1) If McDonald’s wants to introduce a new, healthy salad on its menu, how could the 6
external forces potentially influence or impact McDonalds’ efforts?
Answer:
External Impact to McDonalds
Force
Political Laws and regulations
• McDonalds may need to comply with any food regulations (eg.
nutritional labelling); health and safety regulations, regarding
washing and storing the fresh food products; environmental
legislation regarding the disposal of food waste.
• Food Regulation Examples:
o Canadian Food Inspection Agency (importing food)
o Food and Drugs Act
o Canadian Agricultural Products Act
o Consumer Packaging and Labelling Act
• McDonalds would have to continue with complying with all
other laws and regulations such as employment and labour laws,
human rights laws, tax laws, etc.
• Regulations may increase compliance costs.
Taxes
• McDonalds would have to charge and collect sales taxes on the
salad since it is a prepared food product.
• Are there any potential eligible research and development tax
credits (eg. Scientific Research and Experimental Development
tax credit) for new product initiatives? Is McDonalds
researching or experimenting with new product ingredients,
dressings, etc to improve taste?
International trade
• McDonalds is a global company and has established trade
relationships with suppliers in various countries. McDonalds
may need to establish new suppliers in different countries
depending on the ingredients of the salad.
• McDonald’s may need to import some special ingredients not in
season and this may increase shipping, gasoline costs
• McDonalds may need to comply with international trade
agreements such as the North American Free Trade Agreement
(NAFTA) on imported goods
• Would there be any tariffs on any of the food ingredients it
needs to import?
Environmental fees/Garbage fees
• How is the salad going to be served in a paper box or plastic
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
, container? Is it recyclable? Will this increase McDonalds’
garbage or recycling fees if any? For example, do waste and
recyclable items have to be disposed of in separate designated
containers or bins?
Economic Slow growth economy
(The answer • If the economy is not good, it may be a good time to introduce
will depend on another low-cost product item, that people can afford or people
the economy at may have less disposable income and may be eating out less;
the time the therefore, may not be a good time to introduce a new product
question is • If the economy is thriving, people may purchase less fast food
answered). and more upscale or gourmet food.
Interest rates
• If interest rates are still low, may be a good time to borrow
money from the bank and invest in product development, since
interest (financing) costs will be lower and will affect net
profits.
• If interest rates are high, financing costs may be too expensive.
Currency value
• If the Canadian dollar is depreciated compared to the U.S.
dollar, it may be more expensive to buy imported ingredients
from the U.S.
• If the Canadian dollar is appreciated compared to the U.S.
dollar, it may be less expensive to buy imported ingredients
from the U.S.
Unemployment
• If unemployment rates are low, most people are employed, have
income and may be more willing to eat since they can afford it.
• If unemployment rates are high, many people are unemployed,
do not have income and may not be willing to eat since they
cannot afford it.
Inflation
• If inflation rates are low, interest rates are likely to remain low
and therefore, it may be a good time for less expensive
financing.
• If inflation rates are high, interest rates may be raised and
therefore, it may become expensive for financing.
National debt
• If national debt is high, this could negatively impact the
economy. Taxes may be increased by government and reduce
disposable income for individuals. Thus, this may reduce
consumer spending and slow the economy further.
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 2
external forces potentially influence or impact McDonalds’ efforts?
Answer:
External Impact to McDonalds
Force
Political Laws and regulations
• McDonalds may need to comply with any food regulations (eg.
nutritional labelling); health and safety regulations, regarding
washing and storing the fresh food products; environmental
legislation regarding the disposal of food waste.
• Food Regulation Examples:
o Canadian Food Inspection Agency (importing food)
o Food and Drugs Act
o Canadian Agricultural Products Act
o Consumer Packaging and Labelling Act
• McDonalds would have to continue with complying with all
other laws and regulations such as employment and labour laws,
human rights laws, tax laws, etc.
• Regulations may increase compliance costs.
Taxes
• McDonalds would have to charge and collect sales taxes on the
salad since it is a prepared food product.
• Are there any potential eligible research and development tax
credits (eg. Scientific Research and Experimental Development
tax credit) for new product initiatives? Is McDonalds
researching or experimenting with new product ingredients,
dressings, etc to improve taste?
International trade
• McDonalds is a global company and has established trade
relationships with suppliers in various countries. McDonalds
may need to establish new suppliers in different countries
depending on the ingredients of the salad.
• McDonald’s may need to import some special ingredients not in
season and this may increase shipping, gasoline costs
• McDonalds may need to comply with international trade
agreements such as the North American Free Trade Agreement
(NAFTA) on imported goods
• Would there be any tariffs on any of the food ingredients it
needs to import?
Environmental fees/Garbage fees
• How is the salad going to be served in a paper box or plastic
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
, container? Is it recyclable? Will this increase McDonalds’
garbage or recycling fees if any? For example, do waste and
recyclable items have to be disposed of in separate designated
containers or bins?
Economic Slow growth economy
(The answer • If the economy is not good, it may be a good time to introduce
will depend on another low-cost product item, that people can afford or people
the economy at may have less disposable income and may be eating out less;
the time the therefore, may not be a good time to introduce a new product
question is • If the economy is thriving, people may purchase less fast food
answered). and more upscale or gourmet food.
Interest rates
• If interest rates are still low, may be a good time to borrow
money from the bank and invest in product development, since
interest (financing) costs will be lower and will affect net
profits.
• If interest rates are high, financing costs may be too expensive.
Currency value
• If the Canadian dollar is depreciated compared to the U.S.
dollar, it may be more expensive to buy imported ingredients
from the U.S.
• If the Canadian dollar is appreciated compared to the U.S.
dollar, it may be less expensive to buy imported ingredients
from the U.S.
Unemployment
• If unemployment rates are low, most people are employed, have
income and may be more willing to eat since they can afford it.
• If unemployment rates are high, many people are unemployed,
do not have income and may not be willing to eat since they
cannot afford it.
Inflation
• If inflation rates are low, interest rates are likely to remain low
and therefore, it may be a good time for less expensive
financing.
• If inflation rates are high, interest rates may be raised and
therefore, it may become expensive for financing.
National debt
• If national debt is high, this could negatively impact the
economy. Taxes may be increased by government and reduce
disposable income for individuals. Thus, this may reduce
consumer spending and slow the economy further.
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 2
