Mcdonalds Project Report

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“One world, One Burger” - McDonald’s 2


CERTIFICATE

3


AKNOWLEDGEMENT

I HAVE GREAT PLEASURE IN PRESENTING MY PROJECT ENTITLED MC DONALD I TAKE THIS AN OPPORTUNITY TO EXPRESS MY DEEPEST GRATITUDE & INEPTNESS TO ALL THOSE WHO CONTRIBUTED INDIRECTLY THEIR VALUABLE TIME & ASSISTED ME IN MY PROJECT. I WOULD LIKE TO THANK MY PROJECT GUIDES, ALL THE FACULTY MEMBERS. FOR THIS APPROVAL & ALSO FOR HER VALUABLE GUIDANCE & SUPPORT IN COMPLETING MY PROJECT OF MC DONALD. LAST BUT NOT THE LEAST I WOULD LIKE TO EXPRESS MY SINCERE THANKS TO THOSE WHO DIRECTLY & INDIRECTLY HELPED IN THIS PROJECT.

SUBMITTED BY, AJAY AVHAD PARAG AWATE SNEHA VINEKAR 4


DECLARATTION

WE STUDENTS OF BIRLA COLLEGE, STUDENT OF SY. B.M.S (SEMESTER 4) HEREBY DECLARES THAT WE HAVE ACCORDINGLY COMPLETED MY PROJECT ON MC DONALDS IN THE YEAR 2008- 2009. THE

INFORMATION

SUBMITTED

IS

&ORIGINAL TO THE BEST OF MY KNOWLEDGE.

5

TRUE


SR NO.

PARTICULARS

PAGE NO.

1.

INTRODUCTION

7-9

2.

CHAPTER 1

10-18

COMPANY PROFILE 3.

CHAPTER 2

19-24

ANALIYSIS ON MCDONALDS AS A SMALL SCALE CORPORATION IN THE BEGINNING CHAPTER 3 4.

25-30

ANALIYSIS ON MCDONALDS CORPORATION AT INTERNATIONAL LEVEL. CHAPTER 4

5.

ANALIYSIS ON MCDONALDS ON PRODUTIVITY & QUALITY.

31-35

CHAPTER 5 6.

ANALIYSIS ON MCDONALDS ADVERTISEMENT AND PUBILE RELATIONS.

36-41

CHAPTER 6 7.

8.

ANALIYSIS ON VALUATION OF TAX OF MCDONALDS CORPORATION.

42-47

CHAPTER 7

48-51

ANALIYSIS ON MCDONALDS IMPORTEXPORT.

6


INTRODUCTION Although the realm of accounting and finance has often been viewed as dull ‘bean counting’, in today’s modern and competitive business environment, the finance department should be at the heart of any company, encompassing a variety of functions that go beyond its traditional financial reporting role. While it is still a priority for accountants to ensure a company’s financial statutory accounts meet legal requirements, dynamic companies such as McDonald’s have shifted the focus of their accounting and finance function to additionally include the evaluation of past performance and appraisal of future opportunities, helping to ensure the Company maximises its strategic capabilities. McDonald’s Restaurants UK Limited, a wholly owned subsidiary of the U.S. parent company, opened its first UK restaurant in Woolwich in 1974. There are now 1,200 restaurants operating in the UK which, despite representing only 4% of the total number of McDonald’s restaurants worldwide, contribute

7


7% of global profits, making the UK a very important financial market for McDonald’s shareholders. McDonald’s understands the value of an integrated accounting and finance function, extending from the restaurant floor up to the board of directors. Each individual McDonald’s restaurant is structured as an independent business, with restaurant management responsible for its financial performance, supported by the centralised Accounting & Finance department.

DEPARTMENT STRUCTURE & FUNCTION McDonald’s Finance Department has two key areas of responsibility: financial reporting and management accounting. Although each of these functions has different priorities, working together ensures the best financial position for the company now and for the future.

8


HOW DOES MCDONALD’S MAKE A PROFIT? McDonald’s has two sources of profit: • Sales made by company-owned restaurants • Rental and royalty income from franchised restaurants.

