Principles of Management in McDonalds

Principles of Management in McDonalds McDonalds is the largest and most well known global foodservice retailer, which was founded in 1955 by Ray Kroc; head quarter in Oak Brook, Illinois, US. McDonalds has more than 32.000 restaurants (19% operated by the Company and 81% of restaurants operated by franchised restaurants) in 117 countries, serving more than 60 millions people each day (McDonalds, 2009). Recently, many of Vietnamese people still think that fast food services are small business that are not worth to do business. After studying McDonalds, my point of views about fast food industry have been changed considerably. Serving fast foods only, McDonalds receives annually almost 23 billions USD, that is equal about 27% of GDP or 71% total revenues of all types of services of Vietnam on 2009 (Vietnam General Statistic Office, 2009) and McDonalds ranks 153 biggest companies in the world (Forber, 2010). This study aims to analyze management of the Company in the past few years and strategy in the next decade, which help us to understand the reasons that lead McDonalds to the success. 1. Core business 1.1. The main products and services The products of McDonalds are fast foods of wide range of choices, such as: hamburgers, chicken, french fries, soft drinks, coffee, milkshakes, salads, deserts and breakfast with varies of famous in the world brands (Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, Chicken McNuggets, Chicken Selects, Snack Wraps, McFlurry, McCafe) which meet requirement of customers of different ages. McDonalds fast foods have became necessary daily foods for the numbers of people not only in the US but in other countries also. Therefore, McDonalds brand name became so popular, that many investors in the world willing to deal with McDonalds to open restaurant under franchised agreement 1.2. Business generates the most revenue McDonalds revenues mainly come from its own restaurants and from restaurants operated by franchisees. In accordance with the McDonalds Corporation Annual Report 2007, 2008, 2009, revenues of the Company in 2007, 2008 and 2009 are 22.8 billions USD, 23.5 billions USD and 22.75 billions USD respectively. Most of Companys revenues come from the restaurants operated by the Company, which has percentage in 2007, 2008 and 2009 are 73%, 70% and 68% respectively; the rest of revenue are from franchised restaurants. Obviously, the percentage of revenue of Companys operated restaurants has been decreased while percentage of revenue of franchised restaurants increased (McDonalds, 2009). Source: McDonalds Corporation Annual Report 2009 1.3. Business generates the most profit In 2007, 2008 and 2009, consolidated net incomes of Company are 2,395, 4,313 and 4,551 millions respectively. In accordance with McDonalds Corporation annual Report 2009, the most profit of the McDonalds has been generated by franchised restaurants, which in 2007, 2008, 2009 holds about 64%, 65%, 66% of the total profit of the Company respectively. The second place of profit has been generated by restaurants operated by the Company (McDonalds, 2009). Franchised margins Franchised margin dollars represent revenues from franchised restaurants less Companys occupancy costs (rent and depreciation) associated with those sites. Franchised margin dollars increased $254 millions of 4% (7% in constant currencies) in 2009 and $695 millions or 14% (11% in constant currencies) in 2008. The franchising strategy contributed to grow in franchised margin dollars in 2009, 2008 and 2007 (McDonalds, 2009). Company-operated margins Company-operated margin represent sales by Company-operated restaurants less the operating costs of these restaurants. Company-operated margin dollars decreased $101 millions or 3% (increased 3% in constant currencies) in 2008. Company-operated margin dollars were negatively impacted by this transaction in 2008 and 2007 and by the enfranchising strategy in 2009 and 2008 (McDonalds, 2009). Source: McDonalds Corporation Annual Report 2009 1.4. Business will drive growth in the next decade In order to keep sustainable growth in the next decade, for the last few years, McDonalds has differentiated the brand and enhanced efficiency of investment in expansion of restaurants chain in the world, mainly in the type of franchised restaurants. In accordance with McDonalds annual Report 2009 and report of Jim Skinner (2009) To our valued shareholder: To state the obviuos, 2009 was a tumultuous year economically, these strategies will continue drive growth in the next decade. Regarding to the strategy of differentiation of products, due to criticism in the society to McDonalds fast foods as the cause to obesity, McDonalds has launched new lines of products, which contain low fat, low calories or more fruit and vegetable, healthy alternative for the customers, which have been in great success for the last few years with some famous brands, such as: Fremium Fiesta Salad, New mans Own Low Fat Balsamic