Contemporary development for business
Introduction on McDonald Restaurant
McDonald restaurant was originally started as the small hamburger stand in the Bernardino, California, owed by Dick and Mac McDonald in the year of 1948. In the year of 1954, Ray and Kroc, a multimode salesman visit McDonalds and learn that the MacDonald’s brother are looking to go national wide. Kroc then pursue his interest in the hamburger business and signs a franchise agreement with Dick and Mac opening his first McDonald in Des Plaines, Illinois on April 15, 1955.Now it has more than 30000 restaurants operating in more than 118 countries. As the restaurant chain is originated from U.S nearly 45% of the franchises are in U.S and McDonald has more than 45 million daily customers worldwide. More than 80% of the restaurants are run by franchisees or affiliates. Even though most of the branches has dine-in and drive through facilities, McDonald has quite a few standalone restaurants in airports, bus or train stations and shopping malls. McDonald competes with the fast food seller such as burger king, Subway, KFC etc.
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The key success factors of McDonald are Promotional offers, availability, affordability, marketing strategies and customer range. As far as known from the given information McDonalds follows two sources of income and they are as follows: – Sales made by company owned restaurants and – Loyalty and rental income from the franchisees. McDonald as a green organisation: 2011, the McDonald is converting its UK fleet which contains more than 155 trucks which will be running on bio-fuel made from recycled vegetable fat coming from more than 900 restaurants. According to the speculation by McDonald’s, this transformation will save more than 1650 tonnes of carbon emission per year. McDonalds now sell Rainforest Alliance coffees, and are known that joint scheme with ‘Friends of the Earth’ to eliminate polystyrene from their restaurants. Now all of the food containers and packaging of McDonald’s are made from recycled paper and plastic and can be recycled again. Financial reports The following table shows the financial reports of the McDonalds for the year of 2010 and 2011 Year 2010 2011 Total revenue $ 24,075 million $ 27,006 million Net income $ 4,946 million $ 5,503 million Total sales $ 61,147 million $ 67,648 million Business transformation system
It is a continuous process which is needed to any business organisation to implement in its strategy in order to reach to the objectives and achieving its goals. It is important because this is a process of transformation that formed output as goods or services from inputs while raw materials, machineries and labours are used as the main inputs. The business includes the following: Therefore, input includes human resources, financial resource, human resources, machinery & technology and land. Whereas, outputs are the information and the ideas collected and goods & services. Internal and external environmental factors of McDonalds: The internal environmental factor involves everything within the organisation like culture and structure of the company, human relation, policies, procedures, experience and skills of the workforce. Whereas the external environmental factors goes more deeply they includes political, economic, social, technological, environmental and legal environment of the market i.e. PESTEL. PESTEL analysis:
Political: – Implement and enforce laws and regulation – Each of the emirates has its own governmental institute – Social welfare attitudes – Trading blocks and foreign trade attitudes. – liberal democracy( individual freedom, free election) – absolutist( Saudi Arabia) – communist(one political party like china) – theocratic( Iran) McDonald’s has it different policies rules and regulations, and because of that it has its own license of restaurants which is controlled by the government for health, workers protection and environment. Government also controls the issuing of new licence for opening a new fast-food restaurant and it works for the franchisees as well. There were some violations of religious laws pertaining to the contents of food. According to them the meat used by them in their foods was completely hateful to the Hindu religion in the said market. And also same situation were faced in Pakistan for using ham and pork in there foods because using this content are not accepted by the peoples as it is in opposition to Muslim religion. So, this is also one type of political factor faced by McDonald’s. Economic: – Product pricing – Purchasing power of the customer – Shareholder dividend – National economic trends including pay rate, interest rates, inflation, GNP and unemployment. – Trends of internal economic McDonalds’s have its own problems they are also involved in economic factor. Branches and franchises of fast food chain like McDonald’s has to face many problems due to economic factors such as inflation, exchange rates, recessions, income and interest rates. As an international business McDonalds is required to deal with a lot of economic variables other than its macro environment. International sourcing of the materials of McDonalds requires being aware of the global currency exchange and supply charges as McDonalds import most of the materials it uses due to the fact that most of the local suppliers cannot supply in abundant to the demand of its product. So any upside in currencies in USD will impact on the cost of purchase. While operating in different countries McDonald has to face the local government regulations on tax as most of the governments has different types of taxes that the industry needs to comply in order to continue business. Social: – Population growth health, public opinion, attitude of workers, language – Religious and moral value – Work and leisure attitudes – Education and other cultural institution When McDonald’s start their business in Saudi Arabia people was not very much habituated with fast food but they have gradually changed their lifestyle and accept fast food. As McDonald’s offer Halal food in Saudi Arabia so the people especially young generation accepts fast food very quickly. Public opinion is a very important factor for McDonalds. Due to the difference of public opinion McDonald’s food menus are different in every country.
