Skip to content

Steeple Analysis Case Study Examples

McDonald’s Corporation’s strategies address issues identified in this PESTEL/PESTLE analysis. The PESTEL/PESTLE analysis model determines the various external factors that present opportunities or threats to the business, based on its remote or macro-environment. In the global fast food restaurant market, McDonald’s is focused on economic and sociocultural factors. Nonetheless, the company’s success is indicative of its effective strategies to deal with all of such external factors. As the biggest fast food restaurant chain in the world, McDonald’s must keep adapting its strategies based on the conditions of its industry environment.

This PESTEL/PESTLE analysis of McDonald’s shows that there are many opportunities and considerable threats that the firm must address to keep its viability in the rapidly changing global economy.

Political Factors Affecting McDonald’s Business

McDonald’s considers the impacts of the political environment on its industry. This aspect of the PESTEL/PESTLE analysis refers to the effects of governmental action on the remote or macro-environment of businesses. In McDonald’s case, the most significant political external factors are as follows:

  1. Increasing international trade agreements (opportunity)
  2. Pending tax reform (opportunity)
  3. Evolving public health policies (threat and opportunity)

McDonald’s has the opportunity to expand its business based on improved international trade, which can enhance global supply chains. McDonald’s also has the opportunity to reform its practices and strategies to lessen the impact of taxation on the business without violating the law. However, public health policy increasingly tends to discourage people from consuming fast foods from firms like McDonald’s. Nonetheless, the company has the opportunity to address this external factor by improving the healthfulness of its products. In this aspect of the PESTEL/PESTLE analysis of McDonald’s, the political external factors present opportunities that outweigh threats.

Economic Factors Important to McDonald’s

Economic changes around the world influence McDonald’s industry environment, considering its global nature. This aspect of the PESTEL/PESTLE analysis pertains to the effects of economic conditions and trends on the remote or macro-environment of firms. In McDonald’s case, the following are the most notable economic external factors:

  1. Slow but stable growth of the U.S. economy (opportunity)
  2. Stable but risky European economies (threat)
  3. Slowdown of the Chinese economy (threat)

McDonald’s has the opportunity to grow, even slowly, in the American economy, which is the firm’s biggest market. However, the current economic conditions in Europe could threaten McDonald’s growth in the region. Also, the slowdown of the Chinese economy threatens the company’s growth in Asia. In this aspect of the PESTEL/PESTLE analysis of McDonald’s, the economic external factors mainly threaten the business.

Social/Sociocultural Factors Influencing McDonald’s Business Environment

McDonald’s must respond to sociocultural changes in its remote or macro-environment. This aspect of the PESTEL/PESTLE analysis refers to the social conditions that support or limit businesses. In McDonald’s case, the most significant sociocultural external factors are as follows:

  1. Widening wealth gap (opportunity)
  2. Increasing cultural diversity (opportunity)
  3. Healthy lifestyle trend (threat & opportunity)

Based on the external factor of the widening wealth gap, McDonald’s has the opportunity to grow because the company’s target consumers are mostly from medium and low-income households. Also, McDonald’s has the opportunity to improve its products mix to satisfy a more diverse target market. However, the healthy lifestyle trend is a threat because many of McDonald’s products are often criticized for their negative health effects. Nonetheless, the company has the opportunity to improve the healthfulness of its products. In this aspect of the PESTEL/PESTLE analysis of McDonald’s, the social external factors create mostly opportunities for business development.

Technological Factors in McDonald’s Business

McDonald’s success partly depends on technological applications. This aspect of the PESTEL/PESTLE analysis pertains to the impact of technologies and related trends on the remote or macro-environment of companies. McDonald’s must address the following technological external factors:

  1. Moderate R&D activity in the industry (opportunity)
  2. Increasing business automation (opportunity)
  3. Increasing sales through mobile devices (opportunity)

McDonald’s has the opportunity to increase its research and development investments to improve business effectiveness and efficiency. Also, McDonald’s can apply more automation to maximize productivity, based on the external factor of increasing business automation. Furthermore, McDonald’s can improve its mobile services to tap more consumers via its website or mobile app. In the technological aspect of the PESTEL/PESTLE analysis, McDonald’s has major opportunities for growth.

