Company Analysis: McDonald’s
This paper recognizes the creation of jobs, increase in government revenue in terms of corporate and income taxes and making our local markets attractive to investors as the main benefits associated with allowing McDonald’s to conduct business in our country. The benefits also come with associated costs and risks. The most significant cost is the effect this move will have on our local fast food restaurants since they won’t be able to match McDonald’s immense bargaining power and everyday low price. Another fundamental cost is the capital flowing out of the country in terms of profit to this company instead of investing within the country. There could also be a risk of the giant fast food chain exploiting our unskilled low income earning workers who cannot afford losing their jobs. After considering and comparing all the benefits, costs and risks, it is apparent that the benefits outweigh the costs and risks. Therefore, I would recommend the government to allow McDonald’s to setup operations in our country. Company Description
McDonald’s is categorized under the retail sector. It franchises and operates all the McDonald’s restaurants all over the world. It’s the leading global food service retailer in the world.1 The annual revenue for McDonald’s Corp in the year 2012 totaled to $27.6 billion over the four quarters, while its annual earnings equalled to $5.36 per share.2 It has segments in the US, Canada, Europe, Asia, Middle East and Africa. As of Dec 2012, McDonald’s Corp had a total of 34,480 restaurants in 119 countries with a workforce of approximately 440,000 employees. The number of restaurants has risen up compared to 33,510 restaurants as reported at the end of 2011. Out of this number, 27,882 are franchised or licensed and the other 6,598 are operated by the corporation.3 More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local owners, these are the franchised restaurants. The company’s corporate office is located in Oak Brook, IL, United States.4 McDonald’s is a fast food chain and some of the products in its menu include hamburgers and cheeseburgers like the Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Snack wraps, French fries, salads, soft drinks, hot drinks and some desserts.5 It has shown relatively increasing revenues for the last couple of years and an ascending operating profit making the company stable in growth and profit margin. Their sustainability efforts ensure that their business practices and policies continue their rich heritage of making a positive impact on society.6 Company’s International Strategy
The key to McDonald’s success has been the strength of the alignment between its franchisees, the suppliers and the corporation itself. Collectively, these three are known as the System. It has also come up with a customer-focused plan, which concentrates on being better, not just bigger. The company’s key global priorities have been optimizing the menu and modernizing the customer experience.7 McDonald’s has enacted an aggressive international strategy which is aimed at expanding internationally and specifically into the markets of developing countries. Initially, they entered the international market by leveraging standardized product offerings, clean environments, and the American brand equity. That strategy had to change in recent years. Nowadays, McDonald’s has adapted to local regional needs by remodelling its retail space while changing the product line to appeal to local and cultural tastes and preferences. This recent strategy has paid off in the short term, but the company has realized that they have to adapt to each country they move to. Catering to local preferences and changing the restaurants’ design and appeal are diluting brand equity. This can have disastrous consequences in the long term.8 The company has a...
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