Vinargrette These types of foods will be developed in the next decade. Regarding to efficiency of investment, McDonalds will concentrate into expansion of restaurants in the world, mainly in the type of franchised restaurant, which have many advantages compare with restaurants operated by Company type. 1.5. How successful would you say this company has been since 2007? Cumulative total shareholder returns from 2007 to 2009 has been increased, higher than average of that of SP 500 index and Dow Jones Industrials (McDonalds, 2009). Net income is increased. Source: McDonalds Corporation Annual Report 2009 At the result of implementation of strategy Plan to Win, income and dividends were increased during period from 2007 to 2009, while revenue has been decreased. The number of restaurants operated by the Company decreased from 6,906 in 2007 to 6,262 in 2009, while franchised restaurants is increased from 24,471 in 2007 to 26,216 in 2009 (McDonalds, 2009) 2. Corporate Responsibility In accordance with the commitment to social responsibility, McDonalds focuses primarily on animal welfare, education, environment, people, quality, safety and Ronald McDonald House Charities (RMHC). Regarding to the animal welfare, McDonalds recognizes that its responsibility as purchaser of food products includes working with their suppliers to ensure good animal handling practices. Thus, it buys all its beef, fork and poultry products from suppliers who maintain the highest standards and share McDonalds commitment to animal welfare. Regarding to the education, McDonalds mould the future of the society and therefore, is committed to the education of the youths. Thus, they support school-age employees in their reaching of educational goals. Regarding to the people, McDonalds recognizes the importance of the employees, who is driving force to the Companys success. So, McDonalds is committed to creating an environment that value and respects their employees, recognizes and rewards their performance, as well as providing them with meaningful growth opportunities. Regarding to the quality and safety, McDonalds has set strictly enforcing high-quality and safety standards often exceeding those standards established by industry and governments, quality and safety are the most important items on McDonalds menu of success, because they give customer confidence to McDonalds. Regarding to the Ronald McDonalds House Charity (RMHC), McDonalds supports RMHC by providing free goods and services, covering 100 percent of management and general costs for RMHCs global office. Therein, RMHC works to improve the health and well-being of children by awarding grants to organizations and supporting 206 RMHC worldwide. Recently, McDonalds has many CSR initiatives; and these seem to focus mainly on the areas in which they ware accused. For example, on allegations of rainforest deforestation, McDonalds response was CSR initiatives in the field of environment. Where they were being accused of bad working conditions, they responded that McDonalds has been a leader in setting and strictly enforcing high-quality and safety standards often exceeding those standards established by industry and governments and contributing to this cause. Fortune Magazine has even ranked McDonalds as one of the most admired socially responsible company. 3. Crisis management McDonalds manages to overcome the crisis occurred for the last few years, such as: CSR case (McLibel trial) and economical crisis from 2008-2009. From the case McLibel In the middle of 1980s London Greenpeace began a campaign focusing on McDonalds as a high profile organization, symbolizing everything they considered wrong with prevailing corporate mentality. In 1986 London Greenpeace produced a 6-sided fact sheet called Whats wrong With McDonalds? Everything they dont want you to know, which accused McDonalds of exploiting children with advertising, promoting an unhealthy diet, exploiting their staff and being responsible for environmental damage and ill treatment of animals. In 1990, McDonalds served libel writs against the five activists who came up with the Whats wrong With McDonalds leaflet. Three of the five activists took the former suggestion, while Dave and Helen chose the former. On 28th June 1994, the McLibel trial began and the verdict was announced on 19th June 1997 in favour of McDonalds, which stated that Helen and Dave had not proved the allegations against McDonalds on rainforest deforestation, heart disease and cancer, food poison ing, starvation in the Third world and bad working conditions. However, they had proved that McDonalds exploited children with their advertising, falsely advise their food as nutritious, risk the health of their most popular, long term customers, are culpabably responsible for cruelty to animals, are strongly antipathetic to unions and pay their workers low wages. Justice Bell ruled that Helen and Dave had libelled McDonalds, but because they had proven many of allegation true, they would only pay half of the