The McDonalds Australia - Case Study Example

Name Class Unit Executive summary This report analyses McDonalds Australia. The report carries out environmental analysis by looking at both internal and external environment. To achieve this, the report have utilised SWOT analysis. The report identifies the company strength are based on their strong brand image, large market share, specialised training for management, strategic planning. The weakness is identified on poor reputation, health issues, high competition, high employees’ turnover and dissatisfaction among the franchises. The main opportunities are in industry growth, conservation, discounts, low cost menu and addressing health concerns. The main threats identified by the report are; rising competition, health issues and economic crisis. The report recommends McDonalds Australia to come up with a healthy breakfast menu targeting the family segment. The report concludes that this will help in addressing the weakness and threats faced by the company. Introduction In a business, it is vital to understand both internal and external environment which its operating in. environmental analysis in a business helps a lot in evaluating both strengths and weakness of an organisation. SWOT analysis is an acronym for Strengths, Weakness, Opportunities and Threats. SWOT analysis helps in strategic business planning. It also helps in identifying the business opportunities and competitors’ evaluation. The business is able to gain the insights of the past and the viable solutions for the existing problems (Valentin, 2001). McDonalds Australia Holdings Limited is unlisted public company operating through franchises in Australia. The company employs over 6,580 staff in Australia and has its headquarters in Thorn Leigh, New South Wales. Almost 80 % of the MacDonalds operations in Australia are through franchises while the rest is owned by the company. The company main competitors in the market are; domino pizza, Yum! Restaurants Australia and Pizza hut (IBIS World, 2015). The products offered by McDonalds Australia are; salads, French fries, hamburgers, cheeseburgers, chicken sandwiches, Big Mac and desserts among other (Mcdonalds.com, 2015). This report carries out a SWOT analysis on McDonalds Australia identifying the strengths, weakness, opportunities and threats in the company. The report will also use segmenting variables to identify one of the target markets. SWOT analysis Strengths Weakness Strong brand name- McDonalds Australia has been able to build its brand equity. Large market share- McDonalds have a large market share in Australia due to its size and reach. Specialised training for the managers. Innovation- McDonalds Australia has been in the forefront in adopting food technology. Excellent marketing strategies Reputation of being unhealthy Fierce competition- McDonalds Australia has been facing stiff competitions from Burger Kings, Yum! Brands among other fast-food chains in Australia. Health trends- consumers who are conscious about their health have been shunning McDonald’s foods. High employees’ turnover- Franchises becoming dissatisfied due to high fees. Opportunities Threats Growth- the fast food industry is growing at fast rate. Conservation- consumers are more interested in companies that operate ethically through taking care of the environment. Discounts- through giving discounts, McDonalds will be able to attract more customers. Low cost menu- consumers in the low income segment require a cheaper menu. Heath trend-customers have been avoiding fast food due to health concerns. High competition-The market has strong brands such as Yum! Brands, Burger King, Wendy’s and Pizza hut. Health- due to increase of obesity in Australia, McDonalds have been facing a lot of criticism due to their menu. Economic crisis- McDonalds Australia faces a threat from economic crisis Analysis McDonalds Australia SWOT analysis shows that the company main strengths lie on its strong brand name, large market share and managers training. The company strong brand name has made it to be well known across Australia. Brand equity is intangible but has measurable and real benefits. One of the benefits is increased margins since the company products have a better perception than those of the competitors. The strong brand has also led to increased customer loyalty where the customers are willing to pay more for the products which have a strong brand. Customers are more likely to remain loyal to the company due to its brand equity. With a strong brand name, it becomes easier for McDonalds Australia to expand in the country and beyond. This is due to fact that people can easily identify the brand. McDonalds Australia has a competitive advantage based on their strong brand (Valentin, 2001). The company will have more customers compared to the competitors with weaker brands. McDonalds Australia has also been able to gain a large market share in the Australian market. The changing lifestyles and increase in disposable incomes have led to many people choosing to eat in fast food restaurants. The busy working schedules have also contributed to the rise in demand for fast foods. This is a great opportunity that McDonalds Australia can use to expand their market and increase revenue. Through training their managers, the company have a highly trained management who can lead the company to success. McDonalds is very keen on training its managers. Through an established program, McDonalds trains its managers in Hamburger University. This helps the company to have highly qualified managers who helps in its development. The company is also good at drafting strategies which makes it possible to gain a large share. In the fast food industry, adoption of technology makes it possible to meet customer needs and enhance efficiency. The main weakness with McDonalds Australia is based on health concerns and competition. The fast food industry has been blamed for the rising cases of obesity in most countries. This makes the health conscious consumers to avoid them. The market is highly competitive