Business policy and strategy

Summary of McDonald’s strategies and performance

The McDonalds Corporation is a successful global restaurant that operates chains around the globe. The organization has employed global expansion and effective management strategies to enter new markets and gain a share of the diverse, fast food market. It is clear that McDonalds has achieved this massive success. The business has established best practices in the global food industry. However, it has also experienced international growth challenges trends in the recent past. These factors have seen the company perform poorly in its different businesses in both local and foreign nations. (Mourdoukoutas, 2013)

One of the strategies employed by McDonalds is the creation of both customer and brand loyalty for its products and services. Right from the beginning, the founder, Ray Kroc ensured that the French fries customers bought in one restaurant would be similar to another McDonald restaurant by developing a sophisticated operating and delivery system. He proved himself an industrial pioneer who revolutionized the American restaurant industry by imposing discipline on the production of milkshakes, hamburgers, and French fries. The consistency made McDonald’s the brand name that defined American fast food. In the restaurant industry, the McDonald’s is well known for high-quality foods and services evident in the quantity of customers they serve. The making of a uniform and consistent product for customers is one of the most important aspects of McDonald’s success. (Beef Central, 2015)

Irrespective of where customers purchase their products, once they see the ever-present “golden arches” they know exactly they are expected to get. McDonald’s Mission Statement has helped the business to focus on what really matters both to itself and to stakeholders. It has acted as a guide to strategic and routine operational decisions. In addition, it represents the glue that binds all the franchises under the organization together. Another strategy employed by McDonalds is rapid expansion. Right from the beginning, McDonalds expanded by franchising. By 1960, more than 200 McDonald’s outlets were operational. McDonald’s Corporation has been recording declining sales and profits both in its local and foreign businesses. On the other hand, competitors have been formulating strategies to attract more customers to their business. In 2015, McDonald’s reported 30% drop in profit and 11% decrease in revenue for the first three months of the year. It announced hundreds of store closings. The company has been trying to fix its problems particularly in the U.S market that generates 40% of its profit. It is simplifying its menu to appeal to its customers. It is testing all-day breakfast and has slowed down service and focused efforts on reducing errors in orders. (Mourdoukoutas, 2013)

The reality is that McDonald’s recent performance has been poor. In 2015 first quarter, the company recorded US$5.6 billion in global revenue down from $6.7 Billion in 2014 first quarter. The net income recorded amounted to $ 811 million down from $1.2 billion in the year 2013. Part of the business expenses arose from charges linked to restaurant closures. In the US and Canada, 220 restaurants were closed as well as 130 in Japan. The company is expected to close other 350 restaurants worldwide to avoid further loses. McDonald’s largest division in the United States saw a decrease in sales of up to 2.6% reflecting low customer traffic and negative sales amidst high competition. (Mourdoukoutas, 2013)

The operating income decreased by 11% as a result of weak sales and restructuring and closing activities. In its Europe’s division, the business experienced a decline in sales of 0.6%. First quarter operating income decreased by 20% partly as a result of currency and inflation pressures in Russia and continuing macroeconomic pressures facing much of Europe The business’s Pacific, Asia, Middle East and African divisions saw first quarter sales decrease by 8.3%. Asia region had a prolonged impact of consumer perception issues particularly in Japan over food safety breaches. The operating income in these regions decreased due to restaurant closing in response to poor performance.

Oil Industry in Saudi Arabia

Introduction
The oil market is normally oligopoly since the industry normally has a few firms although the large proportion of the output in the industry shared among a few firms. Oil is one of the commodities heavily traded in the entire world. The oil demand, on the other hand, normally prices inelastic as a result of the versatility in its uses. The fluctuations in the oil prices play a significant role in the impacts for the oil exporters/producers as well as the fact that most of the nations around the world are dependent on oil being their chief energy source.

