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From Politics to Technology: How McDonald's and Amazon Navigate External Factors to Stay Ahead

Updated: Sep 19, 2023

Businesses, regardless of size or scope, are influenced by a variety of external factors that can have an impact on their operations, performance, and profitability. These factors include, among others, the economy, politics, society, technology, and competition. In this blog post, we'll look at some of the external factors that have influenced Amazon and McDonald's.


Learn more by watching the video (based on Amazon) and reading the blog post (based on McDonald's) below:



Economy


The economy is one of the most important external factors affecting businesses, and it includes things like inflation, interest rates, and consumer spending. When the economy is doing well, consumers tend to spend more money, which can lead to increased sales for businesses. When the economy is weak, consumers tend to cut back on spending, which can have a negative impact on businesses.


McDonald's is not immune to these trends. The COVID-19 pandemic caused a global economic downturn in 2020, forcing McDonald's to adapt its operations in order to survive. The company's sales fell as a result of the closure of many of its stores and a drop in consumer spending. As a result, the company shifted its focus to drive-thru and delivery options, which assisted in mitigating the pandemic's impact on its operations.


Politics


Political factors can also have an impact on businesses. Government policies and regulations can have an impact on the operations, supply chains, and profitability of businesses. Political unrest can have an impact on businesses by creating uncertainty and a lack of confidence among investors and consumers.


The recent backlash against fast food and its impact on public health is one example of how politics has impacted McDonald's. Governments and public health officials have become increasingly critical of the fast-food industry's role in fueling the obesity epidemic. As a result, governments have imposed regulations such as calorie labelling requirements and sugary beverage taxes, which can have a negative impact on McDonald's sales.


Society


Cultural norms, values, and demographics can all have an impact on businesses. Product demand can be influenced by shifting consumer preferences and trends, while cultural differences can have an impact on product design and marketing strategies.


McDonald's, for example, has been chastised by various social groups for its environmental impact and animal welfare practises. As a result of these concerns, the company has taken steps to address them, such as sourcing more sustainable ingredients and implementing animal welfare standards.


Technology


Technological advances have also had an impact on businesses, with the rise of e-commerce, mobile technology, and automation causing significant changes in consumer behaviour and business operations. Companies that do not adapt to technological advancements risk falling behind their competitors.


McDonald's has adapted to technological changes by including mobile ordering and payment options as well as self-service kiosks in its stores. These technological advances have assisted the company in improving the customer experience, increasing efficiency, and lowering labour costs.


Competition


Competition is an important external factor affecting businesses because it can affect market share, pricing strategies, and product innovation. Companies in highly competitive markets must constantly innovate and differentiate themselves in order to remain relevant.


McDonald's competes with other fast-food restaurants such as Burger King, Wendy's, and Subway. McDonald's has introduced new menu items to remain competitive, such as the McPlant, a plant-based burger, and the Travis Scott Meal, a collaboration with rapper Travis Scott. These marketing strategies assist McDonald's in distinguishing itself from competitors and attracting new customers.

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