George Orwell and Animal Farm A Critical Analysis

Accounting for Uncollectible Accounts Essays

Accounting for Uncollectible Accounts Essays Accounting for Uncollectible Accounts Essay Accounting for Uncollectible Accounts Essay For the exclusive use of X. LIU CASE: A-165 DATE: 09/00 (REVD. 05/07) SEARS: ACCOUNTING FOR UNCOLLECTIBLE ACCOUNTS Sarah Simons picked up the 1999 Annual Report for Sears, Roebuck and Co. , which had Just been delivered to her office. As an analyst for a major brokerage, she was responsible for providing investment advice regarding companies in the retail industry, including Sears. She looked over the income statement, noting that net income grew by 39 percent over the previous year, despite a slight decrease in revenues (see Exhibit 1). Before long, however, she turned her attention to the Companys credit card receivables and allowance for uncollectible accounts (see Exhibit 2). In recent years, Sears had suffered heavy write-offs from uncollectible credit card accounts, as well as an expensive scandal caused by illegal collections procedures. These problems had depressed Sears stock price substantially from its peak in mid-1998. Had Sears overcome their credit card problems? BACKGROUND Sears, Roebuck and Co. as founded in 1886 as a retail mail-order business and grew rapidly by providing a wide range of products to people in rural areas who did not have access to large, well-stocked stores. The Company began to diversify into financial services in 1931, when it established Allstate Insurance Company. This diversification continued in the 1980s, as it acquired Dean Witter Reynolds and Coldwell Banker, and launched the Discover card. By 1990, however, Sears was struggling and the investment community was critical of its business strategy, which was derisively characterized as socks and stocks. Shareholder discontent drove the Company to a massive restructuring to refocus on its retailing roots. According to former CEO Edward Brennan, 1992 was a disastrous year in which the Company lost 3. 9 billion, of which $3. 1 billion was a charge related to the restructuring. By 1995, Sears had divested its financial services businesses and largely restructured its merchandising operations. The transformation of Sears was largely credited to Arthur Martinez, the former chairman of Saks Fifth Avenue, who Joined the Company in 1992 as head of the merchandising group. His actions were swift and decisive. He immediately closed the unprofitable Sears Catalog, shut 113 Research Associate David Hoyt prepared this case under the supervision of Professor Karen K. Nelson as the basis for class iscussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright 2000 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or request permission to reproduce materials, email the Case Writing Office at: [emailprotected] tanford. edu or write: Case Writing Office, Graduate School of Business, Stanford University, Stanford, CA 94305-5015. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any torm or by any means lectronic, mechanical, photocopying, recording, or otherwise without the permission of the Stanford Graduate School of Business. This document is authorized for use only by XUEYONG LIU i n Financial Accounting taught by Yonca Ertimur from August 2013 to October 2013. Sears, Roebuck and Co. A-165 unprofitable stores, cut 50,000 Jobs, and launched a five year, $4 billion capital investment program to renovate and update the stores. In 1993, he initiated an intensive marketing campaign, Come See the Softer Side of Sears, which was a hugely successful move to call attention to changes in the apparel division and ttract women to the stores. Sears made a remarkable turnaround. From its massive 1992 loss, it recovered to post net income of $1. 8 billion in 1995. Martinez was named Sears CEO in 1995 and was also recognized as Financial Worlds CEO of the year. The stock price responded accordingly, increasing more than seven-fold from 1991 to mid-1997. 1 By the late 1990s, however, problems had surfaced and the financial press had become critical. They questioned whether some components of the Martinez turnaround had backfired, most notably his strategy related to the Sears proprietary credit card, the sears card. THE SEARS CARD AND CREDIT CARD RECEIVABLES Prior to 1993, the only charge card that Sears accepted was the Sears Card. In order to attract new customers and prop up sagging store sales, Sears began accepting other major charge cards in 1993. While this helped improve sales, Sears lost the opportunity to collect interest on purchases made with other cards. To avoid a drop in profits from its own credit operations, Sears aggressively marketed the Sears Card, mailing out pre-approved card offers, hawking the card at tables positioned at store entrances and paying incentives to sales