F.4 Economics ProjectF.4 Economics ProjectThe McDonald’sThe McDonald’s

McDonald’s Restaurants McDonald’s Restaurants

(Hong Kong) Limited(Hong Kong) Limited

History/development of Hong Kong History/development of Hong Kong McDonald’s RestaurantsMcDonald’s Restaurants

McDonald’s Restaurants (Hong Kong) Limited

Established in 1975

First Hong Kong McDonald’s:Paterson Street, Causeway Bay

In HK, there are over 200 McDonald’s restaurants.

Horizontal Expansion has taken place!

History/development of Hong Kong History/development of Hong Kong McDonald’s RestaurantsMcDonald’s Restaurants

The FIRST restaurant group to adopt a total SMOKE-FREE POLICY

The Hamburger University Hong Kong (HUHK), was opened in 2002.

Vertical Backward Expansion has taken place!

History/development of Hong Kong History/development of Hong Kong McDonald’s RestaurantsMcDonald’s Restaurants

McCafe is also opened in Hong Kong recently.

Lateral Expansion has taken place!

35McCafes

Form of Business OwnershipForm of Business Ownership

McDonald’s Corporation

Private Limited Company

Private Limited Company

McDonald’s Restaurants (Hong Kong) Limited

Public Limited Company

Public Limited Company

McDonald’s Corporation

CompanyOperated

ConventionalFranchise

Joint Venture

DevelopmentLicense

APMEA (Asia/Pacific, Middle East and Africa)

McDonald’s Restaurants (Hong Kong) Limited McDonald’s

Restaurants

McCafe

Company Structure

Products/Services producedProducts/Services produced “What to produce?” “What to produce?”

Food Service Industry

McDonald’s Unique FoodMcDonald’s Unique Food

Coffees

French Fries Apple PieSalads

Big Mac

McFlurry

Factors of ProductionFactors of Production “How to produce?” “How to produce?”

Entrepreneur

Land

Factors of ProductionFactors of Production “How to produce?” “How to produce?”

Labour

Factors of ProductionFactors of Production “How to produce?” “How to produce?”

Capital

Target CustomersTarget Customers “For whom to produce?” “For whom to produce?”

People in all ages

Mainly children and teenagers

Demand and Supply RelationshipDemand and Supply Relationship

Inelastic demandEd<1Price increases%change in P > %

change in QdGain > loss TR increases.

0

P

Q

D1

P2

P1

Q1Q2

GAIN

LO

SS

McDonald’s Restaurants

Competitive Environment Competitive Environment of the Industryof the Industry

Oligopoly

McDonald’s KFC

There are a few major sellers provide a large share of the market output (fast food) in Hong Kong,

for example:

SWOT AnalysisSWOT Analysis

Has its signature products

Gives people a sense of belonging

Has built up its brand name

Takes up a large market share of the fast food industry

Strength~

SWOT AnalysisSWOT Analysis

Focuses only on teenagers and kids

Has not done enough to bring in the fitness market

Produces mainly fried and heavy-flavoured food

Not many different types of healthy food

Weakness~

SWOT AnalysisSWOT Analysis

Put more effort in producing healthy food

Bring in the fitness market

Increase its exposure and promote more about its healthy image to the public

Try to sponsor more activities for the elderly, they will be more willing to have their meals here

Opportunities~

SWOT AnalysisSWOT Analysis

Growing influence of the KFC cannot be underestimated.

The slogan is “So Real!”

Delivery service provided, which starts earlier than that of the McDonald’s

New food is also created

Threats~

Suggestions to Increase ProfitsSuggestions to Increase Profits

Produce more spicy food

Produce more healthy (less oil) foodto open up the fitness market

Suggestions to Increase ProfitsSuggestions to Increase Profits

0

P

Q

D1

S1

D2

P1

P2

Q1 Q2McDonald’s Food

• Demand increases

• Price increases (P1P2)

• Qt increases(Q1 Q2)

• TR increases

Suggestions to Increase ProfitsSuggestions to Increase Profits

Producing more toys for customers when buying food

All McDonald’s in Hong Kong provides free-delivery service

Enabling the wireless internet access

Suggestions to Increase ProfitsSuggestions to Increase Profits

0

P

Q

D1

S1

D2

P1

P2

Q1 Q2McDonald’s Food

• Demand increases

• Price increases (P1P2)

• Qt increases (Q1 Q2)• TR increases

Suggestions to Increase ProfitsSuggestions to Increase ProfitsOpen more McCafes

0

P

QFig.5 McCafe

S1S2

D1

P1

P2

Q1 Q2

GA

IN

LOSS

Suggestions to Increase ProfitsSuggestions to Increase Profits

0

P

Q

D1

S1

P1

P2

Q1 Q2McDonald’s Restaurants opened for 24 hours

More McDonald’s Restaurants operated in 24 hours

S2 • Elastic Demand• Supply increases• Price decreases (P

1P2)• Qt increases

(Q1 Q2)• %change in Qd >

%change in Price.• TR increases

LOSS

GA

IN

Main SourcesMain Sources

www.mcdonalds.com.hk

www.mcdonalds.com www.wikipedia.com

Member ListMember List

Chan Oi Lam

Kwong Chung Yan

KwokWing Yee

Lai Wing Sum

TTHE HE EENDND