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Environmental Factors Paper

Essay by 24  •  January 15, 2011  •  756 Words (4 Pages)  •  1,078 Views

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Several environmental factors such as economic, political-legal and cultural characteristics can affect global and domestic marketing decisions. A company must understand the global marketing environment before venturing into the arena. Companies must weigh the risks involved and answer many questions about the ability to operate globally. The company must learn to understand the preferences and buyer behavior of consumers in other countries. Some companies have the ability to adapt to other countries’ business cultures and deal effectively with foreigners. Mc Donald’s is a good example of a company that has stretched out globally. McDonald’s has been successful in establishing franchises in every continent.

McDonald’s considers the regulations and political environments of other countries. Companies deciding to branch out into other countries must consider the financial and political risks involved. Financial risks are associated with the fluctuating foreign exchange and the differing country interest rates (Currency Exchange Rate, 2007). One example of interest rates, short-term interest rates could be 2.8 percent in the United States, 3.5 percent in the euro countries, and only .5 percent in Japan. Transactions with these varying interest rates can knock a company off course and transform positives to negatives.

The need to adjust marketing mixes according to another countries preferences is a necessity in global marketing. Companies must decide how much of their products, promotion, price, and channels should be adapted for each foreign market. For instant, McDonald’s has built its reputation on their fast-food burger product. However, before entering the India market that focus had to change because of cultural differences. India considers the cow sacred, so the MC burger would have been an insult to Indians and a disaster for the company. Hence, the McDonald’s India developed a special menu with vegetarian selections to suit Indians tastes and preferences. In Italy McDonald’s serves pasta entrees. Versatility and flexibility must be part of the marketing scheme in order to succeed in global environment.

Today’s technology has helped McDonald’s to gain competitive advantages in the global markets, which was not possible 30 years ago. Technology positively impacts each of the marketing mix elements. It helps web portals to enhance distribution networks and logistics, creates new marketing channels by providing better and faster product access for customers. The growth of the Internet’s accessibility is a huge asset toward the success of companies such as McDonald’s.

Social responsibility and ethics is also very important to McDonald’s success. The founder of McDonald’s, Ray Kroc, instilled the legacy, “Give back to the communities that have given so much to us”. In local neighborhoods across the country, McDonald’s owner-operators and company-operated restaurants sponsor community programs, provide career opportunities, and contribute to local economic growth.

The ability to do what is right comes naturally for McDonald’s. McDonald’s is a leader in their industry and everyone looks to

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