McDonald’s Corporation

When most firms were struggling in 2008, McDonald’s increased its revenues from $22.7 billion in 2007 to $23.5 billion in 2008. Headquartered in Oak Brook, Illinois McDonald’s net income nearly doubled during that time from $2.4 billion to $4.3 billion—quite impressive. Fortune magazine in 2009 rated McDonald’s as their 16th “Most Admired Company in the World” in terms of their management and performance.

McDonald’s added 650 new outlets in 2009 when many restaurants struggled to keep their doors open. McDonald’s low prices and expanded menu items have attracted millions of new customers away from sit-down chains and independent eateries. Jim Skinner, CEO of McDonald’s, says, “We do so well because our strategies have been so well planned out.” McDonald’s served about 60 million customers every day in 2009, 2 million more than in 2008. Nearly 80 percent of McDonald’s are run by franchisees (or affiliates).

McDonald’s in 2009 spent $2.1 billion to remodel many of its 32,000 restaurants and build new ones at a more rapid pace than in recent years. This is in stark contrast to most restaurant chains that are struggling to survive, laying off employees, closing restaurants, and reducing expansion plans. McDonald's restaurants are in 120 countries. Going out to eat is one of the first activities that customers cut in tough times. A rising U.S. dollar is another external factor that hurts McDonald’s. An internal weakness of McDonald’s is that the firm now offers upscale coffee drinks like lattes and cappuccinos in over 7,000 locations just as budget conscious consumers are cutting back on such extravagances.

About half of McDonald’s 31,000 locations are outside the United States. But McDonald’s top management team says everything the firm does is for the long term. McDonald’s for several years referred to their strategic plan as “Plan to Win.” This strategy has been to increase sales at existing locations by improving the menu, remodeling dining rooms, extending hours, and adding snacks. The company has avoided deep price cuts on its menu items. McDonald’s was only one of three large U.S. firms that saw its stock price rise in 2008.

The other two firms were Wal-Mart and Family Dollar Stores.

Other strategies being pursued currently by McDonald’s include replacing gasoline-powered cars with energy-efficient cars, lowering advertising rates, halting building new outlets on street corners where nearby development shows signs of weakness, boosting the firm’s coffee business, and improving the drive-through windows to increase sales and efficiency.

McDonald’s receives nearly two thirds of its revenues from outside the United States. The company has 14,000 U.S. outlets and 18,000 outlets outside the United States. McDonald’s feeds 58 million customers every day. The company operates Hamburger University in suburban Chicago. McDonald's reported that first quarter 2009 profits rose 4 percent and same-store sales rose 4.3 percent across the globe. Same-store sales in the second quarter of 2009 were up another 4.8 percent.

Questions:

1.      Which theory of organizational adaptation is applied at McDonald's (Theories to choose from: Institution Theory, Strategic choice perspective, and Organizational Learning Theory) ? Discuss.

2.      Conduct the environmental scanning of McDonald's through SWOT analysis.

3.      Discuss any 2 strategies used at McDonald's ( Strategies to choose from : Corporate strategy, Business Strategy, and Functional Strategy) . Elaborate.

4.      Under which strategic type (according to Miles and Snow) can McDonald’s be classified? Elaborate.

One of the most popular tourist destinations in the US is Las Vegas. Unlike many other destinations in the US, price discrimination is common in Las Vegas, with many businesses regularly offering discounts to local residents for food and drink, entertainment and even hotel rooms. Why do you suppose these local’s discounts are common in Las Vegas but not other US cities? How is this pricing policy similar to the one described for the Buddhist temple in Laos?

1. Do you think the price elasticity of either supply or demand for airline flights to France (from the U.S.) will increase, decrease, or remain the same for each event? Explain your answer.

   1. Relations between the US and France break down, causing Americans to need an expensive visa to visit.

   2. The price of oil for airlines increases.

   3. The price of baguettes falls.

   4. The French real estate market takes a dive, causing AirBnB and hotel prices to drop significantly.

Cindy moved to Seattle from Portland to work as a software engineer in 2002.  Assume she meets the duration test.  She incurs moving expenses of:  $10,000 for the movers (she could have paid $5,000 for a cheaper moving company); hotel fees of $1,000 on route to Seattle, $100 in meals while on route to Seattle, and closing costs of $3,000 for her new home.  All of these fees qualify for the moving expense deduction.True/False and Explain.

Consider the game of craps designed by Econ 261 Hotel students. The game consists of rolling two fair six-sided dice. You win a dollar if the sum of the dots on the two dice is 2, 3, 4, or 5; if the sum of the dots on the two dice is 9, 10, 11, or 12 you lose a dollar. You win nothing, (that is you get $0) if the sum is 6, 7, or 8. The variance of X, Var(X) is:

“Marriott International announced in November 2018 that attackers had stolen data

on approximately 500 million customers. The breach initially occurred on systems

supporting Starwood hotel brands starting in 2014. The attackers remained in the

system after Marriott acquired Starwood in 2016 and were not discovered

until September 2018.”(sourced from a published report)

Referring to the case given, list and explain 2 steps that can help prevent data breach like this.

Park Acreage A state executive claims that the average number of acres in western Pennsylvania state parks is less than 2000 acres. A random sample of 12 parks is selected, and the number of acres is shown. 2075 2065 2174 1934 2265 1936 2277 1968 2183 2029 1976 2151

a. At = 0.01, is there enough evidence to support the claim? Use the P-value method

b. Find the 99% confidence interval of the true mean.

You are given the following information about the stocks in a two-stock portfolio:

Correlation coefficient between the two stocks is 0.5.

Using the information above, calculate the following:

1. The expected return of the portfolio,
2. The variance of the portfolio,
3. The standard deviation of the portfolio.

（All calculations must be shown for intermediate calculations）

In March, you bought 4 tickets to Lady GaGa's concert at Fenway Park in July for $125 each. Due to Covid issues the concert was postponed to August 7. You are unable to go and want to sell your $125 ticket. Whoever you sell the ticket to, you will have to send to by mail for a postage cost of $15 (with postal insurance). What is the minimum amount you would be willing to sell the ticket for? Explain your answer.