Business Strategy for Hungry Jack's: Cost Leadership, Differentiation and Focus

This report outlines and discusses the business level strategies such as cost leadership, differentiation and focus for Hungry Jack's. It also evaluates the suitability of these strategies and analyzes them using McKinsey 7S model. Key issues and recommendations are also discussed.

Running head: Business strategy
Business strategy
2018

Business strategy
Table of Contents
Executive summary.....................................................................................................................................3
Background of the company........................................................................................................................3
Business level strategies..............................................................................................................................4
Suitability of the business level strategies...................................................................................................5
Evaluation of business level strategy by using McKinsey 7 S model..........................................................6
Key issues and recommendations................................................................................................................9
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10
Appendices................................................................................................................................................12
2

Business strategy
Executive summary
Business level strategy is an effective tool to analyze and measure the position of the
rivals. Hungry Jack’s which is the biggest fast food brands has been taken in the task to discuss
the significance of business level strategy. Hungry Jack’s launched its first store in Innaloo in
1971.The firm believes in promoting innovative and unique vision among the customers by
initiating four key values such as ensuring safety, giving maximum importance to customers,
improving and enhancing its performance and enabling integrity. The main objective of this
report is to outline and discuss the business level strategies such as cost leadership,
differentiation and focus. By implementing these strategies, the company has an option to boost
profitability and revenue globally. The paper further explains that how business level strategy is
suitable for Hungry Jack’s Company as it also explains that how this strategy can be evaluated
and analyzed by using McKinsey 7S model. At the end, some key issues that are being faced by
Hungry Jack’s have been discussed in the paper. More detail of the task has been drawn below.
Background of the company
Hungry Jack’s Pty Ltd. is a franchise of burger king Corporation. The company was
incorporated in 1971 as a wholly owned subsidiary of competitive foods Australia, privately held
firm owned by Jack Cowin (HungryJacks, 2018). The company is having more than 420
restaurants that serve various customers in the country; the firm employs approx 19,000 people
in Australia. The organization has been making fresh and good quality of burger for providing
satisfaction to the customers around the globe. The main mission of the corporation is to render
excellent quality of fast food products to the key target audience globally. Hungry Jack’s is the
second biggest franchise of burger king across the world. It is reported that organization offers
various fast food products and services including biscuits, sandwiches, french-fries, hamburgers
and chicken sandwiches to the customers in the market. Hungry Jack’s manages and operates
restaurants throughout Australia (Bloomberg, 2018). The company serves its products in more
than 390 locations across Australia. The market size of the firm is larger and wider to gain
competitive benefits globally. In today’s era, the company is maximizing profitability and
3

Business strategy
outcomes for improving its scope for making a dynamic and unique brand image in the market.
The vision of Hungry Jack’s is to be a leader in fast food industry by rendering fast food
products internationally.
Business level strategies
It is noted that business level strategies are being used by Hungry Jack’s to compete with
rivals in the international market. The business level strategies that help in maximizing profit
have been discussed below.
Cost leadership strategy: Hungry Jack’s uses this strategy to beat the rivals in the global
market. Market price is a vital and significant factor in selling the products and services. It is
elucidated that Hungry Jack’s offers products at reasonable prices to attract maximum target
audience in the market. The pricing of Hungry Jack’s products lines is done in an effective and
cost effective manner (Mishra, Sharma, Kumar & Dubey, 2016). Hungry Jack’s struggles with
major and unique fast food leaders including Wendy’s and McDonald’s. The firm uses market
based pricing approach to stand out over the rivals internationally. It is stated that the firm also
uses bundle pricing strategy to earn greater revenue and profitability (Rothaermel, 2015). The
company uses cost leadership strategy to attain operational efficiency and effectiveness by
purchasing the best quality of raw material and ingredients from the most effective and reliable
suppliers and using them in manufacturing excellent quality of fast food and desserts in the
global market (Leonard, 2018).
Differentiation strategy: It has been analyzed that differentiation is one of the significant and
fundamental strategies that used by the company while initiating the business globally. The firm
uses differentiation strategy to distinguish its products from their rivals’ fast food products
(Wright & Clarke, 2009). The motive behind using this strategy is to build and develop a unique
and effective brand reputation in the minds of potential and effective customers. To differentiate
the products, Hungry Jack’s is trying to keep an eye on the performance, product, policies and
strategies of the competitors (Scully et al, 2012).
Focus strategy: It is noted that focus strategy is unique and similar to cost leadership; the firm is
trying to strive with rivals by using this strategy. Hungry Jack’s focuses on its marketing efforts
in an effective manner to maximize revenue and returns (Verhoef, Lemon, Parasuraman,
4

