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128 PART 2 • STRATEGY FORMULATION

ASSURANCE OF LEARNING EXERCISES

Assurance of Learning Exercise 4A

Performing a Financial Ratio Analysis
for McDonald’s Corporation (MCD)
Purpose
Financial ratio analysis is one of the best techniques for identifying and evaluating internal
strengths and weaknesses. Potential investors and current shareholders look closely at firms’
financial ratios, making detailed comparisons to industry averages and to previous periods of
time. Financial ratio analyses provide vital input information for developing an IFE Matrix.
Instructions
Step 1 On a separate sheet of paper, number from 1 to 20. Referring to McDonald’s income statement
and balance sheet (pp. 31–32), calculate 20 financial ratios for 2008 for the company. Use Table
4-7 as a reference.
Step 2 In a second column, indicate whether you consider each ratio to be a strength, a weakness, or a
neutral factor for McDonald’s.
Step 3 Go to the Web sites in Table 4-6 that calculate McDonald’s financial ratios, without your having
to pay a subscription (fee) for the service. Make a copy of the ratio information provided and
record the source. Report this research to your classmates and your professor.

Assurance of Learning Exercise 4B

Constructing an IFE Matrix for
McDonald’s Corporation

Purpose
This exercise will give you experience in developing an IFE Matrix. Identifying and prioritizing
factors to include in an IFE Matrix fosters communication among functional and divisional man-
agers. Preparing an IFE Matrix allows human resource, marketing, production/operations,
finance/accounting, R&D, and management information systems managers to articulate their
concerns and thoughts regarding the business condition of the firm. This results in an improved
collective understanding of the business.
Instructions
Step 1 Join with two other individuals to form a three-person team. Develop a team IFE Matrix for
McDonald’s.
Step 2 Compare your team’s IFE Matrix to other teams’ IFE Matrices. Discuss any major differences.
Step 3 What strategies do you think would allow McDonald’s to capitalize on its major strengths?
What strategies would allow McDonald’s to improve upon its major weaknesses?

Assurance of Learning Exercise 4C

Constructing an IFE Matrix for My University

Purpose
This exercise gives you the opportunity to evaluate your university’s major strengths and weak-
nesses. As will become clearer in the next chapter, an organization’s strategies are largely based
upon striving to take advantage of strengths and improving upon weaknesses.