Business at work Mcdonalds.

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CIBS 2a

16th of January 2004

Introduction                                4

Business type                                5                                

Objectives                                         7

Business functions                        10

Style and culture                         12

Communication and ICT                 16

Adding value                                 18

Sources                                         21

About McDonald’s
The history of McDonalds starts at 1954. That year Ray Kroc, representative of five-spindled milkshake makers, discovers the McDonalds hamburger stand in California. In that restaurant many people were served very quickly and Ray Kroc soon realizes this restaurant has a future.
They conclude a contract what gives him the right to use the McDonald’s concept all over the world. On 15 April 1955 the first restaurant is opened in Des Plaines (Illinois). This is now no longer a restaurant, but a museum containing McDonald’s memorabilia and artefacts, including Ray Kroc’s milkshake maker.

McDonald’s is a big success, and restaurants open all over the world. In 1965 McDonald's went public with the companies first offering on the stock exchange. A hundred shares of stock costing $2,250 dollars that day would have multiplied into 74,360 shares today, worth over $2.8 million on December 31, 1998. In 1985 McDonald's was added to the 30-company Dow Jones Industrial Average. The current stock price is $24,70.

Ronald McDonald is the mascot of McDonald’s; he is a well-known entertainer.  In 1974 Fred Hill of the Philadelphia Eagles teamed up with McDonald's to create Ronald McDonald House. Here the families of critically ill children have a place to call home while they're away from home as the young patients undergo treatment for their conditions. These houses turn out to be a success, and other Ronald McDonald houses are opened all over the world.

McDonald’s serves the world some of its favourite foods - World Famous French Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin. And they are available all over the world.

Now McDonald’s is the world's leading food service retailer with more than 30,000 restaurants in 119 countries serving 46 million customers each day.
It is one of the worlds most well-known and valuable brands and holds a big share in the quick service restaurant segment.

Business types

Businesses can be classified in two ways, according to sector and according to ownership. There are two kinds of sectors:

  • The public sector
    this sector includes the government-owned or government-controlled companies.
  • The Private sector
    this sector comprises businesses that are directly or indirectly in private ownership.

McDonalds belongs in the private sector, because it is in private ownership. There are five different kinds of ownership:

  • Sole traders
    one person business
  • Partnerships
    groups of people in business
  • Limited companies
    a company owned by shareholders, set up to do business
  • Franchise operations
    a trader can ‘buy’ a name and set up a business which is already established
  • Co-operatives
    groups of people ‘clubbing’ together for a specific purpose.

Limited company

McDonalds is a limited company, so that means is it owned by different shareholders, but the owners don’t control the business. There are two kinds of limited companies:

  • A private limited company (Ltd)
    Most small or medium-sized business which decide to become a company become private limited companies; they are often family businesses with the shares held by the members of the family. All the shareholders of a Ltd are registered.
    An Ltd cannot offer his shares for sale to the public, and the ability to raise money may be limited.
    A private company may become a public limited company is it has a share capital of at least 50,000 pounds and is issued with a Trading Certificate issued by Companies House.
  • A public limited company (Plc)
    A Plc can offer its shares for sale on the Stock Market in order to raise finance, but not all Plc’s take this step. When a business offers its shares for sale to the public it will employ a merchant bank to manage the operation, which is known as a ‘flotation’. The cost of a flotation can be high, sometimes running into millions of pounds for the largest issues. The shareholders of a Plc are not registered.

Public limited company

The McDonald’s group is a Plc, so they sell their stocks to the public. There are a lot of advantages about being a Plc, but there are also some disadvantages.

Advantages:

  • The liability is a big advantage of a Plc. The owners or the management cannot be held accountable for the debts with their private properties, which is the case if you have a small business such as a partnership or a sole trader. With a Plc you can only lose the money you have put in the company. In the case of McDonald's this means that if McDonald's goes bankrupt the holders of the shares only lose the amount they have invested in these shares.
  • Another reason for becoming a Plc is the taxation. If a business has a profit over a certain amount, they have to pay more tax as a partnership then as a limited company.
  • A big amount of money can be made from the sale of shares to the public. If McDonald's has plans to invest on a large scale, for example a take over, they can offer more shares to the public in order to raise finance.
  • And continuity is also a big advantage, so you can be sure that the business can extend after your gone, because there are a lot of other people involved.
  • Because of the size of a Plc, they can often dominate the market.
  • And it also becomes easier to raise finance, as financial institutions are more willing to lend them money. McDonald's is a very well known company to the investing community, partly due to the fact they are a Plc. So people won’t be afraid to invest in the company because they know it is solid.

Disadvantages:

  • The setting-up costs are very expensive and you need a lot of documentation.
  • Since anyone can buy the shares, it is possible for outsiders to take control of the company. In the case of McDonald's this would be difficult because it is such a large company with many shareholders.
  • All the accounts of the company are published. Competitors can use this information to their advantage.
  • There are several Company Acts who protect the shareholders, and they control the way a company operates.
  • Because a limited company is very big, they are not able to deal with customers at a personal level.

Franchise

McDonald’s owns a franchise organization, so as a Plc McDonald’s is a franchisor too. Almost every McDonald’s restaurant is owned by a franchisee. He bought the right to trade under the well-known name of McDonald’s.

Join now!

The person setting up the restaurant is getting advice and sometimes equipment in return for a percentage of the profit. Also a franchising has its advantages and disadvantages for the franchisee and the franchisor.

Advantages:

For the franchisee

  • You will get a business that is already tried out and tested in the market, so you know that is a success.
  • The name McDonald’s is well known, so the customers already know what they can expect.
  • You’re more likely to be able to raise finance from a bank for a franchise as McDonald’s because it’s a famous name.
  • ...

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