Response to the public pressure McDonalds added new food items in their menu. In UK due to the increasing demand of the provenance food McDonald’s added milkshake and coffee to their food menu the young consumer’s looks for a place where they can use wireless internet and a cosy and relaxing environment where they can hang out with friends or family members while having food at the same time. Till today McDonalds has shown good efforts in localising its menu in respect of the religious beliefs and lifestyle of the local consumers. Technological: – New materials like handset for the use to ensure the operations are controlled and smooth or in use of placing orders – Innovative developments – Technology transfer McDonalds seeks the competitor’s innovation and improve itself in term of integrating technology in managing its operation. For example in inventory system, supply chain management system to manage its supply, easy payment and ordering systems for its customers and wireless internet technology. Implementation of technology can make the management more effective and cost saving in the long term.
This will also make customer happy if cost savings results in price reduction or promotional campaign discount which will benefits them from time to time. Environmental: – Government introduces new legislation( e.g. increase in minimum wage) – Changing attitudes to the environment – Innovation of new product – Energy consumption – Waste disposal – Proper farming McDonalds franchise use McDonald ingredients which help to keep the food world class standard and fresher. In UK & USA McDonalds give priority to keep the restaurants environment friendly. They took initiative to reduce car-bon in there restaurants, use environment friendly element for serving food items Our world is getting concern on environment issue and business operating here should not just care for profit, but careful usage of world resources for sustainable development and care for environment safety and health for our future generation. Critics and concern from all public or activist should be review and support if necessary to ensure we play our social responsibility better. Legal: – Financial regulation – Terms and condition of trade – Choice of production techniques – Product safety legislation – Health and Safety – Employment law is carried out by 4 different system which are civil law(socialist law), common law( criminal and civil law), theocratic law, customary law. As a certified fast food operator, there are many regulations and procedures that McDonalds should follow.
For example is the Halal certification that becomes a concern to Muslim consumers. McDonalds should protect its integrity and consumer confidence by ensuring all materials and process are as claimed or must followed. Other legal requirement that the business owner should follow as stipulated in laws are such as operating hours, business registration, tax requirement, labour and employment laws and quality & environment certification (such as ISO) in which the outlet has been certified. The legal requirement is important because the offenders will be fined or have their business prohibited from operating which can be disastrous. Porter’s five forces is used to analysis the organisation’s external competitive environment a. Threat of new entrants: The threat of new entrants is very high in the fast food industry as there are no legal barriers which would keep them from entering the industry. The major barriers in which a firm faces in the industry are the economies of scale and the access of the distribution. To uplift the brand the company has to invest large amount of capital for the advertising and also on the marketing. There are lots of competitors like burger king, KFC which are making same kind of product in the reasonable price. Franchise options also make is easier to enter the market, however, it can cost upwards of millions of dollars for all the equipment, licensing, and the property. This costly barrier is the most probable reason that maximum people do not enter this business. The food-service industry doesn’t have any exit barriers, which allow firms to easily leave the industry if they’re not successful, at virtually only the cost incurred. b. Threat of Substitute Products McDonald’s is known for their famous French Fries, Big Macs, seasonal food and Happy Meals.
