Unit 5: Assignment 2
Introduction: This report will explain the external factors that influence a selected business
considering international trading. Explain how business support systems enable a selected business
to trade internationally Carry out a situational analysis on two countries a selected business may
consider trading in. Recommend one country an established business could target for international
trade, justifying your decision.
Explain the external factors that influence a selected business considering trading internationally.
The first chapter of our history was started by Ray Kroc, who in 1954 created a little burger joint in
California. We're pleased to have grown from small beginnings as a restaurant to become one of the
top food service brands in the world, with more than 36,000 locations across more than 100 nations.
McDonald's inventiveness, consistency, and franchising model are primarily responsible for its
success today. Their franchising strategy allowed them to see quick expansion. In a nutshell, our goal
is to give customers excellent food and service at a fair price.
Political
The way a country conducts business and the kinds of companies that can transact there on a global
scale are significantly influenced by the political influence of the government of that country or the
presidency of a group of countries, such as the EU or APEC. Understanding a country's or set of
countries' political structure is crucial; for instance, the fact that China and Cuba are both communist
regimes means that trade with them is more difficult than it is with other nations and may be subject
to additional restrictions. Vodafone has had to contend with escalating competition over the years in
Spain and Italy. In more than a hundred nations, McDonald's must answer to political regulations
and pressures. They are subject to the same health and sanitary rules as any other restaurant.
Numerous prevalent health conditions, including type 2 diabetes, hypertension, and heart disease,
are associated with consuming excessive amounts of sugar and sodium. Additionally, obesity, stroke,
and heart attack may result from these foods.
Governmental disputes between nations have an impact on McDonald's as well. For instance, recent
tensions have existed between the United States and the United Kingdom. Additionally, contact with
Russia can be iffy. Despite having eateries all around the globe, McDonald's is an American
corporation. Governmental disputes could change the terms of present trade agreements, making it
difficult for McDonald's to operate abroad.
Economic
The economic climate in the nation where a company conducts business has an impact as well.
Customers' capacity to purchase goods in that nation as well as the firm can be significantly
impacted by the economy. The following list of economic factors can have a big impact: Taxation,
interest rates, inflation, and the business's economic cycle stage, such as growth or reduction in
employment or unemployment, all have an impact on how much people are willing to pay for goods
and services. They must choose if buying raw materials locally or importing them is the better course
of action. This choice is heavily influenced by the number of import tariffs and international
incorporation charges. The negative impact of rising customer health consciousness on McDonald's
brand image. To combat their reputation as serving "junk food," many fast-food chains are
,expanding their menus to include healthier options. However, it is challenging and expensive to
influence the public's perceptions.
Each location's unemployment rate should be considered by McDonald's. The business is renowned
for having a high turnover rate, which means that employees are hired and fired frequently.
Although it's a running joke that McDonald's is "always hiring," this may offer some hope for areas
with high unemployment rates.
Social
Depending on the nation in which an international firm operates, social external pressures on those
businesses vary. Social external effects can have a significant impact and can range from health
aspects of a nation, such as obesity or smoking rates, to other social aspects of life, such as attitudes
toward work and leisure, or aspects of the population itself, like the pace of population growth or
ageing. Consumers examine everything they put into their bodies with obsession. The popularity of
low-carb and low-sugar diets is growing. Unfortunately, McDonald's menu does not meet these
requirements, which makes them a less appealing choice for individuals who are concerned about
their health. Recently, they introduced high-protein smoothies. Customers continue to criticize these
drinks' high sugar content, nevertheless. Fries and hamburgers are inadequate when eaten abroad.
People in Asian nations, for instance, are accustomed to consuming their regional food. Even if
hamburgers and fries are pleasant to indulge in on occasion, they might not be the first option for
audiences from other countries. While McDonald's has provided customized menu selections in
nations like Japan and Canada—a chance they ought to seize more frequently—doing so can be
expensive for the business as well.
