McDonalds Franchise Business in Cambodia and Bolivia

This document provides an analysis of the potential for McDonalds to establish its franchise business in Cambodia and Bolivia. It includes information on the ease of doing business, GDP, inflation rate, skilled labor, interest rates, unemployment rates, per capita income, and population of both countries. Based on the analysis, the recommendation is for McDonalds to invest in Cambodia.

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Introduction: McDonalds
McDonalds is a fast food company that was founded in 1940 in San Bernardino in United
States. It is the world’s most successful fast food company operating in over 120 countries
around the world. Founded by two brothers Maurice and Richard McDonald, it was initially
christened as a hamburger business only selling in stands but later converted into a franchise.
Later in 1955, the two brothers joined hands with businessman Ray Kroc as the franchise agent
for expansion purposes. Later Kroc bought the company from the two brothers at $2.7 million. It
had its initial headquarters at Oak Brook, Illinois but in 2018, it moved its headquarters to
Chicago (Al Muala, 2018). Its numbers are impressive. It’s the largest fast food franchise by
revenue with 37,855 outlets by the end of 2018. McDonalds serves more than 69 million
customers daily and is known for its tasty hamburgers, French fries and cheeseburgers. Chicken
products are also very popular in these restaurants but due to the changing consumer tastes, the
restaurant has introduced menus added with salads, fruit, smoothies and fish. The revenues come
from rent, royalties, sales from the restaurants operated by the company and fees paid to the
franchises (Bareša, Ivanović, and Bogdan, 2017). It is among the world’s largest employers in
the world with over 1.7 million employees. McDonalds wants to start its franchise business in
Macedonia and Cambodia. Here are the demographics of the two countries;
b) One product the Restaurant intends to introduce in the two countries
As a fast food restaurant with reputable attributes, McDonalds want to introduce the
hamburgers to the markets. Its best seller is the cheese hamburger which has had a lot of success

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in international markets. The cheeseburger is the best seller since it has its own taste different
from the usual burgers in other restaurant. The burger will cost an average of $4 depending on
the size and flavor. There are different sized of the burgers and are priced differently. The
product has had huge success especially when there is an introduction of the franchise in a
specific country. They are the best sellers in many countries followed by the restaurants Chicken
Nuggets (Devine, et al, 2018). The background of the product is a bun or bread cut into two then
meat or cheese sandwich is placed in the middle. It is then put in an oven to make it among the
best. The hamburgers have the following characteristics; seasoned with pepper and salt only,
uses the 80/20 ground chunk to make, getting the right temperature, use of cast iron, canola oil
and high heat temperatures. The cheese is then added to the mix then melted under the
temperatures. Grill the final product. A typical McDonald burger contains about 4 ounces of
meat. It is about 4 inches in diameter and three-quarter inches in thickness. They are grilled
either directly or indirectly under heat (Healey, et al, 2017).
c) Background for Cambodia
Cambodia is a country located in South East Asia peninsula. It is 181,035 sq. kilometers
in its total geographical area and borders Thailand and Vietnam. It has a population of 16
million. Its capital city is Phnom Penh. It is also a monarch with the head of Royal Throne
council acting as the head of state and the prime minister acting as the head of government. Hun
Sen, is the current prime minister one of the longest serving leaders in the world ruling
Cambodia since 1985 (Hovhannisyan, and Keller,2015). Buddhism is the main religion with
98% of the population prophesying the faith. There are over 1000 temples in major cities. In
Cambodia, the ease of doing business as reported in many international firms is one of the