The threat of substitute products and services is high. Since McDonald’s can be categorized as a fast food service franchise, we have to take into account other fast food restaurants’ products and classify them as substitute products. Restaurants with similar hamburger substitutes include nationwide chains Burger King, KFC etc. Competitors of the industry also try to compete with similar products; therefore, leading to price wars. McDonald’s created a pound Value Menu, in response to competitors likes as 99 pence mayo chicken. Overall, the industry has tried various product differentiations in order to accumulate greater market share, but most consumers are drawn to the classics for which the establishment is known for. However, growing concern to achieve a healthier society has led McDonald’s, as well as other competitors, to make extensive menu changes, in order to conform to a more concerned society. McDonald’s is doing more and more to compete with health focused restaurants like Subway. c. Bargaining Power of Customers: The industry should maintain a hold on the market by conforming to a changing society as well as maintaining high quality.
The bargaining power of buyers is low in the industry as well. McDonald’s, Burger King, among others, are highly competitive with their product pricing as it stands. Price floors are already being experimented with through dollar menus at McDonald’s and Burger King, and 99¢ menu at Wendy’s T US, at which some of these companies actually operate at a loss for each sale from this value menu. Therefore, with low prices already established in the industry, the bargaining power of buyers will be low because fast food restaurants already offer selections at various price points that cater to all budgets. d. Bargaining Power of Suppliers: It can be said that McDonald’s has a large bargaining power because of the fact that they are spending billions money in food and paper..
The suppliers that sell to McDonald’s have a strong voice also because of the fact that the switching cost for McDonald’s as a whole would be so tremendous that they would not want to make that change, so any problems or disputes would be worked out with their suppliers. With the competition and the number of buyers in the market place, losing a large company like McDonald’s could destroy any supplier. But there are other prospects out there to buy that product like Subway, Burger King and a few others that they may be able to salvage their losses. As for the paper goods that McDonald’s buy from the manufacturers, if McDonald’s were to change manufacturers the supplier could easily change their manufacturing to note book paper by just re-adjusting the machines but it would come at a great cost. e. Rivalry among existing firms: Rivalry among Firms Currently in the fast food industry, there is intense competition for growth in the market. The market growth is rising because of the convenience factor and busy consumers not having enough time to cook a meal.
The restaurant industry is also growing rapidly due to opportunities in other global markets. In McDonald’s case, they actually have a competitive advantage because they have already entered many different countries and are succeeding in these countries. Each firm within the food-service industry is susceptible to losing customers because there are relatively no switching costs for consumers, therefore the industry has to rely heavily on their brand image and quality of products. McDonald’s has a number of competitors; however they are currently the leader of the industry in market capitalization. Globalisation
Held et al (1999) define globalization as, “The widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual.” They see globalization as pervading all areas of society.
Process of globalisation:
Globalisation is a process of increasing and deepening interactions between individuals and organization across the globe, facilitated by advancing communications technology and the opening of markets to trade and investment.Globalization involves the creation of linkages or interconnections between countries. It is usually understood as a process in which barriers (physical, political, economic and cultural) separating countries and regions of the world are reduced or removed. This facilitates and stimulates exchanges of goods, services, money and people. This removal and reduction of barriers is called liberalization. As these exchanges grow, countries and businesses become increasingly integrated and interdependent. Globalization promotes mutual reliance between countries. Globalization can have many advantages for business such as new markets and increased choice of suppliers of goods and services, lower prices, cheaper locations for investment and cheaper labor.
Globalization also carries dangers for businesses such as: increased competition, dependence on foreign suppliers and markets increases vulnerability of events in foreign economies and markets. Countries may find that globalization leads to increased specialization and the benefits of economies of scale but may also lead to increased dependence on a smaller range of products and leave their economies vulnerable to external events. Globalization is something of a misnomer because most foreign trade and investment takes place within and between the three great economic blocs. Western Europe dominated by the European Union member’s states NAFTA (North American Free Trade Association) – the USA, Canada and Mexico Japan
These three economic blocs are called the ‘triad’
Most trade for these countries is internal to their bloc, for example, NAFTA is not heavily dependent on trade with either Japan or Europe. These three economic blocs remain very important in terms of economic output, trade and investment but they are being challenged by ‘emerging countries’ such as China and India. The term BRIC countries have been coined to include Brazil, Russia, India and China as the main emerging economies. The term G2 has been coined to include the USA and China.