RESTAURANT SALES McDonald’s retains all of the profit earned by company-owned restaurants. An example Profit & Loss Statement for a restaurant is shown left and highlights how food and labour constitute a restaurant’s largest costs. In addition to variable costs, which increase or decrease depending on the level of sales, McDonald’s also incurs costs that are largely fixed, for example utilities and advertising, which need to be paid for even before the restaurant makes any sales. Increasing sales and controlling costs are fundamental to ensuring the profit of each restaurant is either maintained or increased.

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CHAPTER:-1

COMPANY PROFILE

10


McDonalds is a leader in convenient foods and beverages, with revenues of about $23 billion and over i.6 million employees serving the customer’s world wide. The company consists of the snack business of Beverages and Foods. PepsiCo brands are available in nearly 115 countries having more than 24,500 restaurants in the world providing 24 hour service. Having about 1 billon customers to be served all over the world. McDonalds’s success is the result of superior products, high standards of performance, distinctive competitive strategies and the high integrity of our people. McDonalds is continuing to expand and introduce new alternative beverages in the market. Approximately 85% of McDonald’s restaurant businesses worldwide are owned and operated by franchisees .All franchisees are independent, full-time operators. McDonald’s was named Entrepreneur’s Number-one franchise for 1997 Our mission is to be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity you could now join our team. Greater 11


variety and quality choices surprise and delight customers with the food and beverage they desire. McDonald’s corp. is currently one of the most successful consumer products company in the world with annual revenues exceeding $23 million and has more than 1.6 million employees. McDonald’s products are recognized and are most respected all around the globe. Currently, its divisions operate in all over the world in beverages, snack foods, and restaurants. The corporations increasing success has been based on high standards of

performance,

marketing

strategies,

competitiveness,

determination, commitment, and the personal and professional integrity of their people, products and business practices. McDonald’s believes their success depends upon the quality and value of their products by providing a safe, whole some, economically efficient and a healthy environment for their customers; and by providing a fair return to their investors while maintaining the highest standards of integrity.

12


HISTORY OF McDONALDS.

13


The McDonald's History - 1954 to 1955 Raymond Albert Kroc 1902-1984, A Salesman Ray Kroc mortgaged his home and invested his entire life savings to become the exclusive distributor of a five-spindled milk shake maker called the Multimixer. Hearing about the McDonald's hamburger stand in California running eight Multimixers at a time, he packed up his car and headed West. It was 1954. He was 52 years old. Dick and Mac McDonald's Restaurant, San Bernardino, California Ray Kroc had never seen so many people served so quickly when he pulled up to take a look. Seizing the day, he pitched the idea of opening up several restaurants to the brothers Dick and Mac McDonald, convinced that he could sell eight of his Multimixers to each and every one. "Who could we get to open them for us?" Dick McDonald said. "Well," Kroc answered, "what about me?"

Where it all began, Des Plaines, Illinois

14


Ray Kroc opened the Des Plaines restaurant in 1955. First day's revenues-$366.12! No longer a functioning restaurant, the Des Plaines building is now a museum containing McDonald's memorabilia and artifacts, including the Multimixer!

The McDonald's History - 1956 to 1963 Ray Kroc At Work "If you've got time to lean, you've got time to clean," Ray Kroc preached to his troops. Heeding his own words, here the Chairman of the Board cleans the parking lot of the first McDonald's franchise in Des Plaines, Illinois.

Ronald McDonald, In Any Language He Means "Fun!" "The smile known around the world," In his first TV appearance in 1963 the happy clown was portrayed by none other than Willard Scott.

Fred Turner And Ray Kroc, Architects Of A Dream 15


Here Ray Kroc (right) and Fred Turner study the design which would replace the red and white tile buildings that had become landmarks throughout the U.S. Called Kroc's first "grill man extraordinaire," Turner is today Senior Chairman of the Board.

The McDonald's History - 1965 to 1973 McDonald's Comes To Wall Street In 1965 McDonald's went public with the company's 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 approximately $3.3 million on December 31, 2006. In 1985 McDonald's was added to the 30-company Dow Jones Industrial Average.

