Every organization will face environmental constraints no matter how successful the business is. One of the most common organizations that we can refer to in our daily lives is the restaurant industry. Restaurant is basically a place that prepares and serves food for customers outside from home. The main purpose of a restaurant is serving food to customers, but some may also provide entertainment or other services. With all the various types of food that we consumers demand for, the restaurant industries have different kind of restaurants, for example, Thai cuisine restaurant, Chinese food restaurant, Sushi restaurants, fast food restaurant, in order to satisfy customers’ desire. The restaurant industry is the largest employer in the private sector, and it continues to get larger every year (Vault.com, 2014). According to the National Restaurant Association’s analysis, the restaurant employment stands 441,000 jobs above its high point before the recession, while the overall economy in 2012 is still down 3.2 million jobs from the prerecession peak (Qsrmagazine.com, 2013). It might seem like an easy business to set up as food is under the physiological needs according to the Maslow’s hierarchy of needs, which means there will be no problem of running the business as an individual moves up the needs hierarchy from one level to the next (McLeod, 2007). Human needs food to survive, thus, the restaurant industry may easily gain a desirable profit. However, there are a few external environmental factors that affect the organization. For example, the most well-known globalized fast food restaurant that is operating now, McDonald’s, has to face some of the external environment constraints despite of how successful it is. All these external environment constraints are the factors and forces outside the organization that may affect the restaurant’s performance in either a good or bad way. McDonald’s can be referred to the most successful restaurant chain in the restaurant and food industry especially with the number of franchises it has all around the world.

First of all, smart companies are looking at many ways to harness technological factors to perfectly improve operations management. There are bunch of significant strategies where they can promote the goods and service to make production easier and more responsive to the public consumption. It’s no surprise that businesses of all shapes and sizes are bringing in technology to bolster sales (Robbins 2012). These advances have made an impact everywhere, and one of the places we’re seeing more and more technology is in the food and restaurant industry. The restaurants must have consistent touch points in order to attract an attention of the customers, in other ways its look and feel to communicate with the customer at different points of the journey and direction, from digital marketing, to people sitting at home and potential customers walking by a restaurant. Innovative technologies are exist as a service restaurant brands, with many concepts and background to employing digital menu boards such as how they ordering the goods and how they give a feedback of their services, the strategy and location of production, iPads at the table, and other ways of letting customers tap into technology while they are ordering the type of good and service. Some of food experts claim that one example of this technology in play at many brands is restaurants whose chefs are using technology to track recipes and ensure that food costs are in line with company expectations. Technology is also allowing organization to control cost particularly in areas of predictive maintenance, remote diagnostic, and utility cost saving (Wood 2005). In this case, companies are facing the Internet service to communicate with suppliers, support the production through advertisement, and even receiving feedback. Many fast-food companies are competing to see whom cab provides faster and better service to drive-through customers. For instance, with drive-through now representing a huge portion of sales, faster and better delivery can be a significant competitive edge in the market that also affect for the company. For example our selection company McDonald’s, a technology that helped this company boost accuracy by more than 11 percent. Technology used by two national chains tells managers how much food they need to prepared by counting vehicle in the drive-through line and factoring in demand for current promotional and popular staple items. Compare to McDonald’s, another fast-food company has to adapt the McDonald’s formula of “good food, fast” to the digital savvy customer, while encouraging staff to stay up to date with technology customers use, and technology that make their jobs easier to do. They also need a robust technology to support the kitchens and back office that uses a large amount of technology. The brand also uses online ordering that is interfaced directly with its POS systems to enable guests to order and pay online. Guests then show up at the restaurant, give an employee their name, and collect their food. In terms of operations, the process is seamless, acting as a typical walk-up, to-go order.

Secondly, every organization in the business world will definitely face the economic environment constraints. Economic environment encompass factors such as unemployment rate, income, taxes, interest rate, stock market fluctuations, inflation, recession and wealth that affect the buying behavior of a person. The economic environment of any businesses not only for the restaurant industries, play a significant role in determining whether the business will be success or failure. Let’s say, a restaurant can employ labor at cheaper cost if the unemployment rate is high, but if it is too high, a recession might occur and a less discretionary consumption, therefore lead to an unfavorable outcomes or even loss (Grimsley, 2014). Other than that, a wealth of a certain area may influence the consuming behavior of customers. Running a restaurant especially a fast food restaurant in a place surrounded with wealthy consumers is not the optimal choice as wealthier people tend to dine in in pricier restaurant. Fast food restaurant like McDonald’s tend to fare better when it is facing an economic downturn than a costly and fancy restaurant. As mentioned, people tend to spend more on their food if they have the ability to. However, if consumers are facing an economic downturn, they will live on a tight budget and mostly turning to fast food for inexpensive meals (Burks, 2014). An economic downturn might benefit McDonald’s but a constant economic downturn will lead to a recession. At this stage, consumers will rather eat at home to save up and resulting a vulnerable outcome. Whenever the inflation rate of a country is high, restaurants have no chance but only to increase their price to avoid making loss. In 2011, McDonald’s in the United State had increased their price to keep up with food inflation due to the inflation that push up the cost of ingredients like Big Mac Beef, cheeseburger cheese, McCafe coffee beans and all things in between (Wilson, 2011). Whenever it comes to price raising, McDonald’s has had an edge among all the other fast food restaurants because it attracts consumers with a higher income. Therefore, it helped the chain post seven years of positive comparable sales growth in every part of the world in which it operates (Wilson, 2011). Moreover, if the government increases the government tax, it might decreases the demand of consumers for eating outside home even though the food in McDonald’s and all fast food restaurants are considered as inexpensive meals.

