Strategic Analysis of McDonald's and Hungry Jacks in Australian Fast Food Industry

This report analyzes the growth strategies of McDonald's and Hungry Jacks in the Australian fast food industry. It examines the market structure, pricing and non-pricing strategies, and opportunities for business growth. The report also compares the pricing and non-pricing strategies of both companies.

Running head: STRATEGIC ANALYSIS
STRATEGIC ANALYSIS
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1STRATEGIC ANALYSIS
Abstract
The report aims at investigating on the different prospects of growth in the fast food industry in
the Australian markets. The analysis of the market structure influences the strategies that are
implemented by the organizations. The report focuses on identifying the growth strategies that
are undertaken by MC Donald and Hungry Jacks. It also examines the manner in which the
strategies affect the proper functioning of the systems of business in order to assess the
opportunities of the same.

2STRATEGIC ANALYSIS
Table of Contents
1. Introduction......................................................................................................................3
2. Market Structure Analysis...............................................................................................4
3. Growth Strategies............................................................................................................6
3.1. Expansion Strategies of MC Donald and Hungry Jacks...........................................6
3.2. Opportunities for Growing Business........................................................................8
4. Pricing and Non-pricing Strategies..................................................................................9
4.1. Comparison of Pricing Strategies.............................................................................9
4.2. Similarities and Differences in Non-Pricing Strategies..........................................10
4.3. Opportunities that can be exploited by Hungry Jacks............................................11
5. Conclusion.....................................................................................................................12
References..........................................................................................................................13

3STRATEGIC ANALYSIS
1. Introduction
The strategies that are framed by the organizations are dependent on the assessment of
the market situation that is faced by the same. The ever- changing business environment creates a
huge impact on the organizational performance and thereby modifications are undertaken by the
firms in order to cope up with the diverse situations. The assessment of the capabilities and
competencies of organizations help the management in understanding the situation of the
business environment and thereby assist the same in enhancing the operations as per the needs.
The fast food industry has grown enormously in Australia based on the changing needs and
preferences of the customers. According to a report, around $7.16 billion are spent by the
Australian customers on fast foods annually (Agriculture.gov.au., 2018). The identification of the
diverse preferences of the customers is assessed by the industry while developing their units,
which has assisted the same in undertaking a wide expansion in the markets. Strategies on
pricing structure and the product offerings has helped the fast food providing organizations in
undertaking the rapid expansion of the same in the Australian markets.
. The purpose of undertaking the report is to assess the growth of McDonalds and
Hungry Jacks in the Australian markets through analysis of the market structure and the growth
related strategies that are implemented by the same. The contrasting characteristics of the
strategies that are framed by the organizations in this respect will be helping to identify the
proficiency of the functions that are undertaken by the same. The report aims at differentiating
the pricing and non- pricing strategies of the respective organizations as it will assist in
identifying the feasibility of growth in the competitive Australian markets.

4STRATEGIC ANALYSIS
2. Market Structure Analysis
The various social and economic developments in the Australian markets have helped in
the growth of the fast food industry with steady momentum. A series of strategies are employed
by the organizations in the sector in order to gain a competitive edge over the other players in the
oligopoly market structure. Macnamara and Zerfass (2012) stated that the frequent innovation in
the recipes and the pricing structure of the fast food organizations has helped the same in their
growth and sustenance in the Australian markets. The smooth functioning of the existing fast
food companies are affected by the new entrants in the Australian markets. Thiel et al., (2012)
noted that the Australian fast food market follows an oligopoly structure which is dominated by
McDonalds, Pizza Hut, Subway and KFC. Karim and Arif-Uz-Zaman (2013) stated that the
small-to-medium enterprises in the Australian markets are affected the wide market domination
of the large multinational fast food corporations. The identification of the subtle preferences of
the customers and thereby applying their knowledge on the product development process is one
of the major priorities that are faced by the small and medium sized enterprises while operating
in the oligopoly market structure. The competitive edge that is gained by the fast food
manufacturing organizations are due to the economic growth, increased population and the
increased rate of potential customers. The potentiality of the customers is backed by their
financial capabilities, which has helped the organizations in expanding their operations in the
different regions of Australia. Ley et al., (2014) stated that increased scope of employment in
Australia has helped in enhancing the lifestyle of the people resulting to their potentiality of
affording the fast foods prepared by the companies in the sector.

5STRATEGIC ANALYSIS
Figure 1: Food expenditure in Australia
(Source: Agriculture.gov.au., 2018)
McDonalds is one of the companies that hold a larger part of the share in the Australian
fast food markets. Pinto et al., (2017) noted in a report that McDonald’s is one of the leading
quick service restaurant summing up to around 52.7% of the people availing the services and
foods that are offered by the organization. The quality of the food is one of the major criterions
that have helped the organization in establishing a sustainable position in the oligopoly structure
of the Australian markets (Mcdonalds.com., 2018). The sustainability of operations that are
undertaken by the organization is dependent on the quality of the products and the affordable
prices that are marked by the same. On the other hand, the sustainable approach that is
undertaken by the business has helped the same in maintaining the efficacy of the functions in
different situations where new entrants might pose possible threats to the organizational
performance.

