Founded in the 1940s, McDonald’s has become the largest, the most successful and most well known fast-food chain in the world. When ranked amongst the rest of their industry competitors, McDonald’s are consistently ranked as the most valuable fast-food brand in the world as well as being in the top 10 of all the overall brands in the world . Achievements like this highlight the enormity of the firm when they are ranked amongst the likes of Apple, Google and Coca-Cola year after year (Forbes, 2015).
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Between 2003 and 2011, McDonald’s saw a rise in its value from $12 per share to $100 per share at its peak in 2011 (The Economist, 2015b). However, over the last 18 months, the firm’s dominance is not as apparent as it once was. With a fall in sales revenue and a more substantial challenge from other fast-food competitors, the question being asked is – why, after so long, is McDonald’s starting to falter and what can they do to solidify their top spot? This essay will argue that the main reason behind the decline in McDonald’s sales is the change in the social and cultural makeup of many of its consumers. Whilst other factors will be highlighted through the use of a PEST analysis, this essay will argue that the main reason is a generational shift that McDonald’s has failed to keep up with and will ultimately offer recommendations that could potentially help the fast-food chain increase sales. The essay will primarily focus on ways to increase sales in the UK. The UK is home to over 1,200 McDonald’s restaurants. In recent years it has become the UK’s third largest fast-food chain behind the likes of Costa and Greggs (Armstrong, 2015). Despite sales increasing in the UK by 0.5%, worldwide, the firm saw a decrease of 1.8% in sales (Fortune Magazine, 2015). There are things that are out of the control of those in charge of UK operations such as food safety scares in Japan and China but there can be measures taken to increase sales so that it can offset the problems in other parts of the world (Fortune Magazine, 2015). All businesses, no matter the size of the company, or the scope of their operations, must consider the external environment they are operating in. Failure to do so can result in missed opportunities to maximise one’s profit-making or allows competitors to come into the market and control a significant portion of the market share (Worthington, 2009). PEST analysis (an acronym for Political, Economical, Social and Technological) is a tool used to examine the external environment to outline potential limitations in various aspects of a business’ operations. Anything that can hinder the ultimate aim for a company, to make money, needs to be a priority for any business on the behalf of their shareholders.
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