Podcast
Questions and Answers
What is McDonald's goal regarding coffee trends in the US?
What is McDonald's goal regarding coffee trends in the US?
McDonald's aims to capitalize on the coffee trend by establishing coffee credentials and attracting a different customer base.
By how many additional sites does McDonald's plan to expand globally by 2027?
By how many additional sites does McDonald's plan to expand globally by 2027?
McDonald's plans to open an additional 10,000 sites globally by 2027.
What challenges does McDonald's face in establishing its coffee business domestically?
What challenges does McDonald's face in establishing its coffee business domestically?
McDonald's faces challenges in establishing its 'coffee credentials' in the US market.
What is the difference between organic growth and external growth for companies like McDonald's?
What is the difference between organic growth and external growth for companies like McDonald's?
List one reason why businesses pursue external growth.
List one reason why businesses pursue external growth.
What are some risks associated with external growth?
What are some risks associated with external growth?
How does franchising contribute to McDonald's growth strategy?
How does franchising contribute to McDonald's growth strategy?
Why can organic growth lead to diseconomies of scale?
Why can organic growth lead to diseconomies of scale?
What is the definition of internal growth for an organization?
What is the definition of internal growth for an organization?
Name one advantage of pursuing internal growth over external growth.
Name one advantage of pursuing internal growth over external growth.
What role does retained profit play in internal growth?
What role does retained profit play in internal growth?
How does McDonald's strategy with 'CosMc's' reflect internal growth?
How does McDonald's strategy with 'CosMc's' reflect internal growth?
What financing method is still considered a form of internal growth despite involving a third party?
What financing method is still considered a form of internal growth despite involving a third party?
List two reasons why organizations pursue internal growth.
List two reasons why organizations pursue internal growth.
What are the top two largest IPOs listed in the case study?
What are the top two largest IPOs listed in the case study?
In what market does McDonald's aim to compete with its CosMc's concept?
In what market does McDonald's aim to compete with its CosMc's concept?
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Study Notes
Internal Growth
- Internal growth, or organic growth, is when a company expands without the support of other organizations.
- Internal growth is powered through using the company's own resources like retained profits and share capital.
- Examples of internal growth are using retained profits to invest in new facilities or an initial public offering (IPO).
- Case Study 1 - The World's 11 largest IPOs:
- Saudi Aramco: $29.4 billion
- Alibaba.com: $25 billion
- SoftBank: $23.5 billion
- Agricultural Bank of China: $22.1 billion
- Industrial & Commercial Bank of China (ICBC): $21.9 billion
- AIA: $20.5 billion
- General Motors: $20.1 billion
- NTT DoCoMo: $18.4 billion
- VISA: $17.8 billion
- ENEL SpA: $17.4 billion
- Facebook: $16.0 billion
- Internal Growth benefits include:
- Fostering brand awareness and loyalty
- Increasing market share
- Maintaining corporate culture
- Maintaining ownership and control
- Avoiding the high expenses and risks of external growth.
- Case Study 2 - McDonald's launches CosMc's:
- McDonald's introduced CosMc's, a retro-style coffee concept similar to Starbucks.
- CosMc's offers unique drinks like Churro Frappe and S'Mores Cold Brew, targeting the lucrative coffee market.
- McDonald's aims to open 10,000 new locations by 2027 with a focus on China, which is considered a key growth market.
- Internal Growth disadvantages include:
- Being slower to bring results compared to external growth
- Can lead to diseconomies of scale due to inefficiency and coordination problems.
External Growth
- Companies use external growth when they need the support of other organizations for growth.
- External Growth relies on methods like mergers and acquisitions, or using franchisees for expansion.
- Examples of external growth include a company using franchisees to operate restaurants or merging with another company.
- External growth is often faster than internal growth but has high costs and risks.
- External Growth benefits include:
- Faster growth
- Diversification of product portfolio
- Gaining market share
- Reaching new markets
- Reducing competition in the industry.
- External Growth disadvantages include:
- High cost and bureaucracy
- Gaining trust from partner companies
- Organizational culture clashes
- Diseconomies of scale due to inefficiency in a larger organization.
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