Indicators of Globalization
a. International trade in goods and services: Between 1950 and 2006 world trade grew 27-fold in volume terms, three times faster than world output therefore we can conclude that international trade became an ever more important component in national and global economic activity. Multi-National Corporations (MNCs) are major traders and account for a large proportion of international trade. Often this is trade between subsidiary companies within the MNC. Some countries are particularly dependent on international trade. For example, exports and imports account for more than two-thirds of China’s output and more than half for the UK but only around one-quarter for the USA. The UK depends on only two countries for almost a third of its exports (Germany and the USA). Events in Germany and in the USA are beyond Britain’s control but could have major effects on the UK economy. Source: The World Trade Organization (2007) World Trade Report b.
Financial Flows: Second main indicator of globalization is the transfer of money capital across borders. This can take two forms: FDI and FII. Foreign Indirect Investment or international portfolio investment is the purchase of financial assets in another country: stocks or shares, bonds or even currency. Foreign Direct Investment is when a firm establishes, acquires or expands production facilities in a foreign country. Most FDI flows between rich developed countries mainly because of their large and affluent markets. FDI grew spectacularly during the 1990s, fell back after 2000 and recovered by 2006.The 2008/9 economic recession. Big MNCs are the most important foreign direct investors and table 1.1 in Hamilton and Webster (2012) shows the top 25 non-financial MNC by foreign assets measured in millions of dollars and number of employees.
1. General ElectricUSA US$401,290 mn. foreign assets
2. Shell Group UKUS$222,324 mn. foreign assets
3. VodafoneUKUS$201,570 mn. foreign assets
4. BPUKUS$188,959 mn. foreign assets
Note that the countries of origin are almost entirely USA, EU and Japan although BRIC companies are coming up the list e.g. Hutchison Whampoa Hong Kong. c. Migration: The liberalization of markets has not been matched by a liberalization of labour flows. Barriers to migration have not been dismantled and in many cases have increased. Despite this migration form developing countries into developed countries have increased. Most migration is into the USA and into Europe. For example, there are an estimated 43 million immigrants living in the USA (6 or 7 million illegal?)Migrants may be economic or may be political refugees.
At time of labour shortages some countries have welcomed immigration but at other times immigration may be severely restricted or may be limited to those with desirable skills on migration. Other mass movements of people include the expansion of global tourism. Globalization is often seen as an economic phenomenon involving trade and investment but it also has other social and cultural dimensions. Attitudes and behaviour e.g. attitudes to work
Mass media e.g. film, television, news
Diet – increased internationalisation of foods
Education e.g. distance learning, study abroad, foreign investment by educational firms Work practices – e.g. Japanese work practices introduced to UK firms Sport – Brazilian footballers playing for English clubs wearing Chinese made kit Health – SARS, swine and bird flu
Crime – international crime e.g. Nigerian internet scams
Religion – e.g. Muslims in Spain and Christians in Afghanistan Drivers of Globalization: In 1983, Levitt identified a number of drivers of globalization. a. Economic: benefits of economies of scales. Availability of cheap labour b. Technological: communication and transports
c. Political/Regulatory: GATT/WTO – reduced trade tariffs
Regional free-trade areas, customs unions and common markets e.g. EU, NAFTA, ASEAN, Caricom, etc Collapse of communism in the former Soviet Union and Eastern Europe Deng Xiaoping’s market economy reforms in China
Levitt T. (1983) the Globalization of Markets, Harvard Business Review, May-June, 19-102
Barriers to international trade
In the preceding discussion on international trade we assumed that there was free movement of goods, services and capital between countries and regions. In practice many countries try to create barriers to trade. This may occur in an attempt to: Protect local companies and their employees.
