McDonalds

McDonalds Corporation im lovin it

1INTRODUCTIONMcDonald's Corporation is a restaurant franchise recognized for its affordability.Their menu consists of a variety of fast foods, deserts and drinks. Headquarters are located in Oak Brook, IL.They employ approximately 1.8 million worldwide.Major subsidiaries are Chipotle Mexican Grill Inc. and Boston Market Corporation.

McDonald's Corporation is a restaurant franchise recognize for its affordable prices all over the world. The restaurant offers a diverse menu with some slight changes depending on the country. Their specialty is affordable fastfood but in recent years they have added a new line of specialty coffee and deserts. McDonalds provides their services to more than 69 million people in 118 countries. About 80% of their restaurants are franchised and it is expected that they will keep growing. McDonalds headquarters are located in the city of Oak Brook, IL. They employ approximately 1.8 million people worldwide. Their major subsidiaries in the United States are Chipotle Mexican Grill Inc. and the Boston marketCorporation.

2McDonald's CORPORATE Structure

Chairman of the Board (11 Directors)Chief Executive Officer (CEO)Chief Operating Officer (COO)Corporate AffairsMarketingHuman ResourcesNational OperationsRegional ManagersFinanceStrategic Planning

McDonalds Executive structure consists of : at the top are the chairman, with 11 directors, chief executive officer, and the chief operating officer. Consequently, under it comes the department of corporate affairs, marketing, human resources, national operations, regional managers, finance and strategic planning. In addition, other functional departments are legal, customer services, franchising, security, hygiene and safety, property and construction, supply chain and restaurant services.3McDonalds Organizational PhilosophyIf I had a brick for every time Ive repeated the phraseQuality, Service, Cleanliness and Value, I think Id probably be able to bridge the Atlantic Ocean with them. Ray Kroc

Ray Krocs philosophy:Serve high-quality foodUniform methods of preparationMenu; burgers, fries, buns, and beverages

Although it is to say Ray Kroc became an overnight success, he says 30 years, was a long, long night. Ray KrocRay Krocs philosophy consists of selling high quality food with uniform methods of preparation. He wanted to sell burgers, fries, buns, and beverages. He wanted his food to taste the same everywhere, so he established a standard menu for all of his restaurants. 4McDonalds Values

We place the customer experience at the core of all we do.We are committed to our people.We believe in the McDonalds System.We operate our business ethically.We give back to our communities.We grow our business profitably.We strive continually to improve.

McDonalds Values are as following: by placing the customer experience at the core, their customers are the reason of their existing, their most important mission is to apply Ray Krocs philosophy of quality, service, cleanliness and value for each and every customer. By being committed to their people they provide opportunities to develop leaders, nurture talent and reward achievement. They believe a system of well-trained individuals with different backgrounds fosters respect and drives high levels of engagement. In addition, they believe in the McDonalds system which is their business model portrayed by their three-legged stool of owner/operators, suppliers, and company employees, is their foundation, and balancing those interests is key. Operating their business ethically is McDonalds fourth value, they imply holding their business with integrity, honesty and fairness. Additionally, McDonalds gives back to the community by donating money to better their communities and supporting Ronald McDonald house charities, also they grant scholarships to students with high academic standards who cannot afford Universities' tuitions. We grow our business profitably is another McDonalds value where they state to provide a continuous profit to their shareholders by performing an unceasing attention to their customers and the companys health. Such value is of our interest since we are considering investing is this company. Last but not least, they strive to improve by constant evolution and innovation.

5MARKETING STRATEGYMcDonald's marketing strategy starts by determining key audiencesTheir main focus is on the 4Ps:ProductPricePromotion PlaceGoal is to retain as many people as possible once they become customersMajor marketing strategy: association with athletes and celebrities.

McDonalds is one of the best-known brands worldwide. McDonalds aims to continually build its brand by listening to its customers. McDonalds rode the baby-boomer trend in the 1960s, the swelling ranks of teenagers and the rising female labor force participation, supplying a fast and inexpensive menu. In the 1970s and the 1980s, McDonalds rode the globalization trend by transferring the American Way of Life to many countries around the world. At the same time, McDonalds adapted to the social context of each county by franchising to locals. A company as old and large as McDonalds must be efficient in their marketing strategy in order to maximize their profits and ensure the durability of their brand.The starting point is to find out who McDonalds potential customers are, as not everyone will be interested in what McDonalds has to offer. These potential customers are known as key audiences. The basic marketing strategy focuses on the 4Ps, that is: product, price, promotion, and place. McDonalds combines this basic knowledge with detailed research on the customers in order to ascertain the correct marketing strategy. They focus on: which products are well received, what prices the consumers are willing to pay, what television shows, newspapers and advertisement customers read and view, and finally which restaurants are visited.

6KEY AUDIENCESParents with two children: Take children to get a treat.Children: See it as a fun place to eat and play.Business customer: Great food, fast service, on-the-go.Teenagers: Dollar menu and free Wi-Fi Internet.

Basic knowledge of economics shows us that there are a limited number of customers in the market. Therefore, in order to build a long-term business, it is crucial to retain as many people as possible once they become customers. However, not all customers are the same. A few examples of McDonalds customers are: parents with two children, children, a business customer, and teenagers. Each of these respective customers is attracted to McDonalds for different reasons. A parent with two children visits McDonalds to give their children a treat. Children want to visit McDonalds because they view it as a fun place to eat. A business customer eats at McDonalds because the food is great, the service is fast, and the food itself can be eaten on the go. Teenagers are attracted by the Dollar Menu, which is highly affordable, and the Internet access available. By far the most successful marketing strategy that McDonalds has used is its association with athletes and celebrities. This strategy has translated well not only in the U.S. but also throughout the world as children everywhere idolize superstars such as Lebron James and Kobe Bryant.With all this research in mind, McDonalds constantly continues to change its strategy to evolve with its ever-changing consumer base. What always remains however is the Golden Arches, a symbol that is associated worldwide with McDonalds. McDonalds association with athletes and celebrities, highlights that McDonalds is hip and fashionable, ensuring that, everyone wants to eat McDonalds.