A Big Idea Called "Big Mac" "Introduced systemwide in 1968, the Big Mac was the brainchild of Jim Delligatti, one of Ray Kroc's earliest franchisees, who by the late 1960s operated a dozen stores in Pittsburgh." The Egg McMuffin Introduced in 1973, the Egg McMuffin was developed by owner operator Herb Peterson.

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The First Ronald McDonald House in Philadelphia, PA 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.

The Happy Meal Since 1979 the Happy Meal has been making kids visits that much more special. Clubs the world over collect Happy Meals toys and boxes.

The Future Begins Now McDonald's Express for a world that can't slow down!. McDonald's is popping up in more nontraditional locations like Amoco and Chevron stations, with full menu offerings and dining room seating, just like you'll find in a traditional McDonald's.

FACTS & FIGURES

1.6million Restaurant employees System wide dedicated to serving our customers 17


540million Snack Wraps were sold in 2007

24,500 Restaurants around the world offer extended or 24-hour service

1billion More customers were served in 2007 than in 2006

115 Countries participated in one of McDonald’s most successful promotions ever – Our tie-in with DreamWorks’ Shriek the Third™

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CHAPTER:-2

ANALIYSIS ON MCDONALDS AS A SMALL SCALE CORPORATION IN THE BEGINNING.

McDonald’s is one of the leading restaurant chains in the world, touching the lives of people everyday. The long journey of the burger brand started in 1940, when two brothers, Dick and Mac McDonald opened the first McDonald’s restaurant in San Bernardino, California. Initially, they owned a hotdog 19


stand, but after establishing the restaurant they served around 25 items, which were mostly barbequed. It became a popular and profitable teen hangout. In 1948, the brothers closed and reopened the restaurant to sell only hamburgers, milkshakes and French fries. As per the information of the McDonald’s history, the major revenue came from hamburgers, which were sold at a nominal price of 15 cents. The restaurant gradually became famous and the McDonald brothers begin franchising their restaurant in the year 1953. The first franchise was taken by Neil Fox and under it; the second Mc Donald’s restaurant was opened in Fresno, California. It was the first to introduce the Golden Arch design. The third and fourth restaurants were opened in Saginaw, Michigan and Downey, California, respectively.

The business began in 1940, with a restaurant opened by siblings Dick and Mac McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was 20


"Speedee." Speedee was eventually replaced with Ronald McDonald in 1963. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955 , the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion and the company became listed on the public stock markets in 1965. Kroc was also noted for aggressive business practices, compelling the McDonald's brothers to leave the fast food industry. The McDonald's brothers and Kroc feuded over control of the business, as documented in both Kroc's autobiography and in the McDonald brothers autobiography. The site of the McDonald brothers' original restaurant is now a monument. With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility. MCDONALD'S India Pvt Ltd (MIPL), the wholly-owned subsidiary of the US-based fast-food giant, McDonald's

21


Corporation, is likely to put on hold its earlier declared expansion plan of opening 80 restaurants in India by 2003.

McDonald’s has 132 restaurants in India of which 79 are in North & East India and 53 in West & South India.

79 restaurants in North & East India: with 33 in Delhi • •

22 in Uttar Pradesh – Noida (5), Ghaziabad (4), Mathura (1) (Highway and Drive Thru), Kanpur (2), Meerut (2), Lucknow (4), Agra (1), Allahabad (1), Varanasi (2)

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11 in Haryana - Faridabad (3), Manesar (1) (Highway and Drive Thru), Gurgaon (5), Karnal (1) (Highway and Drive - Thru), Panipat (1)

•

7 in Punjab - Chandigarh (2), Ludhiana (2), Doraha (1) (Highway and Drive - Thru), Jalandhar (1), Patarsi (1) (Highway and Drive Thru)

•

3 in Rajasthan - Jaipur (3)

•

1 in Uttaranchal - Dehradun (1)

•

1 in West Bengal – Kolkata (1)

•

1 in Himachal Pradesh- Jabli (1).