clerks for opening new accounts. Between 1993 and 1996, Sears issued 24 million new credit card accounts. In his Letter to Shareholders in the 1996 Annual Report, Martinez commented on the importance of the credit card program, stating that the Sears Card is one of the most important ways we form an alliance with our 50 million customer households. The availability of credit is critical to the ability of moderate-income families to finance the purchases they require. Despite rising delinquencies in the industry, we have a very strong and profitable credit portfolio. However, the new Sears Card users were not necessarily he best credit risks. Sears marketing of their credit card tended to attract customers that had trouble paying their bills. Those that could get cheaper credit elsewhere used bank cards with low teaser rates and incentives. These factors, combined with an increase in delinquencies and average balances, were cause for concern (see Exhibit 3). By late 1997, the average Sears Card balance was more than three times that carried by J. C. Penny Co. cardholders and delinquencies exceeded the industry average by two percentage points. Sears drive to issue more cards, and the lax credit policies that were needed to ncrease cardholders at such a rapid rate, eventually caught up with them. Uncollectible receivables and charge-offs started rising in 1995. The Company responded by increasing the interest rate toa hefty 21 percent while at the same time lowering the minimum required monthly payment. This let cardholders continue to ring up purchases on their Sears Cards and also increased interest revenue on outstanding credit balances. To offset the impact of delinquencies, Sears raised late fees and other charges. However the quality of their credit card receivables was still questionable, as by 1997 Sears was a creditor in about one-third f U. S. personal bankruptcies. This case was prepared using public documents, including Sears Annual Reports and a variety of news accounts, including: Debra Sparks, Arthur Martinez: Financial Worlds CEO of the Year, Financial World, March 25, 1996; John McCormick, The Sorry Side of Sears, Newsweek, February 22, 1999; Joseph Cahill, The Softer Side: Searss Credit Business May Have Helped Hide Larger Retailing Woes, Wall Street Journal, July 6, 1999. Neither Sears nor any current or former employee participated document is authorized for use only by XUEYONG LIU in Financial Accounting taught y Yonca Ertimur from This in preparing this case. The problems went further, however. In January 1997, it was discovered that Sears had illegally coerced payments from cardholders who had sought bankruptcy protection. This resulted in a criminal conviction as well as restitution payments to 187,000 customers. In the end, the scandal cost Sears $475 million in fines, refunds, interest, and legal fees, which the Company charged against income in 1997. ACCOUNTING FOR UNCOLLECTIBLE ACCOUNTS Generally Accepted Accounting Principles (GAAP) require that accounts receivable be ecognized in the balance sheet at net realizable value†that is, at the amount the company can reasonably expect to collect from its credit customers. Moreover, Statement of Financial Accounting Standards No. 5 (SEAS 5) requires that an estimated loss from a contingency, such as uncollectible receivables, be accrued by a charge to income if two conditions are met: (1) it is probable that a loss has been incurred; and (2) the amount of the loss can be reasonably estimated. According to their Annual Reports, Sears reported credit card receivables net of an allowance for uncollectible accounts. The allowance was based on impaired accounts, historical charge-off patterns, and management Judgments. Until late 1998, uncollectible accounts were generally charged off automatically when the customers past due balance was eight times the scheduled minimum monthly payment, except that accounts could be charged off sooner in the event of customer bankruptcy. In 1998, Sears began phasing in a new system in which accounts were charged off automatically when the customer fails to make a required payment in each of the eight billing cycles following a missed payment. In the fourth quarter of 1998, 12 ercent of accounts were converted to this system, with the balance being converted in the first and second quarters of 1999. This new system was intended to help Sears better manage its collection efforts by identifying delinquent accounts earlier and enabling better c ontrol of uncollectible expenses. It also had the affect of charging off balances earlier than under the previous system. ARE THE PROBLEMS IN THE PAST? As she read the Letter to Shareholders in the 1999 Annual Report, Sarah noticed Martinezs comments regarding credit: In our credit business, we worked tirelessly to trengthen our portfolio quality, reduce