The McDonald's Australia Holdings Limited SWOT Analysis - Case Study Example

Executive Summary The McDonald's Australia Holdings Limited SWOT Analysis report is meant to examine as to whether the Company is serving its purpose as a fast food chain in Australia in terms of making profits, and if it is capable of surviving the saturated competitive fast food business in Australia. The company is doing well in the food industry except that it has experienced a lot of problems and complaints levelled against it in regard to selling unhealthy fast food to its clients. The SWOT analysis identifies the major areas that need attention from the company. However, the report also identifies certain recommendations that the company can scrutinise and make changes where necessary and help it improve on its business operations. 1. Introduction and Company Background McDonald's Australia Holdings Limited is part of the US based McDonald Corporation. The company franchises the McDonald’s chain of family restaurants in its operations in Australia and other selected countries. It was established in 1971 with its headquarters being in Thornleigh, New South Wales Australia. McDonald Corporation is the second largest private employer after Wal-Mart and the biggest chain of hamburger fast food restaurant operating in more than 100 countries (IBISWorld 2013). The company has more than 35, 000 outlets and over 60 million customers. McDonald's Australia Holdings Limited company is unlisted Australian Public Company and employs over 6000 staff members in Australian. The major role of the Australian based McDonald Company is to initiate and operate a chain of quick services of the family restaurants all over Australia. The company operates an approximately 20% of the restaurants in Australia. The rest of 80% of McDonald’s restaurants in Australia are run by franchisees that are responsible for the company service fees and rents (IBISWorld 2013). McDonald Australia Limited offers sweet snacks, cheeseburgers, milkshakes, coffee, chicken, savoury snacks, French fries, and freshly baked pastries. The company also expanded it menu to provides wraps, seasoned fries, soft drinks, breakfast, dinner, value picks, fruits, desserts, favourites, salads and sides as a response to its customers clients tastes (Bloomberg 2015). 2. SWOT Analysis Table The McDonald’s Australia Limited SWOT Analysis Strengths Weaknesses 1. The bulk of its customers comprise of children. 2. The company is mostly recognised by its brand and logo, and it is also in partnership with established brand across the world. 3. High quality food products at an affordable price. 4. High profit margins. 5. Independent franchisees own over 80% of the restaurants. 6. Their system is efficiently connected and decentralized. 7. Ethical conduct practises. 1. Low differentiation and market trends fluctuation issues. 2. Unhealthy foods allegations in McDonald’s menu. 3. High employee turnover, training and recruiting issues. 4. The company experiences some negative publicity Opportunities Threats 1. Home meal delivery, and/or outside catering. 2. Flexible and attractive employment prospects. 3. Higher demands for healthy foods. 4. Reputable brand image and integrity. 5. Positive environmental concerns. 1. Healthy eating tendency demands. 2. Constant fluctuation of world currencies is financially affecting the business. 3. Developed economies being treated with saturated fast food markets. 4. Findings of SWOT analysis a) Strengths Targeting children clients: McDonald’s Australian Holdings has an accommodative playing ground that gives children the opportunity to play as they have their favourite meals in the establishment (Yuece 2012). Business brand and logo reputation and efficient business partnerships across the globe: McDonald enjoys reputable brand respect and identification in the entire fast food industry (Ansel 2015). The company’s partnership with best brands in the world has enables it to stock and sell reputable brands such as Heinz Ketchup, Dannon Yogurt, Coca Cola, among other brands in its famous restaurants (Yuece 2012). The Company’s logo is also among the most recognised logo among other logos such as Nike, Coca Cola etc. High quality food products at an affordable price: The company endeavours to consistently provide value products to its clients, and sells high quality fast food to its customers. Ethical conduct practises: The Company utilises open channel communications so as to retain its integrity with its shareholders. Independent franchisees own over 80% of the restaurants: The Company has the time and ability to concentrate on marketing its products and working on the efficiency of its system because the bulk of the work is taken care of by the franchisees (Yuece 2012). High profit margins: McDonald's Australia Holdings Limited continues to record high profit margins with the help of its enough capital. Their system is efficiently connected and decentralized: The Company can easily respond to the local markets and clients diversity with the help of its flexible programme framework. This has further been boosted by the core standards, principles, and values of the company that are implemented by the managers (Armstrong, Stewart, Denize & Kotler 2014). Weaknesses Low differentiation and market trends fluctuation issues: These kinds of issues are driving McDonald's Australia Holdings to compete by price instead of competing by additional features. This makes it difficult for the Company to significantly distinguish itself from other similar fast food chains, and hence recording insufficient market share (Ansel 2015). It would be difficult for the company to change market trends in accordance to customers’ demand preferences such as consuming organic and eco-friendly foodstuff without incurring financial losses as well as changing their suppliers (Ansel 2015). Unhealthy foods allegations