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Saudi Arabia is among the most rapidly growing nations in the greater Middle East regions. The development of the country’s oil sector is the main attribute that has been making it possible for the major improvement of the county’s position in the context of the international community. The evident increase energy needs in the world have contributed to the rapid development of the nations that have major oil productions, with Saudi Arabia the main country. The economy of Saudi Arabia is heavily dependent upon their oil industries. The ministry of petroleum, as well as mineral resources, offers the estimation that more than 90% of the expert in the country are normally from the proceeds of the oil export (Fattouh 2013). The export of oils into the world markets contributes more than 40% of the country’s GDP. Additionally the common assertion is that Saudi Arabia is world’s second largest producer of crude oil as well as an exporter.

For decades, the Saudi Arabian economic development has been dependent on their strong success in the oil industry. The country is world’s largest producer as well as exporter of the petroleum products and at the same time is a second largest producer of crude oil after Russia. Their economy is also dependent on the oil as well as the oil related industries encompassing the refinery of petroleum as well as petrochemicals. At the same time, Saudi Arabia is the biggest consumer of energy in the Middle East countries mainly as a result of their growing population as well as the large-scale development projects they are undertaking (Aissaoui 2013). The large government subsidies on fuel as well as the historically high prices of oil are the main causes that have been stimulating domestic consumption.

Considering the country’s high levels of production, it accounts for approximately 13% of world’s oil output and consequently almost 35% of the overall OPEC annual oil productions. The country has become a major determinant of the world oil demand as well as supply implying that the country’s oil production policies cold have a far-reaching effect on international oil prices (Naimi, 2012). From the 1970s, Saudi Arabia has been using their dominance to influence the prices of oil and consequently further their objectives in the sustenance of the long-term oil consumption. Additionally they have been using their dominance to promote their economic stability in the context of the industrialized world.

Reserves
Research indicates that Saudi Arabia possesses approximately 266 billion of oil reserves that have already proven which accounts for 16% of all the proved oil reserves in the world. Even though the country has approximately 100 main oil as well as gas fields, over 8 of their fields are normally located in the country’s northeast portion (Fattouh and van der Linde 2011). The giant Ghawar oil field is the world’s biggest field in the context of production as well as overall remaining reserves.

Production
The country produced an average of 11.8 million bbl/d of the overall oil liquids in the year 2013. The total production of the petroleum products, however, declined by 0.14 million bbl/d from the year 2012 which was their first decline since the year 2009 (Fattouh and van der Linde 2011). Additionally the country declined it oil production in the year 2013 with the objective of accommodating the non-OPEC production development from the country as Canada as well as the US.

Processing
Saudi Aramco is the firm that operates the world’s biggest oil processing facility in addition to a crude oil stabilization plant. It additionally possesses a crude oil processing capacity of over 7 million bbl/d. The efforts by Saudi Arabia to maintain their leading position in the international oil market has been the foundation of their economic policies from the beginning of the 1990s. Although the country has been making attempts aimed at diversifying their economy, the development of a self-propagating mo oil sector has been a very difficult task for the Saudi planners (Naimi, 2012). The government none the less has been able to offer above-average living standards for its citizens as well as the development of a world-class infrastructure basis as well as the social services. However, the sustenance of these living standards, however, is greatly dependent chiefly on the spending of the government which relies on the revenues from its oil industries. In this case, it is not possible for the Saudi Arabian government to neglect their oil industry as it has proven to be their chief economic engine.

The development of the oil industry is additionally a significant attribute in the promotion of the domestic political stability. In the early production days, it was evident that there was going to be the reduction in the Russia as well as from the other OPEC countries. Consequently, the country realized an opportunity to develop their disproportionate share of the net increment in the crude oil demand over the following years. With the objective of realizing their endeavor, the country focused on expanding their oil industry and consequently augments their production capacities. Also, the country embarked on the plans for upgrading their refineries with the objective of meeting the contemporary environmental standards in the west as well as their growing domestic demand.

The oil production in Saudi Arabia negatively correlated with those of other OPEC producing nations and consequently has been highly volatile although the country has not experienced any political shocks. Saudi Arabia sets its oil output in the anticipation that there is going to be the reaction of the fringe as well as maximize their profits relying on the residual demand (Naimi, 2012). The additional evident that is available from the various literature is that Saudi does not vary the output of their oil industries about the demand changes in the international markets. Instead of Saudi acting as the dominant oil producer, the country adopts a tit for tat strategy in punishing their members who produce beyond their quotas while at the same time rewarding those who normally comply.

