As a result, the advertising budget will be one of the first things they trim when they have to cut down on their spending.
- McDonald's Loves Your Recession.
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When budgets are tight, small businesses need to be wiser about how they spend their marketing money, since there's less to go around. Traditional methods such asadvertising on television or buying print ads in magazines also tend to cost the most. Small businesses simply don't have that type of money to spend during a recession, so they may start looking for areas where they can advertise for free instead. For example, businesses might start focusing on creating free Facebook pages and Twitter accounts as advertising methods.
Or they may focus on publishing press releases, which are free to write and send out. Another reason that the advertising budget experiences a slump during a recession is because when times are good, some businesses go overboard and take advantage of every luxury advertising opportunity available to them. They may buy the most expensive prime-time slots for placing commercial advertisements and buy premium back cover, full-color placements for magazine ads.
When these businesses experience a recession, they have to scale back from luxury advertising to more common-sense advertising, resulting in a slump in the advertising market even if they aren't cutting the budget completely. A business might choose to run a smaller print ad in a newspaper or a smaller color ad inside a magazine rather than on the back cover in order to save on costs.
Why are people flocking here? Similarly, KFC is huge in China. Will they take a massive hit as that nation spirals into a bad economic situation? I would note, however, that 'dynamic' and 'ETF' don't belong in the same sentence due to tax inefficiency and index confusion. On McDonald's, I am as impressed and bewildered as anyone else as to why their brand is doing so well.
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It's not only old fashioned, but it's out of style, and MCD's success is somewhat like 'Cadillac' becoming the world's best-selling car. Clearly, past or current image is not holding them back. They do emphasize 'value' in everything they do and seem to be communicating that to customers, either through service, convenience, coffee or whatever.
MCD does sell one scarce resource very cheaply--time. Depending on how you price yourself, that sandwich could cost you 2x to x the MCD deal. All power to them. Starbucks is not providing value for money and McDonald's is. I think it is interesting to note how quickly tastes have moved from luxury to value across the consumer spectrum. Starbucks was an affordable luxury--now it is not. One of the best things about a McDonald's meal is that they are extremely good at delivering a consistent customer experience around the nation and certainly around the globe.
For example, I don't recall ever reading about a major food poisoning incident involving McDonald's anywhere. I know when I am traveling around the globe, I am relieved to find McDonald's in a airport food court in other countries--I feel safe eating there knowing I won't get sick.
Safety and consistency are extremely appealing to consumers in hard times--add to that low price, and it is a winning formula. The other thing that is interesting about McDonald's is the rapid growth in other countries. They are clever with menus--they vary and add items that match the local culture in other parts of the world, making it familiar enough to bring the comfort element in those countries.
For countries where foreign goods are extremely expensive, a McDonald's meal is a chic treat to try something exotically American. I have been in McDonald's in Asia and in the Caribbean and the restaurants are full of young people who are into Western culture. So I think they have a winning formula from a bottoms-up perspective.
They now offer healthier items as well, which is great. I think the value they are showing consumers during a recession will be rewarded with some marginal additional loyalty when the recession is over, and foreign growth will continue. Enlightened decision making may have blocked another Depression, but it could not prevent a great deal of misery.
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The financial crisis struck individual countries with an impact that depended heavily on two factors: whether local institutions had ties to the U. Most of the developed countries had close financial and trade relations with the U. The dynamic economies of Asia were well positioned, and three large Asian countries—India, Indonesia, and China—escaped relatively unscathed.
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At least in the short run, India benefited from having isolated itself from the crosscurrents of the global economy. With a large economic stimulus package in place, however, Japan pulled out of recession in the third quarter of Fearful that strict limits on greenhouse gas emissions could cripple the economic rebound, the Japanese government proposed weaker limits than those under discussion in Europe and the U. Europe, with its close financial and trade ties to the U. Even Norway, which had virtuously invested its North Sea oil revenue with considerable prudence while the U.
Norway slipped into a mild slump in late and emerged early in Most of the rest of Europe fared worse. Many countries approved economic stimulus packages to extricate themselves from recession, and many resumed economic growth, although the U. In the fourth quarter, the U. Reflecting fears of future inflation, the stimulus programs in Europe were smaller than those in the U.
Perhaps more significant, the largesse stopped at national borders. Iceland became the first country to lose its government over the financial crisis. Then the tables turned, and the Latvian economy shrank at double-digit rates in —possibly the worst performance in Europe, although its Baltic neighbours, Lithuania and Estonia, were not far behind. In the Latvian capital of Riga, a street demonstration in January to protest economic decline turned violent, and a month later the prime minister resigned.
A default on its debt would be a giant headache not only for Greece but also for the entire EU. The fiscal problems that put Greece and Spain on a slippery slope were common across Europe, especially among economies that had grown the most largely on borrowed money during the heady early years of the decade. Ireland, heretofore an EU success story, was a typical case. In the United States, the government followed a two-pronged strategy to reverse the financial crisis: bail out distressed financial institutions lest they transmit their failure to their creditors and pump government money into the economy to stimulate business activity when private loans were scarce.
What emerged from the bailout was an extraordinary degree of government involvement in—and sometimes even majority ownership of—the private sector. Congress in February handed Pres. Obama claimed that the bill would create or preserve 3. Congress also played a role in the bailout of failing financial institutions. The Fed, using authority that it already had, played an even bigger role. Printing more money when not enough was available, the central bank invested heavily in foundering institutions and guaranteed the value of their shaky assets.
The government promised to play no role in managing these companies and to sell its ownership stakes as soon as practical. TARP provided the Treasury with only a fraction of the funds used for the bailout, however. Reflecting public views, members of the government expressed outrage that some of the same executives who helped precipitate the financial crisis should make millions of dollars a year in salaries and bonuses.
Many of the biggest bailout beneficiaries balked at the proposed salary limits and strove to get out from under them by paying the government back. More ominously for the financial institutions, many members of Congress marched into with a determination to regulate them more closely.
The House passed a bill in that for the first time would bring exotic financial instruments under review by federal regulators.
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The bill would also establish a single agency to protect financial consumers and guarantee shareholders a chance to vote on the compensation packages of corporate executives. The Senate planned to take up the issue in Despite the year-end sighs of relief over the improving economy, the economic destruction had not necessarily run its course. Many banks that survived the crisis were badly bruised by the collapse of the housing market and remained less willing than before to provide the credit that greases all capitalist economies.
Huge government budget deficits, designed to facilitate economic growth in the short term, loomed like dark clouds on the horizon, threatening inflation and currency devaluations. Low interest rates encouraged immediate business activity, but, like budget deficits, they could ultimately feed inflation.
Nearly one house in four was worth less than what the occupants owed on the mortgage, and similar problems in commercial real estate were mounting. Despite this, harbingers of prosperity were not hard to find. Stock markets turned robustly upward, with the DJIA making up half of its losses by year-end