F.4 Economics Project The McDonald’s

McDonald’s Restaurants

(Hong Kong) Limited

History/development of Hong Kong

McDonald’s Restaurants

McDonald’s Restaurants (Hong Kong) Limited

Established in 1975

First Hong Kong McDonald’s: Paterson Street, Causeway Bay

In HK, there are over 200 McDonald’s restaurants.

Horizontal Expansion has taken place!

History/development of Hong Kong

McDonald’s Restaurants

The FIRST restaurant group to adopt a total SMOKE-FREE POLICY

The Hamburger University Hong Kong (HUHK), was opened in 2002.

Vertical Backward Expansion has taken place!

History/development of Hong Kong

McDonald’s Restaurants

McCafe is also opened in Hong Kong recently.

Lateral Expansion has taken place!

35 McCafes

Form of Business Ownership

McDonald’s Corporation

Private

Limited

Company

McDonald’s Restaurants

(Hong Kong) Limited

Public Limited

Company

McDonald’s Corporation

Company

Operated

Conventional

Franchise

Joint

Venture

Development

License

APMEA (Asia/Pacific,

Middle East and Africa)

McDonald’s Restaurants

(Hong Kong) Limited McDonald’s

Restaurants

McCafe

Company Structure

Products/Services produced

“What to produce?”

Food Service Industry

McDonald’s Unique Food

Coffees

French Fries Apple Pie Salads

Big Mac

McFlurry

Factors of Production

“How to produce?”

Entrepreneur

Land

Factors of Production

“How to produce?”

Labour

Factors of Production

“How to produce?”

Capital

Target Customers

“For whom to produce?”

People in all ages

Mainly children and teenagers

Demand and Supply Relationship

Inelastic demand

Ed<1

Price increases

%change in P > %change in Qd

Gain > loss

TR increases. 0

P

Q

D1

P2

P1

Q1 Q2

GAIN

LO

SS

McDonald’s Restaurants

Competitive Environment

of the Industry

Oligopoly

McDonald’s KFC

There are a few major sellers provide a large share of the market output (fast food) in Hong Kong,

for example:

SWOT Analysis

Has its signature products

Gives people a sense of belonging

Has built up its brand name

Takes up a large market share

of the fast food industry

Strength~

SWOT Analysis

Focuses only on teenagers and kids

Has not done enough to bring in the fitness market

Produces mainly fried and heavy-flavoured food

Not many different types of healthy food

Weakness~

SWOT Analysis

Put more effort in producing healthy food

Bring in the fitness market

Increase its exposure and promote more

about its healthy image to the public

Try to sponsor more activities for the elderly,

they will be more willing to have their meals here

Opportunities~

SWOT Analysis

Growing influence of the KFC

cannot be underestimated.

The slogan is “So Real!”

Delivery service provided,

which starts earlier than that of the McDonald’s

New food is also created

Threats~

Suggestions to Increase Profits

Produce more spicy food

Produce more healthy (less oil) food to open up the fitness market

Suggestions to Increase Profits

0

P

Q

D1

S1

D2

P1

P2

Q1 Q2

McDonald’s Food

• Demand increases • Price increases

(P1P2) • Qt increases (Q1 Q2) • TR increases

Suggestions to Increase Profits

Producing more toys for customers when buying food

All McDonald’s in Hong Kong provides free-delivery service

Enabling the wireless internet access

Suggestions to Increase Profits

0

P

Q

D1

S1

D2

P1

P2

Q1 Q2

McDonald’s Food

• Demand increases • Price increases

(P1P2) • Qt increases (Q1 Q2) • TR increases

Suggestions to Increase Profits

Open more McCafes

0

P

Q

Fig.5 McCafe

S1 S2

D1

P1

P2

Q1 Q2

GA

IN

LOSS

Suggestions to Increase Profits

0

P

Q

D1

S1

P1

P2

Q1 Q2

McDonald’s Restaurants opened for 24 hours

More McDonald’s Restaurants operated in 24 hours

S2 • Elastic Demand • Supply increases • Price decreases

(P1P2) • Qt increases (Q1 Q2) • %change in Qd >

%change in Price. • TR increases

LOSS

GA

IN

Main Sources

www.mcdonalds.com.hk

www.mcdonalds.com

www.wikipedia.com

Member List

Chan Oi Lam

Kwong Chung Yan

Kwok Wing Yee

Lai Wing Sum

THE END