Encourage local production and protect new industries.
Encourage exports and so increase the flow of inward payments. Discourage imports and so reduce the flow of outward
Prevent ‘dumping’ of foreign goods, where goods are sold at low prices to encourage new production or ailing industries in the other country. Promote political objectives (for example, stopping trade with countries with a poor human rights record).
Types of barrier
Barriers may be of a number of types. The most common are:
Price based: Examples include the additional tariff added to tobacco products entering the US, or the additional tax on alcohol in the UK compared with the rest of the EU. The latter is example of a hidden tariff – Britain’s membership of the EU prevents it from setting up formal barriers to trade with other EU countries. International price fixing. Groups of countries (such as the Organisation of Petroleum exporting Countries OPEC) or businesses (for example, British fine art auctioneers Christie’s and Sotheby’s) may try to act together if they dominate a particular market. We will consider this topic more closely in Unit 3. Quantity limits. In an attempt to protect its own producers, a country may set limits on the quantity of a product that may be imported. Financial limits. Countries may set limits on the flow of currency, or act to alter the exchange rate to discourage adverse capital flows.
Financial environment: Whether your organisation imports materials or goods from abroad, exports products or services, or is a large multinational enterprise, you need to consider the effects of costs of transferring funds from one currency to another. You also need to assess the future effects of changes in exchange rates. The first section of this unit looks at the operation of currency markets, and the relationships between inflation, money supply and exchange rates. The second section then looks at ways in which changes in exchange rates may affect business. In section three we look at the changes that have occurred in Europe during the development from a free trade area towards full economic union. In particular we consider what changes would be needed for the UK to fully join the economic union,
and the effects that this would have on UK businesses. Finally we consider the key financial aspects of foreign investment. For example, we look at questions relating to the sources of funding for that investment and the transfer of funds from one currency to another. Foreign exchange markets: When there is trade between organisations in two countries, they must trade international currencies. The exchange rate is the rate at which one currency is converted into another. The foreign exchange market is the market in which those exchanges of currency are made. It has no physical existence; it is made up of the currency dealers in the world’s major banks and other organisations. Dealers distinguish between a spot rate, for which payment will be made within three days, and a forward rate, the rate at which payment will be made at some date in the future, say 30, 60 or 90 days ahead. Forward rates may be used by three groups of people: · Hedgers: those who want to cover themselves against future changes in the currency rate. For example, if I intend to buy a shipment of goods from a country in three months’ time, I could agree a rate now for that future date. I would not then have to worry if there was a change in the exchange rate which reduced the value of my country’s currency. · Arbitragers: those who try to profit from differences in interest rates in different countries. For example, if I see that another country offers higher interest rates than my own, I could invest my savings there. But there is a risk that the other currency will fall in value and wipe out the benefits of my investment. To reduce this risk I might agree to pay for my investments at the 90day forward rate. · Speculators: People and organisations who try to identify poor predictions in the forward rates. If I believe that the 60day forward rate is too low, I could buy at that rate and hope to profit by selling on the spot rate that actually occurs in 60 days’ time. Supply and demand for a currency
The foreign exchange market works on the basis of supply and demand, just like any other market. Currency will flow out of a country when tourists leave to have holidays in a foreign country, when a company transfers capital to build a factory abroad, and when the country imports goods or services. If the outflow of currency is greater than the inflow, over an extended period, then demand for the currency by other countries will decrease. As a result the value of the currency will fall. Economists
consider the separate exchange rates between individual countries’ currencies (for example, the British pound sterling against the euro, or the Singapore dollar against the Japanese yen). To consider the overall trends in international finance, they also compare each currency against a weighted average of exchange rates. For example, a UK economist will give greater weight to the euro and the US$, since these are the UK’s largest export and import markets.
