McDonald’s External and Internal Environments


McDonald’s is an international fast-food brand that operates effectively in today’s global marketplace. However, this transformative environment requires corporations to become increasingly flexible to maintain a competitive advantage. The paper describes McDonald’s general environment, forces of competition, threats and opportunities, strengths and weaknesses, as well as resources, capabilities, and core competencies. On their basis, an assessment is made of the influence of various aspects of the internal and external environment on the company’s performance and recommendations are given for transforming the strategy in modern conditions. Most importantly, to maintain a competitive advantage in the international market, McDonald’s needs to modify its brand image, as well as pay attention to product diversification and improvement of internal operations.

General Environment

Segment 1

For McDonald’s as an international corporation, global market factors have the strongest influence. The most significant segment of the general environment for the organization is currently socio-cultural factors. In particular, the growth of cultural diversity, as well as trends in a healthy lifestyle, can be a threat to the company (Jian et al., 2021). On the other hand, this segment also offers the company opportunities in the form of increasing the average income of people, as well as a more busy lifestyle in the urban environment. These aspects affect corporate operations through the need for more culturally sensitive marketing and the industry through increased competition.

Segment 2

Legal factors are another significant segment of the general environment influencing McDonald’s operations. In particular, increasing workplace health regulations, stricter animal welfare regulations, and rising minimum wages are having a significant impact on corporations. These factors are especially important in the framework of the international nature of the company, as it must comply with international legal standards (Tien, 2020). This segment affects the corporation through increased costs for compliance with regulations. For the industry, legal factors make it harder to do business and potentially reduce competition.

Five Forces of Competition

Force 1

The most important competitive factor for a corporation is the bargaining power of customers. At present, the welfare of customers even in developing countries is gradually increasing, which increases economic freedom (Raj & Singh, 2020). There are many offerings in the fast-food industry that vary in quality and cost. Customers can choose from many other fast-food restaurants with unique features and pricing. In the past, the company has addressed this aspect by building customer loyalty and strong brand awareness that keeps customers. Additionally, the corporation focused on creating unique products that differ from those offered by competitors.

Force 2

Another significant force is the threat of substitutes or substitution, which is especially relevant in modern conditions. Currently, McDonald’s is facing competition not only from local companies but also from international players. Additionally, people can switch to other food sources, including homemade food or independent restaurants. The corporation addressed this aspect through an emphasis on the speed of delivery and quality of products. McDonald’s focused the attention of customers on the speed and taste of the food offered, which gave them a competitive advantage.

Future Improvements

Concerning the identified competitive forces, McDonald’s needs to transform its strategy to function effectively in the future. In particular, it is currently not enough for a corporation to maintain existing low prices and brand awareness to maintain a competitive advantage. The main threat is also the emergence of large international players in the industry, which can significantly limit the activities of McDonald’s. At the moment, corporations need to develop their strategy, taking into account the diversity of the global market. To effectively minimize the bargaining power of consumers, McDonald’s should create unique value based on a culturally sensitive approach. To minimize the risks associated with increased competition and the threat of substitutes, it is also important to provide a unique customer experience through a variety of unique offers. Importantly, cultural sensitivity within an international marketplace can be key to maintaining a competitive advantage. Addressing current social trends will allow the company to take a more stable position in a transforming global environment.

Greatest External Threat

The most significant external threats to corporations are associated with increased competition and increasing cultural diversity due to internationalization. Additionally, current food trends with a focus on healthier lifestyles also pose a threat to McDonald’s. In this situation, the corporation may consider diversifying its operations toward creating a more diverse customer experience (Schmid & Gombert, 2018). In particular, these aspects may include taking into account the cultural and behavioral characteristics of the modern consumer. Such changes can enable a company to capture large market shares and maintain a competitive advantage. The corporation can actively participate in the diversification of its activities by emphasizing the importance of the direction of healthy food.

Greatest Opportunity

An increased focus on healthy food, as well as ways for global development, appear to be opportunities for the corporation. In particular, in modern conditions, McDonald’s can transform the perception of its brand as more diversified with a focus on current trends. Additionally, the company can actively use modern technologies and introduce innovative products, which is possible due to the economic strength of the brand. The corporation may pay attention to the development of a mobile application or a product delivery system. It is also important to create unique products that can reflect a focus on cultural diversity and healthy food trends. These aspects will allow the company to offer a more diverse customer experience, as well as increase the number of unique products.

