Monthly Archives: October 2014

Reply to Dennis Wong: McDonald’s Keeping up with Recent Trend — Healthy Living

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Though I agree that McDonald’s should be careful with their positioning change, I would like to offer a different perspective. McDonald’s does target people without much time or money; however, this does not mean this target market is not concerned about their health when deciding where to eat. This market might be more than willing to pay a few extra dollars for a healthier option that takes roughly the same amount of time. If there was always a stigma that McDonald’s makes you unhealthy, consumers of all classes would be less inclined to eat there.

Although the prices of meals at McDonald’s have increased over the past ten years, it would be unfair to blame price increases entirely on the “health movement”. Other fast food chains have also been increasing their prices as the cost of food in general has increased dramatically. This makes McDonald’s costs higher so they need to raise prices to accommodate this.

If we look at McDonald’s financials over the past 10 years, we can see that their positioning change has actually been effective. In 2002, the company made a profit of $2.28 billion. Last year, this number was $5.59 billion so there is some merit in their new positioning strategy.

Sources:
http://www.gurufocus.com/financials/MCD
http://www.nbclosangeles.com/news/local/Restaurants-Hike-Prices-Food-266313461.html

 

BC Hydro and First Nations – Site C Debate

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BC Hydro is facing external challenges that could prevent the company from building “a dam and 1,100-megawatt hydroelectric generating station on the Peace River in northeastern British Columbia.” They face a political and legal issue in the sense that the dam would be on Native territory, prohibiting its construction without legal consent. Furthermore, there are environmental implications, as the dam would flood 83 kilometres of land, destroying farmland and wildlife habitat.
This puts the government in a conflict of interest. Clearly, they would want to build the dam because it would generate much needed clean energy. Nevertheless, they are obligated to respect the privileges of the First Nations, who do not want the project to be approved.

Personally, I agree with First Nations people that the dam should not be built. BC Hydro published a poll that suggests most of the B.C. population is in favour of the project. However, the majority of the B.C. population is in the south where people are not directly impacted by the flooding. I would be interested to see how the poll results would differ if more people were directly impacted by the project’s flooding. Perhaps then, the project would be more opposed.

Sources:

http://www.vancouversun.com/news/First+Nation+chiefs+stage+Site+showdown/10215965/story.html

https://www.bchydro.com/news/press_centre/news_releases/2014/site-c-opinion-poll-2014.html

Easyjet revenues boosted by Air France strike

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Easyjet, a British airline carrier, is reporting a £5M revenue boost following Air France’s pilot strike. Easyjet is modelled off of Southwest Airlines; it is a focus strategy – low cost company. The company does not offer connecting flights or complimentary snacks and utilizes quick turnaround times between flights.

Easyjet attracted many of Air France’s customers who had their flights cancelled. Because of its low cost model, Easyjet can offer more flights with cheaper fares. This meant there were many flights available for fliers when news of their competitor’s pilot strike arose. Though this boost was brought on by the misfortune of Air France, it is just one of many positive signs coming from the company. Its fuel bill is expected to be £50M lower than last year, its revenue per seat is expected to grow around 1.5%, and they are about to make their largest ever dividend payment – something that will be viewed favourably by investors.

Easyjet is seeing success because they identified a solid business plan that they have kept consistent for years. Consumers are willing to sacrifice some of the extra service for the low price that Easyjet offers and it is likely the company will continue to grow.

Source:

http://www.bbc.com/news/business-29471988

Adidas Struggles in America: Too Much Fussball, Not Enough Football?

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This summer, Adidas sponsored nine teams at the FIFA World Cup, the world’s most watched sporting event. Two of the teams they sponsored were Germany and Argentina who ultimately played each other in the final. Despite Adidas’ success at that event, the company has been struggling recently.

The root of Adidas’ struggles lies in the U.S., the market responsible for nearly a quarter of their revenue. The company focusing on soccer, a sport that is not entirely popular in North America, as its primary sport, has caused part of their struggle. This has helped top competitor Nike win over North American consumers in the football and basketball industry, two of the most popular sports in the U.S.

This seems to me like the classic battle between the number one and two competitors in an industry. Adidas can try, but it is hard to see it overtaking Nike as the number one brand in competitive areas where Nike has led for ages. If they continue to see negative growth in sales in foreign markets in the long run, it may be in their best interest to focus more on what has made them a global success – the soccer industry.

Source:

http://www.businessweek.com/articles/2014-10-02/adidass-u-dot-s-dot-sales-drop-as-hedge-funds-circle