McDonald’s Australia Holdings Essay Example

  • Category:
    Business
  • Document type:
    Article
  • Level:
    High School
  • Page:
    3
  • Words:
    2020

McDonalds Australia Holdings

Executive Summary

Australia’s fast food industry has experienced tremendous growth over the past few decades. Since the fast food eating habit was introduced in Australia, Australians have adopted fast food as part of their foods culture with a significant Australian population today eating out in restaurants. This report examines the internal and external factors that influence McDonalds Australia Holdings’ operations with the help of SWOT analysis. The report also discusses the findings to explain the strategic direction that the company should take based on the SWOT analysis. The report also highlights the need for McDonalds Australia Holding to introduce natural fresh fruit juices as part of its product offering to minimize the weaknesses associated with junk foods and soft drinks. The discussion also centers on the marketing mix elements that are appropriate to ensure competitiveness.

Introduction

Australia’s fast food industry has experienced tremendous growth over the past few decades. Since the fast food eating habit was introduced in Australia, Australians have adopted fast food as part of their foods culture with a significant Australian population today eating out in restaurants (IBIS World 2014). The high consumption of fast food in Australia has not gone unnoticed as it has attracted many domestic and foreign companies that have established businesses in the Australian fast food industry to exploit the opportunity. McDonalds Australia Holding is amongst the leading fast food chains in Australia today. The restaurant, which is a subsidiary of McDonalds started operating in Australia in 1971 and has since then expanded to all major cities in Australia through franchising (IBIS World 2014). Currently, there are approximately 2,647 McDonalds Australia Holding branches in Australia (Bloomberg Business 2015). The restaurant offers a variety of products, such as hamburger, desserts, salads, dinner, breakfast, smoothies, drinks, value picks, sides, and favorites. The restaurant also provides coffee, snacks, and baked pastries. The company employs about 8,000 people, effectively making in one of the major employers in the Australia’s restaurant industry. The company has been profitable, generating about $4 billion in revenue and $1 billion profit in 2014 despite the stiff competition it faces in the industry (The Sydney Morning Gerald 2015).

SWOT Analysis

SWOT analysis is s business strategic analysis tool used to assess a company’s strengths, weakness, opportunities, and threats. Using SWOT as a tool, a company can understand the internal and external factors that might affect the operation of the company in a market and respond effectively

McDonald’s Australia Holdings

Strengths

  • Strong brand name and reputation

  • Commands large market share

  • Highly innovative

  • Effective marketing strategies

  • Government support

  • First to introduce the concept of fast food

  • Highly trained staff that results in excellent customer service

Weaknesses

  • Unhealthy product image

  • Health issues associated with junks

  • Unbalanced meals

  • Many litigations

  • High rate of employee turnover

  • Environmental issues

Opportunities

  • Growing fast food industry

  • Expansion into more Australian cities and towns

  • Adoption of sustainable production processes and packaging

  • Increased demand for low-cost meals

  • Diverse preferences and taste of customers

  • Growing demand for healthy meals

  • High competition

  • Health problems linked to junk meals

  • Increasing environmental concerns

  • Economic recession

Findings

According to SWOT framework, it has emerged that McDonald’s Australia Holdings has numerous strengths that it can utilize to exploit the numerous opportunities that it is presented in the Aussie food market. The first major strength of the company is its strong brand image and reputation. In Australia, the majority of Aussies associate fast food with McDonald’s Australia Holdings because of its parent company McDonalds. Therefore, the company has a chance to take advantage of its strong brand image and reputation to acquire more Aussie customers. However, using its brand image and reputation does not necessarily mean that McDonald’s Australia Holdings should introduce additional product lines to acquire more customers. Rather, the company should exploit its strong brand name and reputation in promoting its existing product offerings to the Aussies.

McDonald’s Australia Holdings should also consider using its strong brand name and reputation to expand to other major towns and cities in Australia. As at present, the company has not reached many towns and cities in Australia that it ought to exploit to ensure growth and success. Therefore, being that it has a strong brand name and reputation; it should exploit this strength to expand to as many towns and cities in Australia as possible. Its strong brand name and reputation will give it a competitive edge over its rivals as it expands to more regions in Australia.

Secondly, McDonald’s Australia Holdings should take advantage of its strong innovativeness to exploit the opportunities available in the market. The company should exploit its strong innovation to establish a position in the market by diversifying its product portfolio. In particular, the company should invest in R&D to enable it to come up with new innovative products and services. For instance, McDonald’s Australia Holdings should consider intruding kids play place in all its restaurants throughout its stores in Australia as this will help enhance its competitiveness. Introducing kids’ playground will attract Australian households to come with their children to the restaurant as they will be able to dine while leaving their kids to play in a secure place. Because most customers love the service, popularizing kids playground in all its branches in Australia will enhance the satisfaction of customers, thereby helping build loyalty, which is important in enhancing the McDonald’s Australia Holdings’ competitiveness.

The other important strength that McDonald’s Australia Holdings should exploit is its excellent customer service. The company has highly trained and top-notch talents that are ever committed to ensuring high customer satisfaction. It is for this reason that the staff of McDonald’s Australia Holdings is rated highly as the employees portray not only good behavior but also positive attitude when handling customers. As such, the restaurant should consider exploiting this strength to attract new customers to the restaurant. However, because customers sometimes complain about having to wait for too long in the queue to be served, McDonald’s Australia Holdings should consider increasing the number of service staff to help address this weakness. Fortunately, the company has strong financial muscle, which is a strength it can exploit to ensure that it hires enough staff and increase their pay to help enhance their motivational level and commitment to delivering quality meals and services to customers.

