Submitted to

Mr. Aamir Ali Ansari

Project Report on

GLOBAL PROFITS ARE A MENU MAINSTAY AT MCDONALS

Submitted by

M. Yawar Khan (0372) M. Fahad Iqbal (0374) Syed Ahmed Ali (0538) Faizan Razzak (1200)

Project Report (Group-5)

TABLE OF CONTENT
S.No.
1 2 3 4 5 6 7 8 9 10 Certificate Letter of Transmittal Acknowledgement Executive Summary Introduction to the Report Analysis of McDonalds global business from an economist perspective Benefits and costs of McDonalds ringing up sales in so many foreign currencies Worldwide Opportunity cost of Joint Venture in different regions Economically short-term global business Conclusion

SUMMARY
3 4 5 6 7 8 9 9

Page no.

10

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CERTIFICATE

It is to certified that M. Yawar Khan M. Fahad Iqbal Syed Ahmed Ali Faizan Razzaq (0372) (0374) (0538) (1200)

Has satisfactory carried out necessary task for developing this report on under my supervision and meet the minimum requirement for preparing this report.

-----------------------------Mr. Amir Ali Ansari Report supervisor

Date:

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LETTER OF TRANSMITAL
To: From: Subject: Date: Amir Ali Ansari M. Yawar Khan, M. Fahad Iqbal, S. Ahmed Ali, Faizan Razzaq Project Report 25th July 2012

Here we have to submit the Project report. The report contains on how we are going to develop and it and what is our plan about or entire Report.

It contains a 33 headings and our main focus is to analyze the report and get properly structured.

Fundamental tools of making this report are Research from internet and Library and with the help of our colleagues.

In my opinion, we have learnt many things while making this report about the perspective of business economics.

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ACKNOWLEDGEMENT

We are really appreciating the efforts of our beloved teacher who gave us a chance to enhance our skills and provide the vast knowledge in the field of Business Economics. It was really truly a challenging task and we hope that this report meets the requirement of the course and the instructor. Without his profound guidance and cooperation we would not have been able to gather the required information for this Project Report. Every persons comments are have been very helpful to us we want to thank the People who help us in making our project report and suggestions for understanding our Report. As a group we found this marketing plan to be very challenging, interesting and a complete learning experience. Now special thank our all members who are here with participate with us, work hard to coordinate all the materials and response.

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EXECUTIVE SUMMARY
McDonalds Corp, operates or licenses more than 30,450 fast-food restaurants in the U.S, Canada and overseas. Fifty eight percent of these stores are operated by franchisees, twenty eight by the company, and fourteen percent by affiliates. Its partner b rands include Boston Market, Chipotle and Donatos Pizzeria, which are all located primarily in the United States, and Aroma Cafe, located primarily in the United Kingdom. Foreign operations contribute around 51% of system wide sales and about 65% of operating profits. Its main source of income is through franchise fees. Under the conventional franchise arrangement, franchisees provide capital by initially investing in the equipment, signs, seating and decor of their restaurant businesses, and by reinvesting in the business over time. The Company shares the investment by generally owning or leasing the land and building. Franchisees in the United States generally have the option to own new restaurant buildings while leasing the land from the Company. Franchisees contribute to the Company's revenue stream through payment of rent and service fees based upon a percentage of sales, with specified minimum payments, along with initial fees. The conventional franchise arrangement typically lasts 20 years and franchising practices are generally consistent throughout the world. One of the companies major cost is advertising McDonalds has had many successful marketing campaigns and has built its self a solid brand name. Evidence of this can be seen by the fact that (Business week) ranked McDonalds eighth in the world for brand name value. Business week figured that McDonalds brand value for 2002 is about 26.4 billion McDonalds current market cap is 21.2 billion. Showing that its brand value alone is worth more th en the current market cap.

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INTRODUCTION TO THE REPORT

McDonald's Corporation operates in the food service industry, primarily operating quick-service restaurant businesses under the McDonald's brand. These restaurants serve a varied, yet limited, value-priced menu in 121 countries around the world. McDonald's menu includes hamburgers, cheeseburgers, Big Macs, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, french fries, salads, milk shakes, McFlurry desserts, sundaes, soft-serve cones, pies, cookies, soft drinks and other beverages. In addition, the restaurants sells a variety of other products during limited-time promotions. Approximately 80% of McDonald's restaurants and more than 80% of the System wide sales of McDonald's restaurants are in eight markets: Australia, Brazil, Canada, France, Germany, Japan, the United Kingdom and the United States.

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1)

Analysis of McDonalds global business from an economist perspective

Being global also gives a company easier access to a Global talent pool. Its a pool thats shifting demographically. Our research indicated more viable strengths than weaknesses. Strengths such as brand recognition, steady growth in global markets, and strong leadership. McDonald's has become part of America's culture and now the same can be said for the global arena based on the demonstration of growth and continued dominance over competitors. With $22 billion in annual revenue, McDonalds now rings the world with 32 ,400 restaurants and serves 60 million customers every day. United States accounts for 35 percent of McDonalds global revenue, Europe accounts for 41percent and the Asia/Pacific, Middle East, and Africa regions account for 19 percent. Fifty eight percent of these stores are operated by franchisees, twenty eight by the company, and fourteen percent by affiliates. McDonalds sells differenct flavor in different countries as per their taste & Preferences. The Partners of McDonalds is located primarily in U.S & U.K. The main source of income is through franchise fees the company sells more than four million burgers every day. However, one of McDonalds key strengths is its ability to adapt to local tastes. At the time of recent recession, McDonalds Asian revenue grew almost twice as quickly as its European revenue, both of which balanced the smaller increase in U.S. sales. Worldwide, McDonalds owns some of its restaurants and also sells franchise licenses to firms that open restaurants under the McDonalds brand name. In some markets, the company operates restaurants in joint ventures with local firms. The company also attracting more customers during different dayparts, such as at breakfast time and in the late-night hours. A growing number of its global units stay open 24 hours a day for customer convenience. McDonalds has introduced a steady stream of breakfast, beverage, snack, and sandwich items to encourage repeat visits from customers at all income levels.