Inflation: it is an increase in general price level. It can affect the international competitiveness of business and countries. In order to contain inflation governments dampen demand for goods and services and/or control the growth in the money supply. Both of these can weaken economic growth Interest rate: it is the price paid to borrow money. It influences the cost of borrowing to the business. Exchange rate: the price of money expressed in anther. It influences international competitiveness and the value of foreign sales, profit and assets.
The competitive environment
Every business operates in unique market conditions. However, it is possible to identify general characteristics that apply in many situations. This unit begins by looking at the different market structures that exist, from perfectly competitive market to perfect monopoly. We then look at the results that are likely to occur if a business takes a particular action in each of the types of market. For example, what would happen if a business in a perfectly competitive market reduced its prices? What would customers do? What would the competitors do? And what would be the long term results? The second section looks at how governments react to different types of markets. How will it affect their citizens if a monopoly exists? What can governments do? How can they support their own companies against newly developing markets, or in declining markets? The final section then considers these questions from the viewpoint of the individual company. How can they analyse their competitors and select a suitable positioning strategy that will create competitive advantage? Types of market: Using the terms used in Porter’s model, our discussion of the various types of market will start by considering the number of existing firms, the barriers that may deter new
entrants and the threat of substitutions. Perfect competition
In this, the most competitive market structure:
There are a large number of buyers and sellers, so no one buyer or seller can dominate. All of the goods being bought and sold are identical.
Everyone involved has full knowledge of all of the various prices and costs. There is perfect mobility; Customers can switch freely to other producers, and producers can switch easily to use the resources to create other products. There are no barriers to entering or leaving the market.
In a perfect marketplace of this type, the rules of supply and demand would operate perfectly. They would be based on the whole market, not on the power of one buyer or one seller. No one seller could charge higher prices than the others; The buyers would simply migrate to other sellers. As a result, the prices that each seller could charge would all be the same. Operating in a perfect market, the individual organisation has no power at all. It must charge the same price as its competitors. There is no point in spending money on advertising, since everyone involved knows that all goods have the same value. No one seller is likely to make more, or less, profit than others, except in the very short run if they suddenly reduce their prices and capture a large share of the market. Monopoly
A monopoly is the opposite of a perfect market. In a pure monopoly: There is only one seller, who supplies the whole market.
There are no substitutes.
The barriers to entry are high enough to exclude any competitors. In a monopoly, the company has absolute market power and can charge whether it thinks each segment of the market will pay. There is no need for advertising, as they are the only seller. Profitability is high. Where a monopoly exists, it is generally believed that prices will be higher, that customers will have less choice of goods, and that the company will have less need to innovate. In practice, the situation may be more complicated. Taking each of those points in turn, you could also argue that: Prices under a monopoly can be kept low by fully using the economies of scale. Choice may be greater if the company does not have to cater to the widest section of
the market. Under perfect competition, radio stations would be unlikely to offer programmes catering for minority tastes, such as discussion programmes, jazz or programmes focused at disabled people. A monopoly may innovate to gain higher profits in future; it may also have greater resources to devote to innovation.
An oligopoly exists where a small number of companies dominate the market. In many countries, a small number of car manufacturers and oil companies form oligopolies. For example, petrol retailing in the UK was, until the late 1990s, dominated by Shell, BP and Esso. A worldwide example occurs in the soap powder industry, where Lever Brothers and Proctor and Gamble dominate. As with monopolies, large oligopolies may not be long lasting. In the UK, the large supermarket chains have entered both the petrol retailing and soap powder markets. The supermarkets’ success in the petrol market was a result of reducing their margins, and discounting to customers who had already visited their stores. In the sale of soap powders, the supermarkets’ size enabled them to get large discounts from the producers, create home brand items and offer large price discount. Monopolistic competition
Although this term may seem to be a contradiction of it, this approach is actually the aim of many companies in today’s market place. Consider the high-street clothing retailers. Many of them aim to be the monopoly provider for their own market segment. Those companies that have tried to satisfy a wide range of markets have found difficulties, as shown by Marks and Spencer. In a monopolistic competitive market, each company will have little overall power, and prices will be relatively fixed within each market segment. To clearly identify the market segments, there will be heavy advertising. Profits may be high in the short term, but over longer periods will be affected by the entry of competitors into particularly successful segments.
