business research

II- The characteristics of the West African business environment and the influence it could have on McDonalds

A key point that must be understood is that developing countries form the West African region. For this reason, the business environment is affected by elements that are not common in the most developed countries such as where McDonalds has started and grown its business. This part of the report focuses on those elements that shapes the West African business environment and is supported by analytical report from ECOWAS (Economic Community Of West Africa States) and literature review and interview with Sir David Santos Professor of economy at the University of Dakar.

The major elements that influence the business environment are economic (Wall et al, 2010: 231).

First of all, the West African region is characterised by a low income and saving rates. For instance according to (Santos, 2014) the masses low-income individuals struggle to survive on less than a dollar a day. This leads into having a difficult increase in voluntary saving through a cut in current consumption.

For McDonalds, low income means low effective demand because purchasing power is severely constrained.

A poor infrastructure may be the most visible distinguishing characteristic of the West African countries (ecowas.com). Modern facilities are often lacking for transportation, electrical, water waste disposal and other utilities. Port capacity is often inadequate, service inefficient and charges high. Truck transport suffers from poorly maintained or unpaved roads, which increase maintenance cost and shorten the life of the equipment. In such condition, McDonalds would feel the lack of infrastructure more directly in its choice of production opera...

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...d earlier, barriers to entry could also be economical. According to The salt article, a franchisee was force to shut down after six year of trading in the isolated island of Iceland. "When we were importing goods, it was doubling and tripling in price, we always thought in Iceland our currency would recover, but it hasn't, even until today." Jon Gadar, the franchisee owner said (npr.org).

In Ghana, McDonalds restaurants were to be opened by 2011. However, plan was put on hold because it is considered that Ghanaians would not have enough income to become regular customers (ghanabizmedia.com).

Due to it social environment and the nature of its international links, North Korea is among the countries that cannot host a foreign company like McDonalds (bbc.com).