53 Restaurants in West & South India: 32 in Maharashtra – Mumbai (23), Pune (8), Nasik (1) •

7 in Gujarat – Ahmedabad (4), Vadodara (2), Surat (1)

•

7 in Karnataka – Bangalore(7)

•

4 in Andhra Pradesh – Hyderabad (4), 3 in Madhya Pradesh – Indore (3)

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1996

1997

The first McDonald's restaurant opened on Oct. 13, at Basant Lok, Vasant Vihar, New Delhi. It was also the first McDonald's restaurant in the world not serving beef on its menu The first Drive - Thru restaurant at Noida (UP) The first disabled friendly store at Noida (UP)

1999

The first Mall location restaurant at Ansal Plaza (New Delhi)

2000

The first highway restaurant at Mathura (UP)

2001

The first thematic restaurant at Connaught Place (New Delhi)

2002

The first restaurant in a food court at 3C's, Lajpat Nagar (New Delhi) The first restaurant at the Delhi Metro Station at Inter State Bus Terminus The first annual fundraiser in association with ORBIS and Dr. Shroff's Charity Eye Hospital.(Delhi)

2003

The first Dessert Kiosk - Faridabad (Haryana)

200304

Indigenous products like McAloo Tikki, McVeggie and Pizza McPuff exported to Middle East countries

2004

McDonald's Delivery Service (McDeliveryTM ) introduced in New Delhi

2006

McDelivery on Bicycles flagged off at Chandni Chowk (Delhi)another first initiative by McDonald's India 100th McDonald's Restaurant in India 10 Year Anniversary

2007

The first Restaurant opened in the Eastern Region at Park Street, Kolkata (West Bengal) The first Restaurant opened at Airport.(Domestic Airport, New Delhi)

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CHAPTER:-3

ANALIYSIS ON MCDONALDS CORPORATION AT INTERNATIONAL LEVEL.

McDonald's International through its wholly owned subsidiary McDonald's India entered into two JVs, one with 25


Connaught Plaza Restaurants Pvt. Ltd. in the Northern & Eastern region and another with Hard Castle Restaurants Pvt. Ltd. in the Western & Southern region McDonald's restaurants are found in 119 countries and territories around the world and serve nearly 47 million customers each day. McDonald's operates over 31,000 restaurants worldwide, employing more than 1.5 million people. The company also operates other restaurant brands, such as Piles Café, and has a minority stake in Pret a Manger. The company owned a majority stake in Chipotle Mexican Grill until completing its divestment in October 2006. Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.

Most standalone McDonald's restaurants offer both counter service and drive-through service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or McDrive as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, 26


though the latter two steps are frequently combined; it was first introduced in Arizona in 1975, following the lead of other fastfood chains. In some countries "McDrive" locations near highways offer no counter service or seating. In contrast, locations in high-density city neighborhoods often omit drivethrough service. There are also a few locations, located mostly in downtown districts, that offer Walk-Thru service in place of Drive-Thru. Especially themed restaurants also exist, such as the "Solid Gold McDonald's," a 1950s rock-and-roll themed restaurant. In Victoria, British Columbia, there is also a McDonald's with a 24 carat (100%) gold chandelier and similar light fixtures. Each McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The corporations' revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion. Full year 2008 highlights included:

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Global comparable sales increase of 6.9%, including U.S. 4.0%, Europe 8.5%, and Asia/Pacific, Middle East and Africa 9.0%

•

Growth in McDonald’s combined operating margin of 320 basis points to 27.4%, after adjusting for the impact of the 2007 Latin America transaction

•

Operating income increases in the U.S. 8%, Europe 23% (17% in constant currencies) and Asia/Pacific, Middle East and Africa 33% (28% in constant currencies)

•

Earnings per share from continuing operations of $3.76, an increase of 16% (14% in constant currencies), after adjusting for the impact of the 2007 Latin America transaction

Return of $5.8 billion to shareholders through shares repurchased and dividends paid, including a 33% increase in the quarterly cash dividend to $0.50 per share for the fourth quarter – bringing our current annual dividend rate to $2.00 per share Individual franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and royalties to the Company based upon a percent of sales with minimum rent payments that parallel the Company’s underlying leases and escalations (on properties that are leased). McDonald’s franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most 28


cases, the use of a restaurant facility, generally for a period of 20 years. Franchisees pay related occupancy costs including property taxes, insurance and maintenance. In addition, in certain markets outside the U.S., franchisees pay a refundable, non interestbearing security deposit. Foreign affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales, as well as initial fees. The results of operations of restaurant businesses purchased and sold in transactions with franchisees, affiliates and others were not material to the consolidated financial statements for periods prior to purchase and sale.

