McDonalds – Product Positioning Exercise 8A and 8B

PART 3 STRATEGY IMPLEMENTATION

ASSURANCE OF LEARNING EXERCISES

Assurance of Learning Exercise 8A
Developing a Product-Positioning Map for McDonalds
Purpose
Organizations continually monitor how their products and services are positioned relative to competitors. This information is especially useful for marketing managers but is also used by other managers and strategists.
Instructions
Step 1
On a separate sheet of paper, develop a product-positioning map for McDonalds, Wendys,
Step 2
Step 3

Burger King, and Hardees. Include in your diagram.
At the chalkboard, diagram your product-positioning map.
Compare your product-positioning map with those diagrammed by other students. Discuss any major differences.

Assurance of Learning Exercise 8B
Performing an EPS/EBIT Analysis for McDonalds
Purpose
An EPS/EBIT analysis is one of the most widely used techniques for determining the extent that
debt and/or stock should be used to finance strategies to be implemented. This exercise can give
you practice performing EPS/EBIT analysis.
Instructions (1-1-10 Data)
Lets say McDonalds needs to raise $1 billion to expand into Africa. Determine whether
McDonalds should have used all debt, all stock, or a 50-50 combination of debt and stock to
finance this market-development strategy. Assume a 38 percent tax rate, 5 percent interest rate,
McDonalds stock price of $50 per share, and an annual dividend of $0.30 per share of common
stock. The EBIT range for 2010 is between $6.332 billion and $9 billion. A total of 1 billion
shares of common stock are outstanding. Develop an EPS/EBIT chart to reflect your analysis.

Assurance of Learning Exercise 8C
Preparing Projected Financial Statements for McDonalds
Purpose
This exercise is designed to give you experience preparing projected financial statements. Pro
forma analysis is a central strategy-implementation technique because it allows managers to
anticipate and evaluate the expected results of various strategy-implementation approaches.
Instructions
Step 1
Work with a classmate. Develop a 2008 projected income statement and balance sheet for
McDonalds. Assume that McDonalds plans to raise $900 million in 2010 to begin serving
Africa and plans to obtain 50 percent financing from a bank and 50 percent financing from a
stock issuance. Make other assumptions as needed, and state them clearly in written form.