For McDonald's to keep up with the evolving cuisine trends, it must shed its unfavourable
reputation. This won't be simple. But they must do it if they are to compete successfully with rival
fast-food chains that are changing their menus in response to consumer demand.
Technological
Technology significantly impacts businesses, and it changes quickly most of the time. Through the
usage of the internet, and particularly through online communications and social media, the velocity
of change and the capacity for communicating change is accelerating quickly. The international
company could be impacted positively or poorly by access to quickly evolving technology, notably in
the area of communications. Updates and information exchange can happen very quickly. Sales are
possible around-the-clock; the idea of a closed business does not exist. Sending an email instead of
sending a publication through the mail saves money and time. It is possible to track many locations
using GPS or other tools, such as parcel delivery. The technology they employ is required to increase
employee efficiency, team communication, and food production by client expectations. McDonald's
has improved its menus by installing glitzy television screens behind their cashiers that hang from
the ceiling. They also display nutritional data on their website. In some places, you may place an
online order for food, enabling you to walk in and have your meal without waiting in line. Many
McDonald’s now have new paint, chairs, and tables to complement their beautiful flat-screen menu
screens. To entice more consumers to place orders and remain longer, they also offer free Wi-Fi.
However, as the old saying goes, their ice cream maker is still down more often than it has ever been
up.
Additionally, active on social media is McDonald's. They advertise on Facebook and Instagram to
draw people in with new or returning products like the McCafé Vanilla Chai Frappuccino, which was
a summertime favourite. Even though Wendy's is renowned for its clever and amusing Twitter
, exchanges, and McDonald's is tremendously well-known (and hardly needs an introduction), failing
to utilize social media will only give its rivals an advantage.
Legal and regulatory
The legal systems and legislation of the various nations where multinational corporations conduct
business will have quite diverse effects on how those businesses conduct their operations. In the UK,
the USA, and India, common law is used, which means that in addition to statute law or laws passed
by Parliament, the law is construed by decisions that have already been decided in court. Other
nations, like France and Germany, run their governments under the civil system. This indicates that
they have a set of written regulations outlining what is permitted and how these regulations are to
be applied.
McDonald's has the chance to expand its R&D spending to boost operational effectiveness and
efficiency. The business can also increase automation. Changes in McDonald's operations
management and productivity strategies might be necessary to accommodate this automation. The
fast food industry has the chance to enhance its mobile offerings to reach more customers through
mobile apps. The corporation might anticipate increased revenue from mobile channels given the
technological trend of rising food sales via mobile devices. To be competitive, McDonald's must keep
up with technological advancements.
Ecological/Environmental Factors
International businesses are impacted by and contribute to environmental and ethical pressures in
the nations in which they operate. For instance, they may produce large amounts of waste when
providing services or producing goods, or they may emit pollutants when operating machinery or
transporting goods. The laws and regulations of specific nations or groups of nations can significantly
affect how a firm conducts its operations.
The majority of companies are paying attention to their plans and initiatives to make lasting changes
to lessen their negative effects on the environment. To improve its brand image, McDonald's can
also implement some environmentally friendly modifications. The business operates more than
37,000 locations. To reduce their reliance on non-renewable energy sources, they can transition to
renewable energy sources like solar energy. McDonald's can organise campaigns to protect the
environment, reduce the use of plastics, etc. because the company has a huge consumer base and
the ability to quickly reach a large number of people.
Explain how business support systems enable a selected business to trade internationally.
Systems that facilitate international trade are referred to as international business support systems.
The concept of "the globe is getting smaller" was introduced earlier in this chapter. Because of the
internet and other international payment options, it is becoming simpler to interact with clients who
are located in other countries and conduct business with them.
The influence of the internet
Businesses can now conduct international business in a variety of nations that were previously
inaccessible to them. Social media and websites on the internet, which are continually developing,
enable businesses to swiftly and easily draw in new clients from around the globe. Customers at
McDonald's benefit from having access to technologies they are familiar with, which makes their
lives easier. Restaurant operators need to start updating their technology since tablet technology is
