McDonalds – Product Positioning Exercise 8A and 8B

PART 3 STRATEGY IMPLEMENTATIONASSURANCE OF LEARNING EXERCISESAssurance of Learning Exercise 8ADeveloping a Product-Positioning Map for McDonaldsPurposeOrganizations 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.InstructionsStep 1On a separate sheet of paper, develop a product-positioning map for McDonalds, Wendys,Step 2Step 3Burger 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 8BPerforming an EPS/EBIT Analysis for McDonaldsPurposeAn EPS/EBIT analysis is one of the most widely used techniques for determining the extent thatdebt and/or stock should be used to finance strategies to be implemented. This exercise can giveyou practice performing EPS/EBIT analysis.Instructions (1-1-10 Data)Lets say McDonalds needs to raise $1 billion to expand into Africa. Determine whetherMcDonalds should have used all debt, all stock, or a 50-50 combination of debt and stock tofinance 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 commonstock. The EBIT range for 2010 is between $6.332 billion and $9 billion. A total of 1 billionshares of common stock are outstanding. Develop an EPS/EBIT chart to reflect your analysis.Assurance of Learning Exercise 8CPreparing Projected Financial Statements for McDonaldsPurposeThis exercise is designed to give you experience preparing projected financial statements. Proforma analysis is a central strategy-implementation technique because it allows managers toanticipate and evaluate the expected results of various strategy-implementation approaches.InstructionsStep 1Work with a classmate. Develop a 2008 projected income statement and balance sheet forMcDonalds. Assume that McDonalds plans to raise $900 million in 2010 to begin servingAfrica and plans to obtain 50 percent financing from a bank and 50 percent financing from astock issuance. Make other assumptions as needed, and state them clearly in written form.