Recommendations

Target Market

Market segmentation is an important activity that any company that hopes to succeed in a market must engage in. Market segmentation involves defining a market that a company intends to serve. Segmentation ensures that a company understands the needs of customers in that particular segment so that the right products and services can be developed that meets the needs of the target market. McDonald’s Australia Holdings, however, has a diverse target market for its services and products. The target markets include adults, children and people on the move that are in need of quick breakfast to start their day. Despite the fact that all these target markets contribute significantly to the growth of McDonald’s Australia Holdings, kids segment is increasingly becoming a huge market for the company in Australia. According to IBIS World (2014) report, a large proportion of Aussie children love fast foods. For this reason, McDonald’s Australia Holdings has focused much of its marketing efforts in serving this valuable market segment that the other food companies in Australia have largely ignored.

Proposed New Product for Children

For several decades since McDonald’s Australia Holdings entered the Australian market, the company has been serving Aussie kids will junk foods and soft drinks. However, junk foods and soft drinks that the company serves kids have been under increased criticism on the grounds that they impact the health of Aussie children negatively. In particular, the junk foods and soft drinks have been blamed for the increased obesity rates among Aussie children. According to NHMRC (2014), approximately 20% of Australian children are overweight or obese. The rate is expected to increase in the coming years if nothing is done to address the problem. The main concern is that obesity is associated with a variety of health problems, such as diabetes, hypertension, heart illnesses, certain cancers and kidney problems among others. This implies that, for McDonald’s Australia Holdings to continue remaining competitive in the Australian food market, it has no option but to change its strategies by introducing healthier products for Australian kids.

To remain competitive. McDonald’s Australia Holdings should consider introducing natural fruits to form part of its product offering for the Aussie kids. Because of the health benefits that come with eating natural fruits, the Australian government and health professionals are conducting campaigns encouraging Australians to feed their kids high quantities of fruit to enable them grow up healthily (NHMRC 2014). The campaign has born fruits as most Australians currently spend a huge portion of their income on fruits for their kids to enable their kids grow and live a healthy life. Therefore, McDonald’s Australia Holdings should take advantage of this opportunity by introducing natural, fresh fruits juices to its restaurants as part of its product offering for the Australian children. Introducing natural fresh fruit juices will help attract a huge number of customers visiting the restaurant to eat healthy foods, thereby helping give McDonald’s Australia Holdings a competitive edge over rivals in the industry.

Because the price is an important marketing mix element that influences customer buying decision, McDonald’s Australia Holdings should ensure that it charges affordable prices for its fresh fruit juices (Wenderoth 2009, p. 19). Charging prices that customers can afford will give the restaurant a competitive advantage over its rivals as it will help attract many children and their parents to McDonald’s Australia Holdings instead of competitors.

The place is the other important marketing element that the company must consider when coming up with its marketing decisions for the kids’ new product. Place defines how the company will make the fruit juices available to its customers (Wenderoth 2009, p. 23). Therefore, McDonald’s Australia Holdings should ensure that the products are made available within the easy reach of kids by ensuring that they are not forced to travel long distances to reach the stores where to buy the fruit juices. This implies that McDonald’s Australia Holdings should consider opening up more shops in major cities and towns throughout Australia to enable the customers to get the fruit juices easily. At the same time, McDonald’s Australia Holdings should introduce a concept that allows customers to make orders for the fruit juices and get them delivered to their doorsteps. Additionally, e-commerce that allows customers to buy the fruit juices online.

Promotion is also a key marketing mix element that McDonald’s Australia Holdings management must consider when developing is marketing strategies. Therefore, to create product awareness and persuade customers to buy the newly introduced fresh fruit juices, the company should consider employing aggressive promotional campaign that include advertising the products on TV, newspapers, social media, website, billboards and road shows (Richter 2012, p. 74). Additionally, the company should consider using direct sales to promote its new product to the Australian population.

Conclusion

The introduction of natural fresh fruit juices suits SWOT analysis because it helps in addressing McDonald’s Australia Holdings’ main weakness that has to do with serving unhealthy junk foods and drinks. As noted earlier, junk foods and soft drinks that McDonald’s Australia Holdings serve are associated with poor health something that makes most health conscious Australians avoid McDonald’s Australia Holdings foods. Therefore, serving fresh fruit juices will help address this weakness. Similarly, introducing fresh fruit juices will help the company exploit growing untapped market of health conscious consumers in Australia.

References

Bloomberg Business 2015, Company overview of McDonald’s Australia Limited, accessed 17 Dec. 2015 http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=11312749

IBIS World 2014, McDonald’s Australia Holdings Limited — Profile company report Australia, accessed 17 Dec. 2015 http://www.ibisworld.com.au/enterprisefull/default.aspx?entid=202

NHMRC 2014, Obesity and overweight, accessed 17 Dec. 2015 https://www.nhmrc.gov.au/health-topics/obesity-and-overweight

Richter, T 2012, International marketing mix management: theoretical framework, contingency factors and empirical findings from world-markets. Logos Verlag Berlin GmbH, Berlin.

The Sydney Morning Gerald 2015, McDonald’s sales reach $4b in Australia, 18 March, accessed 17 Dec. 2015 http://www.smh.com.au/business/retail/mcdonalds-sales-reach-4b-in-australia-20150313-143gru.html

Wenderoth, M 2009, Particularities in the marketing mix for service operations. GRIN Verlag, Berlin.