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  1. 1. StudiesInvestigating BusinessThe business I have decided to choose for this assignment is McDonald’s. McDonald’sownership is a franchise. McDonald’s is a large business with more than 30.000 restaurantsin over 100 countries, serving more than 38 million people each day. The company is aprivate limited company (PLC).McDonald’s is the world’s largest chain of hamburger fast food restaurants, serving around68 million customers daily in 110 countries. The company began in 1940 as a barbecuerestaurant operated by Richard and Maurice McDonald in 1948 they reorganised theirbusiness as a hamburger stand using production line principles.A McDonald’s restaurant is operated by a franchisee, an affiliate, or the corporation itself.The corporation’s revenues come from the rent, royalties and fees paid by the franchisees,as well as sales in company-operated restaurants. McDonald’s primarily sells hamburgers,cheeseburgers, chicken, French fries, breakfast items, soft drinks, milkshakes and desserts.McDonald’s restaurants are found in 119 countries and territories around the world andserve 58 million customers each day. McDonald’s operates over 31,000 restaurantsworldwide, employing more than 1,5 million people. The company also operates otherrestaurant brand, such as Piles Café.McDonald’s Corporation earns revenue as an investor in properties, a franchiser ofrestaurants, and an operator of restaurants. Approximately 15% of McDonald’s restaurantsare owned and operated by McDonald’s Corporation directly. The remainder are operatedby others through a variety of franchise agreements and joint ventures.The United Kingdom and Ireland business model is different than the U.S, in that fewer than30% of restaurants are franchised, with the majority under the ownership of the company.McDonalds trains its franchisees and others at Hamburger University in Oak Brook, Illinois.In other countries, McDonalds restaurants are operated by joint ventures of McDonaldsCorporation and other, local entities or governments.
  2. 2. McDonald’s aims are to maximise the profit by increasing the sales, keeping cost low andmore outlets nationwide. McDonald’s main aim is to lead the Quick Service restaurantmarket by a programme of site development and profitable restaurant opening.The mission statement of business"McDonalds mission is to be the worlds best quick service restaurant experience. Being thebest means providing outstanding quality, service, cleanliness, and value, so that we makeevery customer in every restaurant smile." This mission statement shows that the companycares about what customers want and they want to make all the customers happy.The main aims of the business areMcDonalds main aims are to serve good food in a friendly and fun environment, to be asocially responsible company and provide good returns to our shareholders. The companyaims to provide its customers with food of a high standard, quick service and value formoney. They also wish to be more eco-friendly and to serve healthier food. Profit maximization Maximising sales revenue or profit is an aim McDonalds may have been using since the beginning as the success of the business has grown immensely. This is where the business will seek out to gain and increase in their income from the customers. For example, McDonalds have done this by selling two burgers for the price of one or even one pound per burger. This gains a lot of customers coming in and spending more as they assume they are getting value for their money plus more and no doubt that they actually like these offers McDonalds is so generously giving out. Survival Survival is an aim for many businesses. For McDonalds, as they started out they would first try aiming to stay in the business by earning enough money from customers to meet all of the businesses expenses. McDonalds also has the majority of its businesses as franchise. This means that the person or manager opening a McDonald’s restaurant up would have to aim for making enough money to cover its costs during the first year or so. Market Share McDonalds needs to research other business and find out how they make customers so they can promote their business and they can make their business better than their competitors.
  3. 3. GrowthGrowth is an aim McDonalds have succeeded in however are still always aiming to grow inorder to fulfil new targets or objectives. The objectives are more detailed aims, which setout more specific targets. It helps increase the size of the business year by year.Aims help businesses to measure whether or not they have been successful. If a business achieves orexceeds its aims, then that business is successful. If an aim is not achieved, then a business will needto think about the way it is carrying out its operations.Aims help McDonalds to measure their success. McDonalds needs to make profit to grow andcontinue the business and they also need to survive. McDonalds has to be ahead of its market sharein order to survive as well.To achieve their aims, business managers and owners set themselves objectives. Objectives are thesteps that a business needs to take in order to achieve its overall aim. Objectives are short term andaims are long term.The main objectives of the businessThe McDonald’s main objective is to provide its customers with food of a high standard,quick service and value for money. They also provide good returns to shareholders.Evaluating the objectivesMcDonalds must set objectives in order to meet the aims of the business. A business objective needsto be SMART objectives. SMART is an acronym which stands for specific, measurable, achievable,relevant and time specific.Specific:The business can make objectives to achieve their targets at the end of the year. Thespecific is important in the business plan to find out what kind of specific targetsMcDonald’s needs to make. For example, McDonald’s might set an objective of serving atleast to per cent of single- order customers within a minute of the order being placed.Measureable:The objective needs to be measured so that managers can see whether it has beenachieved. For example, McDonald’s could measure service times during a typical one-hourperiod and record the number of times single-order customers were served within a minuteof placing their order.
