...Assignment 5 Valerie Lagana Strayer University Eco550 – Economics for Managers September 5, 2011 Question: Describe the changing economic variables in China that influenced McDonald’s expansion strategies. The main changing economic variables in China that influenced McDonald’s Expansion were the increase in GDP and the economic stimulus package. In 2007, the increase in GDP showed a level of strong jobs in China as well as increase income for the Chinese (Farnham, 2010). This allowed the Chinese to spend more money on eating out at restaurants which gave McDonald’s a great opportunity for expansion. In addition, the Chinese government had a stimulus package after the economy dropped in 2008. The stimulus package included building more highways which allowed the Chinese to be accessible to the drive through window opportunity that McDonalds was able to offer as part of their expansion. Question: What factors led to the Mexican currency crisis and peso devaluation in 1994? The factors that led to the Mexican currency crisis and peso devaluation were the Appreciation of the exchange rate, falling interest rates, and the foreign savings. The appreciation of the exchange rate resulted in a decrease in savings with an increase in investment due to the expansion of credit without any federal regulations (Farnham, 2010). The falling interest rates were a result of the appreciation of the exchange rate attracting private capital via privatization of banks and...
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...1) Macro environmental analysis Macro analysis is also known as PESTEL analysis which stands for- Political factors Economical factors Social factors Technological factors Environmental factors Legal factors Political factors The business operation of an organization is always influenced by the policies of state and its government. McDonald’s business is also under the control of government’s rules and regulations. The main issue of controlling food business is health and other issues are license, employee laws, tax issues etc. McDonald’s follows the local government’s policies as well as foreign investment policies on its franchise business strategy. Political instability of local state also affects McDonald’s business. Political factors The business operation of an organisation is always influenced by the policies of state and its government. McDonald’s business is also under the control of government’s rules and regulations. The main issue of controlling food business is health and other issues are license, employee laws, tax issues etc. McDonald’s follows the local government’s policies as well as foreign investment policies on its franchise business strategy. Political instability of local state is also affects McDonald’s business. Economical factors Economical factors always come as vital issue to business organisations. For example, more or less all companies are affected by ongoing global economic slowdown. Due to international business operation, McDonald’s...
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...the major theme of this text: Changes in the macro environment affect individual firms and industries through the microeconomic factors of demand, production, cost, and profitability. Drawing on current business publications, find some updated facts for each case that support this them. Drawing on current business publications and the two cases in this chapter it is prevalent that several changes in the macro environment have had an effect on the profitability of individual firms and industries. The text states that (Farnham, 2010 page 459), downturns in economic activity forced all the fast-food companies to develop new strategies. During this economic downturn McDonald’s was one company in particular that has developed strategies that were influenced by microeconomic changes. A great example is when McDonald’s entered the Chinese market they had to take into consideration consumer taste and acceptance in China. They had to decided whether or not to have the menu in Chinese or English and whether or not to take on the American menu or add more Chinese influenced menu items. Cost also played a part in the China market. Beef was much more expensive and so therefore could only reach a certain percentage of the people. Half of McDonald’s sales in China had been of chicken product with beef only making up 35 percent (Farnham, 2010). II. Compare and contrast McDonald’s strategies in China with those of Wal-Mart in Mexico. McDonald’s responded to the changing economic conditions...
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...The macro- environment is an extremely influential factor when considering change dynamics within any company. Because of this, it is important that each company learns to adapt to any external changes in the macro- environment that become apparent. To do this companies must be aware of factors such as political, economic, social and cultural and technological that may influence their business and their internal processes. For McDonalds, these four factors are significantly influential. The correct way of dealing with the effects of these factors will ensure McDonald’s success both in the short term and long term. There are many political factors that have the potential to influence McDonald’s in the near future. One of the main things that can be influential is unemployment levels. McDonald’s currently help Australia’s high unemployment rate by providing people with jobs who may not have been given the opportunity to work otherwise. These people may or may not have disabilities, but do however have little experience and qualifications if any. This affects the unemployment rate in Australia as McDonald’s aim to give people opportunities to further their careers (Gould, 2010). For McDonald’s, Australia having a high unemployment rate would mean that more people would be applying and they would have a larger pool of people to choose from when hiring. This would in turn cause the quality of employees to rise within the company which can only improve McDonald’s as a whole (Gould...
