McDonald's Marketing Project Introduction McDonald's was founded by Ray Kroc, who built upon the hamburger stand of Dick and Mac McDonald, which sold bags of hamburgers and fries to customers. Mr Kroc decided a franchising model was the best way to grow the company, and it turns out he was right. Over the 55 years... GROWTH FIGURES The company had massive sustained growth, and moved into many territories across the world. McDonald's was a story of success. From 2000 onwards, the image of the company was tarnished, becoming an easy target for media and government for various reasons, and so profits dwindled. However, the company fought back, with a change in marketing strategy and corporate policy as a whole, and sought to turn its fortunes around with its 'Plan To Win'. During the recent recession McDonald's has been in rude health, with profits spiralling due to people once again prioritising cost and convenience over other values such as sustainable sourcing and healthy eating. As is discussed later on, the recession won't last forever and so future policies will again have to deal with the public's changing tastes (excuse the pun). Strategic management is a key area in business and can help to decide the fate of a company when analysing where its strengths, and perhaps more importantly, where its weaknesses lie. A company that can successfully identify these characteristics will certainly have an advantage over its competitors. One example of such a strategy is PESTEL analysis. SWOT

STRENGTHS

WEAKNESSES

Strong Brand Image & recognizable logo. High employee turnover increases HR costs. Ranked very highly in Fortune 500's list of most Media and government tend to give the admired food companies. company a bad image. Image of Cheap food even though it is not that well priced. Global spread of restaurants provides economic resilience. Established staff training program.

OPPORTUNITIES Organic foods.Untitled 1 Healthier foods. More animal welfare concious foods. Growing demand for coffee from McDonald's.

THREATS Growing concern for obesity and health issues Growing concern for animal welfare Major competitors e.g. Burger King, KFC etc.

PESTEL Analysis There are many factors in the macro-environment that will effect the decisions of the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes . To help analyse these factors managers can categorise them using the PESTEL model. When looking specifically at McDonald's we can see that a PESTEL analysis may look like this: P = Political Factors McDonald's as a company in the fast food market has taken, both internationally and more specifically from a UK perspective, most of the blow when it comes to the fast food clampdown and was under both media and political pressure from various groups to alter both its selection of food it provides and perhaps more importantly the fat and salt values within the menu it already offered. The intense political pressure was backed by research into the fat and salt values of McDonald's meals and together with the rising levels of obesity in the country it pushed McDonald's to make a significant change. The result of this pressure led to a few changes in the way the company operated and the most noticeable change was in the form of a wider menu range and nutritional values being printed on most meals. Aside from being criticised for being a typically unhealthy and damaging company to the health interests, McDonald's has been involved with the new UK health policy that tackles issues such as obesity. This is a clear example of McDonald's adaptability to pressure from the media and political parties and this may play a key part of McDonald's marketing strategy. The role of government concerning McDonald's and its operations is discussed in greater detail in 'The Role Of Government'. E = Economic Factors McDonald's economic factors range internationally but in terms of the UK economic outlook McDonalds is currently strong with high sales and profits resulting from the recession because of its image of cheap and fast food earning itself a boost in sales from an initial drop a few years ago.

As a result of this boost in sales, McDonald's has emphasised this perceived image of itself and launched television adverts portraying several images of McDonald's being a convenient food stop that is both available to everyone and enjoyed by all. S =Socio-Cultural Factors McDonald's have aimed to improve their workforce's education and hence their efficiency by providing a degree accredited by Manchester Metropolitan University. From a socio-cultural point of view this degree may give access to education to those who would normally just partake in low level skilled work instead of attending university and complementing the workplace with businesses theory. As previously mentioned, the main social factor concerned with McDonald's would be the issue of obesity and the impact McDonald's has both negatively and its propositions to help combat the problems.Time inc (2010) [online]. Available from: http://newsfeed.time.com/2010/11/27/u-k-university-to-offer-mcdonaldsdegree/ [Accessed 3rd December 2010]

