FINANCE

Despite the recessionary conditions and threatening environment worldwide, adding the fact
that McDonald’s is known as one of the largest player in size and global reach which made it more
vulnerable, the company still carried out a strong and exceptional year of growth, having excellent
sales, steady progress in the number of restaurants and an increased market share around the world
in the first quarter of 2009. What’s good about this company’s performance is that it made its
vulnerability into its advantage. Since the company is big, having various locations all over the world,
its total sales and earnings in different regions tend to offset one another. Given this, if domestic sales
are collapsing, it’s possible that they could be strong in in other parts of the world. As a result, the
company doesn’t rely on one key source of income, contrasting from many of its contenders. Its 2009
comparable sales increase marked the sixth consecutive year of its positive sales in every geographic
segment of its business and as a result of its sustained operation, its total stock return for the three-
year period ending in 2009 was ranked number one among the 30 blue-chip companies that comprise
the Dow Jones Industrial Average. In analyzing business trends, management considers a variety of
performance and financial measures, including comparable sales and comparable guest count
growth, Systemwide sales growth, restaurant margins and returns. Constant currency results exclude
the effects of foreign currency translation and are calculated by translating current year results at prior
year average exchange rate because this better represents the Company’s underlying business
trends.
The revenue of McDonald’s involves sales by Company-operated restaurants and charges
from restaurants operated by franchisees. Revenues from conventional franchised restaurants
include rent and royalties based on a percent of sales along with minimum rent payments, and initial
fees. Fees vary by type of site, amount of Company investment, if any, and local business conditions.
These fees, along with occupancy and operating rights, are stipulated in franchise/license
agreements that generally have 20-year terms. The strength of the arrangement between the
Company, its franchisees and suppliers has been crucial to McDonald’s feat over the years.

OPERATIONS
McDonald’s is characterized by customer-focused strategies. In addition, the company’s
achievement is the unswerving outcome of its individuals—the owner/operators, suppliers and
Company employees. Ever since they initiated their “Plan to Win”, the management’s ongoing focus
on improving solidarity, solid leadership, and the support to having balanced lifestyles amongst
managers contributed to achieving the business’s purpose that attracted and retained its customers.
They have a leadership culture that embraces variation and discards contentment. They are
continually focused on what’s working and then alleviating the gauge around the world for the overall
moral of the customers and the company itself. As the company operates globally, its proposed
menus are adapted and changing to the local customers’ desires. They respected cultural differences
and every country has its own policy of developing menu items. Most importantly, McDonald’s focus
is on the quality and speed of the provided services. Considerable assessment is given to advertising
in order to support brand recognition and reputation to further company development. From its
operations to promotion, from customer insights to its menu supervision, in practically every facet of
its business, McDonald’s continually improved as they constantly live with their quote that states,
“better, not just bigger.”
As per the annual report, it has been stated there that the intense effort of the business
regarding restaurant reimaging, some elements on specific parts of their operations were now an
initial elements of each Area of the World business plan. To sum up, their continuous pursuit to
opportunities extended the company’s significance with a certain weight on three key areas: service
enhancements, that will use technology for easier, quick and accurate management service to
customer; restaurant reimaging, to enhance brand perception and drive higher sales and returns;
and lastly, menu innovation to sustain the momentum and create excitement for the customers.