McDonalds Corporation - Research Paper Example

The paper "McDonald’s as the Industry Leader in the Fast-Food Industry" is a wonderful example of an essay on business. McDonald’s is the industry leader in the fast-food industry. The company was founded by Ray Kroc in 1955. The business was an instant success. Within 3 years of its creation, McDonald’s had sold its 100th million hamburger (Mcdonalds). Ray Kroc bought the exclusive rights to the McDonald’s brand in 1960. One of the biggest innovations the firm created was introducing the drive-through window in 1975. Today the company enjoys the biggest market share in the industry. McDonald’s is a publicly-traded company whose stocks are sold in the New York Stock Exchange under the symbol MCD. The price of MCD stocks as of February 15, 2013, was $93.90 (Yahoo). In the fiscal year, 2011 McDonald’s generated global revenues of $27.01 billion. The revenues of the firm increase by 12.17% in comparison with the previous year. The net income of the company in 2011 was $5.5 billion. McDonald’s net margin during 2011 was 20.36%. The net margin is a measure of the absolute profitability of the company. The firm’s earnings per share and dividend per share in 2011 were $5.33 and $2.53 respectively (Annual Report: McDonald’s).

The business model of the company is based on selling franchises to achieve growth. These franchisees are independently owned. Over 80% of the firm’s stores are owned by franchisees. The owners of the franchises are part of the human capital of the firm. McDonald’s ensures prior to selling a franchise that these individuals are properly trained. All owners of franchises must graduate from McDonald’s Hamburger University. Hamburger University is also used by the company to train employees that have the potential for growth within the firm. The firm believes in the value of promoting from within. Over 80,000 people have graduated from Hamburger University (Mcdonalds). 

The company operates over 34,000 restaurants across 119 countries worldwide which serves 69 million customers daily. The continent outside the United States with the most McDonald’s stores in Europe. The staff of the company must ensure its customers are satisfied to obtain customer loyalty. McDonald’s has one of the largest workforces in the world with 1.8 million employees. The average amount of employees per store is 52. The fast-food industry is extremely competitive. The majority of McDonald’s employees are part-time workers. The starting salary for a McDonald’s employee is the federal minimum of $7.25 an hour. Due to the hard nature of the job and the low wages, the employee turnover rate in the industry is high.

To provide an incentive for employees to stay the firm offers yearly raises. The company also offers very good benefits as part of its total compensation package. The benefits that McDonald’s employees receive include medical plan, dental plan, profit sharing, vacation, sabbatical program, employee and dependent life insurance, incentive pay, and recognition programs (Aboutmcdonalds). The company prides itself on offering excellent customer service. Most drive-through orders are ready in three minutes or less. The high employee turnover rate causes the firm to be constantly hiring workers. The manager of each store is responsible for the hiring process.