Online Buying and Traditional Buying

Currently, technology has continued to develop dramatically. It has therefore made lives more convenient. One convenience is the online shopping which remains renowned as a business strategy on The Internet. While there are differences in several ways, the two methods have many similarities. This paper will compare as well as contrast aspects between online buying and traditional buying. With the increasing popularity of the Internet and the increasing options to online shoppers, more people continue to turn to cyberspace for shopping needs. As a response, retailers continue to enhance online stores, giving customers similar comprehensive experience available at a mall.

Like traditional shopping, online buying gives a great variety of stores. Nearly any store typically found in malls correspond online store with similar items. From departmental stores to specialty ones, many retailers find through Internet search. In both options shopping experience provides a large item selection to choose from. If one is looking for dresses, a simple search end up yielding hundreds of dresses with various styles, sizes, shapes as well as colors. Similar to visiting a specialized department in the store, the criteria for search can become narrowed to present the particular results like cocktail dresses or sundresses. Many retailers give similar deals in store as well as on their website. Like in the mall, online stores always have seasonal as well as end-of-season items, in many case having extra incentives like free shipping for online buyers. The retailer’s site end up reflecting seasonal promotions present in-store and enable buyers to redeem coupons as well as gift cards. Sales and promotions will typically start and end on the same dates both in-store and online.

The other similarity is that both the two shopping options have an interactive experience. Through the enhanced features on many retailer websites, buyers manage to see how an item look like in other color, in different sizes, or send links to friends for feedback. The Victoria’s online store Secret, for example, allows buyers to click on the color swatches to alter the color of items then click through alternate brands to know the exact fit as well as shape. Similar to purchases at the mall, items purchased from online shops also get returned to retailers for a refund as well as an exchange with conditions varying depending on retailer’s policy. Like in mall stores, most online stores allow buyers to return items for a total full refund while others only allow for exchanges. As one would expect, returns as well as exchanges of some personal items like undergarments as well as toiletries get not accepted at malls or online.

The two business methods pose some distinctive features. A basic difference is time operation. For instance, customers may buy and view things every time they feel like because online shops operate on a 24-hour basis as well as seven days a week. Contrary, stores, supermarkets, markets, as well as plazas, begin in limit time like 8 am to 9 pm. Hence, online buying remain more useful as compared to traditional shopping particularly those without time or those always working with a computer like office workers. The Second difference is the mode of the exhibition (Odyssey & the Standard’ 2000). Traditional shopping has direct alternative to a product through touch as well as handling to ascertain their quality as well as their material. On the contrary, online shops only display items on the Internet for customers to image the producers through their mind pictures, information in every produce. Hence, face many difficulties in making choices. As a consequence, traditional buyers remain more attracted as compared to the online customer.

The third difference is the communication. In specific, online buyers have no capacity to negotiate directly with the sellers since they face a screen while traditional buyers have a face to face interaction and can bargain with respective sellers. Therefore, communication in online buying remains more interesting as compared to traditional shopping. Fourthly, the investment also contrasts between the online and the traditional buyers. For example, online business have no huge budget of leasing space, rent employee as well as décor store while traditional shops need more money. Additionally, online business managers to save money in the investment and they manage to expand and produce over the globe in short time, making online buying easy. Lastly, one of the advantages of online buying is convenience. Particularly, online buyer access products not only from within the nation but also from other countries. Hence, buyers get items by their computer irrespective of their area of stay.

To conclude, while there are differences between the two shopping methods, there are many similarities. Many factors propel people to choose the type of shopping suits their demands. Hence, both methods have advantages and disadvantages, and while making chooses between them, it remains critical to consider the situation. Irrespective of the method both the two enables buyers to get what they want and satisfy their consumer needs. Hence, if opportunity dictates, they can shop online, and the same should apply in traditional shopping.