Ecological/Environmental Factors

Ecological external factors affect McDonald’s consumers and, thus, the company’s performance. This aspect of the PESTEL/PESTLE analysis refers to the environmental issues in firms’ remote or macro-environment. In McDonald’s industry, the following are the most significant ecological external factors:

  1. Rising interest for corporate environmental programs (opportunity)
  2. Increasing emphasis on sustainable business strategies (opportunity)
  3. Climate change (threat)

McDonald’s can expand its corporate social responsibility strategies to reach even high performance in addressing environmental concerns. However, climate change remains a threat because of its negative effects on farms and, thus, McDonald’s supply chain. In this aspect of the PESTEL/PESTLE analysis, the ecological external factors highlight corporate social responsibility opportunities, although McDonald’s also needs to further diversify its supply chain to address the effects of climate change.

Legal Factors

McDonald’s must follow legal requirements imposed on its remote or macro-environment. This aspect of the PESTEL/PESTLE analysis pertains to the impact of laws or regulations on firms. The most significant legal external factors for McDonald’s are as follows:

  1. New legal minimum wage levels in the U.S. (threat)
  2. Local health regulations in workplaces and schools (threat)
  3. Animal welfare regulation (threat & opportunity)

McDonald’s faces the threat of higher minimum wages, which lead to higher costs and prices. Also, local health regulations impacting food service in workplaces and schools could reduce the company’s revenues from these areas. In addition, McDonald’s must address animal welfare regulatory effects on its supply chain. For example, the company can implement new policies to ensure animal welfare among meat producers. McDonald’s faces mainly threats based on legal external factors in this aspect of the PESTEL/PESTLE analysis.

McDonald’s PESTEL/PESTLE Analysis – Recommendations

This PESTEL/PESTLE analysis of McDonald’s Corporation shows that there are significant opportunities for business growth. The company can capitalize on technological strategies to enhance efficiency and productivity. McDonald’s can also improve product quality to address sociocultural and political external factors about health. This PESTEL/PESTLE analysis also indicates that the company must deal with a number of significant threats. McDonald’s can address economic external factors by expanding into other high-growth economies, such as Southeast Asian countries.

References
  • Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics, Oxford University Press, USA.
  • Housing Industry Association (2011). An Introduction to PESTLE Analysis. HIA Ltd.
  • McDonald’s Corporation (2015). Company Profile.
  • McDonald’s Corporation Form 10-K 2014.
  • Murphey, M., & Gause, R. (1974). UCF Research Guides. Industry Analysis. PESTLE Analysis. Business Horizons17(5), 27-38.
  • Roper, K. (2012, November). BIM Implementation: PESTEL Drivers & Barriers (Cross-national Analysis). In World Workplace 2012. IFMA.
  • United States Department of Agriculture Economic Research Service (2015). Food Service Industry Market Segments.

Case Study & Case Analysis, McDonald's Corporation, PESTEL/PESTLE Analysis, Restaurant Industry

COPYRIGHT NOTICE:
This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Copyright by Panmore Institute - All rights reserved. Small parts of this article may be quoted or paraphrased for research purposes, as long as the article is properly cited and referenced together with its URL/link.

Sony Corporation continues its global success by addressing the external factors and related issues in the remote or macro-environment of its business. The PESTEL/PESTLE analysis identifies such external factors in the political, economic, sociocultural, technological, ecological and legal aspects. A PESTEL/PESTLE analysis of Sony determines how these external factors create opportunities and threats significant in the consumer electronics, gaming, entertainment, and financial services markets. The company must effectively consider these factors in its strategic decision-making. Including the results of the PESTEL/PESTLE analysis can increase the suitability of Sony’s strategies with regard to the remote or macro-environment of the business.

A PESTEL/PESTLE analysis of Sony Corporation considers the external factors in the remote or macro-environment of the company’s business in the electronics, gaming, entertainment and financial services markets. Investors and managers can use the analysis in evaluating Sony’s strategies.