T = Technological Factors McDonald's is very in touch with technology with countless examples from their clever television adverts to the toys that feature in happy meals. McDonald's is clearly a company that lives in the modern era and puts technology high on its priority list. McDonald's also incorporates a sophisticated inventory system together with its international supply chain help McDonald's to us technology as a means to add value to their products and provide a low cost system which then passes these costs down to the customers. E = Environment McDonalds is very keen to promote its attitude towards helping the environment by drawing up a comprehensive environmental policy that states that its aims to reduce energy emissions, reduce odour and noise pollution and minimise the solid waste produced by the company. All of these help to market McDonald's as a company that is not only helping to reduce its impact on the environment but to be proactive in showing that it wants to do as much as it can.McDonalds (2010) [online]. Available from: http://www.mcdonalds.co.uk/ourworld/environment/policy.shtml [Accessed 3rd December 2010]

L = Legal Factors The legal factors surrounding McDonald's tend to link to its social responsibilities and the issue of fast food and obesity in general, although no specific legal action has been formally made against McDonald's its clear that the pressure put on the company has certainly had a clear effect on the way in which it operates and the response it has given to show that it is proactive in its social responsibilities.IvyThesis (2010) [online]. Available from:http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-ofmcdonalds.html [Accessed 3rd December 2010]

Relevance of Michael Porter. Porters 5 Forces: Michael Porter provided a framework that models an industry as being influenced by five forces. Companies can use this model to better understand the industry context in which the firm operates and identify the areas in which it needs toQuickMBA (2010) [online]. Available from: http://www.quickmba.com/strategy/porter.shtml [Accessed 3rd December 2010]

Diagram of Porter's 5 ForcesSUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in industry BARRIERS TO ENTRY Absolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products BUYER POWER Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity Threat of backward integration Product differentiation Buyer concentration vs. industry Substitutes available Buyers' incentives

THREAT OF SUBSTITUTES -Switching costs -Buyer inclination to substitute -Price-performance trade-off of substitutes

DEGREE OF RIVALRY -Exit barriers -Industry concentration -Fixed costs/Value added -Industry growth -Intermittent overcapacity -Product differences -Switching costs -Brand identity -Diversity of rivals -Corporate stakes

Degree Of Rivalry The degree of rivalry in the fast food and restaurant industry is very high especially within the UK and the economic climate. To help ensure that McDonald's has an advantage over its competitors McDonald's has diversified itself into broader food markets. These range from offering breakfast

items to competing with sandwich companies such as Subway by offering a deli sandwich meal. These decisions by McDonald's help to make it a dominant force by directly competing with a wide range of company's and such offering a low price to keep its sales high. Barriers To Entry Barriers to entry in the fast food and restaurant market is extremely difficult, especially for larger companies that are in national competition with McDonald's and other well established fast food chains. However, on a small scale small restaurants or cafes may be able to compete on a local basis and may draw away some of the consumers from the larger chains but in terms of the regional and national markets there are huge barriers to entry simply because of McDonalds excellent supply chain, very low cost production and massive marketing budgets. Threat Of Substitutes There are various substitutes in the industry because of the sheer number of fast food chains and smaller restaurants. These include small fast food vendors, sandwich shop, coffee shops, and other large chains. Supplier Power The power of suppliers will be quite low in the industry because the products needed by the industry are in abundance and often the fast food chains can simply select the cheapest suppliers available to them. Buyer Power Similarly the buyer power is low in the fast food industry as the volume of buyers are so high and the prices of the meals so low that buyer power does affect the market that much. In consideration of the vast number of buyers in the fast food industry together they possess strong buyer power but individually they have very weak buyer power. References: 1. Time inc (2010) [online]. Available from: http://newsfeed.time.com/2010/11/27/u-k-universityto-offer-mcdonalds-degree/ [Accessed 3rd December 2010] 2. McDonalds (2010) [online]. Available from: http://www.mcdonalds.co.uk/ourworld/environment/policy.shtml [Accessed 3rd December 2010] 3. IvyThesis (2010) [online]. Available from:http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html [Accessed 3rd December 2010] 4. QuickMBA (2010) [online]. Available from: http://www.quickmba.com/strategy/porter.shtml [Accessed 3rd December 2010]

