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Individual Case Assignment 1 I c) The competitor I choose is Sonic Corp. , their competitors are 1) Burger King, 2) McDonald’s and 3) Whataburger. The first financial ratio calculated was the current ratio. The industry percentage is . 93, McDonald’s current ratio is 1. 14 and Sonic is 1. 72. Both companies have ability to pay back their short-term liabilities with their short-term assets. Debt to Equity: McDonald’s: . 75, Sonic (-172. 3) and the industry: 1. 00. Sonic’s short-term debt has gone up from 22. in 2007 to 57. 5 in 2009 and the long term has gone down from 727. 2 in 2007 to 683. 4 in 2009. Their Owner’s Equity has been in the red; in 2007 it was (-106. ) and slowly has decreasing to (-4. 3). Gross Profit Margin: McDonald’s: 38. 65, Sonic 33. 11, and industry: 31. 74. Both companies are about average. The gross profit margin has been stable for the past three years and had not fluctuated far from the industry median. Net Profit Margin: MCD: 20. 01%, SONC: 10. 29% and industry: 2. 99.
McDonald’s is keeping above the industry average on every dollar of sales a company earns. Sonic has been having some trouble keeping above water. For ? in Sales and ? in Net Income Growth the formula I used was (B-A)/A*100 or (new# – old #)/old # times 100. ? in Sales: both companies increase sales in the year 2008 but then a slight decrease in the year 2009. ? in Net Income Growth: Where as MCD has double in net income in the last three years, going from 2395. 1 in 2007 to 4551. 0 in 2009, SONC has decline in net income. In year 2007 it was at 64. and now in 2009 it is 49. 4. II a) When I found out that we were going to be studying McDonald’s for this semester, I could only think about hamburgers and coffee. I never gave it a thought that a fast food restaurant would have deal with environmental, social, economic or political responsibilities. In our text book Strategic Management Concept by Fred R. David (2010), strategies is defined as “the means by which long-term objectives will be achieved. ” Well McDonald’s has definitely achieved more than it’s share of objectives in the past years.
Even at the beginning of MCD, Ray Kroc, the businessman who bought McDonald’s from the McDonald brothers, had a long-term objective for that restaurant. He wanted MCD to be the most successful fast food operation in the world. And year after year he has achieved this by continuously surpassing its competitors, supporting the local community and “work to provide sustained profitable growth for our shareholders. ” II b1) Economic Forces: Unemployment rate of 9. 5%. While large corporation are downsizing and cutting jobs, MCD is hiring.
Breakfast sales are declining due to the unemployment rate. Dollar’s value: on Market Watch (July 17, 2009) with William Spain he wrote that “with the economy going the way it is going, people will keep spending more on fast food than at family-style restaurants, often because they also feel they are no longer sacrificing quality to save money as fast food chains add new products that taste better and are seen as healthier and fresher than ever before. ” Social, Cultural, Demographic, & Natural Environmental Forces: Working Globally on animal’s welfare.
Green Restaurant Design, the MCD in Denmark is the first hydroflurocarbon free restaurant. Political, Govt. & Legal Forces: In 2001, Eric Schlosser’s book Fast Food Nation includes criticism of McDonald’s’ business practices and alleges at MCD used its political influence to increase their own profits at the expense of the health of the nation and the social conditions of its workers. Children obesity problem. Technological Forces: Offering free WiFi hotspots. Competitive Forces: New drive-thur layouts to better service time.