Changes in Maro environment - Essay Example

Changes in Macro Environment Answer to Question No Considering various facts derived from analyzing the cases, the following information can be presented that reckoned to be supporting the mentioned case theme in the question.McDonald’s in China was highly impacted by the global economic crisis of the year 2001 and year 2002. As a result of this crisis, consumers’ demand of its products was affected due to which the firm’s profitability was hampered. Social factors of the economy also impacted upon its performance in the form of objection from the consumers with respect to the firm’s contribution towards obesity and other health conditions.

The economic and social factors which are macroeconomic in nature affected the McDonald’s performance through consumers’ preferences and perception towards the firm (Oxford University Press, 2007).Wal-Mart in Mexico was impacted due to the 1994 currency crisis. Due to currency crisis, the interest rate was decreased in the Unites States as a result of which the amount of net capital inflows in Mexico was adversely impacted. With this macroeconomic variables’ impact, Wal-Mart’s credit position was affected which brought the firm in unstable position through increased level of cost and decreased productivity.

The case of Wal-Mart in Mexico is a practical implication of the political decisions’ impact, which is a macroeconomic factor, upon the operations of a firm (Oxelheim, Wihlborg, & Zhang, 2009).Answer to Question No. 2The similarity between the strategies adopted by McDonald’s in China and Wal-Mart in Mexico is that both the firm strived to come out of certain adverse consequences of the macro environment and succeed in the respective markets. The difference between the strategies is that McDonald’s followed ‘customer driven’ strategy whereas Wal-Mart followed ‘competition driven’ strategy.

This is because McDonald’s focused on implementing various ways of winning customers’ belief, while on the other hand, Wal-Mart concentrated on gaining competitive advantage through adoption of various innovative strategies such as opening up of banks in its stores. Answer to Question No. 3In the case of McDonald’s expansion strategy in China, the Chinese governmental policies towards foreign companies attempting to acquire China’s natural resources impacted upon the firm’s cost during entering the market as they had to make use of channels for avoiding this entry barrier.

Utilization of channels accompanied extra cost for the company and also in certain cases, the firm had to compromise with its business structure for reducing the entry barriers. Again the case of Wal-Mart’s expansion strategy in Mexico had been highly impacted due to the trading situations between Mexico and the US resulting in various governmental interventions. The Mexican government’s policy of reducing the GDP (Gross Domestic Product) estimated during the year 2008 hugely impacted the firm’s operating efficiency within the country.

Pertaining to governmental policy for interest rates, Wal-Mart had to depend greatly upon its short-term obligations rather than long-term credits. Answer to Question No. 4Apart from prices, changing pattern of McDonald’s consumers and their perceived convenience are other variables that influence demand of the firm’s products. Concerning these variables, McDonald’s have consistently applied measures to attract the consumers with regard to enhancing its food quality and outlets’ environment.

McDonald’s has influenced these variables of the consumers and this fact is evident from its reported high sales during the year 2008 when other economies of the world were under the adverse impact of the global economic crisis. The firm’s strategies were directed towards countering to the consumers’ shifting demands which is the ultimate influencer towards generating convenience on the part of the consumers. ReferencesOxelheim, L., Wihlborg, C., & Zhang, J. (2009). Considering Macroeconomic Fluctuations in Designing CEO Compensation Schemes.

Retrieved June 18, 2011, from http://69.175.2.130/~finman/Reno/Papers/Lars.pdf Oxford University Press. (2007). PESTEL Analysis of the Macro-Environment. Retrieved June 18, 2011, from http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm