Wendy’s PESTEL/PESTLE Analysis & Recommendations

Wendy’s PESTEL PESTLE analysis, political economic social sociocultural technological ecological environmental legal external factors case study
A Wendy’s restaurant in Brantford, Canada. Wendy’s PESTEL/PESTLE analysis indicates major changes for the company to address the external factors in its remote or macro-environment. (Photo: Public Domain)

Wendy’s success as one of the biggest hamburger fast food restaurant chains in the world is based on its ability to address the concerns shown in this PESTEL/PESTLE analysis. The PESTEL/PESTLE analysis identifies the most notable external factors in Wendy’s remote or macro-environment. These factors threaten or create opportunities for the company. Wendy’s must include them in strategy formulation to ensure long-term competence. Managers and investors can use the results of the PESTEL/PESTLE analysis to determine Wendy’s potential and capabilities based on the conditions of the remote or macro-environment.

Wendy’s effectively addresses most of the external factors indicated in this PESTEL/PESTLE analysis. However, the business must improve its aggressiveness for innovation and expansion to counteract the threats in its remote or macro-environment.

Political Factors Affecting Wendy’s Business

Wendy’s macro-environment is under the influence of the political landscape. This aspect of the PESTEL/PESTLE analysis considers the political conditions that effect the company’s remote environment. The following are the major political external factors significant in Wendy’s business:

  1. Increasing economic integration and alliances (opportunity)
  2. Stable political conditions in major markets (opportunity)
  3. Increasing government intervention on GMOs in the EU (threat)

Wendy’s has the opportunity to internationally expand based on the economic benefits of increasing integration and alliances among countries. In addition, the stable political conditions in major markets present minimal barriers and challenges for Wendy’s to grow its business. However, the company must address the EU’s strong position against GMO ingredients, which are usually found in fast food. In this aspect of the PESTEL/PESTLE analysis, Wendy’s should consider expanding, while improving its products to counteract the effects of government intervention on GMOs.

Economic Factors Important to Wendy’s

The economic situation determines Wendy’s business performance. The influence of economic trends on the remote or macro-environment is evaluated in this aspect of the PESTEL/PESTLE analysis. The following economic external factors are significant to Wendy’s:

  1. Increasing disposable income in developing countries (opportunity)
  2. Stability of most major economies (opportunity)
  3. Slowdown of Chinese economy (threat)

The external factor of increasing disposable income presents opportunities for Wendy’s to expand in developing countries. Also, the company can expect stable performance in major markets. However, China’s declining economic growth rate could reduce Wendy’s potential global growth, despite the company’s plans to expand in the Chinese market. Based on this aspect of the PESTEL/PESTLE analysis, the economic external factors emphasize Wendy’s opportunities for global growth and expansion.

Social/Sociocultural Factors Influencing Wendy’s Business Environment

Wendy’s business is subject to the impact of sociocultural conditions on the remote or macro-environment. The effects of social or sociocultural trends are considered in this aspect of the PESTEL/PESTLE analysis. The following sociocultural external factors are significant to Wendy’s strategic performance:

  1. Increasing emphasis on quality (opportunity)
  2. Increasingly busy lifestyles (opportunity)
  3. Higher health consciousness (threat & opportunity)

The increasing emphasis on quality is an external factor that creates opportunities for Wendy’s to improve product quality to attract and retain customers. Also, the busy lifestyles of people in town centers and city centers increase demand for convenient fast food. This condition presents the opportunity for Wendy’s to grow in such areas. However, higher health consciousness could dampen demand. Nonetheless, the company can address such threat by further improving product quality. This aspect of the PESTEL/PESTLE analysis shows that Wendy’s can improve its business performance based on the effects of sociocultural external factors.

Technological Factors in Wendy’s Business

Technologies define many processes in Wendy’s business. This aspect of the PESTEL/PESTLE analysis tackles the influence of technologies and technological trends on the company’s remote or macro-environment. Wendy’s must consider the following technological external factors:

  1. Increasing business automation (opportunity)
  2. Moderate degree of R&D investments in the industry (opportunity)
  3. High use of mobile technology (opportunity)

Based on increasing business automation, Wendy’s has the opportunity to implement optimal automation of its processes to support economies of scale. Also, the company can increase its competitiveness by surpassing other companies’ research and development (R&D) investment levels. Wendy’s has the opportunity to improve its online/mobile presence to reach more customers through their mobile devices. In this aspect of the PESTEL/PESTLE analysis, the technological external factors present significant opportunities for Wendy’s to improve business competence.

Ecological/Environmental Factors

Wendy’s partly depends on the natural environment. This aspect of the PESTEL/PESTLE analysis identifies the ecological/environmental conditions and issues relevant in the company’s remote or macro-environment. The following ecological external factors are the most notable in Wendy’s case:

  1. Increasing emphasis on business sustainability (opportunity)
  2. Low-carbon lifestyle trend (threat & opportunity)
  3. Climate change (threat)

Wendy’s can enhance its brand image by improving its sustainability standing. In relation, the company has the opportunity to reduce carbon emissions through efficiency, so as to attract consumers who are conscious about their carbon footprint. However, Wendy’s faces the threat of climate change, which could disrupt the company’s supply chain. This aspect of the PESTEL/PESTLE analysis indicates that the ecological external factors present threats and opportunities that affect Wendy’s long-term viability.

Legal Factors

Legal systems affect Wendy’s performance and its remote or macro-environment. Legal issues and regulatory requirements are considered in this aspect of the PESTEL/PESTLE analysis. The following legal external factors are significant in Wendy’s business:

  1. Increasing food safety regulations (threat & opportunity)
  2. Regulation of GMO ingredients (threat)
  3. Increasing legal support for unions in developing countries (threat)

Increasing food safety regulations are a threat if Wendy’s does not respond accordingly. However, this external factor also presents the opportunity for the company to improve its product quality, such as through innovation. In relation, Wendy’s must respond to the threat of new and tighter regulations on GMO ingredients, especially in the European Union. On the other hand, the increasing support for unions in developing countries threatens Wendy’s leverage for rapid growth in these markets. In the legal aspect of the PESTEL/PESTLE analysis, the external factors threaten Wendy’s business.

Wendy’s PESTEL/PESTLE Analysis – Recommendations

The external factors in Wendy’s remote or macro-environment present a variety of threats and opportunities. However, the company must prioritize the most significant and urgent issues. The primary recommendation is for Wendy’s to focus on product improvement to address issues related to GMO regulation, consumers’ health consciousness, and product safety. Also, Wendy’s must implement a more aggressive global expansion strategy to benefit from the rapid economic growth of developing countries. In addition, international supply chain diversification can improve Wendy’s resilience despite the threat of climate change.

References
  • Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics, Oxford University Press, USA.
  • Housing Industry Association (2011). An Introduction to PESTLE Analysis. HIA Ltd.
  • Murphey, M., & Gause, R. (1974). UCF Research Guides. Industry Analysis. PESTLE Analysis. Business Horizons17(5), 27-38.
  • Roper, K. (2012, November). BIM Implementation: PESTEL Drivers & Barriers (Cross-national Analysis). In World Workplace 2012. IFMA.
  • The Wendy’s Company (2015). Wendy’s Global Growth Vision.
  • The Wendy’s Company, Form 10-K, 2013-2014.
  • Wendy’s International, LLC, Form 424B3, 2001.
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