our losses, and improve our collection processes. Sarah knew that the credit business was important to the overall performance of Sears (see Exhibit 4) and that the Companys stock price had been affected by credit-related issues (see Exhibit 5). Had Sears truly put its problems behind it? Was the allowance for uncollectible accounts adequate? What should she say to the investment community? EXHIBITS Consolidated Financial Statements Analysis of Allowance for Uncollectible Accounts Key Credit Portfolio Information Summary Segment Data Stock Performance This document is authorized for use only by XUEYONG LIU in Financial Accounting taught by Yonca Ertimur from August 2013 to October 2013. Exhibit 1 Income Statement (in millions) 1995 1996 1998 1999 Revenues Merchandise sales and services Credit revenues Total revenues Expenses Cost of sales, buying and occupancy Selling and administrative Provision for uncollectible accounts Other Total costs and expenses Operating income Other income, net Income tax provision Net Income $31 ,133 $33,752 $36,649 $36,957 $36,728 3,702 4,313 4,925 4,618 4,343 34835 38,064 41 ,574 41 ,575 41 ,071 23,160 7,428 589 1,953 33,130 1,705 703 1,801 24889 8,059 971 2,062 35,981 2083 834 $1,271 26,985 8,394 1,532 2,669 39,580 1 ,994 106 912 $1,188 27,444 27,212 8,384 8,418 1 ,287 871 2605 2,157 39,720 38,658 1 ,855 2413 (41) (56) 766 $1,048 $1,453 1997 Balance Sheet (in millions) Assets Cash and cash equivalents $ 606 $ 660 Credit card receivables Allowance for uncollectible accounts (819) (801) Net credit card receivables 20,106 1903 Other current assets 5,729 8,484 Property and equipment, net Other assets Total Assets $ 358 20,956 (1,113) 19,84 3 10,042 495 $ 729 18,946 18,793 (974) (760) 17,972 18,033 10804 9,905 5,077 5878 6,414 6,380 6,450 1,612 1 ,842 043 2,024 1,837 $33,130 $36,167 $38,700 $37,675 $36,954 Liabilities Current liabilities Long-term liabilities Total liabilities Shareholders equity $14,607 $14,950 $15,790 $14,222 $13,701 14,138 16,272 17,048 17,387 16,414 28,745 31 ,222 32,838 31 ,609 30,1 1 5 4,385 4,945 5,862 6,066 6839 Total Liabilities and Equity Source: Sears, Roebuck and Co. s Annual Reports. Exhibit 2 Allowance, beginning of year Net credit losses Allowance, end of year $ 808 578 $ 819 989 $ 801 1 ,220 $1,113 1 ,426 $ 974 $974 1,085 $ 760 Source: Sears, Roebuck Co. s Annual Reports. Exhibit 3 56. 6% 4. % 5. 8% 55. 1% 2. 3% 51 1. 1% 47. % 1. 8% Sears Card sales as a % ot sales Comparable store sales growth (%) Merrill Lynch Broadline Retailers Index of comparable store sales growth (%) 2. 0% 3. 8% 5. 2% Average account balance ($) $ 914 $977 $1,058 $1,076 $1,121 Delinquency rates (%) 4. 16% 5. 40% 7. 00% 6. 82% 7. 58% Net credit charge-offs to average credit card receivables 2. 77% 5. 02% 6. 23% 7. 54% 6. 03% Sources: Sears, Roebuck and Co. s Annual Reports; Merrill Lynch Broadline Retailers Index for 1999 from Merrill Lynch Industry Report Retailing-Broadlines, January 6, 2000. Exhibit 4 Operating Income Retail Services Credit International

Business Environment Essay Example | Topics and Well Written Essays - 1500 words - 2

Business Environment - Essay Example This paper approves that the PMT brand of organic products is also part of a monopolistically competitive industry, but a recent visit to their business advisor informed them that the Price Elasticity of Demand for their products is inelastic. But being in the monopolistically competitive industry, the stiff competition from rival businesses does not affect the profit margins of PMT. There is a niche market for the PMT products, which are unique in their own way and add to the variety of organic cosmetics, soaps and perfumes. People who buy such products will prefer to have variety, and so a good number of buyers will regularly come back to the PMT brand, though they test out other brands in the mean time. The factors that would affect this demand curve and hence the PED include the variety of substitutes available for buyers to try around, the proportion of income required for the item and degree of necessity or luxury. This essay makes a conclusion that disposable income is the amount of income a person or an organization has, after the taxes have been deducted from the total amount. It is being assumed that disposable incomes are going to fall in the next two years. With the decrease in the people’s income, the Income Elasticity Demand for the organic products would turn positive or high positive and the niche market catered to would reduce. The organic perfumes, soaps and cosmetics would thus, come under the category of luxury goods.But the fall in disposable income is not likely to affect the services offered by the salon, since people would still be catering to their basic needs. The income elasticity demand for the services is likely to fall between one and zero.

