McDonalds: Corporate Governance and Firm Organization - Essay Example

McDonalds: Corporate Governance and Firm Organization History of the company McDonalds Company was founded in 1940 operating as a barbecue restaurant by Richard and Maurice McDonald. In 1955 it was then joined by another businessman Ray Kroc as a franchise agent who purchased the chain from McDonalds’ brothers and looked its worldwide growth. Its main revenue is from the royalties, rent and fees paid by the franchisees and also from the company’s self operated restaurants (Colley, 2003). McDonald’s products and services McDonald’s is dedicated to provide the highest quality food and greater service in a cool, clean, quiet and welcoming environment. The restaurant has the pleasure to serve a balanced collection of food choices and provide the nutrition information needed for customers to make sound decisions. Apart from it offering food services it also offers play places and parties and a free WIFI zone. Macdonald offers a wide range of foods depending with their types of ingredients. The main menu categories entails beef, chicken, fish, deli choices, salads, sides, breakfast, saver menu, desserts and treats, McCafe, drinks and shakes and happy meal. Beef foods menu include: Chicago supreme, Memphis special, Texas BBQ, Nevada Grande, New York classic, Big Mac, Double Cheeseburger, Hamburger, Quarter Pounder with Cheese and cheese burger. Chicken foods menu includes: Chicken Selects (3 pieces), Sweet Chili Crispy Chicken Wrap, Crispy Chicken & Bacon Wrap, Grilled Chicken Salad Wrap, Grilled Chicken Salad Sandwich, Crispy Chicken & Bacon Salad, Crispy Chicken Salad (no bacon), Grilled Chicken & Bacon Salad, Grilled Chicken Salad (no Bacon), Chicken Legend with Cool Mayo, Chicken Legend with Spicy Tomato Salsa, Chicken Sandwich, Chicken McNuggets, Sweet Chilly Crispy Chicken Sandwich, Crispy Chicken & Bacon Sandwich, Louisiana Chicken, Classic Chicken Snack Wrap, Peri Peri Snack Wrap, Chicken BLC (Bacon, Lettuce, Cheese), Sweet Chili Mayo Chicken and Mayo Chicken. Fish foods menu include: fish fingers and fish-o- fillet. Deli choices menu foods includes: Grilled Chicken Salad Sandwich, Spicy Veggie Sandwich, Sweet Chili Crispy Chicken Wrap, Grilled Chicken Salad Wrap, Spicy Veggie Wrap, Crispy Chicken & Bacon Sandwich, Sweet Chili Crispy Chicken Sandwich and Crispy Chicken & Bacon Wrap. Salads menu are: Fruit Bag, Crispy Chicken Salad (no bacon), Grilled Chicken Salad (no Bacon), Carrot Sticks, Grilled Chicken & Bacon Salad, Garden Side Salad and Crispy Chicken & Bacon Salad. Sides menu entails of: Garden Side Salad, Fruit Bag, Crosscuts, Hash Brown, McDonald's Fries and Carrot Sticks. Breakfast foods are: Bacon & Egg Snack Wrap with Tomato Ketchup, Sausage & Egg Snack Wrap with Tomato Ketchup, Egg & Cheese Snack Wrap with Tomato Ketchup, Breakfast Wrap, Sausage & Egg McMuffin, Double Sausage & Egg McMuffin, Bacon & Egg McMuffin, Double Bacon & Egg McMuffin, Bacon Roll, Sausage, Egg & Cheese Bagel, Bacon, Egg & Cheese Bagel, Big Breakfast, Pancakes & Sausage with Syrup, Pancakes & Syrup, Hash Brown, Oats Simple, Oats Simple Apple & Cherry Porridge, A Toasted Bagel, Blueberry Muffin, Chocolate Muffin, Raspberry & White Chocolate Muffin, Sugar Donut, Triple Chocolate Cookie, Fruit Bag, Tropicana Orange Juice, Espresso, Latte, Cappuccino, White Coffee, Black Coffee, Tea (with milk), Hot Chocolate and Mocha. Treats and desserts are: Chocolate Fudge Brownie McFlurry, Raspberry & Chocolate Brownie McFlurry, Raspberry & White Chocolate Muffin, Blueberry Muffin, Chocolate Muffin, Sugar Donut, Triple Chocolate Cookie, Apple Pie, Smarties McFlurry, Dairy Milk McFlurry, Crunchie McFlurry, Ice Cream Cone with Flake, Ice Cream Cone, Strawberry Sundae, Toffee Sundae, Strawberry Milkshake, Chocolate Milkshake, Banana Milkshake, and Vanilla Milkshake. Drinks and shakes include: Fruitizz, Espresso, Latte, Cappuccino, White Coffee, Hot Chocolate, Mocha, Black Coffee, Tea (with milk), Coca-Cola, Diet Coke, Fanta Orange, Oasis, Sprite Zero, Organic Milk, Robinsons Fruit Shoot, Tropicana Orange Juice, Strawberry Milkshake, Chocolate Milkshake, Banana Milkshake, Vanilla Milkshake, Buxton Mineral Water (still), Caramel Iced Frappé, Mocha Iced Frappé, Mango & Pineapple Iced Fruit Smoothie, Strawberry & Banana Iced Fruit Smoothie, Chocolate Chip Frappé, Peach & Passion Fruit Iced Fruit Smoothie. Company structure and organization McDonald uses a centralized organizational structure in that the decision making comes from the top management. McDonald all over the world adopts the same style of structure in their branches. It is headed by a chairman, followed by 2 presidents then vice presidents. From then the chain of commands goes to the zone manager then regional manager. Market manager, operational manager and regional human resource manager are answerable to the regional manager. The market manager heads the franchise while the operational manager heads the supervisors who then heads store managers. Store manager heads the first assistant who then heads shift assistant and lastly the lowest person is the crow persons. The below chart shows the McDonald’s