http://www.mcdonalds.co.

uk/content/dam/McDonaldsUK/People
/Schools-and-students/mcd_marketing.pdf
Business Studies
Investigating Business
The business I have decided to choose for this assignment is McDonalds. McDonalds
ownership is a franchise. McDonalds is a large business with more than 30.000 restaurants
in over 100 countries, serving more than 38 million people each day. The company is a
private limited company (PLC).
McDonalds is the worlds largest chain of hamburger fast food restaurants, serving around
68 million customers daily in 110 countries. The company began in 1940 as a barbecue
restaurant operated by Richard and Maurice McDonald in 1948 they reorganised their
business as a hamburger stand using production line principles.
A McDonalds restaurant is operated by a franchisee, an affiliate, or the corporation itself.
The corporations revenues come from the rent, royalties and fees paid by the franchisees,
as well as sales in company-operated restaurants. McDonalds primarily sells hamburgers,
cheeseburgers, chicken, French fries, breakfast items, soft drinks, milkshakes and desserts.
McDonalds restaurants are found in 119 countries and territories around the world and
serve 58 million customers each day. McDonalds operates over 31,000 restaurants
worldwide, employing more than 1,5 million people. The company also operates other
restaurant brand, such as Piles Caf.
McDonalds Corporation earns revenue as an investor in properties, a franchiser of
restaurants, and an operator of restaurants. Approximately 15% of McDonalds restaurants
are owned and operated by McDonalds Corporation directly. The remainder are operated
by 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 than
30% of restaurants are franchised, with the majority under the ownership of the company.
McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois.
In other countries, McDonald's restaurants are operated by joint ventures of McDonald's
Corporation and other, local entities or governments.
McDonalds aims are to maximise the profit by increasing the sales, keeping cost low and
more outlets nationwide. McDonalds main aim is to lead the Quick Service restaurant
market by a programme of site development and profitable restaurant opening.
The mission statement of business
"McDonald's mission is to be the world's best quick service restaurant experience. Being the
best means providing outstanding quality, service, cleanliness, and value, so that we make
every customer in every restaurant smile." This mission statement shows that the company
cares about what customers want and they want to make all the customers happy.
The main aims of the business are
McDonald's main aims are to serve good food in a friendly and fun environment, to be a
socially responsible company and provide good returns to our shareholders. The company
aims to provide its customers with food of a high standard, quick service and value for
money. 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
McDonalds 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.


Growth
Growth is an aim McDonalds have succeeded in however are still always aiming to grow
in order to fulfil new targets or objectives. The objectives are more detailed aims, which set
out 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 or
exceeds its aims, then that business is successful. If an aim is not achieved, then a business will need
to think about the way it is carrying out its operations.
Aims help McDonalds to measure their success. McDonalds needs to make profit to grow and
continue the business and they also need to survive. McDonalds has to be ahead of its market share
in order to survive as well.
To achieve their aims, business managers and owners set themselves objectives. Objectives are the
steps that a business needs to take in order to achieve its overall aim. Objectives are short term and
aims are long term.

The main objectives of the business
The McDonalds 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 objectives
McDonalds must set objectives in order to meet the aims of the business. A business objective needs
to 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. The
specific is important in the business plan to find out what kind of specific targets
McDonalds needs to make. For example, McDonalds might set an objective of serving at
least 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 been
achieved. For example, McDonalds could measure service times during a typical one-hour
period and record the number of times single-order customers were served within a minute
of placing their order.
Achievable:
The objectives should be achievable. McDonalds have to make sure that they have different
taste foods and serve the food as fast as possible. The manager of the McDonalds needs to
assess whether it is feasible for employees, if they work efficiently to serve single-order
customers 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 making
customer happy they will not be able to make the profit that they want to make. So the
business wont be able to grow. For example, by setting an objective to serve customers
quickly, the McDonalds hopes to increase its profits by attracting and serving more
customers.
Time: The objectives should set with start and finish dates. For example, McDonalds
manager might tell the employees that they have one month to achieve the one minute
service time objectives.
The key objective of McDonalds is to reach their aims, because they want to do better than
their competitors. McDonald's main aims are to serve good food in a friendly and fun
environment, to be a socially responsible company and provide good returns to their
shareholders. McDonalds customers are mainly teenagers and kids. The company aims to
provide its customers with food of a high standard, quick service and value for money. They
also wish to be more eco-friendly and to serve healthier food. So they can gain more
customers and it will help business to make a profit. Making a profit will maximise the
increase in sales and in market share it will help business to grow. Objectives communicate
what markers want to achieve, guide marketing actions and are used to measure how well a
plan is working. They can be related to market share, sales reaching the market audience
and creating awareness in the marketplace. Long-term objectives are broken down into
shorter-term measurable targets. Results can be analysed regularly to see whether
objectives are being met. This type of feedback allows the company to change plans and
allows flexibility.
The main aim is to maximise profit and to provide goods/ services that are cheap and
affordable to the consumers. The best way to achieve objectives is to make more customers
and 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 sales
and the market share. If McDonalds makes more profit, they will be able to remain the
number one retail company in the UK.

This graph shows the differences in the market share between the other fast food
restaurants. McDonalds has leading the market share out of all of them. This proves that
McDonalds has achieved their aims of market share.

