PEST analysis is a useful strategic tool for understanding market trends, business position and the potential and direction for operations (Kotler, 1998). PEST also helps to align company performance powerful forces of change that are impacting on the business environment (Porter, 1985).
The analysis examines the impact of political, economic, social and cultural, technological, environmental and legal factors and their interrelation; on the external environment of an organisation. The results can then be used to take advantage of opportunities and plan for threats (Byars, 1991; Cooper, 2000).
McDonalds is heavily affected by political factors in the many countries in which it operates. These political factors can include tax systems and barriers to entry or concessions to industry; as well as attitudes of different governments towards multi-national corporations, foreign ownership of land and businesses, capitalism and Americanisation of culture. These and other political factors can all play very important roles in the viability and profitability of Mc Donald’s entry into regional markets.
Examples of the political environment affecting the McDonald Corporation include concerns in developed countries like the US, Canada and Australia, about the potential exploitation of a youth workforce (Botterill and Kline, 2007). More current examples include the push for greater regulation of marketing of “junk food” to children in Australia (Frith, 2008) and anti-Americanism and anti-bourgeois political activism in France and Germany (Connolly, 2007), as well as Greenpeace active campaigning against McDonaldization in the United Kingdom (Botterill and Kline, 2007).
Economic conditions affect the success and profitability of a business at any given time because they affect capital availability and cost as well as demand (Thompson, 2002).
A depressed economy will generally result in business closures but it can provide opportunities for some organisations...