The Japanese economy is on a downhill and Japan has been battling with deflation and falling consumer prices for years. According to the latest data, the core consumer prices index fell 0.1% in November 2012. This means that the prices of goods are dropping. The way the Japanese government intends to solve this is to spur domestic demand and boost domestic consumption, but this is not working as deflation is occurring, and prices of goods are dropping, therefore consumers are putting off prices to hope for a cheaper deal later on, Japan also has the highest saving rate in the world, therefore consumers are less likely to spend money in the first place. This affects McDonalds in a major way as Japan has the second most number of McDonalds in their country, just after USA with over 3600 restaurants. Since deflation is occurring/ the economy is on a downhill and Japan having such a high saving rate, people will be less likely to spend money on things such as fast food and they will be less likely to eat out. Therefore McDonalds will have a consumer drop. Furthermore, McDonalds can't appeal to consumers by lowering their prices because they still have to pay their workers, and the material they use to make their product will still be the same price and if they lower the price on their product, they will lose profit. On the other hand, they can't raise the price on their products to earn profit as the economy is under such pressure.

Link to Article:

http://www.bbc.co.uk/news/business-20855924

McDonalds, being a multinational corporation, tends to be market oriented it comes to product vs. market orientation. They know their customers really well and they clearly spend a lot of money on market research. As they know that a large part of their market is made up of children, they started setting up playgrounds in their stores to attract more kids to bring their parents to the stores. Furthermore, in the case of Hong Kong, Hong Kong being a metropolis, people are always in a rush, especially when they are getting to or leaving work, also Hong Kongers are starting to be more aware of health issues and are eating more cautiously now. Recently McDonalds started promoting the breakfeast scheme in Hong Kong where marcaroni (more healthy than a cheeseburger) is served during the morning from 7-10. These are great examples of McDonalds being market oriented, spending money on research and making/producing what the market wants. They also started using the "double" strategy in Hong Kong by having double cheesburgers, double fish fillet burgers, because they know that the burgers with double the material on them does sell. Though McDonalds always come up with innovative products, it all revolves around the fast food ideology and they make sure that they know and fulfill the markets needs/wants.

A food scientist at Indiana’s Purdue University has created a “radiant fryer” that results in fried food with all the flavour, but up to half the fat and fewer calories. Foods sold at fast-food restaurants are first partially cooked at a factory and quickly frozen. Then restaurant workers typically use an oil immersion fryer to finish the process. Which is extremely unhealthy. But the "radiant fryer" does not require oil to finish off the process, which results in 30-50% less oil. This affects my company because this technological advance can help McDonalds reduce the amount of oil they use, which not only can slightly enhance its image of promoting a healthy lifestyle but also reduce its production cost. Statistics have shown that there is a rare decline in McDonalds sales recently, and this may be due to McDonalds losing its customers. There can be a lot of reasons for that, but one of them may be that they are now more aware of health issues. The US has the most McDonalds restaurans in the world (18,590) and facts have shown that customers are indeed choosing to eat more healthy there now. Over 5 years ago, over 25% of Americans eat McDonalds or consume fast food everyday but now it dropped to 6%. This radiant fryer may help McDonalds win these customers back with the reduced amount of oil used to produce their food. But, the people who choose to eat at McDonalds may already be well aware that its unhealthy and not care about the health related issues, also McDonalds already projects a strong image of unhealthy and low quality materials. Therefore, this PEST factor may have a minimal impact.

Link to article:

http://www.foodstuffsa.co.za/news-stuff/food-science-and-technology-stuff/2537-purdue-technology-can-fry-food-with-minimal-oil

The mission statement of McDonalds “is to be our customers' favorite place and way to eat. Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers' experience.” Specific aspects of the mission statement communicate vital information of McDonalds aims and strategy. First, the mission statement includes being “our customers favorite place and way to eat”, this clearly communicates the product that McDonalds offers “food” and also its main aim which is “to be the customers favorite place and way to eat”, also allowing the people who read this understand what the company provides at once. This also communicates McDonalds purpose of existence, to serve food and be the favorite of customers. Next, the global strategy of McDonalds is introduced . “Plan to Win” and talks about the specific aspects which the plan centers on (people, products, place, price and promotion). The 5 p’s clearly communicates the aspects that this strategy focuses on and how McDonalds plan to achieve its previous objective which is to be the customers favorite place and way to eat. With the mission statement mentioning “Plan to Win”, it allows the employees to focus on the aspects of this plan (5p’s) and the employers to look back on “Plan to Win” when making decisions. E.g. making the atmosphere in McDonalds more lively by creating playgrounds (focuses on the people and place of the Plan to Win). When the mission statement mentions that “we are committed to continuously improving our operations and enhancing our customers experience” it communicates how McDonalds is trying to improve and shows the companies dedication towards its consumers by mentioning “customer experience”.