The eco-logical environment
We begin by identifying the elements of the natural environment. They include air, land and sea, as well as ecosystem and climate. These elements interact
in ways which scientists are learning more about as time goes by. It has become clear that the shift from agricultural to industrial production has been major factors in accelerating the environmental degradation. Expanding scientific knowledge and greater awareness of the damaging changes taking place have led to new strategies on the part of business, as well as government action at national and international levels. On the other hand, national governments, especially in emerging economies, are keen to promote industrialization for its economic benefits, despite fears about environmental degradation and climate change. Problems
Resource depletion: urbanization, loss of habitats, loss of herbs etc. Pollution and environmental degradation: harmful infections which can be transmitted through air, water and soil. E.g. air pollution in china Global warming: climate change takes a form of global warming. Global warming is known to be built by the damaging built-up of number of greenhouse gases particular co2, which causes the depletion of the ozone layer of the earth’s atmosphere. Climate change is global in its causes and its consequences. In thus differs essentially from air pollution, as climate impact are independent of where in the world the greenhouse gases are emitted (HM Treasury,2006) Carbon reduction emmission
McDonald’s is one the world’s most known brands in the world. McDonald’s operate over 1,000 restaurants in the UK serving over 2.5 million customers a day. 1. Government Policy: UK government have to legislate to put a cap on carbon emissions (to stop factories producing carbon dioxide) and also deforestation and takes steps to promote new forest growth, promote recycling, cut the use of chemical fertilizers whose run-off pollutes our waterways, government should legislate to put a price on carbon. So that polluting industries will be encouraged to cut their emissions. Especially for big company like MC. Encourage take-up of renewable energy. Fund research and development technologies and also governments need to develop some sort of prize fund with large rewards to attract knowledgeable scientists to come and help in the research fields. Issue of government: The 2008 Climate Change Act established the world’s first legally binding climate change target. We aim to reduce the UK’s greenhouse gas emissions by
at least 80% (from the 1990 baseline) by 2050. setting carbon budgets to limit the amount of greenhouse gases the UK is allowed to emit over a specified time using statistics on greenhouse gas emissions and further evidence, analysis and research to inform energy and climate change policy using the EU Emissions Trading Scheme (EU ETS) to deliver a significant proportion of the UK’s carbon emission reductions between 2013 and 2020 using a set of values for carbon to make sure project and policy appraisals account for their climate change impacts show the UK is committed to taking its share of responsibility for reducing global greenhouse gas emissions by developing negotiations on a post-2012 international climate change agreement
2: Consumer demand: demand for green products, service, and companies. In the United Kingdom, increasing numbers of people have adopted a vegetarian diet since the end of World War II. The Food Standards Agency Public Attitudes to Food Survey 2009 reported that 3% of respondents were found to be “completely vegetarian”, with an additional 5% “partly vegetarian (don’t eat some types of fish or meat).vegetarians constitute 7% to 11% of the UK adult population (4 million people).the Vegetarian Society estimates that there are between three and four million vegetarians in the UK. Islam today it is the second largest religion in the country with results from the United Kingdom Census 2011 suggesting that by 2011 the total Muslim population had reached 2.7 million, 4.8% of the total population. They only eat halal meat. They don’t eat pork. 3: Climate change impact weather (adverse weather conditions): Droughts –Less summer water for farms, cities and forests, less water for irrigation due to earlier high river flows and decreasing soil moisture. Floods—Warmer temperatures result in more winter precipitation falling as rain rather than snow, higher winter stream flows with more floods. In various reports, Average global temperature will rise 0.7 to 2.2 degrees Fahrenheit by 2030 and a 2.5 to 10.4 degrees Fahrenheit over the next 100 years (Intergovernmental Panel on Climate Change).Nature; it attributes the changes in weather conditions to high levels of greenhouse gases in the atmosphere. It forecasts that Europe (including the UK) may experience even hotter summers in the future. Greenhouse gas effect: Carbon dioxide is a greenhouse gas (GHG) that is playing an increasingly prominent