Thirdly, An intimate understanding of demographics actually explains all the manufactures in environment condition, whether on a market level or within individual stores quick serves can better direct their menu development, marketing, and promotion. Companies have to be very smart on what customers want and why they come back, and we have to be concerned about how we fit in to their choices.
Demographic is actually relating to the structure of population where the companies are able to adjusting the result of production of number through the various life stages (Wood 2005). Significantly affected every aspect of the external environment conditions. However, demographic is important to the company because, large number of people at certain stage in the life cycle can constrain decisions and actions taken by business, government, education institutions and other organization. This factor also effect for the future condition where number of people are always increasing as a population trends and competing to get everything they want to support their needs. Demographic stage divides the market trade into some groups based on variables like gender, age, nationality, religion, family life cycle and family size (Robbins 2012). McDonald offered their services by segmented their customer based on age, religion and family life cycle. McDonald’s has continually adapted to the customer’s tastes, value systems, lifestyle, language and perception. McDonald’s segmented their product based on customer’s religion. To offer the best goods and services, this company still concern about variations due to differing tastes and cultural issues for their customer over the world. For example, the product that they are trying to promote in Malaysia is totally different with other country such as America and even Thailand. Globally McDonald’s was known for its hamburgers, beef and pork burgers. Most Muslim people in the specific country are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the culture sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to suite the Muslim palate. Even they have different taste, portion, and quality doesn’t mean this company have to change their innovation. It’s effecting demographical because every country has significant level of consumption that they need to be fulfilled. A survey that has been conducted by McDonald’s also proves that most of the customers of McDonald’s are aged below thirty-five including small kids (The WritePass Journal, 2012). Therefore, some McDonald’s provides a play place and kids happy meal for the kids in order to increase the desire of the children.

Sociocultural is a practice, religious beliefs, attitudes, custom and behavior that exists within a population. Every country has different cultural and behavior. For example, in Japan, they hired workers to shove all the commuters into the train so they wont get trapped in the train door, and very thankful to the workers who shoved them in. But in New York city, they don’t practice cultural like Japan do, if you shove the commuters into the train, the commuters will respond unfriendly compare to Japan (McKay, 2014). The sociocultural environment includes the eating behavior of each individual and therefore may affect the operation of a certain kind of restaurant. For instant, some consumers may have different saving behaviors, they will go for a lower cost for food. The restaurant industries are aware of this and they offer different type of valued set meals in order to satisfy consumers’ desire. For to the company we have chosen, McDonald’s has a various type of promotions accordingly to the different seasons because they want to keep up with the trend of consumers’ eating behavior. For example, during Chinese New Year, they offer seasonal meals like the “Prosperity Burger” which only provide for a short period time. By providing seasonal meals, they can earn more profit as consumers will be attracted to the new menu and therefore increase their demand for it. All the McDonald’s around the world have different menus because they have to study what is the consumers’ wants in a certain area before providing the meals. For example, McDonald’s in Malaysia do not sell pork burger as Malaysia has 3 races and they need to be considerate to every race. Pork is a non-halal food for the Muslims and this is why McDonald’s in Malaysia do not sell pork burger, meanwhile in other country like Hong Kong, they do sell pork burger. In India, they don’t have McDonalds everywhere like how other countries because most of the people in India are Hindus and Hindus don’t take beef burger as McDonald’s around the world served beef in their burgers (The WritePass Journal, 2012).

The sophistication of technology nowadays maybe support the company in their productions, but there are some of factors that also push the company, not to forget about the number of unemployment. However, technology affects the opportunity of people who are willing to work hard and are really craving for the job. The company still needs some of the potential workers in specific task in order to get a better result of service. They have to differentiate which are the hand working components and technology assistance. As for the economics issues, McDonald’s should decrease the price of the foods whenever facing a recession as consumers are most likely to have a very limited budget when the world is facing a recession. By lowering the price of their products may increase consumers’ demand for the products. In the demographical environment case, the company needs to conduct surveys base on the society, public religion or even people in different age. All of them have different needs and standard of life. How can a company know what types of goods and service that a consumer needs? Supporting the promotion opportunity to get who are interested and who are not can do it. For instance, they might be little bit hard working in this part to determine which product they should stand for and the location in order to attract the attention of people. From there, the companies are able to identify appropriate product to be sold.

To conclude, each and every organizations in every industry will face the external environment constraints including the most well-known fast food restaurant, McDonald’s. Before setting up a business, we will have to identify all the possible external environment forces that may affect the business. If we want to be successful in any industry, it is best if we already have the ideal solution to solve the problems that will be affected by the external forces. So what that McDonald’s earnings are very high? McDonald’s will still face constraints and factors that affect them like any other restaurants, as mentioned, the external forces of technological environment, economic environment, demographical environment and sociocultural environment have got a big impact in McDonald’s in either good or bad way. Thus, the outcomes of McDonalds are dependent on all these external environment factors.

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