7FINANCIALSMcDonalds is a company characterized for providing steady returns and safe investments; it is a low risk company.In the latest 10K report, we found that McDonald's revenues for 2012 were of $27.6 billion.Total operating costs and expenses were of $19 billion yielding to an operating income of $8.6 billion.Net income for 2012 is $5.5 billion.This is a 2.1% increase from the previous year.

McDonalds is consider a mature company due to its stability and time in the industry.Even though it does not provide excessive returns, it is a company characterized for providing steady returns and safe investments; it is a low risk company.In the latest 10K report, which is the annual report with all the financial information, we found that McDonald's revenues for 2012 were of $27.6 billion.Their total operating costs and expenses were of $19 billion yielding to an operating income of $8.6 billion. Including tax expenses and interest expense the net income for 2012 is $5.5 billion. This is a 2.1% increase from the previous year. Details can be seen in the following chart:

8CONSOLIDATED STATEMENT OF INCOME

As we can see, the highlighted areas indicate McDonalds revenues of $27,567 billion. 9FINANCIAL GROWTHStockholder's dividends have been increasing over the last five years. Current dividend per share (2012): $0.77/share.2011: $0.702010: $0.612009: $0.552008: $0.50

The stockholder's dividends at McDonald's have been increasing over the last five years, which indicates great financial health. The current dividend per share is $0.77, in 2011 was $0.70/share, and in 2010 was $0.61/share, in 2009 $0.55/share and in2008 was $0.50/share.

10PROFIT HISTORY

McDonald's had a profit growth from 2007 to 2012 of 128%In the following chart we can see the net income for the previous six years:

Over the past six years McDonald's has also increased profit per year. The profit growth from 2007 to 2012 was of 128%. In the following chart we can see the total revenues and net income of the previous six years:

11EXPECTATIONS FOR THE FUTUREProjected total revenue for 2013 is expected to be $28.47 billion; a 3.3% growth. Projected stakeholder's share expected to be $0.89/share

It is expected that McDonalds continues to grow the way it has being growing for the past years. The projected total revenue for the year 2013 is expected to be $28.47 billion, which is a growth of 3.3%, more than the 2.1% growth from 2011 to 2012. The future projected stakeholder's share is expected to be $0.89/share.McDonalds offers the perfect stock in a weak economy since they offer very low prices for meals with the convenience of a fast restaurant. In the current economic situation many people may be cutting out on restaurant meals by cooking at home but McDonalds provides a second choice to American. In addition, they don't only target the lowincome population but now McDonalds has developed a line of specialty coffee, the McCaf. This new line has help McDonalds broaden their clientele base but not only offering fast, unexpensive food but also delicious treats and specialty coffee. 12CONCLUSIONPROS OF INVESTING Mature company = low investment riskStable rise of profit/ revenue

International renowned success118 locations worldwide

CONS OF INVESTINGStagnant marketing throughout the yearsUndesired product due to more health conscious optionsExternal Factors

13Final DecisionThe pros greatly outweigh the cons of investing.

Steady increase will result in safe investment with profitable ROI

14RECOMMENDATION

15The chart above shows how the stock price has increased in the past 50 years. There have been regular dividends and a good amount of stock splits. There is no signs that this steady increase in stock price and dividends is going to stop. It is definitely a wise investment choice for the long term investor.RECOMMENDATION

RECOMMENDATION Reasons to InvestStrong increase in stock price and dividends Strong marketing strategyHas withstood the test of time and economyStrong fan baseEndorsed by many celebritiesFoothold in most countries world wideStrong company valuesLow product prices

17REFERENCESKrock , R. (1977).The ray kroc story. Retrieved from http://www.mcdonalds.com/us/en/our_story/our_history/the_ray_kroc_story.htmlMcDonalds. (2010-2013).Mission & values. Retrieved from http://www.aboutmcdonalds.com/mcd/our_company/mission_and_values.htmlMcDonalds. (2010-2013).Mcdonald's corporate governance. Retrieved from http://www.aboutmcdonalds.com/mcd/investors/corporate_governance.htmlMcDonald's , C. (2012, Dec 31).Mcdonald's corporation form 10-k. Retrieved from http://www.sec.gov/Archives/edgar/data/63908/000006390813000010/mcd-12312012x10k.htmNYSE. (2013, November 22).Mcdonald's dividend yield. Retrieved from http://ycharts.com/companies/MCD/dividend_yieldMcdonald's corp. (2013, November 22). Retrieved from http://www.marketwatch.com/investing/stock/mcdScience, N. (2013, July 18).Mcdonald's (mcd) earnings expected to rise. Retrieved from http://www.forbes.com/sites/narrativescience/2013/07/18/mcdonalds-mcd-earnings-expected-to-rise/18References cont.McDonald's , C. (2008).Marketing at mcdonald's. Retrieved from http://www.mcdonalds.co.uk/content/dam/McDonaldsUK/People/Schools-and-students/mcd_marketing.pdfMcDonald's (n.d.).Getting to know us. Retrieved from http://www.aboutmcdonalds.com/mcd/our_company.htmlMourdoukoutas, P. (2013, April 25).Starbucks and mcdonald's winning strategy. Retrieved from http://www.forbes.com/sites/panosmourdoukoutas/2013/04/25/starbucks-and-mcdonalds-winning-strategy/