Andrew Marvell and Oliver Cromwell Essay Example | Topics and Well Written Essays - 2500 words

Andrew Marvell and Oliver Cromwell - Essay Example His sympathies were on the whole royalist and aristocratic but he felt great admiration for Oliver Cromwell the Lord Protector of England who came to power after deposing Charles I. Milton's impunity at the Restoration was largely due to Marvell's influence and exertions. Very few of Marvell's poems were published during his lifetime. Most of his poems appeared posthumously in 1681. His satires were published only in 1689 after the Glorious Revolution. Marvell's best poems were written in the early 1650s. He used to be considered as a typical love poet who wrote in the metaphysical strain. But Marvell displays curious traits which set him apart from the usual poets who wrote of love. Marvell though a poet of wit, love and fancy strangely though not without reason professes admiration for Puritan ideals. "Marvell strangely enough was a Puritan __an admirer of Cromwell, a devote reader of the bible, a supporter of the joyless regime whose spirit is to unlike that of his verse" (Wilson 136).But this ambiguity is not surprising when one considers the turmoil and political upheavals of Marvell's time. In August 1642, the long standing quarrel between Charles I, and the Parliamentarians or Roundheads involving political, religious and constitutional matters, broke up into open hostilities. In the battles that followed, Oliver Cromwell soon proved himself to be the most powerful candidate the Parliamentarians had. In spite of oppositions among his own people Cromwell assumed the position of the Lord Protector of England. In 1647, Cromwell organized the New Model army which inflicted a crushing defeat upon the royal army. Charles surrendered to his Scottish subjects who later turned him over to England in 1647. It is surprising to note the different strains of thought which coloured Marvell's poetic output. In his poems from the Horatian Ode Upon Cromwell's Return from Ireland e onwards the one finds his admiration for Cromwell increasing. The way in which Marvell's perception of Cromwell changed is an indication of the difficulty of the choices of political allegiances facing an alert and sensitive mind of a poet who had political aspirations himself. In the Horatian Ode the Marvell we meet is a troubled man torn between divided loyalties. The title refers to Cromwell's return from Ireland which took place in May 1650. The poem welcomes Cromwell home from his conquest of Ireland, looking forward to his campaign against the Scots. Since Cromwell returned from Ireland in May 1650, and entered Scotland on July 22 of the same year, the poem therefore, was probably written in the early summer of 1650.The poem contrasts two political figures, the ceremonial Charles I and the military Cromwell. I t expresses a deep sense of loss in the passing away of ceremony and ritual with the beheading of the king. A dichotomy is seen in the thoughts and emotions of Marvell the lyric poet and Marvell the Parliamentarian. The Puritan revolution, the new science and modern liberalism were all seen as disrupting an older unified world view in which poetry had a favoured place. In this poem Marvell's attitude towards Cromwell is at best ambivalent. While he shrinks from certain elements in Cromwell's personality and government the poem concludes with a balanced view of his administration. The Ode in two parts celebrates Cromwell

Tools of Organizational Change Essay Example | Topics and Well Written Essays - 250 words - 1

Tools of Organizational Change - Essay Example A leader could further ensure that there is effective communication and engagement within the organization when implementing an organizational change. In order to achieve this, the leader could ensure that workers are not only aware of required changes that are happening but also understand them. A leader could further seek to engage workers in the formulation and implementation of an organizational change as this creates a positive attitude among workers (Lewis, 2011). The third component that a leader could use involves internalization of the change. This refers to the actual implementation of the change. Depending on the nature of the change, a leader could choose the appropriate channel for internalization of the change by the workers. These channels include seminars and departmental meetings. During internalization, workers review the proposed change and analyze how better it is than the old practices. This helps workers to realize the benefits of the change and propel them to work within the set rules of the proposed change (Lewis,

Review And Determine The Mcdonalds Strategic Marketing Essay