claimed damages, that was à ¢Ã¢â‚¬Å¡Ã‚ ¤60.000. However, both Dave and Helens litigation fee and the damages had to pay were donated by the public. Recently, McDonalds has many CSR initiatives; and these seem to focus mainly on the areas in which they ware accused, such as through animal welfare, education, environment, people, quality and safety and Ronald McDonalds House Charity (RMHC), McDonalds has tried to do a lot of good to the community. Economical crisis from 2008-2009 During economic crisis from 2008-2009, the prices on energy, foods and commodities were high, financial market was frozen, rate of GDP of almost countries were low, high rate of unemployment, many companies in fast-food industry suffered loses, such as income have been turned down. However, during this period, McDonalds took necessary measure to stabilize the business, on this, keep relationship with the suppliers to ensure the continuous supply of necessary ingredients for its foods at the reasonable price. Therefore, the prices on foods were stable, revenue was increased, income growled up. In fact, McDonalds net income in 2008 were 4,313 billions and was 4551 billions in 2009. 4. Strategy What markets has it forced on? Over the past few years, McDonalds has focused on the emerging markets, such as China and Russia, where the rate of growth has been highest in the world, even in the time of economic downturn during 2008-2009, the revenue of McDonalds in China increased almost 16% annually, while in the same period, in US and in Europe the rate of growth decreased. Till now, China is the fastest market of McDonalds, where McDonalds operates 1.100 restaurants and plans to increase the number of its restaurants in China to 2.000 by 2013. What are the core strengths? Brand name McDonalds with Golden Arches logo have became the symbol of retail of low cost fast foods among the people, therefore McDonalds products are the first choice of customers in the market of fast foods services. Process management have been established providing business activities efficiency helped secure the quality of products and reduce the cost, which can compete with other fast food companies. Managements staffs, employees of McDonalds are high qualified, quick respond to the changing of the market (products and service innovation, remodelling of restaurants, improvement of technology, management). McDonalds economy scale and bargaining power dominance provide advantages in supplying of raw material (at low costs), that contribute to reduce the price on products lower than competitors. Would you describe the company as innovative? McDonalds is a innovative company because of the following activities: + From 1973, McDonalds was the first company in the world to provide customers with nutrition about the products its offers. + In order to meet requirement of customers to avoid obesity, McDonalds created new line of low fat products, in this Salad is one of the successful low fat bands. + In recent years, McDonalds has turned to new line of products, which are innovative and trendy, such as: coffee and beverage products with brand names McGriddle, Snack Wrap, premium coffee (take market share from Starbucks), Strawberry-banana and Wild berry (take market share from the fruity beverage sector). 5. Vision, Goals and how does it motivate its employees? 5.1. McDonalds mission statement In every stage of development of the Company, the mission of the Company has been changed to meet new goal and adapt trend of the market, and at present, McDonalds brand mission is to be our customers favourite place and way to eat. To implement the mission, Company has reinvented global strategy which called the Plan to Win, which identifies five core drivers that are: people, products, place, price and promotion. 5.2. What are its goals? As stated Jim Skimmer, Vice Chairman and CEO in annual report in 2009, the goals of the Company are improving the overall experience for customers of the Company. In accordance with report of Andy McKenna, Chairman in annual report in 2009, the goal of the Company are elevation of industry leadership of the Company, enhancing long term profitable growth, providing relevant offerings and supporting balanced lifestyles all contribute to the Companys continued success. 5.3. How does it motivate its employees? McDonalds recognizes the importance of the employees, who is driving force to the Companys success. Therefore, McDonalds has taken necessary measures, such as: create good conditions for working, living, studying and promotion. For example, September 2006, McDonalds Europe introduced the McPassport program, designed to help employees move and work in other McDonalds restaurants across Europe with relative ease. McDonalds Singapores vision, Every crew member can be a manager. McDonalds offers a unique training opportunity through the McDonalds University Accredited Programme. McDonalds builds a caring, warm community for employees, offers a variety of programs that franchised and company-operated restaurant employees can participate in to grow and develop, both personally and professionally. Healthcare options for McDonalds restaurant employees. 