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2)

Benefits and costs of McDonalds ringing up sales in so many foreign currencies Worldwide

Companies Going Global. Driven by costs and enabled by technology, companies are aggressively pursuing global markets. Their success depends less on which business model they use than on their ability to embrace cultural differences. Improved understanding of the cultures involved is crucial for corporate facilities groups as they provide office space in any countries, all at the same time, while balancing local and corporate needs. Mcdonald is ringing up sales in so many foreign currencies worldwide, they are keeping that money overseas and not contributing to the American economy. Being a major power in global business means mcdonalds must think carefully about the value of the different currencies its restaurants take in. Outside the United States, much of its revenue is rung up in euros, British pounds, Australian dollars, and Canadian dollars. As a result, mcdonalds pays close attention to swings in foreign exchange rates as it manages its financial affairs.

3)

Opportunity cost of Joint Venture in different regions

McDonald's Corporation has exited Hardcastle Restaurants Pvt Ltd (HRPL), one of its two 15-yearold equal joint ventures that run Big Mac outlets in India, and is converting it into a franchisee operation. The US company is selling its 50% stake to Indian partner BL Jatia family for an undisclosed amount. "We are excited. It gives us the freedom to grow aggressively and take quick decisions," HRPL Vice-Chairman Amit Jatia said. Hardcastle Restaurants operates the fast-food chain in west and south India. The change in ownership means McDonald's will no longer invest in HRPL, but will lend its brand name and help with training, development and knowledge. The Indian company will pay a royalty for the use of the brand. It will own the real estate and use its local knowledge and capital for brand-building. Both Jatia and a top McDonald's official denied speculation that the decision to switch to the franchisee model was triggered by the US firm's reluctance to use bank loans for expanding HRPL operations, for which it supplied letters of comfort, and that it wanted expansion only through internal accruals.
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McDonalds is stepping up its involvement in sustainability all around the world. It has incr eased its use of packaging made from renewable materials and boosted recycling efforts to keep waste out of landfills. It has also been building eco-friendly restaurants in North and South America as well as in Europe to test green construction methods and cut back on energy and water usage. The companys social responsibility menu includes supporting the Ronald McDonald House charities and offering a range of organic foods and beverages plus healthy snack choices.

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CONCLUSION
McDonald's Corporation operates in the food service industry, primarily operating quick-service restaurant businesses under the McDonald's brand. These restaurants serve a varied, yet limited, value-priced menu in 121 countries around the world. McDonald's menu includes hamburgers, cheeseburgers, Big Macs, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, french fries, salads, milk shakes, McFlurry desserts, sundaes, soft-serve cones, pies, cookies, soft drinks and other beverages. In addition, the restaurants sells a variety of other products during limited-time promotions. Approximately 80% of McDonald's restaurants and more than 80% of the Systemwide sales of McDonald's restaurants are in eight markets: Australia, Brazil, Canada, France, Germany, Japan, the United Kingdom and the United States. McDonald's restaurants operating in the United States and certain international markets are open during breakfast hours and offer a full-or limited-breakfast menu. Breakfast offerings include Egg McMuffin and Sausage McMuffin with Egg sandwiches, hotcakes, biscuits, bagel sandwiches, and muffins. To capture additional meal occasions, the Company operates other restaurant concepts under its Partner Brands: Boston Market, Chipotle and Donatos Pizzeria, which are all located primarily in the United States, and Aroma Cafe, located primarily in the United Kingdom. In addition, the Company has a minority ownership in U.K.-based Pret A Manger. In fourth quarter 2001, the Company approved a plan to dispose of its Aroma Cafe business in the United Kingdom and expects to complete the sale in the first half of 2002. Chipotle is a fresh-Mex grill serving gourmet burritos and tacos. Donatos sells pizza, subs and salads. Boston Market is a home-meal replacement concept serving chicken, meatloaf and a variety of side dishes. Pret A Manger is a quick-service food concept that serves mainly cold sandwiches, snacks and drinks during lunchtime. All restaurants are operated by the Company or, under the terms of franchise arrangements, by franchisees that are independent entrepreneurs, or by affiliates operating under joint-venture agreements between the Company and local business people. The Company's operations are designed to assure consistency and high quality at every McDonald's restaurant. When granting franchises and forming joint-venture agreements, the Company is selective and is not in the practice of franchising to, or partnering with, investor groups or passive investors.
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Under the conventional franchise arrangement, franchisees provide capital by initially investing in the equipment, signs, seating and decor of their restaurant businesses, and by reinvesting in the business over time. The Company shares the investment by generally owning or leasing the land and building. Franchisees in the United States generally have the option to own new restaurant buildings while leasing the land from the Company. Franchisees contribute to the Company's revenue stream through payment of rent and service fees based upon a percentage of sales, with specified minimum payments, along with initial fees. The conventional franchise arrangement typically lasts 20 years and franchising practices are generally consistent throughout the world.

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