Custom «McDonalds Strategic Management Study» Essay Paper Sample
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Significance of the Latam Sale
In 2007 the McDonald's corporation decided to sell off 1600 restaurants in the Caribbean and Latin America. In the first quarter which ended on 30th June, the corporation reported a net loss of about $ 711.7 million compared to $834.1 million of net income they received in the previous year. The corporation however recorded a 4% rise in earnings after the exclusion of the impact of the Latam sale (Reuters, 2007).
Significance of McDonald's performance in the global market
According to Reuters (2007), the company's earnings in the first six months of 2007 reported a 96.5% fall to $50.7 million compared to $1.46 billion which was recorded in 2006. Overall, the company saw a decrease of 95 cents in its share price that year although the company recorded a huge loss after the Latam sales, analysts and owners of the company were very optimistic that the company would record profits in the long run. The major reason for this optimism was due to the fact that the company had greatly reduced its operation costs and it posted profits with the exclusion of the Latam sale impact.
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The performance of McDonald's in the global market is very significant. The company has recorded a steady growth of income over the years despite its many challenges that include litigations in markets around the world. The company operates business in not less than 100 countries and therefore its performance affects most economies worldwide.
Legal challenges that have faced McDonald's
McDonald's has had a lot of challenges to deal with over the years as part of impacts of being a fast food global leader. In 2006, there were protests by Chicago farm workers who accused the company of exploitation. The farmers stated that they were being exploited to enable McDonald's to buy their tomatoes cheaply. The aim of the protest was to make sure that the company supported a campaign which boosted the incomes of over 3000 pickers in Florida. The company responded to thus by contracting a research group which was independent to observe the conditions faced by the farm workers and the impact of what they had proposed (Brown, 2009). The company also came under fire from the United States church body accusing it of market malpractices and exploitation of farm workers. Other campaigns against the company include the welfare of animals and concerns over environmental protection.
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In the UK, McDonald's major competitor is Burger King whereas in the United States, the company faces stiff competition from Wendy's franchise, Taco bell and Subway. McDonalds and burger king have been involved in many strategic wars to boost their income and dominance. One particular example is thorough price promotions. In 2009, Burger king in one incident opted to increase the company's price message significantly, resulting in a 40% drop in stock. McDonald's on its part decided to promote products which of higher price/ high margin and this led to a 3% rise in its stock (Brown, 2009).