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...The McDonald's Corporation (NYSE: MCD) is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries.[4][5] Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald; in 1948 they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth.[6] A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. McDonald's Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. In 2012, McDonald's Corporation had annual revenues of $27.5 billion, and profits of $5.5 billion.[7] McDonald's primarily sells hamburgers, cheeseburgers, chicken, french fries, breakfast items, soft drinks, milkshakes, and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, fish, wraps, smoothies, and fruit.[8] Headquarters McDonald's Plaza, located in Oak Brook, Illinois is the headquarters of McDonald's The McDonald's headquarters complex, McDonald's Plaza, is located in Oak Brook, Illinois. It sits on the site of the former headquarters and stabling area of Paul Butler, the founder of Oak Brook.[10] McDonald's moved...
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...EXTERNAL ENVIRONMENT ANALYSIS 2.1 Analysis of McDonald’s macro-environment Political factors The international operations of McDonald’s are extreme under influence of a policy of the separate state put into practice by each government. On the other hand, the company operates the separate policy and instructions of operations. The certain markets concentrate on various areas of anxiety, such as various area of health, protection of the worker, and environment. All these elements are noticed in the state control of licensing of restaurants in the corresponding states. For example, there is a hung legal dispute in privilege McDonald’s in India where certain infringement of rights and infringement of the religious laws concerning the maintenance of meal. Meat existence in their menu in India is obviously offensive to Indian religions in the mentioned market. There are also other researches which specifies in infringement of McDonald's Stores concerning existing laws on employment in the target market. As any business enterprise, these McDonald's stores should argue with problems of procedures of employment just as their tax obligations to succeed in the foreign market. Economic factors The organizations in the fast food industry aren't excused from any disputes and problems Branches and privileges of networks of the enterprises of fast service as McDonald’s has a tendency to experience difficulty in cases where the economy of the corresponding states is amazed by inflation...
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...This report is written to evaluate if the mission statement is still necessary for company's succuss and to review mission statements for five quick services restaurants which are competing in the fast food industry including: Hungry Jack’s, McDonald’s, Domino’s Pizza, Kentucky Fried Chicken and SUBWAY chain. This report finds that a well written mission statement is able to guide the direction of the company and positively change employees’ behaviours which directly link to company profitability. Therefore is essential for successful organizations today. This report also finds that except for McDonald’s, all other four companies’ mission statements are either focusing on these companies’ growth or profitability. This report believes it might be difficult for them to cope with this changing macro-environment and plan for the future scenarios. McDonald’s is the only organisation in these five companies that mentions customer experiences and perception towards the cooperation is also it is the only one communicate effectively this to the target audiences. Table of Contents 1.Introduction 1 2.The need of Mission Statement 1 3. Hungry Jack’s 2 3.1 Company Description 2 3.2 Review of the Mission Statement 3 4. McDonald’s 5 4.1 Company Description 5 4.2 Review on mission statement 6 5. Dominos 9 5.1 Company Description 9 5.2 Review of Mission Statement 10 6. Kentucky Fried Chicken (KFC) 11 6.1 Company Description 11 6.1 Review of mission statement...