Review And Determine The Mcdonalds Strategic Marketing Essay LO1) Review and Determine the McDonalds Strategic Aims and Objectives McDonalds is one of the leading global fast food service retailers, with about more than 32,000 restaurants serving more than 60 million people in more than 117 countries each day. McDonalds is well known for some of its much desired food like; Chicken McNuggets, Big Mac and Egg McMuffins all around the globe. McDonalds 75% of its chains are owned and operated by the franchisees all over the world and only 25% of its chains are owned by the company. In 1967 McDonald opened its first international outlet in Canada. Most of the McDonalds outlets are free standing units, other than that it also has many units located at airports and in other retail areas. Since the opening of McDonalds first international outlet in Canada it is known for providing the outstanding quality, quick service, cleanliness and value to its customers (McDonalds, 2011). Current Strategic Aims and Objectives of McDonalds McDonalds has clearly defined its strategic aims and objectives; the vision of McDonalds is to be the leading, quick and the best fast food service provider all over the world. Other objectives of McDonalds are; to maintain and develop the best quality food products in the quick service restaurant market, McDonalds also wants to lead the quick service restaurant market by attracting new customers, opening more profitable restaurants, increasing its sales through promotion that enable them to continue their program of expansion. The McDonalds goal is to maximize its profits, maintain its competitive advantage by constantly creating new products to add onto its menu, which will help to attract new customers and satisfy their existing customers that gives customers a reason to visit McDonalds often (McDonalds, 2011). McDonalds main objective is to be the worlds best quick service restaurant ever experience and for this McDonalds provide outstanding service, quality, cleanliness and value to its customers all around the globe. McDonalds also aim to grasp every opportunity to innovate and lead the industry on behalf of the customers, they also have a passion and feel committed to go beyond their customers expectations every time in every restaurant in order to enhance and protect the McDonalds brand all over the world (McDonalds 2011). An Evaluation of the Component Parts of a Strategic Plan Strategic planning is a very important business activity and it is used to achieve certain goals and objectives. An organization sometimes summarizes its goals and objectives into a mission statement and a vision statement. Vision is basically a long-term view, which outlines what an organization wants to be in the future and also describe how the organization wants the world in which it operates. Vision basically concentrates on the future and provides the decision making criteria to the organization. Whereas mission defines the basic purpose of the existence of an organization, the mission also defines about the desired level of performance needed in order to achieve the organizational aims and objectives (Kotler, 1986). The Vision of McDonalds is to be the best and the leading fast food provider all over the world (McDonalds, 2011). There are five different ways of judging the suitability of an organizational vision; the first one is the foresight which tells whether the vision of an organization is strong enough and realistic and when the vision of McDonalds is evaluated it is clear that it is strong enough as well as realistic. The second way to judge the vision of an organization is the breadth, which tells does the vision of an organization fully cover likely changes in the market place and McDonalds has a capability to change with the environment and make sure that in every country of the world its customers must always get quality products, in quick time, in a clean and pleasant environment and at a reasonable price. Another way to judge the vision is the uniqueness that an organization can capitalize on and surprise its competitors and the uniqueness in the vision of McDonalds is that the tas te and the size of its burgers are same in each outlet all around the globe where it provides its products and services. The fourth way to judge the vision is through consensus, which tells that an organization should have only one vision and the McDonalds has only one and clear vision and that is to be the best and the leading fast food provider all over the world. Lastly through action-ability a vision can be judge which tells whether the vision is ready for implementation or does the organization have core competences. The vision of McDonalds is ready for the implementation and the core competency of McDonalds is providing convenience to its customers when they want to eat fast food at the prices that are competitive and provide best value for the customers money (Hamel and Prahalad, 1994). The mission statement of McDonalds is to be our customers favorite place and way to eat. Their main focus is on being the best fast food provider and for this their worldwide operations has been aligned around a global strategy called a Plan to Win based on the five factors of an exceptional customer experience; People, Product, Price, Place and Promotion (McDonalds, 2011). Just like the vision statement the mission statement of McDonalds can be judge by seeing how far it meets the certain formulations. Firstly McDonalds should have a clear idea in what business they are in and should also do a thorough market research before introducing any new product. Secondly the mission statement should be made from a customer perspective and the mission of McDonalds is clearly defining that they have made their mission statement while keeping their targeted customers in mind. Thirdly an organization must make