Business strategy
Roggeveen, Tsiros & Schlesinger, 2009). Focus strategy is significant and vital to focus on the
low cost leadership and differentiation in an effective way. For example, Hungry Jack’s uses
focused low cost strategy to monitor and control the marketing cost and heavy manufacturing of
its top selling brands. This strategy further emphasizes on the marketing improvements and
variations in the quality, aspects, flavors and ingredients for a particular product line instead of
differentiating all the fast food products and beverages in the recently rendered brands (Leonard,
2018).
The business level strategies help the company to overcome the competitors in the
market. Business level strategies may work toward the satisfying the consumers by generating
strategies that have ample of values to the company and the consumers as well. A successful and
effective business level strategy helps the company by providing ample of information,
experience and knowledge about the competitors, products and customers across the globe
(Roberts, Pettigrew, Chapman, Quester & Miller, 2013).
Suitability of the business level strategies
The business level strategies are suitable and fit for Hungry Jack’s to reach at top level in
the marketplace. The company attains desired objectives and targets by using this strategy in a
hassle free manner. Evaluation of the business level strategies helps Hungry jacks to stay in the
competitive market. The business level strategies further help the company to reach their goals
and objectives effectively. By using business level strategies, the company could able to identify
and analyze the needs, preferences and choices of the customers to attain maximum returns
globally. It is seen that business level strategies are considered detail actions and steps taken to
render value to the customers and attain a competitive benefit by exploiting the core values and
competencies in an effective manner. This strategy is a concerned with a company’s position and
image in an industry, relative to rivals and to the five force of the competition. It is a strategy to
be dynamic and effective; it cannot be internally inconsistent as it also helps in attain various
benefits internationally. By implementing this strategy, the company could able to reduce and
eliminate the conflicts and challenges in the workplace (Rumelt, 2012).
Business level strategies further help in setting the unique and effective prices of fast
food products. These are the strategies which have to match its external environment in the
5

Business strategy
market. The organizations present in the global market that includes competitors, customers, and
regulatory bodies (Demil & Lecocq, 2010). Business level strategies further helps in delivering
benefits and values to the customers globally. Along with this, the evaluation analyzes and
identifies to what extent the business level strategy addresses various factors in a hassle free
manner. It is reported that business level strategies are fit for the internal and external
environment to beat the rivals. The company has a scope to improve and enhance the quality of
products by initiating the business level strategy at the workplace. Therefore, marketing risks and
challenges can be reduced with the help of this strategy. Hungry Jack’s is a franchise thus,
business level strategy helps to increase and enhance the sale of fast food products widely
(Santos-Vijande, López-Sánchez & Trespalacios, 2012). Predicting the needs, and wants of the
customers and answering these wants and needs can give a business a benefit over the rivals. The
company can work towards satisfying the customers by generating strategies that have value to
the company and customers as well. An effective business level strategy further is needed to
provide information and knowledge about the key target audience and customers as well
(Nandakumar, Ghobadian & O'Regan, 2010). This knowledge and information can lead to
higher profitability and revenue for the company. The business level strategies also provide
sustainable cost advantages to the customers across the globe. Apart from this, business level
strategies further are essential to cope up with McDonalds and Burger king globally. This
strategy is also helpful to global player in fast food industry in Australia (Markgraf, 2018).
Evaluation of business level strategy by using McKinsey 7 S model
It is evaluated that McKinsey model help in evaluating the business level strategies
globally. Hungry Jack’s evaluates the business level strategy by using Mckinsey model 7 S
model. This model is divided into 7 factors including soft and hard factors (Jurevicius, 2013).
The McKinsey 7 S model has been discussed below.
6