with new industries coming in. The major companies such as Yum! Brand and Pizza Hut are major competitors in the industry. The competition has been stiff with the competitors taking some of the McDonalds customers. Restaurants have been reducing the costs of burgers while increasing their offerings. Some of the franchises are becoming dissatisfied due to high fees they are supposed to pay McDonalds. High employees’ turnover is another weakness for McDonalds. McDonalds have high number of employees. Despite this, the employee turnover rate is very high due to firing and quitting. Over the years, most of the McDonalds employees have been quitting their jobs due to low salary and job pressure. As McDonalds expands, they have been increasing the cost of using their logo. This may lead to some of the franchises selling their business. The main threat based on SWOT analysis is competition, health issues and economic crisis. Due to increase of obesity in Australia, McDonalds have been facing a lot of criticism due to their menu. Consumers have also taken the health issues very seriously leading to change in their eating habits (Valentin, 2001). Recommendations Target market The company have segmented their products based on demographics, bahavorial and psychographic. Segmentation involves dividing the customers into small segments with unique needs (Dibb, 2010). Demographics targets kids, family and students. Through psychographic segmenting, the company targets lifestyle and convenience. In bahavorial segmentation, the company have looked at occasions such as birthdays and parties (Hollensen, 2015). The company main target is young families. This consists of the working parents who have busy schedules. The company through strategic positioning should put more focus on this target since it makes a large market share. The restaurant is positioned as a low cost and family friendly restaurant. The family segment benefits a lot from outlets which allows take away and drive through. Most of the families are concerned on the health. This has made them conscious on what they eat. Fast food has been shunned by some consumers due to health concerns. New product description McDonalds Australia has a major opportunity in taking advantage of the growing market in fast food. The company can introduce healthier offering in their menu and eliminate the unhealthy menu. This will make it possible to gain a market share from the health conscious consumers. The company have a major opportunity in low income consumers who makes a sizeable market share. This is through offering low cost menu. Despite the efforts to eliminate the unhealthy menu, the company is still offering food rich in calories and low on nutrients. The company will have to eliminate all products which have been criticised and come up with new ones. The company breakfast menu have been criticised for being highly unhealthy. This requires a breakfast that has a reduced calorie count. The healthy menu will also be sold at a reduced price to cater for consumers at low income segment. Customer value proposition Consumer value proposition describes the reason why the target consumer should buy a given product. The new product will offer the consumers value through health benefits (Anderson, Narus & Van Rossum, 2006). This is attained by reducing the calories and adding the minerals in the menu. McDonalds have great knowledge on the customers hence they can easily come up with the best value proposition. The new healthy breakfast menu will be sold at a lower price based on the current retailing price. The price will be based on the labour costs and the overhead. The product offering should be in all franchises under McDonalds Australia. Promotions play a vital role in marketing. McDonalds should consider offering promotions on holidays and family parties. Justification This is a product that will fit the family target market since they are more health conscious. The new product offering will be able to address the company weakness in reputation for being unhealthy. This will be a major move for the company to be in line with the healthy trends in the industry. Also the product will address the threat from health concerns. The company have been receiving a lot of criticism on their menu due to health. By being more health conscious, it will be possible for McDonalds to attract more consumers. This is the only strategy which addresses the major weakness and threats that McDonalds Australia faces. Conclusion This report has carried out a SWOT analysis on McDonalds Australia. This is through analysing both the internal and external environment for the company. McDonalds have a strong brand image, large market share, specialised training, innovation and well planned strategies. The main weakness lies on bad reputation, competition, unhealthy menu and health trends. On the external environment, the company have opportunities on; growth, conservations, discounts, low cost menu and addressing the health concerns. The threats faced by McDonalds are; rising competition, health issues and economic crisis. The company can target the families through offering a healthy menu. This involves eliminating all unhealthy products from the menu. This will increase their revenues and address their weakness and threats. References Anderson, J. C., Narus, J. A., & Van Rossum, W. 2006. “Customer value propositions in business markets.” Harvard business review, Vol.84, no.3, p.90. Dibb, S. 2010. “Market Segmentation Success–Making it Happen!.” Strategic Direction, Vol.26, no.9. Hollensen, S. 2015. Marketing management: A relationship approach. Pearson Education. IBIS World, 2015, McDonald's Australia Holdings Limited - Profile Company Report Australia, Retrieved 1st August 2015 from, http://www.ibisworld.com.au/enterprisefull/default.aspx?entid=202 Mcdonalds.com, 2015, McDonalds Australia, Retrieved 1st August 2015 from, https://mcdonalds.com.au/ Valentin, E. K. 2001. “SWOT analysis from a resource-based view.” Journal of Marketing theory and Practice, Vol.3, no1., p.54-69. Read More