McDonald's India…… Culturally Sensitive McDonald's worldwide is well known for the high degree of respect for the local customs and culture. McDonald’s has 29


developed a menu especially for India with vegetarian selections to suit Indian tastes and preferences. Keeping in line with this, McDonald's does not offer any beef or pork items in India. In the last decade it has introduced some vegetarian and nonvegetarian products with local flavours that have appealed to the Indian palate. There have been continuous efforts to enhance variety in the menu by developing more such products. McDonald's has also re-engineered its operations repeatedly in its 11 years in India to address the special requirements of a vegetarian menu. Vegetable products are 100% vegetarian, i.e. •

They are prepared separately, using dedicated equipment and utensils.

•

Only pure vegetarian oil is used as a cooking medium.

•

Cheese and sauces are completely vegetarian and egg less.

•

Separation of vegetarian and non-vegetarian food products is maintained throughout the various stages of procurement, cooking and serving.

30


CHAPTER:-4

ANALIYSIS ON MCDONALDS ON PRODUTIVITY & QUALITY.

The site of the first McDonald's to be franchised by Ray Kroc is now a museum in Des Plaines, Illinois. The building is a reproduction of the original, which was the ninth McDonald's restaurant. 31


To accommodate the current trend for high quality coffee and the popularity of coffee shops in general, McDonald's introduced McCafés. The McCafé concept is a café-style accompaniment to McDonald's restaurants. McCafé is a concept of McDonald's Australia, starting with Melbourne in 1993. Today, most McDonald's in Australia have McCafés located within the existing McDonald's restaurant. In Tasmania there are McCafés in every store, with the rest of the states quickly following suit. After upgrading to the new McCafé look and feel, some Australian stores have noticed up to a 60% increase in sales. As of the end of 2003 there were over 600 McCafés worldwide. Some locations are connected to gas stations/convenience stores, while others called McDonald's Express have limited seating and/or menu or may be located in a shopping mall. Other McDonald's are located in Wal-Mart stores. McStop is a location targeted at truckers and travelers which may have services found at truck stops. McDonald's announced on May 22, 2008 that, in the U.S. and Canada, it will be introducing cooking oil for its French fries that contain no trans fats. The company will use canola-based oil with corn and soy oils by year's end for its baked items, pies and cookies. In a bid to tap into growing consumer interest in the provenance of food, the fast-food chain recently switched its 32


supplier of both coffee beans and milk. UK chief executive Steve Easterbrook said: "British consumers are increasingly interested in the quality, sourcing and ethics of the food and drink they buy". McDonald's coffee is now brewed from beans taken from stocks that have been certified by the Rainforest Alliance, a conservation group. Similarly, milk supplies used for its hot drinks and milkshakes have been switched to organic sources which could account for 5% of the UK's organic milk output. The company has also expanded the McDonald's menu in recent decades to include alternative meal options, such as salads and snack wraps, in order to capitalize on growing consumer interest in health and wellness. McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and other localized fare. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to continue by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of Mc Rice in Indonesia). There have been continuous efforts to enhance variety in the menu by developing more such products. 33


McDonald's has also re-engineered its operations repeatedly in its 11 years in India to address the special •

Most Respected Company' for four consecutive years, 2003-2007 in the Food Services sector, by Businessworld

•

Most Wanted Brand of the Year' Award 2003 & 2004 by Franchising Holdings India Ltd.

