Analysis of McDonald's Business Activity in the Australian Fast Food Market

1
ECONOMICS RESEARCH ASSIGNMENT

2
Table of contents
1.0 Introduction..........................................................................................................................3
2.0 Analysis of the firm..............................................................................................................3
3.0 Overall industry....................................................................................................................5
4.0 Change in market conditions................................................................................................5
5.0 Conclusion............................................................................................................................6
Reference....................................................................................................................................8

3
1.0 Introduction
McDonald's is one of the biggest fast food chains in the world that was established in the year
1940 by Richard and Maurice McDonald. This company has a total outlet of 36900 spread all
across 100 countries of the world. In terms of revenue, this company has topped the list
beating all its competitors. One of the attracting things about the products and the service of
this company is that it changes its menu based on the location of the stores. Although,
McDonald is known for its hamburgers, it has successfully launched other chicken products
as well. The objective of this paper is to analyse the business activity of McDonald in the
context of the Australian market. Australia is a major market for this company and the
existence of other similar companies has made its market framework unique from the other
markets. McDonald is one of the most popular companies in the world and operates in a
unique market structure. Therefore, McDonald has been chosen for the analysis of this paper.
2.0 Analysis of the firm
2.1 Type of market
McDonald is operating in an oligopolistic market structure where there exist a small number
of other sellers in the market. Richards, Kjærnes and Vik, (2016) stated that, oligopoly is a
type of market where the number of sellers is small in number. Australian fast-food chain
market is equipped with other established players like Nando’s, KFC and many more. Apart
from that, another feature of the market where McDonald operates has a homogenous
product. According to the principle of market structure, players in the oligopoly can have
either homogenous or heterogeneous product. All these companies meet almost the same kind
of demand of the customers of the market (Janssen, Davies, Richardson and Stevenson,
2018). Although, the preparation and tastes are slightly different, they all fall into the
category of junk food. In addition to that, similar to the oligopolistic market, innovative
nature of the market players have also been seen in all the players including McDonald.
McDonald, in the year 2011, in Australia came up with a menu that used healthy ingredients
to keep the calorie count low to meet the growing demand of customers for healthy food.
Boyland, Kavanagh-Safran and Halford (2015) noted that, in an oligopolistic setting the main
aim of the players is to capture as big a share of the market as possible if they are not in a
mutual curtail. Lastly, the feature of the following strategy of the other players has also been
seen among the players in the Australian market. Currently, most of the players have a