Miami International University of Art & Design McDonald’s Corporation Analysis

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Topic Selection: McDonald’s Corporation and the decision by Seattle, Washington to increase the minimum wage in that city.

Submit the Analysis section of your final project, which is Section II of the critical elements. Your analysis should include answers to all the questions in the Analysis section on business environment, sustainability, internal resources, communication, company image, response, impact, and external resources.

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MBA 665 Final Project Milestone Three Guidelines and Rubric Overview: The final project for this course is the creation of an impact of governmental action on a business paper. For Milestone Three you will submit the Analysis section of your final project, which is Section II of the critical elements. Your analysis should include answers to all the questions in the Analysis section on business environment, sustainability, internal resources, communication, company image, response, impact, and external resources. Specifically, the following critical elements must be addressed: I. Analysis: After submitting your overview, your boss is having second thoughts about bringing Jack Harris and his firm, Crisis Consulting, on board. Before he makes his final decision he has asked you to provide him with a thorough analysis of the situation faced by your business. He asks you to prepare a memorandum to him (the CEO) analyzing the situation that your business faces as well as the resources that are available to it. Address the following: A. Business Environment: Based on your analysis of the governmental action or political challenge, what will be the impact of the governmental action or political challenge on the business’s financial situation and operations? Does the action represent an opportunity or a threat? B. Sustainability: Based on your analysis of the governmental action or political challenge, how will the governmental action or political challenge impact the sustainability of the business? C. Internal Resources: Evaluate the internal resources of the company, including the business project teams that are available to respond to the opportunity or threat. In other words, is the business adequately organized to address the opportunity or threat? D. Communication: How has information about the situation been communicated to various stakeholders? For example, have any public hearings been held? Have the radio, newspapers, or social media been used? E. Company Image: Assess how the situation has affected the company’s public image. Has the impact been primarily positive or negative? If the impact has been primarily negative, what are the positive aspects in addition to the negative aspects? If the impact has been primarily positive, what are the negative aspects in addition to the positive aspects? F. Response: What are the potential courses of action to respond to the situation in the current macroeconomic and business environment? In other words, what is the range of options for the business in this situation? G. Impact: How will these courses of action impact the business? Make sure to consider both short- and long-term impacts, including operational, financial, and ethical implications. H. External Resources: Evaluate the roles and functions of third parties or external resources in the situation. Consider questions such as these in your response: How will lobbyists be involved in the situation? Will there be public affairs professionals who will argue on behalf of the government or the business? Guidelines for Submission: Your paper must be submitted as an 8-10 page Microsoft Word document with double spacing, 12-point Times New Roman font, oneinch margins, and sources cited in APA format. Rubric Critical Elements Proficient (100%) Analysis: Business Accurately determines impact of Environment governmental action or political challenge on business finances and operations, based on analysis of action or challenge Needs Improvement (70%) Determines impact of governmental action or political challenge on business finances and operations, but response lacks detail or accuracy or is not based on analysis Analysis: Accurately determines impact of Determines impact of Sustainability governmental action or political governmental action or political challenge on sustainability of challenge on sustainability of business business, but response lacks detail or accuracy or is not based on analysis Analysis: Internal Comprehensively evaluates Evaluates internal resources of Resources internal resources of company, company, including business including business project teams project teams available to respond available to respond to opportunity to opportunity or threat, but or threat evaluation is cursory or inaccurate Analysis: Accurately assesses how Assesses how information about Communication information about situation has situation has been communicated been communicated to to stakeholders, but with gaps in stakeholders accuracy or detail Analysis: Company Accurately assesses how situation Assesses how situation has Image has affected company’s public affected company’s public image, image but with gaps in accuracy or detail Analysis: Determines appropriate potential Determines potential courses of Response courses of action for responding to action for responding to situation situation in current in current macroeconomic and macroeconomic and business business environment, but not all environment courses of action are appropriate or response has gaps in accuracy or detail Analysis: Impact Accurately determines impact of Determines impact of courses of courses of action on business, action on business, considering considering short- and long-term short- and long-term operational, operational, financial, and ethical financial, and ethical impacts, but impacts with gaps in accuracy or detail Not Evident (0%) Does not determine impact of governmental action or political challenge on business finances and operations Value 10 Does not determine impact of governmental action or political challenge on sustainability of business 10 Does not evaluate internal resources of company 10 Does not assess how information about situation has been communicated to stakeholders 10 Does not assess how situation has affected company’s public image 10 Does not determine potential courses of action for responding to situation in current macroeconomic and business environment 15 Does not determine impact of courses of action on business 15 Analysis: External Comprehensively evaluates roles Resources and functions of third parties or external resources in situation Articulation of Response Submission has no major errors related to citations, grammar, spelling, syntax, or organization Evaluates roles and functions of third parties or external resources in situation, but evaluation is cursory or inaccurate Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Does not evaluate roles and functions of third parties or external resources in situation 10 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas Total 10 100% 1 Milestone Two: McDonalds Corp. SNHU Steven Sanchez