6. Would you like to work for this company and why? Studying McDonalds I would like to work for McDonalds for the following reasons: McDonalds is a qualified company managed by intellectual management teams, which has continuous developed with high rate and high profits. Therefore, McDonalds will secure the job for the long term. McDonalds encourages people to work creative. McDonalds provides good working conditions, social benefits, having a chance to education and of promotion.   The company follow CSR initiatives. 7. Summary McDonalds, with limited of fast-food menu, has served 60 million in almost 120 countries in the world every day and became the biggest company in the food industry and a one of 200 biggest companies in the world. The success of the McDonalds has shown the sample of efficiency management of MacDonalds Board of Management and Directory, which are: strategy in motivation of people, innovation of product, CSR initiatives, creation in management. Although in its history of foundation and development, there were difficulties, but McDonalds has overcame and adjusted these in time contributed in its development. At present, McDonalds still faces many difficulties, such as there are different campaign against McDonalds in advertising towards to children, or accuse its products effect obesity, but I think McDonalds will take necessary measures to overcame this difficulties.

Cubism Essay -- Visual Arts Paintings Art

Cubism is an art period that followed after the art period Fauvism. Cubism is one of the most influential art movements of the twentieth century. It was begun by Pablo Picasso and Georges Braque, by Cezanne's influence in 1907. The leading artists in the cubist period were Pablo Picasso, Georges Brack, Paul Cezanne, Jean Metzinger, Fernand Leger, Juan Gris, Marcel Duchamp, Robert Delaunay, Albert Gleizes and Matisse. These artists all contributed to the cubist art movement in their own individual way. Cubism sprung from a comment made by French Painter Paul Cezanne. Cezanne claimed "All nature is made up of the cone, the cylinder and the sphere". Cubists liked this idea. So therefore they decided to focus on the forms Cezanne was talking about, and they painted the world and objects as if they were really made up of geometric shapes. At first, their works shocked people. It was unrealistic and quite unlike traditional art styles. The cubists were interested in the way we look at the world. They noticed how things take on different shapes when we see them from different view points, for that reason cubists in some artworks painted many views of the same object together in one painting. Through this technique Cubists found a new way of capturing the 3D world on a flat artists canvas. In cubism the subject matter was broken up, analysed, and reassembled in an abstracted form. It was made of simplified forms and geometrical shapes broken into panes wi...

Avid Pharmaceuticals

The cost structure with the lower breakable volume has the lower systematic risk. Fluctuations in sales volume has an impact on net income. Because there is no certainty, Waver must be ready for increases and decreases in sales if the new equipment is purchased. It is important for Waver to understand that the company will not always be at normal operating levels. Sometimes more units will need to be produced and oftentimes, less units will need to be produced due to the demand in sales. Fluctuations in demand will affect the bottom line, as seen in the examples above. ) What other factors should Waver consider in making this decision? Will the quality of the product remain the same? Is the machine more efficient than the workers? Will time be saved? Can the machine produce more than 60,000 units per year? How many units can the equipment produce in a year, while maintaining a quality product? Can the company charge more for the product if there is an increase in quality? How will th is equipment affect Waver long-term? Short-term? Will upgrades be needed (added expenses)? How quickly will the equipment be outdated? How quickly can the equipment be installed?Will there be a loss of manufacturing products while the equipment is being setup? Will the company lose money during setup due to lack of production? How will this new piece of equipment show on the company's financial statements? Will it be depreciated? What form of depreciation? Are there new asset conversions that the accounting department will have to record? Do the product costs and/or period costs change? Is it possible to make other areas more efficient, therefore, reducing fixed or variable costs? What company makes the manufacturing equipment? Is the company successful/reputable?Is the company new? Is the return on the investment satisfactory to board members and owners? How does the new equipment affect the