6STRATEGIC ANALYSIS
On the other hand, the Hungry- Jacks portrayed the accounts of different customers,
which went flat in the year 2016 at $1.23 billion. The organization holds around 400 stores in
Australia and employs more than 15,770 people (Hungryjacks.com.au., 2018). It has helped the
organization in undertaking the smooth functioning of the processes as per the objectives.
However, the competition that is faced by the business by the large scale players like Subway,
Pizza Hut, KFC and McDonalds has obscured the functioning of the same and the brand image.
However, the different promotions that are undertaken by the organization have helped the same
in maintaining their sustainability while operating in the diverse Australian markets (Morimura
& Sakagawa, 2018). The increasing trends of the fast food industry have helped in the
development of the organizations in an oligopoly market structure.
3. Growth Strategies
3.1. Expansion Strategies of MC Donald and Hungry Jacks
McDonald’s makes use of the primary generic strategy as cost leadership, which helps
the organization in offering low priced and high quality products through minimization of
different costs. The minimization of the costs and the lower price of the offerings have helped
the organization in maintaining their competitive advantage over the other existing players in the
market. The development of products with minimal costs has helped the organization in
maint6aining their competitive edge while operating in the diverse Australian markets. Andriulo,
Elia & Gnoni (2015) stated that the competitive pricing strategy of the organization has helped
the same in maintaining organizational propositions as per the differentiation strategy. Unique
selling proposition aimed by the organization has helped the same in enhancing the market grip
and thereby support the sustainable approach of the same. On the other hand, the organization

7STRATEGIC ANALYSIS
also employs a variety of tools in order to enhance the market penetration, which has helped the
same in expanding in the different regions of the Australia (Gollnhofer & Turkina, 2015).
McDonald’s also utilized different feedbacks from the customers through the utilization of CRM,
which has helped the business in understanding the preferences of the customers and thereby
undertake development of the product and service designs in order to suit the purpose of the
target customers (Kahraman et al., 2018). The organization also considers the preferences of the
free customers who might turn out to be the potential customers of the venture in the near future.
It has helped the business in maintaining their efficacy of the functions as per the objectives of
the sustainable approach.
Hungry Jacks utilize the competitive pricing structure, which has helped the organization
in adhering to the interests of the customers subjective to the demand in different regions. The
pricing has helped the organization in competing with the major fast food players including
McDonald’s and Subway (Wilson, 2015). It has helped the organization in adhering to the
flexible pricing structure as per the needs of the organizations. The key elements of change in the
organizational structure are based on the analysis of the needs of the customers while operating
in the diverse Australian markets. The organization holds around 400 stores in Australia, which
has helped in the development of the organization and its perpetual expansion in the different
regions of the nation (Valeeva & yan, 2015). On the other hand, the design of the products and
the quality assurance has helped the business in upholding the goodwill of the business resulting
to positive brand image. The competition that is faced by the organization while operating in the
oligopoly market structure has affected the business operations as the large scale firms obscured
the brand name. However, the quality that is assured by the organization on its propositions has
helped in attracting the attention of the potential customers.

8STRATEGIC ANALYSIS
3.2. Opportunities for Growing Business
McDonald’s might take steps to develop products as per the needs of the health
conscious customers. It will be helping the business in maintaining product diversification and
thereby attract the attention of large customer base. On the other hand, the organization might
take steps to bring forth changes in the processes through undertaking continuous market
assessments. It will be helping the business in facilitating continuous innovation, which will be
supporting the innovative functioning of the procuresses while operating in an oligopoly
structure. Undertaking different franchisee functions will be helping the organization in
expanding its operations in the diverse regions of the Australian markets (Rodriguez-Pardo et al.,
2017). McDonald’s might also take steps to bring forth changes in the networking channels in
order to enhance the engagement of the stakeholders in the processes. It will be helping the
organization in infusing different innovative projects as per the organizational sustainable
approach. The wide expansion of the organization will be supported through the engagement of
the stakeholders in the processes and thereby assist the organization in issuing franchisees.
On the other hand, Hungry Jacks might take steps to develop the products as per the
expectations of the customers, which will be helping the business in undertaking wide
acceptance of the propositions while operating in the diverse regions of the Australian markets
(Nguimkeu, 2016). The development in the range of products through the identification of the
changed preferences of the customers will be helping the business in maintaining the efficacy6 of
the operations while expanding (Namin, 2017). On the other hand, the organization might also
regulate the price of the products in order to make the product offerings more viable for the