Political Factors Affecting Sony’s Business

Political conditions affect the markets where Sony operates. This aspect of the PESTEL/PESTLE analysis considers the influence of governmental activity on the remote or macro-environment of the company. The following political external factors are significant in Sony’s case:

  1. Political stability of biggest markets (opportunity)
  2. Increasing governmental support for data security (opportunity)
  3. Increasing governmental support for online business (opportunity)

Sony Corporation benefits from the political stability in majority of the biggest markets. This stability corresponds to the minimization of political barriers in the remote or macro-environment, thereby presenting opportunities for business expansion. In addition, Sony has the opportunity to grow based on the increased governmental support for data security. Governments are now increasing their efforts for data security, which supports the growth of businesses with online operations. In relation, governments are developing additional measures to support online business. This external factor creates opportunities for Sony to enhance its online operations. For example, the company can expand its online services in relation to its gaming products. In this aspect of the PESTEL/PESTLE analysis, Sony has growth opportunities based on the political stability of the biggest markets.

Economic Factors Important to Sony Corporation

Sony’s performance depends on economic trends. This aspect of the PESTEL/PESTLE analysis identifies the economic conditions significant to the business. Sony needs to consider the following economic external factors in its remote or macro-environment:

  1. High growth of developing markets (opportunity)
  2. Economic stability of developed markets (opportunity)
  3. Increasing disposable incomes (opportunity)

Sony has the opportunity to grow alongside the economic growth in developing markets. These markets have the highest growth rates, which can boost the company’s overall revenues. In addition, the economic stability of developed markets presents opportunities for Sony to enhance its operations, while experiencing minimal market-based risks. Another consideration is the increasing level of disposable income worldwide. This external factor creates opportunities for Sony to grow its revenues. For example, the company can market the PlayStation more aggressively, based on the expectation that customers are increasingly capable of buying the product. Based on this aspect of the PESTEL/PESTLE analysis of Sony, economic conditions present opportunities in the remote or macro-environment.

Social/Sociocultural Factors Influencing Sony’s Business Environment

Social trends affect the responses of customers to Sony’s products. This aspect of the PESTEL/PESTLE analysis determines the effects of social or sociocultural conditions on the remote or macro-environment of businesses. The following sociocultural external factors are relevant in the case of Sony Corporation:

  1. Increasing adoption of online gaming (opportunity)
  2. Improving wealth distribution (opportunity)
  3. Increasing openness toward leisure (opportunity)

The increasing adoption of online gaming and the improving wealth distribution create more opportunities for Sony to increase its revenues from the sale of its gaming products. For example, the company can expect potential increases in PlayStation sales revenues, as more people are likely to purchase the product. In addition, Sony can boost its sales revenues based on increasing openness toward leisure. This external factor highlights the benefit of marketing gaming and entertainment products to address the leisure needs of target customers. This aspect of the PESTEL/PESTLE analysis shows that sociocultural conditions lead to significant growth opportunities in Sony’s remote or macro-environment.

Technological Factors in Sony’s Business

Sony depends on technologies used in its business, and technologies that facilitate the use or consumption of its products. The effects of technological trends and conditions on the remote or macro-environment of firms are considered in this aspect of the PESTEL/PESTLE analysis. Sony must address the following technological external factors:

  1. Increasing dependence on digital technologies (opportunity)
  2. High rate of adoption of mobile technologies (opportunity)
  3. High rate of R&D activity (threat & opportunity)

Sony Corporation has growth opportunities based on the increasing dependence on digital technologies. This external factor points to increasing individual and organizational demand for digital technologies. For example, the integration of digital technology in smart homes presents new markets or market expansion opportunities for Sony. In relation, the company can exploit the high rate of adoption of mobile technologies by innovating its mobile devices for higher competitiveness and revenue generation. On the other hand, the high rate of research and development (R&D) activity among firms increases their competitiveness against Sony. This external factor is a threat because it creates more challenges against the company. Nonetheless, based on the same external factor, Sony has opportunities to grow its electronics, gaming, entertainment and financial services businesses. For instance, the company can use its R&D investment to develop competitive advantage to support the differentiation generic strategy (Read: Sony’s Generic Strategy & Intensive Growth Strategies). In this aspect of the PESTEL/PESTLE analysis, there are major opportunities for growth and competitiveness in Sony’s remote or macro-environment.