Business strategy
(Source: Jurevicius, 2013).
Strategy: It is noted that strategy is a plan built and used by a company to attain sustained
competitive benefits and effective compete in the international market. It is one of the significant
strategies that articulated to achieve rivals advantages globally. Thus, this model can be used to
evaluate and analyze the competitive benefits, strong mission and vision internationally. It has
been found that business level strategy is hard to measure and identify the challenges and
concerns. Along with this, McKinsey model helps in setting the mission, vision and values. The
strategy is aligned and associated with other factors when analyzed alone. Therefore, McKinsey
7 S model finds the great strategy, system, and structure to hit the rivals in the competitive
market. It is seen that McKinsey model is effective and dynamic to provide better results and
outputs by analyzing the business level strategy.
Structure: It is noted that structure shows the way and manner business units and divisions are
formulated and includes the information and facts who is responsible to whom. In other words,
structure is an organizational chart of the company. It is one of fundamental and easy to change
factors of this framework. The structure is needed to identify and measure the business level
strategy internationally. If a company maintains unique and effective framework or structure
then it will help to provide ample of benefits to the customers and employees as well. The
success and growth of Hungry Jack’s is dependent on its structure (Singh, 2013).
Systems: The systems are the procedures and processes of the firm, which explains the business
daily actions, activities and how decisions are made. Systems are the area of Hungry Jack’s that
7

Business strategy
evaluates and determines how the company uses business level strategy and it must be the major
focus for the leaders and managers during managerial change.
Skills: The skills are the capabilities that the company’s employee performs very well and
effective. They further include competencies and capabilities to use innovative business level
strategies effectively. Capabilities and skills are needed to implement the business level
strategies in the organization. If the company possesses innovative and skilled team at the
workplace then it can easily initiate the business level strategies to overcome the rivals globally.
Cost leadership is effective strategy that can be evaluated by using innovative and unique skills
and talents internationally (Singh, 2013).
Staff: This factor is concerned with what type and how many workers Hungry Jack’s would
need and how they would be trained, recruited, rewarded and motivated to implement business
level strategies at the workplace. The trained and skilled employees can easily distinguish
company‘s fast food products from the rivals in the international market. Without innovative and
potential employees, the company cannot exercise business level strategies within the
organization (Letaifa, 2015).
Style: It is stated that style shows the manner the firm is managed and controlled by top level
management, how they interact, and what steps do they take and their symbolic and unique
values. It is an effective management leadership style that help in using business level strategies
in Hungry Jack’s effectively. The company follows chaotic management style to implement
business level strategies such as cost leadership, focus and differentiation strategy.
Shared values: It is noted that shared values are the core part of Hungry Jack’s. They are the
standards, norms and values that assist worker behavior and actions, therefore are the foundation
or framework of every company. By using innovative values, standards and core values Hungry
Jack’s can evaluate and identify the benefits and significance of business level strategies.
McKinsey 7S model is used by the company to evaluate and measure the effectiveness
and efficiency of business level strategies (Jurevicius, 2013).
8

Business strategy
Key issues and recommendations
It is noted that various issues are being entertained by Hungry Jack’s while functioning in
the global market. Due to lack of potential and capable leaders, the company is unable to provide
training and development coaching to the workers. Apart from this, it does not provide
satisfactory wages and pay to the employees for performing roles and responsibilities effectively.
As a result, it may affect the working capacity and efficiency of the workers in a large extent.
Due to poor labor force, the firm could fail to keep an eye on the productivity, policies, products
and approaches of the competitors. Thus, it affects the long term sustainability and objectives of
Hungry Jack’s in the market. Due to lack of training, the employees do not follow code of
conducts and other norms in the organization.
It is recommended that the company should focus on the human resource management to
carry out the business activities and functions successfully and effectively. Ethics is a significant
part of better function of the company. Thus, Hungry Jack’s should focus on the code of
conducts and ethics in the workplace. Hungry Jack’s further must focus on the leadership styles
to guide and assist the workers effectively and smoothly. They provide guidance to implement
the business level strategies in Hungry Jack’s successfully. Advertisement and promotion
strategy must be used by the firm to promote its products in the international market.
It is stated that if current strategy like business level strategy is not working then the
company can use corporate level business strategy and global strategy in the international
market. The corporate level strategy helps Hungry Jack’s to maximize outputs and maintain its
financial success and growth in near future. Along with this, the company can use global
strategy, international strategy, multidomestic strategy and transnational strategy to explore and
flourish the business activities in the foreign market.
Conclusion
On the above mentioned analysis it is evaluated that Hungry Jack’s is one of the biggest
brands in Australia that provides fast food products such as burger, french-fries and biscuits to
the customers around the globe. The major intention of the report is to discuss and analyze the
business level strategy in the context of Hungry Jack’s. The mission of the firm is to ensure that
customers visiting at their place are rendered with quality cleanliness and food. This strategy is
9