Business and Strategic Philosophy The business strategy of a company is intrinsically linked to its marketing strategy. This section assesses the business strategy of McDonalds and compares it to the way in which products are marketed. Marketing is not just advertising: it is an assessment of consumer preferences and views too, which means that the link between marketing and business strategies is a two-way link. The marketing strategy of McDonalds is shaped by four major inputs: 1. Organisational objectives and resources 2. Attitude to change and risk 3. Competitor strategies 4. Market structure and opportunitiesBrassington, F & Pettitt, S (200x) p.846

1. McDonalds is driven by its Mission Statement: Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience People, Products, Place, Price and Promotion. We are committed to improving our operations and enhancing our customers' experience.Student Research [online] Accessed 17/10/10. http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html

When people talk about company resources they often only consider cash and assets but it in fact They include skills and expertise...any area of the organisation that can help to add value and give a competitive edge. Brassington, F & Pettitt, S (200x) p.845. These resources can lead to intangible assets such as a loyal workforce, good customer services and a good brand image. McDonalds introduced qualifications for its employees to work towards which initially received bad press, being called the McJob. It has soldiered on and now they state 96% of our people think the skills theyve gained at McDonalds will be useful to any future employer, and that 8 out of 10 employees see the job as a long term career. Learn how we work[online] Accessed 2/12/10 http://www.mcdonalds.co.uk/static/pdf/aboutus/education/mcd_prospectus.pdf

The company also has many employment-related accolades including being in The Times Top 100 employers list for 10 years in a row. 2. McDonalds is a company which is now well practised at changing its image and taking risks when need be. The company has 32,000 outlets in around 117 countries and so is always risking money by trying out new markets. McDonalds over the years has endured a lot of criticism and bad press, most notably the 2004 documentary Supersize Me and the McLibel trial which started in 1994 and ended two and a half years later. The company markets itself as a much more progressive company these days with recent TV adverts focusing on the British weather and its benefits to the British and Irish Farmers and the Just Passing By campaign [Accessed 2/12/10 www.youtube.com] which looked at the broad spectrum of customers. Junk food is a hot topic in the British Press so McDonalds have moved away from advertising it, which goes to show that they are very capable of adapting to changes in food fashions.

3. McDonalds is the dominant force in fast food in Britain today and it is a market leader in terms of business and marketing strategies. The original competitors such as Burger King and KFC follow in McDonalds footsteps. McDonalds does not expand into making chicken products as much as it could because KFC is the most popular choice and so the market is saturated in this respect. 4. New competition arises in the form of Subway and also coffee shops such as Costa and Starbucks. McDonalds has introduced new marketing strategies and product lines to compete in these alternative and arguably more upmarket sectors. Further opportunities for

expansion can be sought abroad as growth is limited in established markets due to people being able to only eat so much! Both points will be discussed later on. The Role of Government McDonalds is affected a lot by governmental organisations such as the Food Standards Agency, the Department of Health, and OFCOM. The main issue is the advertising of junk food or HFSS (High Fat, Salt & Sugar) foods to children. Pressure had been mounting throughout the 2000s for the advertising regulator OFCOM to restrict the marketing of HFSS foods to children. The Childrens Food Aact 2004 states that The Appropriate Authority shall by regulation prohibit any person... from marketing to children any foods and drinks which contain content which the FSA has decided... is detrimental to the health of children. Childrens Food Bill [online] Accessed2/12/10http://www.publications.parliament.uk/pa/cm200304/cmbills/110/2004110.pdf

These rules were introduced for under 10s in April 2007, by January 2008 covered under 16s and by January 2009 the advertising of HFSS foods on childrens channels was also banned. The ban included the use of celebrities, licensed characters, health claims and promotional offers aimed at under 16s.