sure that its mission statement reflects the core values and beliefs of an organizatio n and the McDonalds mission statement is clearly defining that it provides convenience when people need and want to eat good quality fast food at reasonable price in a pleasant environment. The fourth way to assess the mission statement of an organization is to define what sustainable competitive advantage an organization has over its competitors and one of the McDonalds competitive advantages is it focuses on the consistency of the quality, the use of raw materials and the production of food all around the world. Lastly an organization should summarize the strategic approach they would use in order to achieve the strategic aims and objectives of an organization. McDonalds has design certain strategic approaches to achieve its aims and objectives like the utilization of technology, the defined work routines and maintaining the competitive advantage (Lynch, 2006). Factors Affecting the Strategic Plan There are certain factors that affect the McDonalds corporation so much that their role in shaping the strategies cannot be ignored and these factors are; political, economical and social factors. The political factors affect the organization in different ways like the international operations of McDonalds are highly influenced by the individual state policies enforced by each government. For instance different countries focus on different areas of concern like; the worker protection, health and the environment. All these elements are in the control of government and considers when giving a license of the restaurant in different countries (Bateman and Scott, 2004). Different organizations in the fast food industry have their individual concerns involving economic factors. The different branches and the franchises of McDonalds have the tendency to experience difficulties where the economy of certain countries hit by the inflation and the changes in the exchange rate. Therefore, if a franchise operates in a particularly economically weak country, then these franchises must make certain adjustments in their strategies to maintain the economies of scale (Sustar and Sustar, 2005). The social factors also affect the strategies of an organization. McDonalds cater variety of customers with different types of personalities in different countries. McDonalds uses different concepts of consumer behavior like product personality and purchasing decisions of consumers to make proper strategies, so that it can attract new customers and satisfy their existing customers in order to achieve its aims and objectives efficiently (Bateman and Snell, 2004). LO2) Evaluate the Alternative Strategies to meet the desired Future Strategic Position 2.1) A Range of Strategic Analysis tools to Audit Progress towards strategic Aims and Objectives   The marketing audit is very essential for an organization as it provides the backbone strategic analysis that supports corporate decision making process and it also tells the current position of an organization. The SWOT analysis is one of the auditing tools that are use to analyze the internal as well as the external factors of an organization that are favorable and unfavorable to achieve the objectives of an organization (Aaker, 1997). The biggest strength of McDonalds is its large market share, strong brand image and reputation, strong financial performance and position in the food industry, friendly environment for customers and the practice of going green has made it possible for McDonalds to gain more fame all around the world. The weaknesses of McDonalds are it had to face certain legal action because of using trans-fat and beef oil that can negatively affect its brand image, other weaknesses of McDonalds are it offers the variety of junk food which is considered as a very unhealthy food among people and it is also losing its customers due to the increase competition (Peter and Donnelly, 2007). There are certain opportunities as well for McDonalds like; through globalization open more profitable restaurants, it could also make itself more innovative by offering deals that appeal to new customers, and other opportunity is that in the last few decades there is a huge growth in the fast food industry has been observed. Like some opportunities there are certain threats as well that McDonalds faces like; the health professionals accuses McDonalds because of increasing health issues of diabetes, high cholesterol heart attacks and obesity. Another threat for McDonalds is the competitors market share of the company both internationally and domestically (Peter and Donnelly, 2007). 