It is important that companies understand that the economic sector they represent follows the same business cycle. Therefore, it is difficult for companies to expand their business during periods of recession in the economic sector they represent. But they can expand their business during recession periods of other business sectors, represented by products from indirect competition. This situation can be observed in McDonald's situation.
This can be an explanation of the fact that the company's sales have significantly increased during the crisis. The incomes of most people have been reduced, which means that their purchasing behavior has modified. In such cases, people usually spend less. This means that they purchase less, or they purchase cheaper products. In the case of the restaurants industry, it is obvious that these people cannot afford to eat out in traditional restaurants as much as they used to before the crisis. McDonald's provides a cheaper way of eating out. The smaller prices of the fast food chain in comparison with traditional restaurants have attracted the customers that cannot afford to eat in such restaurants. This situation has determined the sales of McDonald's to increase.
Another idea refers to employment and its influence on the fiscal and monetary policies. Some of the government's strategies are oriented towards reducing unemployment. The level of unemployment determines the government to focus on measures that stimulate jobs development. Such measures refer to modifying interest rates in order to control the money supply and to increase employment levels. The level of taxes can also be influenced by these measures. This is an important issue that affects the activity of McDonald's. If taxes increase, the company's profits are likely to reduce.
Financial Evaluation
The analysis of the financial situation of McDonald's reveals the fact that this is a profitable company. The company's revenues have increased by 27%, reaching $22.8 billion. Its operating income increased by 9%, reaching $3.9 billion. This reflects the fact that McDonald's is characterized by a strong financial situation that allows the company to expand its business.
Other indicators that can reveal the financial situation of the company is represented by its recruitment and selection process. In other words, if companies are hiring employees it means that they are developing, they are expanding their business, and their increased incomes allow them to hire people. If companies are reducing their number of employees, this situation reflects the fact that incomes are reduced and the company in case is not able to pay the salaries of their employees.
In the case of McDonald's it is difficult to make evaluations based on this indicator. This is because the different types of ownership do not allow to develop a correct idea of its human resources situation. The situation of McDonald's franchisees and affiliates does not reflect the situation of the corporation owned restaurants. It is important to establish the evolution of the human resources in the restaurants owned by the company, and not in those owned by its partners.
Reference list:
1. Annual Report (2011). McDonald's. Retrieved May 23, 2012 from http://www.aboutmcdonalds.com/mcd/investors/annual_reports.html.
Macroeconomic Indicators
1. GDP
Consumer spending = $1,000
Government expenditures = $300
Investments by industry = $150
Excess of exports over imports = $200
GDP formula:
GDP = consumer spending + government expenditures + investments by industry + excess of exports over imports
In this case, the GDP = $1,000 + $300 + $150 + $200
GDP = $1,650
2. If the domestic energy production is increased, this leads to reduced oil imports from other countries. In this case, the excess of exports over imports increases, which means the GDP increases with this number.
Inflation
1. CPI1 = 100
CPI2 = 104
Rate of inflation formula:
Rate of inflation = ((CPI2-CPI1)/CPI1)*100
In this case, the rate of inflation is:
Rate of inflation = ((104-100)/100)*100
Rate of inflation = 4%
2. CPI1 = 231
CPI2 = 234
Rate of inflation = ((234-231)/231)*100
Rate of inflation = 1.2% or 0.012
Unemployment rate
1. Total workforce = 20,000
Unemployed people = 2,000
Unemployment rate = (number of unemployed people / number of people in the civilian workforce)/*100
In this case, unemployment rate = (2,000/20,000)*100
Unemployment rate = 10%
2. Total workforce = 20,000
Unemployed people = 2,000, of which 500 are not looking for work. Unemployed people must be looking for work in order to be considered unemployed. In this case:
Unemployed people = 2,000 -- 500 = 1,500
Unemployment rate = (number of unemployed people / number of people in the civilian workforce)/*100
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