November 20, 2019 MILESTONE TWO: MCDONALDS 2 Introduction: There is an old adage that says “there is no free lunch”. They say choices have consequences that the latest decision to increase minimum wage in Seattle has come with substantial costs not only to workers, employers but also to major companies such as McDonald’s Corporation which I wile b using in this study to analyze how the decision by legislators from this State to increase the minimum wage from $7:50 to $15 per hour will impact major corporations such McDonald’s in the region will affect their operations among other things. A. Business Profile: McDonald’s Corporation is an American fast food company that operates in almost every state in America and has more than 110 restaurants across the globe. McDonald’s Corporation serves quality beverages as well as food that are served in numerous joints and the company is both company owned as well as franchised. According to the management of McDonald’s Corporation, the franchised restaurants usually operate under a few structures mainly developmental affiliate or conventional franchise. The relationship between the company that is (McDonald’s Corporation) and its stakeholders which include franchisors is one of the key elements that hold the company together and that influence the overall outcome/performance of the company (Akman, 2019). One of the key issues or rules that those who wish to go into franchise with McDonald’s Corporation must understand is that the company has continued to thrive amid economic hard times because the relationship between the owners and stakeholder is usually supported by an agreement that requires every franchise across America and across the globe to adhere to some standards as well as policies that protect the company’s brand image. MILESTONE TWO: MCDONALDS 3 McDonald’s Corporation faces severe competition from other companies that are in the same industry. Apart from the recent decision by Seattle’s legislators to raise minimum wage, the company faces a few competitions from more than a few competitors from the same industry. The first competitor of McDonald’s Corporation in Seattle is Starbuck, Burger King, Taco Bell, KFC as well as Subway among others (Akman, 2019). Firstly; Starbuck is one to the main business rivals of McDonald’s Corporation in the food industry. Starbucks continues to remain the leading coffeehouse chain not only in Seattle but also; across the globe which possess as major threat to McDonald’s Corporation. Currently; Starbucks has been doing better and has continued to grow going as far as operating in more than 39,000 stores across the globe and with more than 15, 000 stores in America. This according to economists is an indication that while the company may grow to take over the food industry (Akman, 2019). The second main competitor of McDonald’s Corporation in the food industry is Yum Brands, Inc which operates more than a few quick service restaurants across America including Taco Bell, KFC as well as Pizza Hut. According to financial analysis on this company, it is clear that the Yum Brands Company possesses a major threat to McDonald’s Corporation because in the recent months that company has been operating more than 45, 000 restaurants across America and serves food and beverages in more than 135 countries across the globe. The last main competitor of McDonald’s Corporation in Seattle Washington is Wendy’s which is also a fast food chain boasting of over 6, 000 joints across the world. Wendy’s serve the same products as McDonald’s Corporation which include but not limited to hamburgers, sandwiches as well as chicken products among other and this shows and justifies why Wendy’s is a major business rival to McDonald’s Corporation (Akman, 2019). MILESTONE TWO: MCDONALDS 4 While McDonald’s Corporation has been facing severe competition from her competitors, the company has maintained to lead in this industry. There are more than a few internal as well as external strategies that McDonald’s Corporation applies to remain ahead of its competitors. In this section of the study; we will be analyzing some of the potential strengths, weaknesses, opportunities and threats of McDonald’s Corporation. Firstly; it must be understood the current wave of minimum-wage would arguably hurt McDonald’s Corporation operations in many ways and this means it can deter the company’s ability to thrive among other issues. However; apart from the governmental related issues that may hurt McDonald’s Corporation operations, the company has better chances and opportunities for growth. For example; given the fact the company is without no doubt the leading food restaurant chain in the food industry presents a few competitive advantages. For instance; the company enjoys strong brand image not only in America but also; across the globe. In addition; McDonald’s Corporation has an additional advantage for market diversification given its presence in many countries which means more product innovation among other benefits. McDonald’s Corporation has numerous opportunities for business growth away from possible ramifications of the government’s decision to impose the minimum-wage Bill which may affect the company’s performance and competitive advantage in the food industry. One of the main opportunities of McDonald’s Corporation is based on its global presence as well as product mix. The company enjoys strong brand presence in many countries and therefore; has major possibilities of growth in developing countries such as in UAE and Africa which is a major opportunity for growth. In addition; the company has the opportunity to enter new industries as well as develop novel products which would no doubt be well received in the market due to the company’s good reputation and strong brand presence which means there will MILESTONE TWO: MCDONALDS 5 be no additional costs of advertising and other related costs because once people hear a certain product is linked to McDonald’s Corporation they would gladly grab it and pay. Ideally; it is apparent that while McDonald’s Corporation faces severe competition from major business rivals such as Starbuck, Burger King, Taco Bell, KFC as well as Subway, it has more than a few opportunities for growth. Apart from the government’s action facing McDonald’s Corporation, the company stands a better chance of growth. B. Governmental Action: The main issue facing McDonald’s Corporation is Seattle’s minimum-wage Bill which will no doubt hurt the company’s operations. There have been issues related to income inequality in SEATTLE Washington which has prompted the State’s legislators to pass the Bill on minimum wage from $7 to $15 per hour which may hurt food industry and mainly McDonald’s Corporation. There are numerous ways in which the recently passed Bill to increase minimum wage will affect McDonald’s Corporation. For example; the company will be forced to raise prices of their products which may drive customers away as the war on price competition with other companies in the same industry intensifies (Geng, Huang, Lin & Liu, 2018). The minimum-wage Bill will have major impact on McDonald’s Corporation. For example; it could affect the health of restaurant industry because companies such as