•

Retailer of the Year' Award for catering services, 2004-2006 at the Images Retail Awards. •

The 'Most Preferred Fast Food Outlet' 2006 & 2007 by Awaaz Consumer Award, hosted by CNBC. Star Retailer - The Consumer Way, Food Services Retailer' of the Year 2006 & 2007, by Franchise India

•

•

Amity Corporate Excellence Award'-in 2007 & 2008

requirements of a vegetarian menu. Vegetable products are 100% vegetarian, They are prepared separately, using dedicated equipment and utensils. Only pure vegetarian oil is used as a cooking medium. Cheese and sauces are completely vegetarian and egg less. Separation of vegetarian and non-vegetarian food products is maintained throughout the various stages of procurement, cooking and serving.

34


McDonald's India - A decade of quality service For its unparalleled benchmarks established in the QSR sector McDonald’s India has been bestowed with many prestigious awards. To name a few:

CHAPTER:-5

ANALIYSIS ON MCDONALDS ADVERTISEMENT AND PUBILE RELATIONS. 35


Over the years, McDonald's has developed TV advertising campaigns that have become, like McDonald's, a part of our lives and culture. McDonald's commercials have focused not only on product, but rather on the overall McDonald's experience, portraying warmth and a real slice of every day life. This "image" or "reputation" advertising has become a trademark of the company and created many memorable television moments and themes, including:McDonald's is Your Kind of Place (1967) You Deserve a Break Today (1971) We Do it All for You (1975) Twoallbeefpattiesspecialsaucelettucecheesepicklesonionsonasesa meseedbun (1975) 36


You, You're The One (1976) Nobody Can Do It Like McDonald's Can (1979) Renewed: You Deserve a Break Today (1980 & 1981) Nobody Makes Your Day Like McDonald's Can (1981) McDonald's and You (1983) It's a Good Time for the Great Taste of McDonald's (1984) Good Time, Great Taste, That's Why This is My Place (1988) Food, Folks and Fun (1990) McDonald's Today (1991) What You Want is What You Get (1992) Have you Had your Break Today? (1995) My McDonald's (1997) Did Somebody Say McDonald's (1997) We Love to See You Smile (2000) There's a little McDonald's in Everyone (2001) - Canada Only I’m lovin' it (2003) McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper),

the

company

makes

significant

use

of

billboards(outdoors, on which large advertisements or notices are posted.) and signage, sponsors sporting events from ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. 37


Nonetheless, television has always played a central role in the company's advertising strategy.

EMPLOYEE BENEFIT PLANS The Company’s Profit Sharing and Savings Plan for U.S.based employees includes a 401(k) feature, a leveraged employee stock ownership (ESOP) feature, and a discretionary employer profit sharing match. The 401(k) feature allows participants to make pre-tax contributions that are partly matched from shares released under the ESOP. The Profit Sharing and Savings Plan also provides for a discretionary employer profit sharing match at the end of the year for those eligible participants who have contributed to the 401(k) feature. All contributions and related earnings can be invested in several investment alternatives as well as McDonald’s common stock in accordance with each participant’s elections. Participants’ contributions to the 401(k) 38


feature and the discretionary employer match are limited to 20% investment in McDonald’s common stock. The Company also maintains certain supplemental benefit t plans that allow participants to (i) make tax-deferred contributions and (ii) receive Company-provided allocations that cannot be made under the Profit Sharing and Savings Plan because of Internal Revenue Service limitations. The investment alternatives and returns are based on certain market-rate investment alternatives under the Profit Sharing and Savings Plan. Total liabilities were $415.3 million at December 31, 2007 and $378.6 million at December 31, 2006 and were included in other longterm liabilities in the Consolidated balance sheet. The Company has entered into derivative contracts to hedge market-driven changes in certain of the liabilities. At December 31, 2007, derivatives with a fair value of $100.8 million indexed to the Company’s stock as well as an investment totalling $82.0 million indexed to certain market indices were included in miscellaneous other assets in the Consolidated balance sheet. All changes in liabilities for these nonqualified plans and in the fair value of the derivatives are recorded in selling, general & administrative expenses. Changes in fair value of the derivatives indexed to the Company’s stock are recorded in the income statement because

39


the contracts provide the counterparty with a choice to settle in cash or shares. Total U.S. costs for the Profit Sharing and Savings Plan, including nonqualified benefits and related hedging activities, were (in millions): 2007–$57.6; 2006–$60.1; 2005–$58.0. Certain subsidiaries outside the U.S. also offer profit sharing, stock purchase or other similar benefit plans. Total plan costs outside the U.S. were (in millions): 2007–$62.7; 2006–$69.8; 2005– $54.1. The total combined liabilities for international retirement plans were $129.4 million and $197.6 million at December 31, 2007 and 2006, respectively, primarily in Canada and the U.K. Other postretirement benefits and post-employment benefits were immaterial.