Business strategy
suitable for the company to cope up with rivals in the competitive market. Apart from this,
McKinsey 7 model helps in implementing or using business level strategy in Hungry Jack’s to
face and handle the challenges and risks.
10

Business strategy
References
Bloomberg.,(2018). Hungry Jack’s Pty Ltd[Online], Retrieved from
https://www.bloomberg.com/profiles/companies/0366109D:AU-hungry-jack's-pty-ltd
Demil, B., & Lecocq, X. (2010). Business model evolution: in search of dynamic
consistency. Long range planning, 43(2-3), 227-246.
HungryJacks.,(2018). About Hungry Jack’s [Online], Retrieved from
https://www.hungryjacks.com.au/about-hj-s
Jurevicius.O.,(2013). McKinsey 7S model[Online], Retrieved from
https://www.strategicmanagementinsight.com/tools/mckinsey-7s-model-framework.html
Leonard.K.,(2018). Five types of business level strategies [Online], Retrieved from
https://smallbusiness.chron.com/five-types-business-level-strategies-781.html
Letaifa, S. B. (2015). How to strategize smart cities: Revealing the SMART model. Journal of
Business Research, 68(7), 1414-1419.
Markgraf.B.,(2018). How to evaluate business strategies [Online], Retrieved from
https://smallbusiness.chron.com/evaluate-business-strategies-52661.html
Mishra, D., Sharma, R. R. K., Kumar, S., & Dubey, R. (2016). Bridging and buffering: Strategies
for mitigating supply risk and improving supply chain performance. International
Journal of Production Economics, 180, 183-197.
Nandakumar, M. K., Ghobadian, A., & O'Regan, N. (2010). Business-level strategy and
performance: The moderating effects of environment and structure. Management
decision, 48(6), 907-939.
11

Business strategy
Roberts, M., Pettigrew, S., Chapman, K., Quester, P., & Miller, C. (2013). The advertised diet:
an examination of the extent and nature of food advertising on Australian
television. Health Promotion Journal of Australia, 24(2), 137-142.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Rumelt, R. P. (2012). Good strategy/bad strategy: The difference and why it matters. Strategic
Direction, 28(8).
Santos-Vijande, M. L., López-Sánchez, J. Á., & Trespalacios, J. A. (2012). How organizational
learning affects a firm's flexibility, competitive strategy, and performance. Journal of
Business Research, 65(8), 1079-1089.
Scully, M., Wakefield, M., Niven, P., Chapman, K., Crawford, D., Pratt, I. S., ... & NaSSDA
Study Team. (2012). Association between food marketing exposure and adolescents’
food choices and eating behaviors. Appetite, 58(1), 1-5.
Singh, A. (2013). A study of role of McKinsey's 7S framework in achieving organizational
excellence. Organization Development Journal, 31(3), 39.
Verhoef, P. C., Lemon, K. N., Parasuraman, A., Roggeveen, A., Tsiros, M., & Schlesinger, L. A.
(2009). Customer experience creation: Determinants, dynamics and management
strategies. Journal of retailing, 85(1), 31-41.
Wright, O., & Clarke, P. (2009, July). Retail food group co-brand strategy-a case study analysis
in the Australian franchising sector. In Proceedings of the 14th Biennial World Marketing
Congress (pp. 22-25).
12

Business strategy
Appendices
13

Business strategy
14

Business strategy
15