Understanding the external and internal environment

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understanding the external and internal environment of this brand to understand its capabilities. Background Data on Sales & Costs The sales of Mc Donald's and Yum brands have not been that different for some few years now. The two companies have been competitors for a long time, and it is only fair to have them head to head in the market capitalization. As stated, before these two companies are both International giants in the fast-food industry. According to the NYSE as of August 30th, 2019, the market capitalization of Yum Brands was at 35,53 Billion dollars, and on the other hand, Mc Donald's had a market capitalization of 165.54 billion dollars. Which is not a bad thing the gap may be a representation of how Yum Brands is not as "ancient" as Mc Donald's. The good news is that the growth Index of Yum Brands is excellent and within no time will the brand catch up to their fierce competitor Mc Donald's.
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This is also as a result of the strategy the two companies have adopted of late. The de-risking approach, which means using refranchising to drop their ownership of restaurants around the world. This has technically reduced their operational costs, and overall costs while on the other boost earnings per share growth. Another factor is that there is a growing free cash flow, whereby Yum Brands is leading; which in return it gives the chance for both companies to make investments that are aimed at growing their restaurants, technically this is why these two companies are head to head, that will give us a transparent background of their performance in this situational analysis. At the same, it is crucial to recognize that Mc Donald's has more returns of about of 41.2% while on the other hand, Yum Brands have gained a 30.3% in the previous year up to date. This is to add to the fact that both of these companies have outperformed the fast-food industry in the margin of 14.4% in the same period. The EBITDA ratio presents vivid valuation and earnings of the two companies. Typically, it is usually the more appealing company is the one which shows a lower EBITDA. Thus, both of these brands are overvalued based on the overall industry EBITDA of 13,8. However, Mc Donald’s holds the lower EBITDA value between the two at 16.1 and 19.8, respectively (Zack equity research, 2017).
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Competitors There are a lot of competitors in this industry; the like of Wendy’s, Papa John’s, Del Taco, Quiznos and Mc Donald's. But the focus will be mainly on Mc Donald’s since they are almost head to head in all aspects of the company and business in this industry. This segment will be looking at the advantages that Yum Brands had over the competition and what makes them a worthy competitor and a threat to a huge brand such as Mc Donald’s. What makes Yum brands stand out is the three brands, being the owner of the big three brands in the world, KFC, Pizza Hut, and Taco Bell. These three brands have established themselves solidly in the fast-food industry, as compared to Mc Donald's that is competing with the same brands. Another
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  • Fall '19
  • pizza hut, Yum! Brands, Yum Brands

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