9STRATEGIC ANALYSIS
customers. It will be helping the organization in achieving a competitive advantage over the
other players in the oligopoly market structure of Australia.
4. Pricing and Non-pricing Strategies
4.1. Comparison of Pricing Strategies
The pricing strategy of Mc Donald’s is observed to be psychological pricing in order to
attract consumers looking for low priced food products (Namin, 2017). In this strategy the
company sets prices for its food offerings a bit lower than the rounded numbers that make its
consumers believe that it offers low prices for its food products than its competitors. However,
this Australian fast food joint is also evidenced to be involved in changing its pricing strategies
based on its international expansion strategies and market demands. Along with following
psychological pricing, Mc Donald’s offers consumers with several promotional offers along with
discounts on its newly launched fast food ranges. Considering that this fast food company does
not have any discounted store, their value added food meals attracts ad retains its consumers
globally (Srinivasan et al., 2017).
The pricing strategy employed by Hungry Jack is gathered to be competitive pricing in
order to attract consumers from different market places. Moreover, the company has also
considered offering time value for money with maintaining its exceptional food quality that will
also ensure consumer retention. This pricing strategy is also considered to be suitable for this fast
food joint for the reason that it focuses on international market expansion through opening
franchise in North Africa market (Srinivasan et al., 2017). Price cutting policy is also used by
Hungry Jacks in some of its markets for the reason that it can make effective implementation of

10STRATEGIC ANALYSIS
price discrimination policy relied on product positioning. Through implementing this pricing
strategy this fast food joint has attained better position in the high-end market.
Product Mc Donald’s Pricing
Strategy
Hungry Jack Pricing
Strategy
Sandwiches $ 2.99 $ 4 (Competitive pricing)
Nuggets $ 5.99 (Psychological
pricing)
$ 8
4.2. Similarities and Differences in Non-Pricing Strategies
Market research is deemed to be an important non-pricing strategy for both the
companies namely MC Donald’s and Hunger Jack in an attempt to survive within the fiercely
competitive fast food industry. It is also evidenced that both of these fast food joints have
employed highly skilled restaurant attendants in order to spearhead the market research. This can
offer reliable information regarding process of all its fast food offerings available within the
industry with offering suitable demand and supply solution (Bicalho, Hamza & Luppe, 2018). In
case of Mc Donald’s it has been observed that service quality has improved in comparison to
Hunger Jack that has increased consumer base and improved its international mart presence.
However, the similar non-pricing strategy of both these companies that is market
researches strategy has facilitated in analyzing the recent market trends in Australian fast food
industry (Blay-Palmer, 2016). This also encompasses upward or downward movement of market
in a specific timeframe. There is certain difference in the non-pricing strategies of these fast food
joints as Mc Donald’s offers extended wattenties in all its offerings that are not offered by

11STRATEGIC ANALYSIS
Hunger Jack. Moreover, Mc Donald’s greatly use social media for marketing all its food
offerings and on the other hand, Hungry Jack employs advertising channels such as magazines,
billboards and television for its product promotion.
4.3. Opportunities that can be exploited by Hungry Jacks
The opportunities that might be exploited by Hungry Jacks are:
Revising the pricing strategies:
The organization might take steps to develop suitable pricing strategy in order to attract
the attention of the customers (Blay-Palmer, 2016). The utilization of penetration pricing
strategy against the competitive pricing will be helping the organization in grabbing over a large
customer base. It will be helping the organization in supporting its sustenance in the oligopoly
market structure where the large firms hold most of the market share (Bicalho, Hamza &
Luppe, 2018). Reduction of costs like production, packaging and distribution will be helping the
organization in offering their products in an affordable price to the customers. It will be helping
the business in building efficient brand name through offering quality food products in an
affordable price, which is slightly lower than that offered by the competitors.
Merger and acquisition:
The concerned organization might undertake steps to undertake strategic expansion in
the different Australian regions. On the other hand, the merger and acquisition will be helping
the organization in enhancing its knowledge of the processes and thereby build on the brand
name. The strategic merger and acquisition activities of the organization will be helping the

12STRATEGIC ANALYSIS
business in minimizing the risk that might be faced by the business while operating in an
oligopoly market structure.
5. Conclusion
Therefore, from the above analysis it can be stated that the different strategies that are
undertaken by the organizations helps in maintaining the efficacy of the functions while
operating in diverse market conditions. The key elements of change in the organizational
structure are based on the assessment of the market situations. The report undertakes an
assessment of the fast food market in Australia and the different strategies that are implemented
by the companies MC Donald and Hungry Jacks. The identification of the different strategies
and the recommended actions will be helping the organizations in expanding their respective
ventures in the Australian markets.

13STRATEGIC ANALYSIS
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