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...Global Marketing, 8e (Keegan/Green) Chapter 1 Introduction to Global Marketing 1) The market development strategy involves seeking new customers by introducing existing products or services to a new market segment. Answer: TRUE Difficulty: Easy Chapter LO: 1 AACSB: Reflective thinking Course LO: Discuss the fundamental concepts of marketing 2) Starbucks is building on its loyalty card and rewards program in the United States with a smartphone app that enables customers to pay for purchases electronically. This is an example of Market Penetration. Answer: TRUE Difficulty: Moderate Chapter LO: 1 AACSB: Reflective thinking Course LO: Discuss the fundamental concepts of marketing 3) The perceived value equation can be represented as Value = Price/Benefits. Answer: FALSE Difficulty: Easy Chapter LO: 2 AACSB: Analytical thinking Course LO: Discuss the fundamental concepts of marketing 4) Companies can increase prices if costs are low because of process efficiencies in manufacturing. Answer: FALSE Difficulty: Easy Chapter LO: 2 AACSB: Reflective thinking Course LO: Identify and describe the processes and tools of strategic marketing 5) If Nestlé decides not to market biscuits (cookies) in the United States due to competitive reasons, it is considered as a lack of strategic focus and missed opportunity. Answer: FALSE Difficulty: Moderate Chapter LO: 2 AACSB: Reflective thinking Course LO: Identify and describe the processes...
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...1.)How has McDonald’s concept changed since the 1960s ? What environmental forces were behind these changes? By 1960, the company had more than one hundred restaurants. Kroc and the McDonalds owned some, but most were franchises. In addition to paying a franchise fee and part of their profits, franchisees also paid the company rent on the land where the stores sat. This income eventually earned more money for the McDonald's Corporation than selling food. During the 1960s, McDonald's saw many changes. Kroc became the sole owner in 1961, paying the McDonalds $2.7 million for their share of the business. The same year, the company opened "Hamburger University" at its Oak Brook, Illinois, headquarters to train employees. In 1962, McDonald's golden arches replaced Speedee as the restaurant's main symbol, and ads told customers to "Look for the golden arches." McDONALDS : MACRO ENVIRONMENT Organization’s decision making and performance and strategies are sometimes affected by some external factorsThe most common methods used for macro economic environment analysis is PESTanalysis. PEST anlayis do the environmental analysis from the following points of view:Source: Marketing Model, 2009.: Macro Environment and Marketing Mix3 A. Political factors Political factor mainly refers to government policy. For example, the degree of government’s intervention in an economy is a good example of political factor .According to Oxford University Press political factors mainly deals with...
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...Questions 1.) What role do opinion leaders play in McDonald’s marketing? Opinion leaders for McDonald’s marketing initiate or introduce strategic implementation of product positioning within the marketplace. They identify what products are the most beneficial to integrate into the organizations value menu, and what methodology is needed in order to increase profitability and enhance nationwide growth expansion. The opinion leaders must understand about customer’s need and ensure that their needs are met depending on the consumer’s geographic region. They need to introduce some menu that is adapted to regional tastes. For example, McDonald’s restaurants in Moscow promote different value menu compare to other franchises such as in Argentina and France. In Moscow, consumers like to have fresh McMuffin sausage sandwiches as breakfast while in Argentina, Ranchero hamburger sandwich is the customer favourite. Opinion leader for McDonald’s marketing needs to know about the organization inside and outside so that they would able to inform marketers about the aspect of product placement based on the targeted demographic. Besides, last time, McDonalds was investigating for not having enough healthy options for customers. This is because McDonalds built its reputation on burgers and fries. As a result of the need for food with nutritional value, consumers are now able to choose a healthy alternative when dining out at McDonalds. Example, McDonalds introduce new salad, wrap sandwiches...
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...realize that it needs to get involved in international markets. Obviously, it has a lot of benefits when a company enters into a foreign market. Expanding sales, acquiring resources and minimizing risk are the three principal operating objectives that why companies engage in international business. Normally, these three objectives guide all decisions about whether, where and how to engage to be international business. So in order to seek high sales and profits, gain global market share and reduce dependence on existing markets, it is inevitable for any companies to go abroad. However, it also generates enormous number of challenges and issues when organizations decide entry overseas markets. “The international Companies operate in an environment shaped by cultural, legal, economy, trade governmental and institutional forces.”(Daniels, 2010) So this article will use some examples to discuss the key challenges and issues faced by business organizations when they decide expand into overseas market, also compare the difference between...