2.2) The Expectations of major Stockholders and their Influence upon the Organizational Strategy The major stockholders like; the top management, customers and suppliers influence the organizational strategies in different ways. So for this the top management should establish a superior strategic decision process throughout the company so that the strategies can evolve and flourish consistently over time. All the strategic preferences that increase the value for both the customers and the share holders are highly desirable and should increase the growth of any organization. For instance, McDonalds rapid withdrawal of its fifty-five cent hamburger campaign, which separated franchises without creating much new customer loyalty or demand, was a costly but necessary decision to avoid further damage to share holder value (Hill and Jones, 2009) The conflict arises when the manager face choices that involve real trade-offs between the customer and the share holder value. Let say if a proposal to increase customers or customer value will reduce the shareholder value, then it should be rejected. For example with increasing awareness about the food and the importance of the balanced diet, if McDonalds would start encouraging people to opt for low calorie food with high fiber content then people might appreciate McDonalds for giving this awareness and people will might change their eating patterns and spend less on fast food. This would be beneficial for customers but not for the shareholders and this would gives rise to conflict that would harm the organizational strategy (Hill and Jones, 2009). Suppliers play a vital role in achieving the organizations aims and objectives and also influence the strategy of an organization and it is believed that suppliers success is an integral to an organizations success (Webster, 2002). So an organization should remember that suppliers cannot be expected to support their plan with an organizations plan unless organizations have shared its strategic plans with suppliers. 2.3) Analyze, Interpret and Produce a Structured Evaluation of the Organizational Strategic Position The challenges that McDonalds faces are; as the food industry is continuously growing the competitors are entering into the market with competitive prices not only internationally but domestically also and due to this McDonalds can lose its customers as well as its market share. The other difficulty that McDonalds is facing is the increasing awareness about the food and the importance of the balanced diet nowadays people are opting for low calorie food and changing their eating patterns by consuming less fast food and this is because there are competitors that provide the low calorie food at the prices almost the same as McDonalds and due to this McDonalds can lose its customers (Freidman, 1999). McDonalds can achieve competitive advantage by using three generic strategies of cost leadership, differentiation and focus. The competitive advantage can be achieved by differentiating the products from those of competitors and McDonalds is differentiated by its brand name and brand images of Big Mac and Ronald McDonald. Another way to achieve competitive advantage from those of competitors is through low costs and McDonalds provides substantial entry barriers from economies of scale and cost advantages which clearly define that McDonalds follow the cost leadership strategy. Organizations can achieve competitive advantage through targeting their products by a broad target, thereby covering most of the market place, or they can focus on a narrow target in the market. McDonalds target market is broad almost covering the most of the market and not focusing a particular market (Porter, 1998) PEST/EL is an analysis of the external macro environment in which a business operates. The operations of McDonalds in each country are highly influenced by the individual country policies enforced by each government and every country has its own political affects on the organization and its operations. The economic factors are also different in different countries that affect the organizations strategies like the different franchises of McDonalds in different countries have to face different problems due to the change in economic environment (McDonalds, 2011). McDonalds run its operations in more than 100 countries which mean it serves variety of consumers with different cultures and personalities. So McDonalds cannot use only one strategy for all its food chains, the strategy might not be completely different but differs with respect to the social environment. The technology has greatly helped McDonalds in providing quick service to its customers. The incorporation of technology in the operations of McDonalds tends to add value to their products. The social responsibilities of McDonalds on the country are influential to the operations of the company and these involve allegations of environmental damage with such claims like the using non-biodegradable substances for their drinks glasses and the Styrofoam coffers for the meals. McDonalds also had to face certain legal actions because of using trans-fat and beef oil and this could easily harm the reputation of the McDonalds all over the world (McDonalds, 2011). LO3) Decide the Strategy and Justify the Selection to meet the Required Future Strategic Position 3.1) Develop a Range of Alternative Strategic Options to meet Strategic Aims and Objectives The fast food industry is often criticized because of its role in creating numerous health problems like obesity, cholesterol and diabetes and was thought to be the driving force for the unhealthy eating disorders. These days customers are becoming more aware of the nutritional values and the health benefits of the products they are consuming. So in order to achieve strategic aims and objectives McDonalds should come up with greater variations in its menu and offer healthier food like sandwiches and salad and innovative fresh juices