This bad press became a significant problem for McDonalds which, in 2003, recorded its first ever loss in the UK. The Government intervention, along with media criticism, meant the consumer body as a whole were turning away from McDonalds. McDonalds started to change its image and set out its Plan to Win which has been discussed earlier on. Figure shows McDonalds stock price over past decade. Accessed 2/12/10 [online] http://quote.morningstar.com/stock/chart.aspx?t=MCD&region=USA&culture=en-US

Note the very low stock price around 2002/2003, when the press attention for McDonalds was particularly bad. The change in the advertising laws in the UK did not have a massive effect on the stock price, meaning that the company must have found alternative ways of marketing, for instance, online advertising to children was still permitted though frowned upon; Health campaigners have warned that fast food giants are increasingly turning to the internet to circumvent moves designed to curb advertising aimed at children. Johnson, B & Gibson, O (2006) Internet used to push fast food to children, say campaigners[online] http://www.guardian.co.uk/uk/2006/mar/27/advertising.digitalmedia

1. http://www.mcdonalds.co.uk/people/schools-and-students/schools-and-students.shtml [14th November 2010] LEARN HOW WE WORK. PDFs finance, marketing, customer services from here. 2. http://www.aboutmcdonalds.com/mcd/csr/report/looking_ahead.html [14th November 2010] LIVING OUR VALUES. PDF of 2009 Report from here 3. http://www.aboutmcdonalds.com/mcd/csr/report/overview.html [15th November 2010] Doing the right thing is important to us.

4. Marketing Guidelines in Nutrition and Wellbeing http://www.aboutmcdonalds.com/mcd/csr/report/nutrition_and_well-being/promotions.html 5. www.mcdonalds.co.uk/about-us/franchise/overview.shtml COMPANY PHILOSOPHY 6. http://www.aboutmcdonalds.com/etc/medialib/aboutMcDonalds/investor_relations0.Par.17264.File. dat/2009%20AR%20Report%20-%20Print.pdf [2nd December 2010] 2009 REPORT PDF 7. http://www.aboutmcdonalds.com/mcd/our_company.html [2nd december 2010] GETTING TO KNOW US 8. http://www.mcspotlight.org/case/trial/story.html MCLIBEL 2/12/10 9. http://www.mcdonalds.co.uk/static/pdf/aboutus/education/mcd_prospectus.pdf PROSPECTUS 2010/2011 2/12/10 10. http://www.youtube.com [2/12/10] FAVOURITES, WEATHER, BREAKFAST adverts. 11. http://quote.morningstar.com/stock/chart.aspx?t=MCD&region=USA&culture=en-US 12. http://www.publications.parliament.uk/pa/cm200304/cmbills/110/2004110.pdf 13. http://news.bbc.co.uk/1/hi/business/4665205.stm 14. http://www.guardian.co.uk/uk/2006/mar/27/advertising.digitalmedia 15. http://news.bbc.co.uk/1/hi/health/6515245.stm 16. http://en.wikipedia.org/wiki/Fast_food_advertising 17. http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/documents/digitalasset/d h_089123.pdf 18. Principles of Marketing Third Edition (2002) Brassington, F & Pettitt, S Financial Times/ Prentice Hall

Corporate and Operational Marketing Issues Corporate Issues As one of the largest restaurant chains in the world McDonalds spends massive amounts of money on marketing campaigns and advertising. The main target of their advertising campaigns is children, which has proven highly controversial with stakeholder groups mainly the parents of these children. The problem is that children are bombarded by McDonalds marketing, and due to their susceptible nature, are convinced into buying McDonalds products repeatedly, which could be leading to health implications for them. McDonalds argue however that their advertising is no worse than anyone else's and that they adhere to all the advertising codes in each country. (http://www.mcspotlight.org/issues/intro.html) While this may be true, there is no question that a large proportion of children are influenced by McDonalds advertising campaigns and that over-consumption of fast food can lead to obesity and health problems. As the population becomes more aware of the direct link between fast food and health problems, including obesity, (there has even been talk of the NHS refusing treatment to obese patients, ) problems may arise for the company. There is already a drive towards healthy eating at McDonalds, including a range of fruits and salads, but this may not be enough to cope with the increasing demand for healthy food, therefore marketing strategies to change the corporate image may have to be built upon. As awareness for animal welfare increases in society, along with the increase in demand for free range food, McDonalds may find that demand for their products decreases. McDonalds is the worlds largest user of beef and are responsible for the slaughter of hundreds of thousands of cows per year. Half a million chickens who suffer cruelty and pain in factory farms are used by McDonalds every week in Europe alone. (http://www.mcspotlight.org/issues/intro.html) Although McDonalds abide by the rules set out for them by governments, and act probably no worse than any other fast food chain (other than the volume of animals killed), the public will soon realise that animals are not cared for enough during the rearing and slaughter process. This is likely to affect the whole market, but nevertheless, to resolve this situation it is likely that profits may be lost due to higher costs of raw materials coupled with McDonalds elastic relationship between price and demand (that is, if prices are pushed up, demand is likely to fall.) A possible solution to both of these issues could be to move towards adults rather than children as a target market (the introduction of the gourmet Angus Burger may be a possible step towards this.) This would be beneficial as adults are more likely to pay higher prices for better quality, more animal welfare conscious foods which could lead to, at worst, unchanged profits from different sources or possibly even increased profits. By aiming adverts at adults rather than children, McDonalds would receive less bad publicity from their marketing campaigns, which would essentially make their marketing more successful. Operational Issues As McDonalds is mainly a franchise, there are minimal operational financial issues for the company itself, they merely provide the training and tools for the franchisee to set up and run their restaurant.