Strengths and Weaknesses

Strong brand awareness, as well as stable income, are the main strengths of the corporation. These aspects allow the company to experiment with the strategy while minimizing economic and reputational risks. Additionally, a company can adopt technological innovations to improve its operations and customer experience. It is also important that McDonald’s has a large market share in the industry, which helps in international development. Finally, the corporation’s collaboration with international and local suppliers makes it possible to achieve the best product quality. The weaknesses of McDonald’s include an unhealthy brand image, which can currently harm the popularity of the corporation. Additionally, today’s environment often results in supply chain disruption, which negatively impacts operations and incurs additional costs. One of the company’s most significant weaknesses is the active loss of customers due to increased competition. Finally, the evolving legal regulations of employees’ rights and the increase in minimum wages represent a weakness for the company that cannot adequately respond to them, leading to staff dissatisfaction.

Strategy or Tactic

The company’s strategy within the existing conditions should be based on the transformation of the brand image product diversification, as well as on the focus on improving supply chains. First of all, McDonald’s should actively develop healthy food product directions, as well as promote these products among consumers. In this situation, a significant factor is the transformation of the brand image and the shift in the attention of the audience from unhealthy fast food options. Supply chains need to be developed with a focus on local suppliers. However, this factor will increase the influence of suppliers’ bargaining power on the company. On the other hand, supply chains can become more stable and also work effectively on the brand image, emphasizing the local social participation of the corporation and healthy sources of products. In modern conditions, it is also important for a company to improve its employees’ policies to create more comfortable working conditions and increase the efficiency of the staff.

Resources, Capabilities, and Core Competencies

The main resource of the company is a set of unique products that are based on McDonald’s recipes. An important capability of the corporation is the integration and active use of technology for the processing and delivery of orders, which improves the customer experience. Capabilities also include the corporation’s cooperation with third parties in the delivery of orders, as well as the use of mobile digital technologies. Additionally, McDonald’s has an efficient production system that ensures cost and quality efficiency. The most important resource and capability of the corporation is a large international chain of restaurants, which helps to maintain recognition. The size of a global corporation also provides the company with the opportunity to use economies of scale, which helps in technological and economic development. Among the key competencies of the company, one can single out a recognizable and already iconic international brand and the presence of many unique products.


Jian, O. Z., Utama, A., Musa, W., Hasly, W. B., Al-Rifae, R., Hussain, N., & Andriawan, N. (2021). Effective marketing strategies of McDonald’s in Malaysia and Indonesia. International Journal of Applied Business and International Management, 6(2), 33-46. Web.

Raj, S. K., & Singh, N. K. (2020). Strategizing of fast food industries using a balanced scorecard approach: A case study of McDonald’s corporation. International Journal of Humanities, Arts and Social Sciences, 6(6), 258-273. Web.

Schmid, S., & Gombert, A. (2018). McDonald’s: Is the fast food icon reaching the limits of growth? In S. Schmid (ed.), Internationalization of business: Cases on strategy formulation and implementation (pp. 155-171). Springer.

Tien, N. H. (2020). Analysis of McDonalds’ entry strategy into Vietnam market. International Journal of Advanced Research and Development, 5(3), 23-29.

Cite this paper

Select a referencing style


AssignZen. (2023, February 16). McDonald’s External and Internal Environments.

Work Cited

"McDonald’s External and Internal Environments." AssignZen, 16 Feb. 2023,

1. AssignZen. "McDonald’s External and Internal Environments." February 16, 2023.


AssignZen. "McDonald’s External and Internal Environments." February 16, 2023.


AssignZen. 2023. "McDonald’s External and Internal Environments." February 16, 2023.


AssignZen. (2023) 'McDonald’s External and Internal Environments'. 16 February.

Click to copy

This report on McDonald’s External and Internal Environments was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

Removal Request

If you are the original creator of this paper and no longer wish to have it published on Asignzen, request the removal.