An Assignment on

In spite of all the difficulties and failures during recession, why firms like

McDonald’s, Wal-Mart, and Amazon.com were so successful?

Submitted to

Dr. Sayed Golam Maola Professor, Department of Management Studies, University of Dhaka

Submitted by

Group #3

Md. Shafiqul Islam MBA (SIM) ID # 317

Shuvasish Dutta MBA (SIM) ID # 323

Md. Osman Gani MBA (SIM) ID # 324

Md. Wahidud Jaman Tusher MBA (SIM) ID # 328

Department of Management Studies, University of Dhaka

Date of Submission: May 20, 2015

Brief description on McDonald’s, Wal-Mart and Amazon.com:

McDonald’s

Industry Restaurant

Area Covered Worldwide

Founded May 15, 1940 in San Bernardino, California

CEO Steve Easterbrook

Sales US$ 28.1057 billion (2013)

Headquarter Oak Brook, Illinois, U.S.

Slogan I’m Lovin’ It

About The McDonald's Corporation is the world's largest chain of hamburger fast food

restaurants, serving around 68 million customers daily in 119 countries across

35,000 outlets. The company began in 1940 as a barbeque restaurant operated

by Richard and Maurice McDonald.

Wal-Mart

Industry Retails

Area Covered Worldwide

Founded July 2, 1962 in Rogers, Arkansas, US

CEO Doug McMillon (President & CEO)

Sales US$ 485.651 billion (FY 2015)

Headquarter Bentonville, Arkansas, U.S.

Slogan Save Money. Live Better

About Wal-Mart is an American multinational retail corporation that operates a chain

of discount department stores and warehouse stores. Headquartered in

Bentonville, Arkansas, the company was founded by Sam Walton 1962

and incorporated on October 31, 1969. It has over 11,000 stores in 27 countries,

under a total 71 banners.

Amazon.com

Industry Internet: E-Commerce

Area Covered Worldwide

Founded July 6, 1994 in Seattle, Washington, US

CEO Jeff Bezos

Sales US$ 88.988 billion (2014)

Headquarter Seattle, Washington, US

Slogan

About Amazon.com is an American electronic commerce company with headquarters

in Seattle, Washington. It is the largest Internet-based retailer in the United

States. Amazon.com started as an online bookstore, but soon diversified, selling

DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video

games, electronics, apparel, furniture, food, toys, and jewelry.

The Financial Crisis 2007-09

The financial crisis of 2007–2008, also known as the Global Financial Crisis and 2008 financial

crisis, is considered by many economists the worst financial crisis since the Great Depression of

the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of

banks by national governments, and downturns in stock markets around the world. In many

areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged

unemployment.

Causes:

The immediate cause or trigger of the crisis was the bursting of the United States housing

bubble which peaked in approximately 2005–2006.

The U.S. Financial Crisis Inquiry Commission reported its findings in January 2011. It

concluded that "the crisis was avoidable and was caused by: widespread failures in financial

regulation, including the Federal Reserve’s failure to stem the tide of toxic mortgages; dramatic

breakdowns in corporate governance including too many financial firms acting recklessly and

taking on too much risk; an explosive mix of excessive borrowing and risk by households and

Wall Street that put the financial system on a collision course with crisis; key policy makers ill

prepared for the crisis, lacking a full understanding of the financial system they oversaw; and

systemic breaches in accountability and ethics at all levels".

Lower interest rates encouraged borrowing. From 2000 to 2003, the Federal Reserve lowered

the federal funds rate target from 6.5% to 1.0%. This was done to soften the effects of the

collapse of the dot-com bubble and the September 2001 terrorist attacks, as well as to combat a

perceived risk of deflation. As early as 2002 it was apparent that credit was fueling housing

instead of business investment as some economists went so far as to advocate that the Fed "needs

to create a housing bubble to replace the Nasdaq bubble".

Rapid increases in a number of commodity prices followed the collapse in the housing bubble.

The price of oil nearly tripled from $50 to $147 from early 2007 to 2008, before plunging as the

financial crisis began to take hold in late 2008.

Another analysis, different from the mainstream explanation, is that the financial crisis is merely

a symptom of another, deeper crisis, which is a systemic crisis of capitalism itself.

Effects:

The recession resulted in worldwide liquidity crisis.

The effects were basically in the banking industry. The crisis rapidly developed and spread into a

global economic shock, resulting in a number of European bank failures, declines in various

stock indexes, and large reductions in the market value of equities and commodities.

Some developing countries that had seen strong economic growth saw significant slowdowns.

For example, growth forecasts in Cambodia show a fall from more than 10% in 2007 to close to

zero in 2009.

The output of goods and services produced by labor and property located in the United States—

decreased at an annual rate of approximately 6% in the fourth quarter of 2008 and first quarter of

2009, versus activity in the year-ago periods. The U.S. unemployment rate increased to 10.1% by

October 2009, the highest rate since 1983 and roughly twice the pre-crisis rate.

In spite of all the difficulties and failures during recession, why firms like

McDonald’s, Wal-Mart, and Amazon.com were so successful?

There's no such creature as a "recession-proof" company or sector. But some businesses appear

to be recession-hardy, warding off the downturn with strong balance sheets, long-range planning

and rising global sales of products and services that people want — even in scary economic

times.

Why?

Cash-short consumers may hold off buying big-ticket retail items. But they still need food,

clothes and medicine. And they can't seem to do without guilty pleasures such as alcohol,

cigarettes. – This is the real fact.

But now question is why firms like McDonald’s, Wal-Mart, and Amazon.com were so successful

where other firms were in difficulties in the respective industries?

Because, during recession, people expect and want best value at lowest price. And firms

like McDonald’s and Wal-Mart were able to meet customers’ expectation because of their

capabilities. Amazon.com was in addition to its online shopping system. Amazon sells

quality products at very fair price with no bargaining where other online shopping firms

bargains with customers. One another reason in case of Amazon is that it is less time

consuming and cost efficient to shop online.

They were able to meet customers’ expectation because of their competitive advantage to

provide best products of best brands in lowest possible price.