McDonald's Company: The Flawed Fast Food Tax | Free Essay Example

McDonald’s Company: The Flawed Fast Food Tax

Words: 1923
Topic: Business & Economics
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As a McDonald’s lobbyist, what would you like to see done by the Federal government that would be of help to McDonald’s?

McDonalds is one of the world’s leading fast food restaurants serving more than 57 million customers daily with branches all over the major cities. The restaurant has variety of food supplies ranging from hamburger to children’s dishes. In the recent past, McDonald has been facing economical turmoil that has been fueled by debate from different organized groups who are concerned over its menu, business expansion as well as business practices (Britt, Miller & Schmidek, 2001).

McDonald has been the face of globalization following the opening of branches in most locations across the globe. As a McDonald lobbyist, federal government ought to assist the organization by changing various aspects of the existing policies so that it can grow. The federal state should help and protect the organization from the current debate on how it is conducting its business operations alongside other issues which affect its performance and the public perception.

Free marketing of Restaurants product

McDonalds has been facing challenges occasioned by the federal states following the introduction of legislation which permits restaurants products to be scrutinized. The states have also restricted marketing and advertisement of restaurant products following the rise in cases of obesity in the federal states. Federal states is controlling the vigorous advertisement and marketing campaigns by the fast food restaurants due to the rising cases of the obesity and other illness which is attributed to fast food restaurants.

The federal government move to regulate the advertisements and marketing of McDonald’s products is creating unfavorable business environment especially in products where significant amount of money has already been spent on advertisement and marketing. A case example of hefty previous spending on advertising is on children’s meals (Jameson, 2001). As a lobbyist for McDonalds, I suppose there should be free marketing for the restaurant’s products since the company is already spending much of its revenue on similar products. Hence, obtaining some profitable return from its products is indeed necessary.

Federal states’ move to regulate marketing and advertisement of McDonald’s products will lead to low sales which may result into slow growth. This may grossly affect its operation. The federal states should move with speed to abolish laws regulating the advertisement of children’s and adolescent’s foods and instead advocate for healthy dieting and healthy living by encouraging exercise among the young people. McDonalds has been providing information to parents on nutritional content of foodstuffs meant for children. As such, the decision lies with the parent’s guidance in selecting foodstuffs to buy for their children.

As a McDonald’s lobbyist, I strongly suggest that the federal government should not restrict advertisement of food products. Consumers should exercise their freedom in choosing what they need to consume instead of being restricted by the federal states. It is only through advertisement that the company’s products can be known to the people and restricting public knowledge on products being offered by the restaurant is a violation on its own since it may result into less sales for the company.

Minimum wage increase

From the Vermont legislative research shop (Britt, Miller & Schmidek, 2001), increase in employees’ wages has led to reduced employment by McDonalds which has equally affected their operations in the US markets. McDonalds, being a large fast food restaurant, needs to have enough employees to serve the diverse clients with various needs. This will work towards the well being of the restaurant business. However, the push by the federal government to hike minimum wage will lead to more finances being allocated to wages and salaries thereby increasing the overheads and other operational costs.

This may hinder or act as a setback for the organizational plans to expand. On the same note, the federal governments should not dictate the setting of minimum wage paid by McDonalds restaurant and other fast food outlets. The minim wage should be determined by the organizational performance of employees and which may be reviewed from time to time depending on performance. Increase in wages will lead to increased cost of operation which will in turn affect the running of the restaurant (Hoffman & Seidman, 2003).

Abolishment of Sin Taxes

The recent introduction of sin taxes by the federal government which targets fast food restaurants, clubs and other business establishments is not healthy for the operations of McDonalds bearing in mind that the company is competing with other players in the global market. It is not clear why federal governments should promote healthy behaviors by introducing taxation on specific restaurant’s products like cigarettes, beer and other commodities.

It is wrong for the government to impose additional taxes on the legitimately established business premises like McDonald’s to raise revenues for the government budgetary needs, the long term implications of this tax introduction will be felt mostly by the food restaurants like McDonald’s who will have to adjust their prices to cater for the additional taxes. The federal government should not seek quick fix and temporary solutions to budget deficit and structural problems.

Sin tax that has been introduced is a short-cut meant to bridge the budget deficit. It is likely to have serious economic and moral impact on McDonald’s performances. The Federal government should look for other means to address its appetite for spending before resolving to regulate the appetites of innocent consumers (Ballor, 2005).

Improve public image

In most cases, McDonald’s has faced frustrations in its effort to expand in some regions of the world following the United States public perception. The increasing anti-American slogan by many other countries has slowed down and presumably jeopardized McDonald’s expansion bid. It expansion has not been easy since many companies are not willing to corporate with it following trade policies of the host country.

The company has continuously suffered negative publicity and even physical attack from anti-American crusaders. This has tremendously affected the growth and performance of the company. The restaurant’s expansion is seen as an American struggle to reach out several locations across the world and enhance foreign policies in foreign countries alongside grabbing existing opportunities (Brittain & Lamb, 2009). For instance, protestors in Ecuador, Iraq and Pakistan ended their anger at the McDonald’s branches in their countries by destroying and ransacking the interior decorations of the buildings besides attacking workers.

