Company analysis of McDonald
This report intends to conduct a company analysis on McDonald Corporation. Tools such as BCG matrix has been used to assess the business position of the company. The discussion has identified that McDonald has been able to attract its customers with the help of its customised products. In addition, high return to the investors has also allowed the company to strengthen its equity financing position.
The fast food industry is thriving for the past few years. Money is generated in this industry by selling huge quantities of food at a lower price. In this industry, the profit margin for the products is not very high, but the amount of food sold covers up for revenue that is lost. McDonald Corporation is the market leader in the fast food industry, providing mouth-watering burgers to the mass at a quite reasonable price.
McDonald Corporation is regarded as the leading multinational company, which has its operation in more than 117 countries worldwide. The company, through its franchisees, have operated in highly demanding markets, where the competitors are fast enough to imitate their products. “McDonald’s competes on the basis of price, convenience, service, menu variety and product quality in a highly fragmented global restaurant industry” (Franchise Direct, 2013) – is the mission statement for the company. The company has encountered risks in the past and has still been facing some in areas of interest rates, inflation, foreign exchange rates and industry regulations.
The company has achieved competitive advantage, both nationally and internationally, in the fast food industry. The net income of the company has increased from $2.4 billion in 2007 to $5.0 billion in 2011 (Pym, 2009).
McDonald has become a manifestation of globalization worldwide and thus, sometimes, it is said that there has been "McDonaldization" of the society (Ritzer, 2004.). The company serves around 68 million customers worldwide and operate either by franchise or through own control. The revenue of the company is derived from the royalties; rent and fees paid by the franchises; and also, from sales generated by company operated restaurants. In 2012, total revenue of the company had amounted to $27.5 billion, whereas, the profit was $5.5 billion (Neutral Fuel, n.d.).
BCG matrix is important for the portfolio management of a company. The BCG Matrix of McDonald is given below:
For ensuring long-term value creation among customers, McDonald develops product portfolios, which have high growth with respect to the cash inputs. The portfolio also consists of products that consists of low growth products, but generate a lot of cash. The two dimension of BCG matrix, which is followed by McDonald, are the relative market share and market growth. Both are very essential for the company, mainly because if the product has acquired greater market share, then the company is said to be performing well in the market. McDonald has acquired about 19% of the fast food market and thus, it can be said that the company has concentrated on expanding their product range. McDonald is regarded as the “Star” in the fast food industry. The company is the market leader here and generates cash for their further operation.
Company analysis of McDonald
|Domain:||Financial Performance Analysis|
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