role in Earth’s climate. Human-generated emissions of carbon dioxide and other GHGs impact the balance of several global climate processes. Livestock is a main part of McDonald’s supply chain, which accounts for about two-thirds of its carbon footprint. A report by the United Nations Food and Agricultural Organization in 2006 found that the raising of animals for food accounts for 18 per cent of greenhouse gases globally. Fibre and packaging is long-standing. Approximately a third of our packaging comes from sustainable sources that we can document now; we have plans to improve that. Those are the areas with tangible results. In order to reduce carbon dioxide, on palm oil they’ve committed no buying a 100 per cent certified palm oil by 2015. They are working through coalitions and collaborations, such as the sustainable agricultural groups in Europe. We are the chair of the working group that is addressing sustainable beef and their task is to set up ways to measure the greenhouse gas emissions of beef and cattle. We’re recognizing and rewarding suppliers with the best sustainable practices. Carbon reduction emission
McDonald’s has worked to minimize their carbon footprint for a long time. Over 30 years ago, they initiated energy conservation measures. In 1990, they established Global Environmental Commitment, a program specialized in finding ways to be make McDonald’s be more environmental friendly. During the 1990s alone, they eliminated 300 million pounds of product packaging by redesigning items and reducing materials used. In the U.S. last year alone, McDonald’s purchased more than $530 million in recycled materials for our packaging. At McDonald’s, environmental impact is one of five criteria used in the process of developing food and beverage packaging. They consider these key environmental priorities for packaging: Minimizing weight
Maximizing use of recycled materials
Preference for renewable materials
Minimizing the amount of harmful chemicals used in production Reducing CO2 and other greenhouse gas emissions
Maximizing end-of-life options such as recycling
Besides recycling, McDonald’s has also built its restaurants
more friendly to the environment. McDonald’s first green restaurant opened in Umea, Sweden in 2000. In August 2008, McDonald’s USA opened a new green restaurant in Chicago, Illinois. The difference of green elements vary by location, but generally, focus is on efficiency in the design and construction of the restaurant, reduction of energy and water use in equipment and operations, incorporation of green options in the restaurant, and features that enhance indoor air quality and promote natural lighting. McDonald’s has planned to later this year to build these green restaurants in Brazil, Canada and France. Its impact on the environment is most significant in our restaurant operations in the areas of energy use, greenhouse gas emissions, water consumption and waste generation. We continue to concentrate on these key areas in performance management and improvement targets, and we have a number of new incentive and trials underway to help us meet our environmental goals. Energy use and greenhouse emissions: In our operations, energy use accounts for the bulk of C02 emissions so our focus in this area is primarily on reducing electricity consumption. We participate in the federal government’s Energy Efficiencies Opportunities (EEO) Program and our EEO public report outlines our energy usage and identifies opportunities for improvement. We are also required to report our greenhouse gas emissions under the federal government’s National Greenhouse and Energy Reporting Act and the results for this are published online by the Department of Climate Change. Water usage: We have participated in the Sydney Water Every Drop Counts business program since 2001 and currently 194 restaurants in the Sydney Water Catchment are registered with the program. Participation in the program helps monitor water usage, identify opportunities for improved water management practices and helps implement water saving measures. Keeping the streets clean: Our Clean Streets program includes initiatives designed to keep the area around our restaurants tidy and clean. The key to this is the Litter Patrol program which is a structured and regular task for crew members who pick up litter from within the restaurant grounds and in neighbouring streets. Within the Clean Streets program we also use packaging, restaurant tray mats and car park signage to remind our customers not to litter. McDonald’s corporate operations need to set the example for our restaurants, and they do. Similar energy and water saving products are installed in the offices as those in
place in the restaurants. These include rain water tanks, dual flush toilets, water restrictors on taps and sensor lighting in the car parks.