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poorest. Cambodia is very corrupt and many companies actually struggle working in this country
due to poor governance and corrupt government officials. The history of the country is very rich
with many archeological records and historical sites being somehow many and limited in equal
measure. They were colonized by the French but the monarch was later restored (McDermott.,
Boyd, and Weaver, , 2015). The climate of the country is dominated by tropical winds and
monsoons. It has a large and varying ecosystems and biodiversity with many species of birds,
trees, fishes, animals and 212 recorded mammal species. It is a member of the United Nations
but has a poor record on human rights with many torture and execution being reported.
C2. Background for the country of Bolivia
Bolivia is a landlocked country located in western-Central of South America. Its political
capital is Sucre while the financial capital and government of the country is LaPaz. However, the
largest city is called Santa Cruz de la sierra. It is a democratic state with the rule of law as the
main guide to governance. Its headed by the president deputized is vice president. It has a
population of 11.5 million as at the end of 2018. Bolivia is a democracy with an area of
1,098,581 square kilometers and is the fifth largest country in south America (Pindado, and
Requejo, 2015). it was colonized by the Spanish and Spanish is the main language although
indigenous communities have their languages too. Most of the country profess the Christian
faith. Its economy its quite large and has vast mineral varies.
d. Summarize items A to H in point 1 for Cambodia

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In Cambodia, the ease of doing business as reported in many international firms is one of
the poorest. Cambodia is very corrupt and many companies actually struggle working in this
country due to poor governance and corrupt government officials. The GDP(nominal) of
Cambodia stands at $70.242 billion us dollars by 2018. The inflation rate in Cambodia stands at
2.6% while it has average but cheap skilled labor available. The deposit interest rate in
Cambodia in 2018 was at 1.6% while the average borrowing interest rates given by banks stands
at 18%. The current value of the Cambodian currency to the US dollars is one in four. 1 US
dollar is equivalent to 4 Cambodian Riel. It has the lowest unemployment rates in the world with
only 0.6 percent of the total population being unemployed. The average annual income per
person in the country is $ 4,000 dollars (Rodrigues, Nikhil, and Jacob, 2016).
e. Summarize items A to H in point 1 for the second country (Bolivia)
In Bolivia the ease of doing business is relatively low. There are manageable levels of
political instability and corruption. The GDP and the purchasing power parity for the country is
at $95,040 billion. However, the nominal GDP is at $45,045 billion. It has high inflation rates
standing at 10% in 2018. It has high unskilled workforce and the current interest rates at deposit
is at 2.46%. The currency exchange rates in Bolivia is 1 Us dollar is equal to 6 Bolivian
Bolivianos (Shumba, and Zindiye, 2018). The unemployment rate in Bolivia is at 3.6%. As one
of the poorest countries in the world, an average annual income is at $3,000 dollars.
Report to the Board

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According to the report analysis, both countries are risky to invest in. However, based on
numerous economic political and social analysis of Cambodia and Bolivia, Cambodia is better
placed for McDonald to invest in. Bolivia has a lot of economic issues and the poverty levels are
relatively high. The population is also lower than that of Cambodia. The only reason that is
negative in Cambodia over Bolivia is that the corruption levels in Cambodia are relatively high.
There is low levels of unemployment than in Bolivia and the interest rates are also low (Thomas,
and Logan, 2017).
Item / Country Cambodia Bolivia
Ease of Doing Business Favorable Favorable
GDP(nominal) $70.242 Billion $45.045 billion
Inflation rate 2.6% 10%
Skilled labor High Low
Interest rates( deposit) 1.6% 2.46%
Unemployment rates 0.6% 3.6%
Per capita income $ 4,000 $ 3,000
Population 15 million 11.5 million
Recommendations

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Based on the above analysis of the economy of the two countries, the recommendation is that
McDonalds establishes its franchise in Cambodia rather than in Bolivia. This is due to the
following;
1. Cambodia is doing well in all aspects of a thriving country compared to Bolivia
2. Cambodia has a high population than Bolivia
3. Its per capita is higher than that of Bolivia
4. Inflation, unemployment and interest rates are favorable in Cambodia than Bolivia
showing a stronger economy.
5. The political climate is favorable
6. The social lives in Cambodia show a prosperous country than the Bolivia country.
McDonalds should invest in Cambodia

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References
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