Analysing Mcdonalds (Fast Food Outlets) Using the Porters 5 Forces Model – Sometimes Called the Competitive Forces Model.
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 22.9 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 Δ in Sales and Δ in Net Income Growth the formula I used was (B-A)/A*100 or (new# - old #)/old # times 100. Δ in Sales: both companies increase sales in the year 2008 but then a slight decrease in the year 2009. Δ 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 64.2 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
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 22.9 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 Δ in Sales and Δ in Net Income Growth the formula I used was (B-A)/A*100 or (new# - old #)/old # times 100. Δ in Sales: both companies increase sales in the year 2008 but then a slight decrease in the year 2009. Δ 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 64.2 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