This is also true of operational marketing. Franchised restaurants themselves do not need to advertise themselves in their local area extensively, other than billboards alerting potential customers that they are within close proximity of a restaurant. The bulk of marketing is handled corporately, with large scale television adverts. Most customers are likely to already know they want a McDonalds, or simply pick the first burger chain or fast food restaurant they find. There are product variations between countries, but rarely between restaurants nationally. Perhaps this is a problem; maybe more profits could be gained by identifying different market segments (by geographical locations nationally), and using promotional strategies to extract as much profit from each group. For instance, if the Big Mac is less popular in one city than another, lower the price slightly and advertise it more using local means. This however may prove difficult on the financial side, as McDonalds tend to advertise and charge a standard price for each item it sells nationally, and customers may not react well to price changes. Current Human Resource Issues One of the main human resource issues that faces McDonalds is that they constantly associated with the term McJob which basically is a slang term for a job which requires low skills, is not paid well and does not offer future opportunities for workers. (Google Define: McJob) Unfortunately, due to the nature of the market, this is hard to avoid. It would be unsuitable to pay a till worker a high wage, and admittedly, it does not require great skill to perform this job. It could be argued that McDonalds provides jobs for those who need part time work or do not have the skill sets needed to gain higher level employment. McDonalds also offers employees the chance the gain qualifications which would help them progress, not only in their company, but in any other company they may work for in the future. Employees can be trained in skills such as human resources, shift management and marketing. However, some argue that McDonalds, on the whole, is a net destroyer of jobs (http://www.mcspotlight.org/issues/intro.html). It has been put that they use these McJobs with their low wages, coupled with low product prices funded by the vast company size, to undercut and destroy local competition. As a bi-product of the McJob, some workers seem to care less about the service they give whilst working. If you search any web search engine for McDonalds complaints, you will find thousands of hits, where people have vented their frus Future Business EnvironmentIn October 2010, McDonalds launched a variety of new advertisements in the UK highlighting its new coffee range (Marketing Week, 2010), A marketing campaign designed at helping the company to gain a greater hold on the high street coffee market which is predicted to grow to 2 billion by 2012 (Belfast Telegraph, 2010). This, a normal trend for McDonalds, is the companys attempt at trying to capture the next big thing and become a dominate force in the market before any rival companies attempt to do so themselves. By doing so, McDonalds has established itself as one of the leading players in several markets and has managed to target different market segments successfully as well as keeping their dominating image within the fast food market. Coffee on the high street is in no way new, with big stores such as Starbucks and Costa already having a big presence, but by getting in there before coffee becomes the next big thing, McDonalds ensures that it establishes itself as a worthy rival to other competitors instead of a portraying a me too image.