employees? Will additional training be needed? Who will operate and manage this new equipme nt? How difficult would it be to get service if repairs were needed? How dependable are the service repair people? Will Waver have to hire a full time employee to fix the repairs? This salary is an additional expense. How dependable is the machine? Will the equipment affect the factory layout, efficiency, create toxic smells or be too loud for workers to be near it?Will customer satisfaction be increased? Will the employees operating the machine be paid more, therefore, increasing salary Will training occur? This is an added expense. Are there enough Jobs to reassign all employees displaced to new Jobs within Waver? How will Waver communicate this large change to its employees? How much does the machine cost? Are there additional variable costs that will be incurred? (4) What is your recommendation? This does not look like a good investment for Waver. The return on investment is low at the normal 60,000 operating volume. The fixed costs are large, Jumping by 476,000.That is a large increase when the sales at normal operating conditions will only yield an extra $4,000. It is not worth the expense. In the beginning, the equipment may be slow to operate at normal volume due to set up, training, glitches, etc. There may be a length of time where Waver is not able to produce and sell 60,000 units per year, which will hurt Wavers bottom line (as seen in the 25% volume decrease in example above). The new equipment seems like a risky investment. The choice of production structure (with the new equipment or without) depends on the expected future sales.If Waver was certain they could produce and sell more than 60,000 units per year, this may be an investment worth looking into, however, this is an unknown. Making a little less than the 60,000 units (59,500 units), would put Waver in the same position had they not purchased the new equipment. This point at which both cost structures intersect is what is relevant. From a management's perspective, this new equipment is re ally not a good idea. There are too many What ifs' and too many personnel and training issues that could be factors. I would not recommend purchasing this new equipment for Waver.

The Barnum Effect Free Essay Example, 1000 words

113840 â€Å"The Barnum effect is the given to a type of ive validation in which a person finds personal meaning in ments that could apply to many people, † http: //skepdic. com/barnum. html It is an unalterable desire to be praised, flattered and the belief that the individual is capable of greater deeds, which leads into our believing the general and vague prophecies of even the manipulating source. Feror called this souse as Subjective validation that has a certain unlimited power over the psyche of even the strangers, mainly due to guess work and clever manoeuvring. â€Å"Subjective validation is the process of validating words, initials, statements or signs as accurate because one is able to find them personally meaningful and significant† http: //skepdic. com/subjectivevalidation. html Described by Psychologist Paul Meehle, but named after P. T. Barnum, that one of the greatest showmen, who used it in his ‘psychic demonstrations’ to guess about the volunteers and made it immensely popular, Barnum effect is a universal factor. The way professional manipulators of any subject give a mysteriously hidden message that makes the reader immediately feel that there is a certain hidden message meant only for him. We will write a custom essay sample on The Barnum Effect or any topic specifically for you Only $17.96 $11.86/pageorder now The person also feels that the writer, who has written knows everything about the reader and this psychological state is called Cold Reading. This is not limited to mere manoeuvring and flattery and goes beyond it with an inherent potential for hypnotising and hidden nuances, and deep psychological manipulations. â€Å"In the course of a successful reading, the psychic may provide most of the words, but it is the client that provides most of the meaning and all of the significance, † (Rowland (2000: 60, taken from http: //skepdic. com/coldread. html) The phenomenon is named after P. T. Barnum who said that ‘a good circus has a little something for everybody’ and â€Å"There is a sucker born every minute† mainly because his shows thrived on the gullibility of people, ordinary and uncommon both. This concept plays on the innocence of the people who think that they are unique and others could see it. This gives way to personality tests and inventories, usually ending up in a stunningly personalised Barnum effect. Psychologist Bertram Forer too studied this effect and sometimes it is referred as Forer Effect. Sometimes these writing are absolutely far fetched; but in a way, they could sound real and within reach. Sometimes in believers, this could provide a mental stimulation and motivation and make them undertake immense tasks that had been hitherto avoided.