  4. 4. Achievable:The objectives should be achievable. McDonald’s have to make sure that they have differenttaste foods and serve the food as fast as possible. The manager of the McDonald’s needs toassess whether it is feasible for employees, if they work efficiently to serve single-ordercustomers within a minute of the order being placed.Relevant to the aims:The objectives are very important to achieve the aims of the business, without makingcustomer happy they will not be able to make the profit that they want to make. So thebusiness won’t be able to grow. For example, by setting an objective to serve customersquickly, the McDonald’s hopes to increase its profits by attracting and serving morecustomers.Time: The objectives should set with start and finish dates. For example, McDonald’smanager might tell the employees that they have one month to achieve the one minuteservice time objectives.The key objective of McDonald’s is to reach their aims, because they want to do better thantheir competitors.McDonalds main aims are to serve good food in a friendly and funenvironment, to be a socially responsible company and provide good returns to theirshareholders. McDonald’s customers are mainly teenagers and kids. The company aims toprovide its customers with food of a high standard, quick service and value for money. Theyalso wish to be more eco-friendly and to serve healthier food. So they can gain morecustomers and it will help business to make a profit. Making a profit will maximise theincrease in sales and in market share it will help business to grow. Objectives communicatewhat markers want to achieve, guide marketing actions and are used to measure how well aplan is working. They can be related to market share, sales reaching the market audienceand creating awareness in the marketplace. Long-term objectives are broken down intoshorter-term measurable targets. Results can be analysed regularly to see whetherobjectives are being met. This type of feedback allows the company to change plans andallows flexibility.The main aim is to maximise profit and to provide goods/ services that are cheap andaffordable to the consumers. The best way to achieve objectives is to make more customersand to do this McDonalds can advertise their business. If McDonalds gain more customers,that will help the business to make more profit. It will also maximise the increase in salesand the market share. If McDonalds makes more profit, they will be able to remain thenumber one retail company in the UK.
  5. 5. This graph shows the differences in the market share between the other fast foodrestaurants. McDonalds has leading the market share out of all of them. This proves thatMcDonalds has achieved their aims of market share.The external factors of the businessThese rates show that 20 years ago there were very low unemployment people since after2001 the unemployment rates started going down. More people started losing their jobs orcouldnt find any job to work at. Unemployment is referred to as a lagging indicator becausebusinesses will often delay laying people off as long as they can in difficult times. A fewmonths after the start of the recession in 2008, unemployment started to rise sharply.When the global financial crisis hit, the unemployment rate was a little over 5% or 1.6million. Towards the end of 2009, with the UK coming out of its severest recession since the
  6. 6. 1950s, it was almost a million higher at 2.5 million, or 8%. The number of 16-24 year oldslooking for work increased by 7,000 in the three months to July, when compared to theprevious three months, but still remains over one million, or 21.6% of the workforce.Excluding those in full-time education, the figure is closer to 20.3%.Unemployment began tolevel off towards the end of 2011, and the beginning of 2012 saw the first fall in almost ayear. The overall number of people in employment has been going up, as has the numberworking in the private sector.The McDonald’s is urging more businesses to recruit school leavers and end decades ofsnobbery that favoured graduates. The McDonald’s has 6,000 to 7,000 vacancies at any onetime and 15 applicants for every job. More than 16,000 staff is studying for the ofstedrecognised qualifications. McDonald’s is one of the largest private sector employees inEurope, with a workface of around 400, 00 across Europe. The companys continued growthmeans that the employment opportunities provided by McDonald’s are expanding 50 to 100new jobs are created with the opening of each new restaurant. McDonald’s contributes toworkface diversity by employing a high proportion of younger workers and womencompared with EU averages. Part-time and flexible working options are available acrossEurope to accommodate a range of employee lifestyles. McDonald’s equips its workers withpractical skills. This supports internal career development and increases skills for employees.The UKs struggling retail chains are closing their shops at a rate of more than 30 a dayacross the UK as the economic downturn continues, according to research. Figures showthat across the UK embattled retailers closed 32 stores a day in July and August as Britainshigh street continued to suffer from the months of 2012.According to research byPricewaterhouseCoopers and the Local Data Company, retailers with more than one storeclosed 953 shops in the first half of 2012 in leading town centres. This compares to 174closures in the whole of 2011. The number of closures in the first-half represents 20 per day.However, this has accelerated to 32 per day since the end of June following the demise ofJJB Sports and other retailers. Shops selling computer games, toys, clothes, gifts, jewellery,cards, posters and furniture were among the hardest hit in the first six months of 2012. JJBSports, which is among the retailers to have collapsed in recent months, is to close 133stores across the country despite a deal to sell 20 to its rival Sports Direct International.Woolworths first opened in 1879 in New York and in the 99 years it established a UKpresence in Liverpool. In January 2009 all of its stores had closed. Woolworth’s financialperformance had been declining in the previous few years, and the events of the closurecoincided with the financial crisis and recession which was occurring at the time. Thereforeif the stores close down like Woolworths in Northampton the less people will attract totown centre means less people will go to eat to McDonald’s. Businesses like McDonald’s arebusier in places like shopping centres. For McDonalds survival is the main target and withless people going town centre they would have to make special offers or online orders toreach their sale targets.