McDonald’s Corporation will be forced to raise prices of their products which wile b passed on to customers. Price increment as well know does not resonate well with customers and therefore; this means that customers McDonald’s Corporation may opt for cheaper stores. It is imperative to remember that once the minimum-wage commences it will mean McDonald’s Corporation will be forced to pay more than they used yet; they will only be selling the things they used to sell at the same MILESTONE TWO: MCDONALDS 6 price. Based on this; in order to avoid losses the company will be forced to increase prices of their products and with the current war on prices with their competitors their customers may be forced to seek for cheaper products (Geng, Huang, Lin & Liu, 2018). The implementation of minimum-wage in Washington Seattle will have major impact on McDonald’s Corporation operations. One of the main issues that will affect the company’s performance and competitiveness in the region will be less experienced workers. The company is likely to suffer major losses because they may opt to hire less experienced and cheap employees because of the minimum-wage issue. Therefore; it means that these employees may be making mistakes that may cost a fortune to the company. For example; inexperienced employees may be producing bad services and products to the customers which may tarnish the company image among other negative issues (Allegretto & Reich, 2018). The minimum-wage increase has attracted more than a few inexperienced people to the hospitality industry and therefore; this possesses a major challenge to companies such as McDonald’s Corporation. Due to increased minimum-wage, economists believe that the market will be flooded with people who have no prior experiences in certain areas and therefore’ such individuals can be a major threat to organizational performance in an organization like McDonald’s Corporation because they lack the required skills to deliver quality in the most effective and cots manner. Basically; the minimum-wage Bill in Washington Seattle may affect McDonald’s Corporation’s operations due to incompetent people who would be applying jobs anywhere and anytime just because there has been increment in wages and this can cost a company huge losses (Allegretto & Reich, 2018). MILESTONE TWO: MCDONALDS 7 One of the potential governmental actions or political challenges that will affect the business in this particular situation will be increased shutdown of McDonald’s Corporation franchises because owners may not be able to put up with such costly labor. It is a worrying situation whereby; an employer used to pay $7:50 per hour and not they are being forced to pay double of that amount yet; product prices still remain the same (Geng, Huang, Lin & Liu, 2018). This is an absurd decision that would harm not only McDonald’s Corporation but also; their competitors. What the government did not put into consideration when implementing this Bill was product prices among other things that would have been fairly affordable to restaurant owners and that would have enabled them to pay the minimum-wage without being hurt or hurting their businesses. The prices of products have since remained the same and therefore; it means that McDonald’s Corporation will have to put in more monetary resources in order to match the newly introduced minimum wage which means reduced revenue returns among other negative issues (Allegretto & Reich, 2018). C. Organization and Teams: McDonald’s Corporation team evolves on divisional organizational structure. Basically; the company’s structure is divided into numerous components that are assigned certain roles as well as responsibilities such as legal team that responds to legal matters among other divisions. The main idea behind the company’s team work is to pave way for autonomy as well as organizational flexibility in satisfying business needs in different organizational aspects as well as markets. The main idea behind McDonald’s divisions and project teams is to facilitate effective service delivery through global hierarchy, performance-based divisions and functionbased groups which proved to be effective when the minimum-wage issue came up because the MILESTONE TWO: MCDONALDS 8 teams responded effectively and well to the problem and still handles any major hurdle through this formation. C. Stakeholders: There has been a major relationship tension between both internal and external stakeholders of McDonald’s Corporation since the implementation of minimum-wage. In many cases, franchisors usually depend on top line revenues franchisees generate, based on the fact that they take a percentage of revenues for royalties as well as in McDonald’s case, rent however; with the implementation of minimum-wage, it means reduced revenues to the franchisors and low profits and this is not going well with the stakeholders (Geng, Huang, Lin & Liu, 2018). The number of stakeholders as well as franchisees has withdrawn their services and connection with McDonald’s Corporation because of the minimum-wage. Stakeholders argue they are not getting profits that are worth their investments while franchisors are afraid of continued operational losses that they have incurred since the implementation of minimum-wage (Geng, Huang, Lin & Liu, 2018). E. Current Environment: There are more than a few facts that can be used to analyze as well as determine the current business environment, both financial and otherwise, the initial reaction of the company to the situation and the initial position taken by political actors and other stakeholders. For example; Seattle’s minimum-wage means reduced number of employees in McDonald’s Corporation which means low performance and longer working hours. Longer working hours due to low number of employees has affected the company’s financial records because it means that company is paying more than it used to its employees (Geng, Huang, Lin & Liu, 2018). MILESTONE TWO: MCDONALDS 9 One of the major issues in regards to McDonald’s Corporation current business environment, both financial and otherwise, the initial reaction of the company to the situation and the initial position taken by political actors and other stakeholders is the worrying rate of the number of restaurants that are shutting down. The rate at which restaurants are shutting down due to minimum-wage is worrying and this has seen about five franchises of McDonald’s Corporation being shut which is affecting the company in major negative ways. Ideally; the minimum-wage has forced the company to fire its employees and hire inexperienced employee in a bid to maximize/capitalize in its operations which continues to attract negativity rather than positivity. MILESTONE TWO: MCDONALDS 10 References Akman, M. K. (2019). SWOT ANALYSIS AND SECURITY MANAGEMENT. European Journal of Management and Marketing Studies. Allegretto, S., & Reich, M. (2018). Are local minimum wages absorbed by price increases? Estimates from internet-based restaurant menus. ILR Review, 71(1), 35-63. Geng, H. G., Huang, Y., Lin, C., & Liu, S. (2018). Minimum Wage and Corporate Investment. Working paper.
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Running head: MCDONALDS CORPORATION ANALYSIS