The advantages of this statement is that it identifies the company in the first sentence by mentioning “food” and being “customers favorite place to eat”, also talking about its strategy and allows the staff and workers to clearly know what the company focuses on (5p’s), the statement also makes consumers feel more in touch with the company by mentioning them in the statement. The disadvantages of the statement is that it can be unrealistic, as “being customers favorite place and way to eat” is very challenging taking into account that everyone has different preferences and taste. Also, “being customers favorite place and way to eat” can be challenging to measure. If the mission statement is unrealistic, the company will not be able to drive itself towards success as employees may not believe in this statement, thus lacking incentive. Taking into account the advantages and disadvantages of the mission statement of McDonalds, the advantages outweighs the flaws, as the statement is a clear representation of what McDonalds purpose is, how it plans to achieve it and that it’s always trying to improve.

Objectives are vital in managing the McDonalds Corporation. The objectives ensures that everyone (from flipping burgers to the CEO) in the company has a common goal that they can work towards and steers the company in the right direction, thus with a common goal to achieve that is believed by everyone, it will boost staff morale and bring the staff of McDonalds together as a team.  The objectives of McDonalds also serve as an incentive for employees to work hard if they believe the objectives. Furthermore, the appraisal of departments is also based on the objectives, making it very important as it serves as the report card of McDonalds and allows the company to decide its next moves and their progress so far. E.g. when they are assessing the finance department, they may refer back to the objective of providing good return to its shareholders. Lastly, when McDonalds are making huge decisions, they always have to refer back to their objectives to see if the step they are about to take aligns with the objectives, making the role of objectives tremendously important.

McDonalds, being a multinational corporation, sets objectives for themselves in hopes of achieving them through strategies and tactics. The objectives of McDonalds are to serve good food in a friendly and fun environment, to be a socially responsible company, to provide good return to its shareholders and to provide its customers with food of a high standard, quick service and value for money. There are tons of strategies implemented by McDonalds to reach these objectives, all focusing around the 5p’s (People, Products, Place, Price and Promotion) as mentioned in their mission statement. Such as advertising their product to make it seem more high quality than it really is, building playgrounds in restaurant areas, building hospitals for children etc. The tactics of McDonald’s include temporarily decreasing the price of their burgers, creating new forms of product, using celebrities to advertise their products,hosting birthday parties for the less fortunate children etc.

The objectives set by Mcdonalds are all medium to long term targets and cannot be reached instantly, also quite difficult to measure. The phrasing of the objectives also make it seem futuristic with the words “to” and “to be”. It also defines the purpose of McDonalds and what it’s product is, only mentioning “food” in its objectives. These objectives are also quite broad in terms of what it stands for. Whereas the strategies of McDonalds are easily measurable and also quite specific in terms of its plan of action, such as building a hospital and playgrounds in restaurants and are clearly stepping stones to achieve the objectives. E.g. Building playgrounds to serve good food in a fun environment and building hospitals to be a socially responsible company. The tactics are evidently short termed decisions and actions to temporarily boost McDonalds profit and these tactics by McDonalds are also very specific comparing to objectives and strategies. E.g. “Using celebrities to advertise their products” is more specific than “serve good food in a friendly and fun environment”. Unlike objectives and strategies, tactics set by McDonalds are all small scale and does not define the purpose of McDonalds and the reason for its existence.

If McDonalds were to fit in one of the two categories, it would definitely fit in the private sector. As McDonalds is owned by individuals and shareholders. Like most organizations in the private sector, McDonalds is definitely profit oriented,with 30,000 restaurants worldwide in more than 100 countries including franchise stores, it's main goal is to earn money off the service it provides.

McDonalds is also constraint by labour law within Hong Kong. As there are maximum working hours for days and weeks for specific age cohorts, these employees can only work a specific amount of time in the day, forcing McDonalds to hire more employees to even out day and night shifts. Furthermore, wage is a huge constraint as labour laws dictate companies on how much an employees must earn, no matter his/her rank in the company, therefore all workers will earn above a specific amount in McDonalds. The labour law also states that children under 15 are prohibited to work in all industrial undertakings. Thus, the HR department in McDonalds will have to be really careful in selecting its employees and deciding how MANY employees they can undertake.

McDonalds, being a prestigious restaurant chain with tons of franchise stores in Hong Kong, will have constraints from food safety regulations set by the Hong Kong government. The production, processing, distribution, retail, packaging and labelling of food are all governed by a mass of laws, regulations, codes of practice and guidance. For example in the "Coloring Matter in Food Regulations" established by the "Centre for Food Safety Government Organization" it states that "no food intended for sale for human consumption shall contain any added colouring matter which is not a permitted colouring matter". This is a constraint for McDonalds as they try to market their burgers as fresh and colorful. Bright colors can definitely help McDonalds market its products and make their products more attractive and irresistible, thus attracting more consumers. But this law will force McDonalds to only use coloring in that is legal. Thus, they may not be able to fully utilize coloring chemicals to market and shape their product as they want.
There is also a law that states all employees who are intended to participate in the food business take a hygiene course to protect consumers health and safety. This is a barrier for McDonalds as this is very costly and time consuming, employees may not work straight away and have to earn his/her qualifications first.