REASON TO WORK WITH MCDONALDS

• •

• • • • •

Fast-track Career Progression Young , Energetic & Flexible Environment Excellent learning Potential Dignity of Labour World class Training Systems Global Exposure 40 Good Benefits


CHAPTER:-6

ANALIYSIS ON VALUATION OF TAX OF MCDONALDS CORPORATION.

41


The Company records a valuation allowance to reduce its deferred tax assets if it is more likely than not that some portion or all of the deferred assets will not be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax strategies, including the sale of appreciated assets, in assessing the need for the valuation allowance, if these estimates and assumptions change in the future, the Company may be required to adjust its valuation allowance. This could result in a charge to, or an increase in, income in the period such determination is made. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. The Company records accruals for the estimated outcomes of these audits, and the accruals may change in the future due to new developments in each matter. During 2007, the Company recorded a $316 million benefit as a result of the completion of an IRS examination of the Company’s 2003-2004 U.S. tax returns. During 2005, the Company recorded a $179 million benefit due to the completion of an IRS examination of the Company’s 2000-2002 U.S. tax returns. The Company’s 2005-2006 U.S. tax returns are under audit and the completion is expected in late 2008 or early 2009. 42


Deferred U.S. income taxes have not been recorded for temporary differences totalling $6.7 billion related to investments in certain foreign subsidiaries and corporate joint ventures. The temporary differences consist primarily of undistributed earnings that are considered permanently invested in operations outside the U.S. If management’s intentions change in the future, deferred taxes may need to be provided.

43


BALANCE SHEET OF MCDONALDS 2007-08

44


PERIOD 30-Jun-07 ENDING Assets Current Assets Cash And Cash 2,142,100 Equivalents Short Term Investments Net 784,600 Receivables Inventory 1,055,500 Other Current 379,200 Assets Total Current 4,361,400 Assets Long Term 1,060,100 Investments Property Plant and 20,106,600 Equipment Goodwill 2,198,300 Intangible Assets Accumulated Amortization Other Assets 1,268,500 Deferred Long Term Asset Charges Total Assets 28,994,900

31-Mar-07

31-Dec-06

30-Sep-06

2,438,400

2,136,400

4,282,700

-

-

-

848,000

904,200

812,500

143,700

149,000

144,500

449,300

435,700

596,000

3,879,400

3,625,300

5,835,700

1,064,400

1,036,200

1,032,300

20,975,200 20,845,700 20,526,200 2,254,300

2,209,200

2,156,100

-

-

-

-

-

-

1,300,200

1,307,400

1,278,900

-

-

-

29,473,500 29,023,800 30,829,200 45


46

Liabilities Current Liabilities Accounts 2,120,900 Payable Short/Current Long Term 288,200 Debt Other Current 1,020,500 Liabilities Total Current 3,429,600 Liabilities Long Term 7,885,500 Debt Other 1,652,500 Liabilities Deferred Long Term Liability 941,600 Charges Minority Interest Negative Goodwill Total 13,909,200 Liabilities Stockholders' Equity Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common 16,600 Stock Retained 25,881,200 Earnings Treasury (14,832,700) Stock Capital 3,957,000 Surplus Other Stockholder 63,600 Equity Total


2,451,000

2,739,000

4,122,100

613,500

17,700

454,200

-

251,400

-

3,064,500

3,008,100

4,576,300

8,199,900

8,416,500

8,569,400

1,471,000

1,074,900

1,154,300

971,100

1,066,000

1,002,900

-

-

-

-

-

-

13,706,500

13,565,500

15,302,900

-

-

-

-

-

-

-

-

-

16,600

16,600

16,600

26,592,500

25,845,600

24,585,700

(14,371,900) (13,552,200) (11,858,500) 3,731,300

3,445,000

3,228,200

(296,700)

(445,700)

(201,500) 47


CHAPTER:-7 48


ANALIYSIS ON MCDONALDS IMPORT- EXPORT.

