Business and Economics | It's Cookie's Time!

MCD

McDonald’s returned $1.6 billion to its shareholders through share repurchases and dividend payments in the second quarter of 2012. Regardless of the reduction in the future assumptions, I consider the main issues facing the company as recurring in nature. I still see McDonald’s as the best restaurant operator having an extraordinary economic moat.

Global comparable-store sales (comps) rose 3.7% in the second quarter, while U.S. sales are up 3.6%, Europe went up 3.8% and Asia/Pacific,Middle East and Africa (APMEA) up with 0.9% which went down from the last quarter of 7.3% as well as last year’s level of 5.6%. MCD’s solution to declining market share in informal eating-out (IEO) industry and slowdown in comps growth, the company started to implement several strategies in each market with main emphasis on extra-value offer. Although, management noted that most of these measures are short-term and could prove detrimental to margins if exercised on a long-term basis, the company still expects these initiatives to dominate the market from late 2012. Continue reading →

When Morals and Ethics won’t feed us.

A boring topic to deal with on a Monday, but hell I was in a heated debate about it this morning! – While having coffee and cinnamon. Too bad because I am a pro-environment, pro-health and pro-consumer advocate since the 1st day I earned my first penny.

What is going on? For those who find “commercialism” a jargon, whether you find it Good or Bad, it simply means the implementation (the actual) of how one conducts business and trade. It is a free practice, which generates profit. So when you hear “commercialized,” it refers to the “what” or the amount/number of products/services being sold or offered to consumers – to us. When you hear “commercialization“, by now you already have an idea of what it is about. It is the “How” of every business practice – the process, framework, or foundation.

On a nonprofessional’s term, let us say you bake good cakes and pastries, and most of your friends, colleagues, and neighbors love it. They would pay you to make some for occasions and gatherings. That is already a small-scale business in your own home (as they say – home-made and home baked goods are always the best, you’ll know why as you read along). From neighbors and friends – you receive calls and orders from other town; coffee shop and small restaurants. This made you decide to rent a small kitchen where you can bake your daily orders since your home became too small to bake large numbers. Analyzing the costs of putting up an extended kitchen, you know you needed regular number of orders to cover expenses. Then you start making some noise by calling coffee shops, school cafeteria etc., you started to invest on a cooler display (whatever it’s called) so you can sell some baked goods on top of your daily orders in your rented kitchen, transforming it into a small bakeshop or pastry store (commercialized). With competition, cost on rent, added wages for workers, you know you need to do other things to cover everything and at least gain good profit – What will you do? How will you do it? (Commercialization) Whether you decide to either:

a. Cut on raw materials i.e purchase low-grade products, use artificial sugar instead of real sugar (believe me there is such a thing – I just don’t know what it’s called), change from grade A flour to C – things like that. Which we all know may have a difference on product quality. Today they have developed a new age substitute on raw materials, some with health or environment risks to human or animals.

b. Either pays low wages and get under qualified workers. Who are less experienced and trainable in 3 days max haha! Alternatively, get someone who will not eat the cookies or steal them!

c. Another is to invest more money to advertise print and media, buy another delivery truck to cover more cities, hire an SEO for online presence and possibly online sales, get certification from culinary or baking classes, build partnerships with raw material suppliers – and many others.

Whatever you decide to do to implement it, be it A, B, or C – that’s Commercialism (practice or method) – Your Choice.

It is Not a Rule. Businesses will choose what is best to sustain and support itself – for growth eventually. So the dilemma of commercialism being negative is premature, it is often related to environment, health, animals and even human being compromised just to gain some for some. Going back to the debate I had this morning – about a movie based on a true story; Puncture (2011).The movie throws light on some issues which directly affects American Healthcare. Where 2 lawyers, Micheal Weiss (Chris Evans) and Paul Danziger (Director Mark Kassen) found out the government’s involvement (commercialism#1) with a huge manufacturing firm who produces needles and syringe for hospital use worldwide. The government gets a percentage for making all the hospitals use the syringe – nothing else. The disposal, the marketing, the product development and its use is very irresponsible (commercialism#2), which causes death, infections, communicable diseases to other countries not only in US, but other third world countries. It affects doctors, nurses, aides, and patients alike. They make these products but do not work on its disposal management – meaning once used, should it be thrown away? do they recycle or does it go to dump sites and get picked up by small poor kids in the 3rd world country? Do they campaign on public awareness, and the dangers? NO. Apparently, the film presented a breakthrough and a solution to answer to all of these. A smart needle invented by a small company, which is for one time use only, and will retract once after injected – Once. Unfortunately, the government, the hospitals, the professionals – not everyone will use it. It costs more than the usual syringe, but the usual syringe brings about thousands of US nurses contaminated by Hepatitis C and AIDS every year, another is needle reuse in Africa. In continents like Asia and Africa, needle reuse results in 1.3 million deaths every year, with 23 million infections of hepatitis and 260,000 infections of AIDS annually. In the later part of the movie, the big needle company offered to buy the patent of the smart needle, without any intention to manufacture and sell – but to kill it forever. That and some brutal fact about their commercialization, which is why its commercialism is so, corrupted, so their commercialized goods suck – and yet patronized. Can we blame Commercialism in this case? Wrong choice of priority all because the Commercialization Process does not have an imposed rule against morals and bribery – everything is a variable not unless the company or business will make a choice, a stand to conduct business responsibly and consider others by not being so greedy – You can never expect all business to be morally upright – obviously.

It is a Choice – Not A Rule. Commercialization process includes sustainability, product innovation or development, and most importantly – the stakeholders and consumers, which means everyone and everybody who are directly and indirectly affected. Why is it a Choice? Because despite what is right and wrong – companies and or businesses will do what they think is beneficial to them – regardless. It is simply their choice. Not A Rule? If commercialization process follows or is co-inhabited by a certain trade rule, then it should strictly follow with proper implementation. As defined, it is a process wherein sustainability, product innovation or development, stakeholders and consumers are a prerequisite. Now, with the entire clamor on health and environment causes – the pressure is on the government in upholding the Rules of Commercialization. Make it strong; do not cradle a company who does not follow the Rules that can stop their operations. Those companies whose commercialization process lacks indirect and direct effect analysis on animal, human, health, and environment (long-term) or the “sustainability” aspect needs penalized. Responsibility in choices and adherence to a sustainable operation is what we need. Do not make it a choice; make it a rule or a governance. Just like criminal cases – because that is what makes commercialization negative despite the growth, employment, improvement of lifestyle and living it provides to all.