Evidence of this is seen in one of McDonalds more established products, the Deli of the Day. Initially launched back in 2005 to capture a segment of the market which stores such as Subway made popular (Brand Republic, 2005), the Deli of the Day has become a prominent feature of the market offering customers with a healthier lunchtime alternative. Years later, we see the sub/baguette market saturated with many stores and shops offering subs, baguettes and alternative offerings but due to impressive marketing research and fast introduction of products, McDonalds remains as one of the main stores people think of for fast, healthy lunchtime food. Its fairly obvious that this trend is something that McDonalds is going to want to keep doing due to its success in recent years. Therefore, for the future McDonalds will look at keeping the trend alive by analysing the market and reacting in accordance to that. McDonalds has recently enjoyed its best profits in 4 years (Daily Mail, 2010) due to the recession which has affected the global economy and customers looking to ditch expensive restaurants for cheaper fast food outlets. Of course, the global recession cant last forever and McDonalds will be trying to keep a hold of the massive surge in customers it has received as a result of this. In South California, McDonalds has introduced a gourmet Angus burger in a bid to ditch the quick and cheap image the brand of McDonalds is tarnished with (Weston, 2007). This is perhaps the direction McDonalds will soon start to take in the UK, introducing gourmet beef and chicken with high quality ingredients and fresh buns in order to make the brand look more expensive, and to retain the many customers they have previously gained who will in no doubt look for a more premium brand of restaurants to eat at as Britain comes out of the Recession. Another step that McDonalds may use to further itself in the Future is to source all meat from British farmers in humane ways. With a growing amount of consumers in the UK preferring British meat and British produce over meat imported from other countries, McDonalds has for several years had an on-going campaign highlighting how all beef in its burgers is sourced from British farms and how all milk is organic, eggs are free range (Farmers Guardian, 2005). What McDonalds currently do not do however, is get Chicken from British farms instead favouring importing Chicken from Brazil, Thailand and Holland. They do this in order to keep the price of Chicken Dishes (all of which include Chicken Breast Meat) to a minimum (Rawstorne, 2010). As Britain sees itself moving out of the recession, McDonalds may want to think about revising their meat sources to make everything 100% British. This may encourage a lot more people to eat at the restaurant as well as marketing a positive image of how they support British Farmers. It will also help to improve their corporate image, farmers will be more willing to work with McDonalds as they are dedicating themselves to supporting British Farms and bringing as much revenue as possible to British Farmers. Another future strategy that McDonalds will almost certainly choose to adopt is to expand into more countries. McDonalds currently operates in 125 countries (Wikipedia) however still remains non-existent in the majority of Africa

Currently there are 115 countries in the world without a McDonalds (5 of these are countries who previously had McDonalds Restaurants present but were withdrawn for various reasons). The continent with the least amount of countries with McDonalds Restaurants is Africa with 46 out of 53 African countries without McDonalds Restaurants. Although Africa is on the whole a developing and a majority third world continent, McDonalds may want to consider opening restaurants in the more developed countries such as Nigeria or Madagascar. The profile of many African countries would suit the McDonalds restaurant perfectly; such countries often contain people with very little disposable income or on small wages. McDonalds may find itself prospering over in many African Countries because of its cheap, fast and well liked food making it accessible to many citizens, just like the recession has bought out a surge in McDonalds profits over in the U.K. Whichever country McDonalds decides to expand its franchises to in the future, their track record suggests they have a high probability of success with McDonalds operating successfully in 76 countries over 70 years with only a small amount of 7 failures, 2 of which were due to government pressure. McDonaldization of society a term used by sociologist George Ritzer it explains how sometimes culture shapes the characteristics of a fast-food chain. McDonalds venture into the international market has been that of any typical service firm where they have entered a foreign market with a small number of locations and then expanded their geographic coverage with time to grow their franchise even further. Along with their expansion, they have managed to individually cater to the needs of many culturally diverse customers in other countries. In countries like India, where cows are seen as sacred, beef is forbidden for consumption. With a huge part of the population being vegetarian, McDonalds has introduced alternative options such as vegetarian burgers. In the Middle East, where pork is forbidden, any such option containing this is taken off the menu so as not to offend anyone. There is also a trend to introduce food that is specific to that region of the world. For example, a very popular concept that had a tremendously positive reaction was the companys Sichuan Menu, also known as the China Mac, which was introduced at the Beijing Olympics. Establishing these specific items on their menu, along with the introduction of the breakfast menu, the extension of some of the store working hours to 24 hours a day, and building many drive thrus, has contributed heavily to an increase in revenues.

