Why Would Mcdonalds Invest in Global Action

Mary Arnold

Why would McDonalds invest in stocks and debt securities?

McDonalds Corporation would purchase stocks, investments and debt securities to use their excess cash to earn more money. The excess cash would generate earnings from investment income. Speculating that the investment will increase in value and then result in positive returns would be another reason for the purchase. Strategic reasons would be another cause to invest money in another corporation. Say McDonalds was looking for an investment to gain in. They decided to invest in a fishing corporation to increase the company’s output. The fishing company improves in the amount and size of the fish they bring in to sell. McDonalds needs this source for their source to sell fish sandwiches. The fishing company brings in more fish and has a better price for McDonalds. It is a win-win for both of them. The money invested in the fishing company doubles, McDonalds gets more fish for a better price, the fishing company does more business and the investment grows.

McDonald’s risks and rewards of equity versus debt securities, the rewards are always increasing. There are risks, but according to McDonalds in a risk factor statement, “Our ability to remain a relevant and trusted brand and to increase sales and profits depends largely on how well we execute the Plan to Win.” (aboutMcDonalds.com, 2013) The Plan to Win addresses the key drivers of our business and results—people, products, place, price, and promotion. The statement goes on to say their “ ability to anticipate the trends and factors in the diverse markets that they serve, such as spending patterns, demographic changes, trends in food preparation, consumer preferences and publicity,” are all key to them (aboutMcDonalds.com, 2013). McDonald’s want to remain aligned with the company’s operating, promotional, and capital intensive initiatives. The procedures of food safety or other operational problems are all a risk....