The business is managed as distinct geographic segments. Significant reportable segments include the United States (U.S.), Europe, and Asia/Pacific, Middle East and Africa (APMEA). In addition, throughout this report we present “Other Countries & Corporate” that includes operations in Canada and Latin America, as well as Corporate activities and certain investments. The U.S., Europe and APMEA segments account for 35%, 39% and 16% of 49


total revenues, respectively. France, Germany and the United Kingdom (U.K.), collectively, account for approximately 60% of Europe’s revenues; and Australia, China and Japan a 50%-owned affiliate accounted for under the equity method), collectively, account for over 50% of APMEA’s revenues. These six markets along with the U.S. and Canada are referred to as “major markets” throughout this report and comprise over 70% of total revenues. The Company continues to focus its management and financial resources on the McDonald’s restaurant business as we believe the opportunities for long-term growth remain signifi cant. Accordingly, during the third quarter 2007, the Company sold its investment in Boston Market. In 2006, the Company disposed of its investment in Chipotle Mexican Grill (Chipotle) via public stock offerings and a tax-free exchange for McDonald’s common stock. As a result of the disposals during 2007 and 2006, both Boston Market’s and Chipotle’s results of operations and transaction gains have been reflected as discontinued operations for all periods presented. In analyzing business trends, management considers a variety of performance and financial measures including comparable sales growth, System wide sales growth, restaurant margins and returns.

50


• Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results in constant currencies and bases certain compensation plans on these results because we believe they better represent the underlying business trends. • Comparable sales are a key performance indicator used within the retail industry and are indicative of acceptance of the Company’s initiatives as well as local economic and consumer trends. Increases or decreases in comparable sales represent the percent change in constant currency sales from the same period in the prior year for all restaurants in operation at least thirteen months, including those temporarily closed. Some of the reasons restaurants may be temporarily closed include road construction, reimaging or remodelling, rebuilding, and natural disasters. McDonald’s reports on a calendar basis and therefore the comparability of the same month, quarter and year with the corresponding period of the prior year will be impacted by the mix of days. The number of weekdays, weekend days and timing of holidays in a given timeframe can have a positive or negative impact on comparable sales. The Company refers to this impact 51


as the calendar shift/trading day adjustment. This impact varies geographically due to consumer spending patterns and has the greatest impact on monthly comparable sales. Typically, the annual impact is minimal, with the exception of leap years. • System wide sales include sales at all restaurants, whether operated by the Company, by franchisees or by affiliates. While sales by franchisees and affiliates are not recorded as revenues by the Company, management believes the information is important in understanding the Company’s financial performance because it is the basis on which the Company calculates and records franchised and affiliated revenues and is indicative of the financial health of our franchisee base.

METHDOLOGY

This project is prepared with the help of theoretical

knowledge

as 52

well

as

practical


knowledge & a crumb of advises & suggestions from the concerned professors. The theoretical pert taken from the various books & magazines available on this subject. And other recent happing in marketing is taken from magazines & news paper. As

far

as

practical

is

concerned,

all

the

information about the companies information available on net. Overall this mission has been completed with the combination of al those things & it had been with the best of my facts & information.

BIBLOGRAPHY

53


• BOOKS: BRAND PRACTICES.

• MAZINES: BUSINESS WORLD.  100 TOP BRANDS.  THE VALUABLE BRANDS OF INDIA.

• WEB SITES:

www.mcdonaldsindia.com



www.mcdonalds.com

CONCLUSION…………

54


TODAY, MCDONALDS HAS GROWN TO 25,000 RESTAURANTS IN ABOUT 120 COUNTRIES SERVING 50 MILLION

CUSTOMERS

DAILY.

BECOMING THE LARGEST FAST FOOD CHAIN IN ALL OVER THE WORLD………

55


B 56


57


58


59

Mcdonalds Project Report

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