McDonald’s Corpoaration Analysis
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MCDONALDS CORPORATION ANALYSIS

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Introduction
McDonald’s is a food company based in America known for serving quality food fast,
creating a value proposition. The main activities for the company are selling beverages and food
to consumers such as families, elderly, youngsters, business people, and youngsters as well as
marketing. The key strategic partners of McDonald’s are franchise holders. The company has a
three-legged business model comprising of the suppliers, McDonald's, franchisees that strive to
make the company profitable (No, 2015).
The decision to increase the minimum wage does not only affect employers and workers
in an organization but also impacts large companies like McDonald's both negatively and
positively. However, the largest income is negative. The minimum wage is the lowest employee
compensation that an employee should receive in any organization according to the government
or law. This paper discusses the impacts of the government’s decision to increase the minimum
wage of workers from the usual 7.25 dollars an hour to 15 dollars an hour in Seattle,
Washington. The elements that will be used for analysis include business environment,
sustainability, internal resources, communication, company image, response, impact, and
external resources.
A. Business Environment:
Increasing the minimum wage for McDonald’s workers will affect the business
environment of the company negatively. The main area that will be affected will be the financial
situation and company operations. McDonald's is regarded to be the second-largest private
company offering employment in America. The first effect of wage increase is the reduction of
the company’s general income. The reduction will happen because employee compensation will

MCDONALDS CORPORATION ANALYSIS

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come from the organization’s profits. The wage will be more expenses for the company, which
will opt to look for more income from customers.
An increase in the workers’ salary and this will be compensated by charging more for
their products and services. The legislator’s move to increase the minimum wage will mean
more salaries for the broad range of employees who work as cashiers, chefs, cleaners, drive
through checkers, among other job positions. McDonald's is regarded to be the second-largest
private company offering employment in America (No, 2015). The company will be forced to
increase the prices of products and goods because it is the only way that it makes its revenue.
Expensive food and services mean that the company poses a threat to lose their customers who
will opt for cheaper food restaurants, especially in the highly competitive food industry. This
means that the general income of McDonald's will reduce as compared to before because of its
high dependence on customers.
Some franchisors will not be able to keep up with the low revenue, especially in the areas
where consumers do not spend much on food and opt for cheaper products. This ...


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