for the health conscious people. There are many competitors in the industry because of the rapid growth of the fast food industry all over the world and these competitors are offering almost the similar products and services at almost similar prices. So if McDonalds wants to achieve its strategic aims and objectives and wants to attract new customers as well as retain the existing customers then it need to focus more on the strategies that attract more children to their restaurants by offering toys that are most desired among children with a happy meal because this would help them in retaining their customers. McDonalds should also see what similar products the other competitors are offering and try to offer something very innovative product that no other competitor is providing or as well as that attract the customers. McDonalds should also start separate McCafes for teenagers and college going students and the ambience of that cafà © should reflect the different colors of youth. McDonalds should also introduce more variety in the existing range of milk shakes and smoothies and also introduce a variety in coffee and offer innovative high quality and refreshing products at a reasonable price that attracts the young people. 3.2) Determine and Justify the Strategic Option that meets the Revised Strategic Position Among the four strategic options that were given above the first option and that is McDonalds should offer healthier food like sandwiches and salad and innovative fresh juices is the best option for McDonalds to achieve the strategic aims and objectives in the food industry because of the increasing health problems like heart attack, obesity, cholesterol and diabetes. As the awareness about the nutritional values, health benefits and the benefits of low calorie food with high fiber content has increased among people and due to this people have started changing their eating patterns and spend less on junk food that the fast food chains are providing. McDonalds need to introduce a healthier menu that emphasize the healthy side of McDonalds and should also introduce the low calorie variations of all its burgers and make its fries healthier by using the right kind of oil, then do the aggressive promotion of the new menu variety in order to cope with the health concerns related with its products. This would help McDonalds to achieve its strategic aims and objectives efficiently as well as it would proof that McDonalds has the capability to change with the environment and the consumers preferences and lastly this would also enhance the brand image of the McDonalds in the consumers mind.

Social Networkings Influence on Eating Disorders Essay -- Facebook, T

As many as 10 million woman and girls suffer from anorexia or bulimia in the United States (Steele). Anorexia and bulimia are very serious eating disorders. Many women and young girls feel that these disorders are the only way for them to be accepted by others. However the strive for acceptance only ends up causing pain, emotional harm, or death to those affected. Being a sufferer of anorexia, I know the emotional and physical damage this disease can cause. The root cause of having an eating disorder is still undetermined, yet some doctors and physiologist believe the new focus on a perfect body, shown by the media is to blame. Society’s portrayal and promotion of a thin body image as the ideal female body contributes to eating disorders and poor self-esteem in many woman and young girls. Eating disorders are a group of illnesses characterized by abnormal eating habits. The American Psychiatric Association (APA) classifies eating disorders into three categories: anorexia nervosa, bulimia nervosa and eating disorders not otherwise specified, such as binge eating. The history behind these controversial diseases start as far back as 1689 when an English physician, Richard Morton gave the first medical description of anorexia nervosa, which he called "nervous consumption", he said was caused by sadness and anxious cares (Eating Disorders Timeline). The more recent fascination of eating disorders came to light when model Twiggy arrived in the U.S. Her short-haired, super-thin, look altered the fashion industry and shed light on a new feminine body image based on extreme thinness. Twiggy also introduced the â€Å"model† body image known today (Eating Disorders Timeline). In 1994 a study published in the Journal of Adolescen... ...anice. "Old Problem, New Victims." Winston-Salem Journal (Winston-Salem, NC). 26 May 2009: n.p. SIRS Researcher. Web. 05 Apr 2011. Ogilvie, Megan. "How Biology Trumps Image As Cause of Anorexia 'I Became Obsessive..." Toronto Star (Toronto, Canada). 13 Apr 2008: SIRS Researcher. Web. 05 Apr 2011. Onstad, Katrina. "Thin Is Inviolate." Globe and Mail. 20 Nov 2010: L.15. SIRS Researcher. Web. 05 Apr 2011. Siegel, Judy. "Link Found Between Heavy Use of Facebook and Eating Disorders..." Jerusalem Post (International). 01 Feb 2011: 6. SIRS Researcher. Web. 05 Apr 2011. Schwarz, Fred. "Not Our Stars But Ourselves." National Review Vol. 61, No. 3. 23 Feb 2009: 22-24. SIRS Researcher. Web. 05 Apr 2011. Topping, Alexandra. "Kate Moss Fallout: 'Pro-Anorexic' Community Finds Comfort..." The Guardian (London, England). 21 Nov 2009: 11. SIRS Researcher. Web. 05 Apr 2011.