The Federal government should move fast to redress issues related to anti-American and public diplomacy through emphasizing the importance of corporate and citizenship diplomacy in changing the Americans public perception to the better. The perception on United States by other nations must be improved to allow growth and performance of MacDonald’s, a restaurant that has demonstrated upward growth momentum with several branches in major cities across the world. Moreover, the Federal government should improve its foreign policies and guidelines as well as improve international relation to accommodate anti-Americans. The latter is apparently a threat to performance and existence of United States companies which are operating beyond the borders.

In conclusion, it is high time the federal government reformed its domestic and foreign policies to favor the operations of MacDonald’s restaurants and other related business. There should be unrestricted advertisement and marketing campaigns void of government influence to allow companies like McDonald’s create awareness about their products to their intended population. Sin taxes should be scrapped to assist in cutting down the cost of operations since it may result in low consumption of related products and eventual collapse of the organization.

How sensitive do you think McDonald’s is to economic expansions (upswings) and contractions (downswings or recessions)? Explain. If you believe that McDonald’s performance is not sensitive to general economic business cycles, then explain why it is stable as the economy moves up and down.

Following the summary of the economic conditions in the various districts, the economy has hardly been steady but largely characterized by fluctuations since the beginning of the year. MacDonald’s may be influenced entirely by consumer spending and tourism sector of the economy. From my analysis, MacDonald’s is sensitive to expansion on the economy following the adverse locations of its premises.

From the economic summary and point of view, different federal states reported varying growth rates in various sectors. Consumer spending was down but most districts recorded improved growth compared to the latter years. MacDonald’s is sensitive to economic growth following the establishment of branches in other towns, the different growth rates recorded in different districts in the first quarter of 2011.

Varying weather patterns among the federal states contributed to differences in economic growth. MacDonald’s has initially been cautious about by locating its business chain indifferent districts as part and parcel of reducing of reducing risk level of doing business. For instance, performance in the tourism sector was reported to have improved steadily in Richmond, Atlanta, Kansas City and San Francisco. In New York, tourism increased in the first quarter of the year and declined towards the month of May, this is an indicator that MacDonald’s is sensitive towards expansion of the economy and can accommodate visitors in all seasons since various districts face different weather changes.

On the other hand, it can be argued that MacDonald’s did not take interest in diversifying the business. According to the reports, different economic sectors recorded growth patterns that were unique to each other. There was increased growth in the manufacturing sector which only slowed down with the earthquake that hit Japan early in the year on the automobiles production. In addition, the continuous economic recession was equally a bad taste for McDonald’s. It may not perform well in the sense that its revenues are generated from one sector which sometimes can not survive the heat of recession (Brittain & Lamb, 2009).

The company needs to put more strategies and diversify its operations in all the districts to grab the untapped opportunities which exist to avoid the effect of recession. Proper mechanism needs to be put in place to predict various economical patterns which can help the organization prepare for the unpredictable economical patterns.

The Fed has forecasted future economic conditions and they are found in the Fed’s Beige Book. Please choose the one most important economic condition that might affect McDonald’s future performance. Confine yourself to only one

Fed focused on future economic conditions to be determined by specific causal factors. The most notable factor that would influence the performance of MacDonald’s is consumer spending and tourism. Macdonald’s is a restaurant and their target population is the general public who is the consumer. Hence, their spending will be advantageous to MacDonald’s. The increase in tourism flow will lead to improved performance since consumers will need MacDonald’s facilities which will definitely improve the performance of the restaurant (Ballor, 2005). Increased tourism flow across the federal states will lead to more demand for food products and other services which are offered by MacDonald’s. Increased consumer spending will promote the performance of the company since it is likely to sell more of its products due to the increasing demand by consumers who spend more on foodstuffs.

Decreased consumer spending and tourism flow will affect the performance of MacDonald’s since their products will not be consumed by the targeted population. Low flow in tourism will lead to less revenue circulation (Hoffman & Seidman, 2003). This will not only pose negative effects to the hotel industry; other sectors of the economy will be affected as well. It is imperative to note that tourism flow is crucial in foreign exchange since it boosts a country’s economy owing to increased flow of liquid cash.

References

Ballor, J (2005). The Flawed Fast Food Tax. Acton Institute, 15(2), 2.

Brittain, K & Lamb, L (2009). Applied Public Relations: Cases in Stakeholders Management. New York: Routledge.

Britt, J, Miller, T & Schmidek (2001). Effects of Increase in Minimum Wage. Vermont Legislative Research Shop, 1(1), 1-2.

Hoffman, S & Seidman, L. (2003). Helping working families: the earned income tax credit. New York: Alcorn Publishers.

Jameson, S. (2001). Fast Food Lobbies US States on fast food on happy meals laws. Washington DC: Shelby publishing.