Ecological/Environmental Factors

The conditions of the natural environment affect Sony and its markets. This aspect of the PESTEL/PESTLE analysis covers the effects of ecological trends and conditions on firms’ remote or macro-environment. In Sony’s case, the following ecological external factors are significant:

  1. Increasing emphasis on business sustainability (opportunity)
  2. Increasing demand for environmentally friendly products (opportunity)
  3. Increasing availability of recycling facilities (opportunity)

Sony Corporation has growth opportunities based on the increasing emphasis on business sustainability. For example, the company can enhance its brand image by increasing its sustainability efforts. In relation, Sony can innovate to make its products more environmentally friendly. Such products could attract more customers. Another consideration is the increasing availability of recycling facilities. This external factor improves the potential success rate of Sony’s efforts to address product end-of-life concerns. For instance, the company can take advantage of the availability of such facilities to implement more comprehensive recycling programs. Based on this aspect of the PESTEL/PESTLE analysis of Sony, there are notable opportunities for business improvement based on external factors in the remote or macro-environment.

Legal Factors

Sony Corporation must satisfy legal requirements appropriate to its remote or macro-environment. This aspect of the PESTEL/PESTLE analysis determines the effects of regulations on firms. Sony must consider the following legal external factors:

  1. Improving patent protection (opportunity)
  2. Increasing regulations on e-waste (threat & opportunity)
  3. Increasing product regulation (threat & opportunity)

The improving patent protection highlights governmental and intergovernmental efforts to protect patents. This external factor presents opportunities for Sony to grow its business while expecting minimal challenges in protecting its proprietary information and designs. On the other hand, the increasing regulations on e-waste are a threat in terms of the additional efforts and expense of reducing the environmental impact of the company’s consumer electronics and gaming products. Nonetheless, Sony has opportunities to strengthen its brand image by proactively improving its products to minimize environmental impact. In relation, the increasing product regulation threatens the company by requiring additional expenditure for compliance. For example, Sony must increase its R&D investment to satisfy additional regulations on product safety. Still, this same external factor creates opportunities for the company to continually improve its products to ensure compliance and build competitive advantage. In this aspect of the PESTEL/PESTLE analysis, Sony has considerable threats and opportunities in its remote or macro-environment.

Recommendations based on Sony’s PESTEL/PESTLE Analysis

This PESTEL/PESTLE analysis of Sony Corporation reveals a number of significant opportunities and threats that shape the electronics, gaming, entertainment and financial services markets. Most of these external factors present opportunities that Sony can take. A recommendation is that the company must increase its efforts in product innovation to improve environmental impact and competitive advantage, while addressing concerns regarding product regulation. Sony can focus more on enhancing its mobile devices to take advantage of opportunities based on the high rate of adoption of mobile technologies. Such enhancement should embody kando, which is emphasized in Sony mission and vision statements. Another recommendation is to expand the business in developing markets to maximize Sony’s revenues. As shown in this PESTEL/PESTLE analysis, these concerns are crucial determinants in the company’s remote or macro-environment.

References
  • Dockalikova, I., & Klozikova, J. (2014, November). MCDM Methods in Practice: Determining the Significance of PESTEL Analysis Criteria. In European Conference on Management, Leadership & Governance (p. 418). Academic Conferences International Limited.
  • Housing Industry Association (2011). An Introduction to PESTLE Analysis. HIA Ltd.
  • Murphey, M., & Gause, R. (1974). UCF Research Guides. Industry Analysis. PESTLE Analysis. Business Horizons17(5), 27-38.
  • Parcell, J. (2015). Trends on Tuesday: Smartphone Market Growth Makes Mobile-Friendly a Must. U.S. General Services Administration.
  • Sony Corporation – Form 20-F.
  • Yüksel, I. (2012). Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management7(24), 52.

Case Study & Case Analysis, Consumer Electronics Industry, Entertainment Industry, Financial Services Industry, Gaming Industry, PESTEL/PESTLE Analysis, Sony Corporation

COPYRIGHT NOTICE:
This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Copyright by Panmore Institute - All rights reserved. Small parts of this article may be quoted or paraphrased for research purposes, as long as the article is properly cited and referenced together with its URL/link.