Business Policy and Strategy

Page 282
Assurance of Learning Exercise
8A Developing a Product-Positioning Map for McDonald’s
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 McDonald’s, Wendy’s, Burger King, and Hardee’s. Include in your diagram. Step 2 At the chalkboard, diagram your product-positioning map. Step 3 Compare your product-positioning map with those diagrammed by other students. Discuss any major difference.
Assurance of Learning Exercise 8B
Performing an EPS/EBIT Analysis for McDonald’s
 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) Let’s say McDonald’s needs to raise $1 billion to expand into Africa. Determine whether McDonald’s 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, McDonald’s 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.

Read the Assurance of Learning Exercise 8A and 8B on page 282 of the textbook. Prepare a product positioning map, and perform the EPS/EBIT calculations given in 8B. Discuss, in a two-page APA formatted paper, how the product positioning is aligned with McDonald’s corporate strategy. Identify potential gaps in the product line or weaknesses in positioning. Describe the relevance of the EPS/EBIT chart and why it is significant with respect to strategy implementation

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