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...analysis of the external macro environment in which a business operates. According to (2008), pestle stands for political, economic, social, technology, and environmental factors. A. Political Factors The international operations of McDonald’s are highly influenced by the individual state policies enforced by each government. (2001, 705) For instance, there are certain groups in Europe and the United States that clamour for state actions pertaining to the health implications of eating fast food. (2005) They have indicated that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food products. On the other hand, the company is controlled by the individual policies and regulations of operations. Specific markets focus on different areas of concern such as that of health, worker protection, and environment. All these elements are seen in the government control of the licensing of the restaurants in the respective states. For instance, there is an impending legal dispute in the McDonald’s franchise in India where certain infringement of rights and violation of religious laws pertaining to the contents of the food. The existence of meat in their menus in India is apparently offensive to the Hindu religion in the said market. There are also other studies that point to the infringement of McDonald’s Stores with reference to the existing employment laws in the target market. Like any business venture, these McDonald’s stores have to contend...
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...1.Discuss how the two cases in this chapter illustrate the major theme of this text: changes in the macro environment affect individual firms and industries through the microeconomic factors of demand, production, cost and profitability. Drawing on current business publications, find some updated facts for each case that support this theme. Both the cases McDonald’s in China and Wal-Mart in Mexico show how the interplay of microeconomic and macroeconomic factors influences managers’ competitive strategies. For both of these company, expansion abroad was a strategic move that helped offset slowing in the United States. However, both cases show how companies had to understand consumer behavior in these countries and the nature of competition from both local and international sources. is prevalent that several changes in the macro environment have had an effect on the profitability of individual firms and industries. The text states that downturns in economic activity forced all the fast-food companies to develop new strategies. During this economic downturn McDonald’s was one company in particular that has developed strategies that were influenced by microeconomic changes. A great example is when McDonald’s entered the Chinese market they had to take into consideration consumer taste and acceptance in China. They had to decided whether or not to have the menu in Chinese or English and whether or not to take on the American menu or add more Chinese influenced menu items. Cost...
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...Situational Analysis PESTEL Analysis: Political Factor: Generally, McDonalds are affected by government policy on the regulations of Fast Food Company such as health and hygiene policy. Government realized health problem have been a big concern for everyone, people are having diseases such as cardiovascular and cholesterol because they are eating too much fast food. Furthermore, hygiene policy also is a big concern for a fast food company. Good relationship with government will bring McDonald on a better position to service in this industry. Economic Factor: McDonalds have to consider the effect of economic. Organizational performance is usually affected economic factors such as tax rate, exchange rate and unemployment rate. Running a Business in local market, a company must be facing government regulation on tax or profit. Especially McDonald is an international company, and its business is successfully running over the world. Every country also has its own regulation on tax or other else that affect the business. Moreover, McDonald needs to import food and drink in local market, which mean the exchange rate and people living standard also affect the cost of running a business and productivity. Social Factor: The changing lifestyle will affect the sales performance of McDonalds. Nowadays, people are willing to eat more expensively. They want to have quality services and food more than fast food. Moreover, different country has different eating behavior. In western country...
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...Case Analysis on McDonald’s Vinil K Pillai City University of Seattle MBA 500 Essentials of Business Management June 22, 2014 Abstract This paper discuss about the case analysis of McDonald’s, one of the leading food chains around the world. This report starts off with a brief overview of the company, its presence and operations, and moves on to analyses of both external and internal environments. This paper tries to find out the relative strengths, weaknesses, opportunities and threats in different aspects of business operations of McDonald’s. The paper then looks at the issue faced by McDonald’s in today’s competitive world. The study finally concludes by suggesting some actions and recommendations to overcome those issues. Keywords: overview, external & internal analysis, issues and alternatives, recommendations and actions Company Overview McDonald’s corporation headquartered in Chicago, United States was founded in 1940 is the world’s leading global food chain service retailer with customers over 110 countries. The company restaurant offers a variety of food items, coffee, soft drinks and other beverages as well as newly added breakfast menus. McDonald’s is one of the most successful global restaurant chains around the world. Since coming in the market in the early 50’s McDonald’s has done very well in common stock and performing very consistently compared to its competitors. They have used the most effective management and global expansion strategies to...
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