the opportunity and threat of an organization. External environment analysis is conducted so that we come to know about the environmental factors which affect our organization so that we can take maximum advantage of opportunities that can lead to higher profits and reduce the impact of threat that can harm the future of our organization.
McDonald's, the world-famous American fast food franchisor, entered mainland China in 1990, when Chinese franchise law did not even exist. In this once-closed country whose market only opened up to foreign investors in 1978, McDonald's had to adapt to an unfamiliar and rapidly changing environment. Not only was food culture in China vastly different from that in the West, but food culture, lifestyles and legal structure were altering as a result of surging economic growth and massive urbanization. Competition was also intensifying as local and foreign restaurants sought to capitalize on China's increasing affluence. As the growing middle class demanded higher standards from these companies, McDonald's local business practices in terms of food healthiness, employee welfare and other socio-environmental issues were put under close scrutiny in China. While the nation's booming economy provided environmental conditions suitable for fast-food culture, the environment also posed challenges to the survival of fast-food operators in the country.
There are environmental forces that could influence the development of McDonald in china can be determined through pest analysis.
Ans : First of all before describing the purpose of external environment analysis we should come to know what external environment actually is? External environment include all that factors that influences the activities and operations of an organization. Actually it determines the opportunity and threat of an organization. External environment analysis is conducted so that we come to know about the environmental factors which affect our organization so that we can take maximum advantage of opportunities that can lead to higher profits and reduce the impact of threat that can harm the future of our organization.
McDonald's, the world-famous American fast food franchisor, entered mainland China in 1990, when Chinese franchise law did not even exist. In this once-closed country whose market only opened up to foreign investors in 1978, McDonald's had to adapt to an unfamiliar and rapidly changing environment. Not only was food culture in China vastly different from that in the West, but food culture, lifestyles and legal structure were altering as a result of surging economic growth and massive urbanization. Competition was also intensifying as local and foreign restaurants sought to capitalize on China's increasing affluence. As the growing middle class demanded higher standards from these companies, McDonald's local business practices in terms of food healthiness, employee welfare and other socio-environmental issues were put under close scrutiny in China. While the nation's booming economy provided environmental conditions suitable for fast-food culture, the environment also posed challenges to the survival of fast-food operators in the country.
There are environmental forces that could influence the development of McDonald in china can be determined through pest analysis.