Similar to most things in life, actions have consequences. Often it is not just the action but how long it has or does go on, for example the world outside Russia for lots of different reasons did not like Russian invading Ukraine. For countries closer to Russia, they were worried if Ukraine fell, what country is next? For western powers or G7 type countries they were worried about balance of power shifting. For businesses, they relied on their home government for guidance. If a corporation had business with Russia, there was a benefits to Russia and benefits to the corporation. If you think about Europe, in order to diversify themselves from OPEC countries they used Russian oil and gas. It was a good strategy till it does not work.

In an article by David Koeing of the Associated Press, McDonald’s after 30 years of serving Big Macs in Russia has decided to sell its business. McDonald’s has 850 restaurants and through the supply chain connections employees 62,000 people. When McDonald’s opened it had to not only worry about building and operating the restaurants, they had to open factories to supply the restaurants. Those 850 restaurants are about 9% of McDonald’s revenue and 3% of the operating revenue before the war.

When McDonald’s opened its restaurants it was the time of the fall of the Berlin Wall and easing of cold war tensions. Neil Saunders, managing director of GlobalData PLC did not believe the sale price will be close to the value of the business before the invasion.

Linking to dividend paying stocks, some of the dividend paying stocks are global brands and even though they are US based, their revenue and profits come from around the world. For all companies with operations outside the US, they must continually determine if it is worth operating in the country, if and when governments change their policies or regimes. For McDonald’s losing about 10% of its business is a big decision for them, but they have to worry about the other 90%. If they had stayed would people still be loyal? The invasion does not seem to have an end point, although most people would like it to be over a month ago. Diversification just to be diversified is often not worth it.

There are more questions than answers, till the next time – to raising questions.