Research Project - McDonald's Corporation
Essay by zhuang1 • November 21, 2016 • Research Paper • 1,766 Words (8 Pages) • 1,569 Views
McDonald's Corporation Research Report
Part One - Nature of the entity
McDonald’s System, Inc was founded in 1955 by Ray Kroc. Six years later, he bought the exclusive rights to the McDonald's name. Since then, McDonald's restaurant serve burgers, bunds, fries and beverages and decades later expand nationwide. With unique philosophy aiming at recruiting franchisees and suppliers, McDonald's started international growth in 1983 with grand-opening for the first McDonald's restaurants in Spain, Denmark, and the Philippines. In 1983, the restaurant are located in 32 countries around the world. With the assistance of information technology, McDonald's launched its websites which were accessible in most of the countries in 1996. In recent decade, McDonald's Corporation launched a few business activities such as the following.
2007 | New packaging features 24 faces from first-ever global casting call |
2008 | Introduces the most comprehensive global packaging design in the brand's history |
2009 | Campus office building received one of the most prestigious Green Building awards - LEED-EB Platinum |
2010 | Offers visitors free Wi-Fi |
2011 | Now Operates in 119 Countries and improve nutrition choices |
McDonald's includes three ambitions into their culture- Good Food, Good People and Good neighbor. Concisely speaking, McD promote choices and make use of real ingredients to offer great taste. As for people, McD create opportunity, encourage diversity, offer training, facilitate teamwork, reward achievement. McD play a part in charity events by championing happy, healthy kids. Keep families together through Ronald McDonald House Charities. All of the above is to share value with customers and local community to improve mutual benefits of McD and consumers.
Part Two - Industry and regulatory reports
Food Choice
McDonald's embrace innovation for decades. New menu has been added to enrich the variety of food choice. For example, Mac Snack Wrap was added to its Wrap line in 2009; McCafe Real fruit smoothies and Frappes were introduced nationally in 2010; Shamrock Shake were started to be offered nationally in 2012. Moreover, McDonald's offer nutrition calculator for all the items to customer in order to help customer consider calories intake when food are ordered.
Management Change
In August 02, 2016 McDonald's announces the retirement of Chief Administrative Officer Pete Bensen after 20 years with the company. The replacement is to be determined.
In June 29, 2016 McDonald's Corporation announces today the appointment of Colin Mitchell to the position of Global Vice President, McDonald’s Brand, reporting to Silvia Lagnado, Global Chief Marketing Officer.
In May 26, 2016 McDonald’s Board of Directors today announced that Enrique (Rick) Hernandez, Jr. has been elected non-executive Chairman of the company's Board of Directors.
In April 6, 2016, Andrew J. McKenna announced to retire from McDonald's Board of Directors and not to stand for re-election as a member of the Board.
Corporation Regulatory
McDonald's published the following policy and guideline including Audit and Non-Audit Services Policy, Corporate Governance Principles, Director Selection Process, Director Stock Ownership Guidelines, Directors and Officers Policy with respect to Hedging and Pledging of McDonald's Stock, Executive Stock Ownership and Retention Policy, Political Contribution Policy, Standards on Director Independence, 2012 Omnibus Stock Ownership Plan
Customer Expectation
At the end of 2015, ingredient changes plan was in place to raise customer expectation. To win back customers, McD rolled out a revamped Egg McMuffin, featuring a fresh-cracked egg, butter instead of margarine, improved Canadian bacon and a return to the original English muffin recipe. Also, McDonald's announced a long-term commitment to sourcing cage-free eggs and started all-day breakfast in early October 2015 in US region.
Change of organizational Structure
McDonald’s organizational structure has been modified since July 2015 and started operating with the following four segments that combine markets with similar characteristics, challenges, and opportunities for growth: US Market, International Lead Markets, High Growth Markets and foundational Markets. The feature of these segments are detailed as the following.
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Part Three - Strategies and business risks
Risk in managerial and strategic
Based on the Wall Street Journal report from a top McD franchisee, the burger line of McD have been losing momentum in market shares with Hamburger sales at the fast food chain flat for the past few years, compared to modest annual growth before that. Besides, McDonald's burgers recently ranked last in a Consumer Reports survey regarding the taste among 21 hamburger chains stores.
Financial Risk
In the most recent stock report news, Shares of McDonald's were declining due to concerns of company being outpaced by gourmet burger chains like Shake Shack, Smashburger and Five Guys. A notable investment firm TheStreet rates McDonald's as a Hold with a ratings score of C+. Despite the company's in notable return on equity, expanding profit margins and solid stock price performance, the weaknesses include unimpressive growth in net income, weak operating cash flow and generally higher debt management risk.
Risk in consumer base and health
America is the company's largest and most loyal consumer base, however Americans are currently experiencing a health crisis with their life-threatening weight problem. Consumers tend to embrace much healthier diet and watch out for daily calories intake. Countries around the world, such as Russia, Germany, and China are following the same trend. Based on the supply and demand equation, McDonald's potentially facing a big challenge regarding how to optimize their menu to offer healthier and low calories burgers.
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