in McDonald’s menu: The Company’s menu mainly comprise of unhealthy drinks and meals such as burgers and fries. Moreover, despite the fact that McDonald's Australia Holdings food chain also provides some healthy food in its menu, it has still continuously offered its customers with burgers that contain excess calories in them (Gargano 2014). Such kinds of food in their menu have sometimes elicited protests from institutions that endeavour to fight obesity cases. These kinds of occurrences have previously tarnished the good name and popularity of the entire McDonald’s Corporation despite of the progress that it has struggled to make in the food chain business (Yuece 2012). Hence, more serious precautions are needed to take care of the unhealthy fast food issues. High employee turnover, training and recruiting issues: The Company has a problem with finding and recruiting employees because of its hostilities towards unions. Lower performance and employee turnover is also experienced by the company because their employees perceive Mac-Job in negative way because it is a low paying skilled job. This has further led to overall high operation and training costs for the company (Ansel 2015). The company experiences some negative publicity: The Company mostly focuses their marketing campaigns on young children, offering unhealthy food to its clients; a fact that has led to stimulating obesity to its customers and even triggered public uproar. Opportunities Home meal delivery, and/or outside catering: McDonald's Australia Holdings company has the opportunity of increasing its presence and outreach to its customers by offering them with their favourite meals at their doorsteps. Flexible and attractive employment prospects: Various job prospects are available at McDonald's Australia Holdings. The company also presents a variety of employee benefits and flexible shift patterns that favours working mothers and people with special health needs (Duncan 2012). Higher demands for healthy foods: McDonald's Australia Holdings has the opportunity of introducing and increasing healthy foods in its menu, especially for those groups of clients who do not consume meat products. This is a weakness that can be turned into an opportunity by the company by simply responding to the demands for healthy foods by its customers (Buchan 2013). Reputable brand image and integrity: The Company’s genuine marketing communications and campaigns have earned it a good working relationship with its customers and stakeholders, besides building and retaining confidence with them (Yuece 2012). Positive environmental concerns: McDonald's Australia Holdings is accustomed to using recyclable packaging, offering sustainable fish sources, and maintaining daily cleaning routine. This is made possible by utilising friendly products and incorporating environmental committees in its daily operations (Buchan 2013). Threats Healthy eating tendency demands: McDonald clients are more cautious with the kind of food that they offer because of the health concerns. The customers are demanding healthy foods because of health related issues such as obesity, which the government and other relevant organisations are constantly trying to mitigate (Duncan 2012). Constant fluctuation of world currencies is financially affecting the business: The constant appreciation of the dollar against other currencies is always affecting the Company’s profits. This is because the exchange rates usually affects the Company at the time when its profits are first converted into US Dollars before they are sent to the United States where the Company’s headquarters are located (Buchan 2013). Developed economies being treated with saturated fast food markets: Developed economies such as Australia are experiencing a saturation of fast food outlets and hence threatening the profit margins of McDonald’s Australia Holdings (Ansel 2015). 5. Recommendations The target market for McDonald's Australia Holdings Limited is majorly based on chain stores retail franchising and fast food and beverages restaurant services. The main client segments of the Company comprise of business people, families, elderly and young people. The company’s value proposition is to continuously offer its customers with fast food of high quality across the world. McDonald's Australia Holdings Limited should introduce a healthy product in their menu. And since the company sells fast foods to its customers, it should introduce grilled or smoked Salmon fish with honey-mustard dressing plus a yogurt cup and served with greens. This meal is justified because it is a healthy food that will not be in a position to make children and other clients develop obesity issues (Ansel 2015). The marketing mix variables that would be appropriate for this new suggested meal in McDonald's Company is explained in the below diagram: References list IBISWorld, 2013, McDonald's Australia Holdings Limited - Profile Company Report Australia, viewed 30th March 2013, . Bloomberg, 2015, Company Overview of McDonald’s Australia Limited, viewed 30th may 2015, Ansel, K, 2015, fitness: 30 surprisingly healthy fast foods, viewed 30th March 2015, < http://www.fitnessmagazine.com/recipes/healthy-eating/on-the-go/healthy-fast-foods/ >. Gargano, S, 2014, IBISWorld Industry Report H4512: Fast Food Services in Australia, viewed 29th March 2015, < http://clients1.ibisworld.com.au.ez.library.latrobe.edu.au/reports/au/industry/default.aspx?entid=2005 >. Buchan, J 2013, Franchisees as Consumers: Benchmarks, Perspectives and Consequences, Springer, New York. Duncan, WD, 2012, Joint Ventures Law in Australia: 3rd Edition, 3rd edn, The Federation Press, Sydney, Australia. Yuece, I, 2012, SWOT Analysis of McDonald’s and Derivation of Appropriate Strategies, Grin Verlag, USA. Armstrong, G, Stewart, A, Denize, S & Kotler, P 2014, Principles of Marketing, Pearson, Australia. Appendices Read More