  7. 7. Income tax forms the single largest source of revenues collected by the government. Eachperson has an income tax personal allowance, and income up to this amount in each taxyear is free of tax for everyone. Income tax is a tax you pay on your income. You pay tax onthings like; money you earn from employment, most pensions, interest on savings, rentalincome.Council tax is a tax on domestic property collected by your local council. The council use it topay for local services such as schools, rubbish collection, roads and street lighting. You willhave to pay council tax unless:Your rent and the home owner has said that they will be responsible for paying it, or
  8. 8. you let your home and you have agreed that your tenant will be responsible for paying it.The number of councils seeing their rates capped has fallen in recent years. Between 2004and 2006, 13 were targeted but none has been since.VAT is a tax thats charged on most business transactions in the UK. Businesses add VAT tothe price they charge when they provide goods and services to:•business customers - for example a clothing manufacturer adds VAT to the prices theycharge a clothes shop•non-business customers - members of the public or consumers - for example ahairdressing salon includes VAT in the prices they charge members of the publicVAT has risen 15 per cent on 1 December 2008 and returned to 17.5 per cent on 1 January2010. On 4 January 2011 the standard rate increased to 20 per cent. Given that VAT is thetax you have to pay when you buy goods or services. So presuming that retailers pass onthe rise, it means that many of the things you buy in the UK will become more expensive.People will spend their money for things like electricity, gas, clothing etc. That will leavepeople less disposable income. So people might not spend their money to eat when they goout, they will choose to eat their food at their home, because that will cost them lessmoney.Inflation is the rate of change in the level of prices for goods and services, which affects thepurchasing power of money. The official consumer inflation figures (RPI and CPI) measurethe change in prices charged for goods and services bought by households in the UK. It isbased on average spending patterns for UK households. The inflation has risen to 3.5% inMarch from 3.4% in February. The food and soft drink prices were 4.6% higher than inMarch 2011, it cited higher prices for bread, cereals, meat, fruit and vegetables in particular.This increase will make it difficult for McDonald’s to achieve their aims and it will be hard for
  9. 9. business to make the profit. They will have to charge more money for food and soft drinkprices means some customers might not want to spend too much money.The exchange rate is the relative value between two currencies. In particular, the exchangerate is the quantity of one currency required to buy or sell one unit of the other currency.For example, before you travel or while you’re travelling, you need to know what theexchange rate is so you will know how much your UK money is worth in another country. Ifthe pound gets stronger then British businesses are getting better value for their purchases.The fast food restaurants like McDonald’s……………..Degree of Competition within the marketThe degree of competition in a market is a significant factor affecting the ability of abusiness to achieve its aims and objectives. The degree of competition can be measured bythe number of businesses providing similar products compared with the size of the similarproducts compared with the size of the market. For example, McDonald’s has a high degreeof competition as there are many business providing different promotions. In a highlyMcDonald’s market, it is likely that a business will: Find it difficult to charge a higher price than its competitors Be tempted to reduce its prices in order to attracts customers Need to monitor what its competitors are offering in terms of product range and quality Want to offer new products or a better service in order to discriminate itself from competitors. Face a high degree of uncertainty, as the success of the business will partly be determined by the actions of its competitors. McDonald’s can find it difficult with facing with a high degree of competition, to achieve their SMART objectives. The extent to which objectives are achievable will depend on the speed at which a business acts compared with the responses of its competitors. The competitions in Northampton for McDonalds are other fast food restaurants such as Burger King, Pizza Hut and KFC. McDonalds tries to advertise to families. Their target audience is families. They have the Play places and some have water slides, geared toward providing a family environment for them to have fun and enjoy a meal at an affordable price. Also teenagers are McDonalds’s target audience, as they looking for a quick meal to eat. The advantage of McDonalds is that McDonalds has a good reputation in a coffee making. They beat out Starbucks and Burger King in a coffee taste according to the consumer report. This means that people love coffee from
  10. 10. McDonalds. By increasing advertising if they become able to attract more customerstheir market share will obviously increase.The competition that McDonalds have is different fast food restaurants such as PizzaHut, KFC, Frankie & Benny’s and Burger King etc. These restaurants sell the sameproducts at different prices. All these businesses are in same location, they’re near toMcDonalds which creates the competition between the businesses.