organization chart structure. Financial structure McDonalds Company is now a large fast foods restaurant company in the world that makes a lot of profits from its sales of products and services. The company’s financial structure is shown by the table below. McDonald's Notes to Consolidated Financial Statements     Segment and Geographic Information   In millions 2013   2012   2011 U.S. $8,851.3 $8,813.7 $8,528.2 Europe 11,299.8 10,827.4 10,886.4 APMEA 6,477.2 6,391.1 6,019.5 Other Countries &   Corporate 1,477.4   1,534.8   1,571.9 Total revenues $28,105.7   $27,567.0   $27,006.0 U.S. $3,779.3 $3,750.4 $3,666.2 Europe 3,370.6 3,195.8 3,226.7 APMEA 1,479.7 1,566.1 1,525.8 Other Countries &   Corporate 134.7   92.3   111.0 Total operating income $8,764.3   $8,604.6   $8,529.7 U.S. $11,711.8 $11,431.6 $10,865.5 Europe 15,096.3 14,223.3 12,015.1 APMEA 6,202.7 6,419.3 5,824.2 Other Countries &   Corporate 3,615.5   3,312.3   4,285.1 Total assets $36,626.3   $35,386.5   $32,989.9 U.S. $875.5 $1,065.0 $786.5 Europe 1,157.3 1,114.7 1,130.1 APMEA 654.6 716.6 614.1 Other Countries &   Corporate 137.3   152.9   199.1 Total capital           expenditures $2,824.7   $3,049.2   $2,729.8 U.S. $503.6 $477.1 $446.0 Europe 627.1 573.5 570.3 APMEA 319.2 296.2 267.5 Other Countries &   Corporate 135.2   141.7   131.2 Total depreciation and   amortization $1,585.1   $1,488.5   $1,415.0 The six year financial statement for McDonalds reveals a continuous growth over the years. For example, the sales in million dollars have been on the rise from the year 2008 with a slight dip in 2009. The growth parameter for assets, expenditure and revenue is presented in the table below. 6-Year Summary                                               Dollars in millions, except per share data 2013   2012   2011   2010   2009   2008 Company-operated sales $18,875 18,603 18,293 16,233 15,459 16,561 Franchised revenues $9,231   8,964   8,713   7,842   7,286   6,961 Total revenues $28,106   27,567   27,006    24,075   22,745   23,522 Operating income $8,764 8,605 8,530 7,473 6,841 6,443 Net income $5,586   5,465   5,503   4,946   4,551   4,313 Cash provided by operations $7,121 6,966 7,150 6,342 5,751    5,917 Cash used for investing activities $2,674 3,167 2,571 2,056 1,655    1,625 Capital expenditures $2,825 3,049 2,730 2,135 1,952    2,136 Cash used for financing activities $4,043 3,850 4,533 3,729 4,421    4,115 Treasury stock purchases(4) $1,810 2,605 3,373 2,648 2,854    3,981 Common stock cash dividends $3,115   2,897   2,610   2,408   2,235    1,823 Financial position at year end: Total assets $36,626 35,386 32,990 31,975 30,225    28,462 Total debt $14,130 13,633 12,500 11,505 10,578    10,218 Total shareholders’ equity $16,010 15,294 14,390 14,634 14,034    13,383 Shares outstanding in millions 990   1,003   1,021   1,054   1,077    1,115 Per common share: Earnings-diluted $5.55 5.36 5.27 4.58 4.11 3.76 Dividends declared $3.12 2.87 2.53    2.26 2.05 1.63 Market price at year end $97.03   88.21   100.33    76.76   62.44   62.19 Company-operated restaurants 6,738 6,598 6,435 6,399 6,262 6,502 Franchised restaurants 28,691   27,882   27,075   26,338   26,216   25,465 Total System wide restaurants 35,429   34,480   33,510   32,737   32,478   31,967 Franchised sales(5) $70,251   69,687   67,648   61,147   56,928   54,132 Training at McDonald’s Company Training is very important in McDonalds and it normally starts as soon as you join the team. Training continues as one advance through the McDonalds system. Employees do learn as they earn. Teamwork, leadership, communication and customer care service skills, time management and responsibility are being offered in the Company’s training. Training is being given to everyone, even the management. Apart from training people with outstanding performances do get awards, for instance, there is award for outstanding restaurant manager which is the Ray Kroc Awards. McDonald’s areas of operations. McDonald being the largest fast foods restaurant company in the world operates in many regions including Asia pacific, Latin America, North America, Europe, Middle East and Africa (Grandori, 2004). It has branches and outlets in over 100 countries and around 35,000 locations in the world. More than 80% of the company is owned and operated by independent local business men and women. The ownership of the company in terms of percentage is 57% conventional franchisees, 24% is licensed to foreign business affiliates and 19% is owned by the company. The company’s head office is located in Oak Brook, Illinois U.S. Other offices are located in Australia, London, Hong Kong, Dubai, Singapore and South Africa. Reference List Colley, J. L. 2003. Corporate governance. New York: McGraw-Hill. Grandori, A. 2004. Corporate governance and firm organization: microfoundations and structural forms. Oxford: Oxford University Press. Research and Markets Offers Report: Mobile Advertising: 2013 - Company and Country Profiles, Analysis and Forecasts. (2013, April 30). Entertainment Close-up , 2, 50. The U.S. foodservice landscape restaurant industry and consumer trends, momentum and migration. 2010. Rockville, Md.: Packaged Facts. Read More