The external factors of the business










These rates show that 20 years ago there were very low unemployment people since after
2001 the unemployment rates started going down. More people started losing their jobs or
couldnt find any job to work at. Unemployment is referred to as a lagging indicator because
businesses will often delay laying people off as long as they can in difficult times. A few
months 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 1.6
million. Towards the end of 2009, with the UK coming out of its severest recession since the
1950s, it was almost a million higher at 2.5 million, or 8%. The number of 16-24 year olds
looking for work increased by 7,000 in the three months to July, when compared to the
previous 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
to level off towards the end of 2011, and the beginning of 2012 saw the first fall in almost a
year. The overall number of people in employment has been going up, as has the number
working in the private sector.
The McDonalds is urging more businesses to recruit school leavers and end decades of
snobbery that favoured graduates. The McDonalds has 6,000 to 7,000 vacancies at any one
time and 15 applicants for every job. More than 16,000 staff is studying for the ofsted
recognised qualifications. McDonalds is one of the largest private sector employees in
Europe, with a workface of around 400, 00 across Europe. The company's continued growth
means that the employment opportunities provided by McDonalds are expanding 50 to 100
new jobs are created with the opening of each new restaurant. McDonalds contributes to
workface diversity by employing a high proportion of younger workers and women
compared with EU averages. Part-time and flexible working options are available across
Europe to accommodate a range of employee lifestyles. McDonalds equips its workers with
practical skills. This supports internal career development and increases skills for employees.
The UK's struggling retail chains are closing their shops at a rate of more than 30 a day
across the UK as the economic downturn continues, according to research. Figures show
that across the UK embattled retailers closed 32 stores a day in July and August as Britain's
high street continued to suffer from the months of 2012.According to research by
PricewaterhouseCoopers and the Local Data Company, retailers with more than one store
closed 953 shops in the first half of 2012 in leading town centres. This compares to 174
closures 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 of
JJB 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. JJB
Sports, which is among the retailers to have collapsed in recent months, is to close 133
stores 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 UK
presence in Liverpool. In January 2009 all of its stores had closed. Woolworths financial
performance had been declining in the previous few years, and the events of the closure
coincided with the financial crisis and recession which was occurring at the time. Therefore
if the stores close down like Woolworths in Northampton the less people will attract to
town centre means less people will go to eat to McDonalds. Businesses like McDonalds are
busier in places like shopping centres. For McDonalds survival is the main target and with
less people going town centre they would have to make special offers or online orders to
reach their sale targets.




Income tax forms the single largest source of revenues collected by the government. Each
person has an income tax personal allowance, and income up to this amount in each tax
year is free of tax for everyone. Income tax is a tax you pay on your income. You pay tax on
things like; money you earn from employment, most pensions, interest on savings, rental
income.

Council tax is a tax on domestic property collected by your local council. The council use it to
pay for local services such as schools, rubbish collection, roads and street lighting. You will
have to pay council tax unless:
Your rent and the home owner has said that they will be responsible for paying it, or
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 2004
and 2006, 13 were targeted but none has been since.
VAT is a tax that's charged on most business transactions in the UK. Businesses add VAT to
the price they charge when they provide goods and services to:
business customers - for example a clothing manufacturer adds VAT to the prices they
charge a clothes shop
non-business customers - members of the public or 'consumers' - for example a
hairdressing salon includes VAT in the prices they charge members of the public
VAT has risen 15 per cent on 1 December 2008 and returned to 17.5 per cent on 1 January
2010. On 4 January 2011 the standard rate increased to 20 per cent. Given that VAT is the
tax you have to pay when you buy goods or services. So presuming that retailers pass on
the 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 leave
people less disposable income. So people might not spend their money to eat when they go
out, they will choose to eat their food at their home, because that will cost them less
money.








Inflation is the rate of change in the level of prices for goods and services, which affects the
purchasing power of money. The official consumer inflation figures (RPI and CPI) measure
the change in prices charged for goods and services bought by households in the UK. It is
based on average spending patterns for UK households. The inflation has risen to 3.5% in
March from 3.4% in February. The food and soft drink prices were 4.6% higher than in
March 2011, it cited higher prices for bread, cereals, meat, fruit and vegetables in particular.
This increase will make it difficult for McDonalds to achieve their aims and it will be hard for
business to make the profit. They will have to charge more money for food and soft drink
prices means some customers might not want to spend too much money.

The exchange rate is the relative value between two currencies. In particular, the exchange
rate is the quantity of one currency required to buy or sell one unit of the other currency.
For example, before you travel or while youre travelling, you need to know what the
exchange rate is so you will know how much your UK money is worth in another country. If
the pound gets stronger then British businesses are getting better value for their purchases.
The fast food restaurants like McDonalds..

Degree of Competition within the market
The degree of competition in a market is a significant factor affecting the ability of a
business to achieve its aims and objectives. The degree of competition can be measured by
the number of businesses providing similar products compared with the size of the similar
products compared with the size of the market. For example, McDonalds has a high degree
of competition as there are many business providing different promotions. In a highly
McDonalds 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.
McDonalds 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. McDonald's 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 McDonaldss 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
McDonalds. By increasing advertising if they become able to attract more customers
their market share will obviously increase.
The competition that McDonalds have is different fast food restaurants such as Pizza
Hut, KFC, Frankie & Bennys and Burger King etc. These restaurants sell the same
products at different prices. All these businesses are in same location, theyre near to
McDonalds which creates the competition between the businesses.