McDonalds cannot export their product, although this is something to be given considerable thought, they choose among different modes of operation. Overseas, McDonalds tends to prefer franchising to third parties than have the restaurant as company-operated. Based on statistics from late 2009, over 25,975 (80%) of its 32,278 restaurants around the world were franchises; where as only 6,303 (20%) restaurants were company-operated. This is because franchising provides the initial capital needed for building the restaurant and then maintaining it by constant reinvestment. However, operating a branch on its own requires a significantly larger amount of capital and will hence lower the revenues generated. This would explain why McDonalds are leaning more and more towards becoming entirely franchise based.

Current Business IssuesThe most significant of all the issues and a popular target for criticism, nutritionists argue that the high fat content in the food promoted by McDonalds is linked to critical diseases such as heart disease, cancer, diabetes an obesity - all of these diseases which are very common among the public. There is a huge question as to why sports events are sponsored by a firm that promotes unhealthy products, and also why there are sometimes McDonalds branches in hospitals. Another issue is the role and contribution of McDonalds towards the environment. There must be more pressure placed on creating more environmentally friendly packaging, as millions of tons of packaging are produced, only to be thrown away after a few minutes when the meal is finished. Tropical forests are also cleared to make room for ranches to stock the cattle, which again, contributes towards the destruction of the environment. McDonalds spend an average of two billion dollars each year on advertising their products. Some people, mainly parents, object to this as they feel it has a strong influence over their children. McDonalds sponsor many school events and programmes, however, there is doubt over whether

this is genuine philanthropy or an attempt once again to maximise profits, as a large part of their target audience are actually children. McDonalds employ over 1.5 million young people around the world. This can be seen as creating a huge base for job opportunities however, it creates a threat for local food chains, as being such a huge brand name, it is likely to be a more popular choice for jobs which could put local food places out of business. There have also been a range of complaints from employees about discrimination, lack of rights, few breaks, long working hours, unsafe conditions, understaffing, sale of food that has fallen on the ground, kitchen floors flooding with sewage, etc. However, all these complaints have been dismissed by McDonalds, claiming that their staff are happy and content with their jobs. Being among the worlds largest users of beef, McDonalds slaughter millions of cows every year meaning they are once again targets by vegetarians and animal welfare activists. There have also been issues regarding the treatment of chickens and regarding them being kept indoors with no access to clean fresh air and sunlight. The concept of McDonalds opening in countries like India could mean wealth is taken out of the local economy only to benefit the rich. This directly affects farmers and such foods are slowly replacing sustainable farming. Although McDonalds is constantly among controversies, debates and criticism there is an issue of free speech as there are rumours that McDonalds use their financial and legal power to influence the media. As of January 2009, McDonalds reported that same store sales continued to rise by 7.1% globally. The figure could have been potentially higher at 9.1% if not for the American Dollar becoming stronger. enormous presence in developed countries like United Kingdom, Canada, Australia and South Korea, they have also expanded into countries with fast growing, emerging markets such as India, China, Russia, Eastern Europe, etc. The market potential in such countries affects the companys decision to enter and grow its business - as they also have to consider other factors involved such as expansion post entry. However, aside from promoting and marketing themselves abroad, McDonalds continue to exhaust opportunities within their home market and optimize profits. The globalization of McDonalds is so tremendous that it is sometimes referred to as the tration at the poor service they received at a McDonalds restaurant. Although complaints are inevitable when any company deals with the public, McDonalds are likely to feel the pressure of the complaints they receive probably more than most companies, mainly due to the large scale of operations and the already established McJob theory.

The International Export DimensionMcDonalds is the worlds largest food industry operating 31,000 restaurants in over 119 countries, serving 58 million customers daily and employing more than 1.5 million people. A firm that started in California USA, McDonalds has now expanded throughout most of the world. The majority of the sales made by McDonalds are outside the United States of America. Geography and location give the most basic grounds for diversification and growth. With an

Referenceshttp://findarticles.com/p/articles/mi_m3190/is_n5_v30/ai_17898853/ http://www.wikinvest.com/stock/McDonald's_(MCD)

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