Strategic Environmental Analysis - PDF

Running head: STRATEGIC ENVIRONMENTAL ANALYSIS
STRATEGIC ENVIRONMENTAL ANALYSIS
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STRATEGIC ENVIRONMENTAL ANALYSIS
Executive Summary
This report is based on the analysis of the internal environment and the strategies that have
been implemented by McDonalds to gain a competitive position in the market. The corporate
and the financial performance of the company is analysed in detail. The various strategic
options that have been considered by the company is also analysed in detail. The
recommendations and suggestions are provided based on the ways by which the organization
can improve its revenues in the fast food market of Australia.

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Table of Contents
Introduction....................................................................................................................3
Trends and the size of the market..................................................................................3
Corporate and financial performance.............................................................................4
SWOT Analysis & Competitive Advantage..................................................................4
Strategic Options............................................................................................................6
Recommendations..........................................................................................................6
References......................................................................................................................8

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Introduction
The first restaurant of McDonalds in Australia was opened in the year 1971 in a
suburb in Sydney which was known as Yagoona. The organization has crossed more 900
restaurants all across Australia and the employee base of McDonalds consists of 90,000
people in the various management offices and the restaurants. The restaurant chain also has a
customer base of greater than one million people who visit the various restaurants every day.
The staff of the restaurants make sure that the customers are provided with the best of
services that they deserve. They also try to maintain hard work, service, cleanliness, quality
and the value that is provided to the customers (McDonald's Australia., 2018).
The report is mainly based on the analysis of internal environment of the organization
and the competitive advantage that it is able to gain in the market. The strategic options that
can be considered by the organization and the various recommendations are also discussed in
the report.
Trends and the size of the market
McDonalds is an American fast food giant and has more than 950 restaurants all over
the country which generated 5 billion dollars in the year 2016. The burger chain has depicted
a 3.5% increase in the sales of the global stores of the restaurant chain. The Australian market
has shown continuous growth in the last few years and is expected to grow further in the
years to come. The spending of the Australians in takeaway food has also increased in the
recent years. McDonalds has received the position of the king of the Australian market of fast
food which consists of more than 15.6 billion customers (Carroll, Primo & Richter, 2016).
McDonalds has acquired the topmost position in the fast food market of Australia which
amounts to around 29.5%. The market share of McDonalds was thereby followed by other
huge organizations like, KFC, Subway, Hungry Jack’s and Domino’s.

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Corporate and financial performance
Australia has proved to be a star in the entire global operations of McDonalds in the
entire world. The organization has doubled its profits every year and the sales growth has
been stable for many years. The steady growth in the sales of McDonalds has further led to
40% growth of group in Australia. The restaurant chain has been able to increase the growth
in sales with the help of the increase of choices in the menu for the customers who have a
variety of demands (Trigeorgis & Reuer, 2017). In spite of the tough phase that has been
faced by the restaurant industry McDonalds has been able to maintain its topmost position in
the market. The organization has aimed to improve the image of the restaurants so that the
perceptions of the brand in the minds of the consumers can be changes (Karadag, 2015). The
investment that was made by the management of the group in the new properties had proved
to be effective for the improvement of the revenues and the employees of the organization as
well.
SWOT Analysis & Competitive Advantage
Strengths – McDonalds has been able to build a huge brand equity in the Australian
fast food market. The image of the company is quite strong and recognised by the customers
all over the world. The market share that has been gained by McDonalds in Australia is the
highest among the other organizations. The managers of the restaurant chain are provided
with specialized training for dealing with the customers in an effective manner (Wheelen et
al., 2017). The fast food chain has introduced many new methods related to the production of
food items. This has increased their production speed and the reach to the customers has also
been increased further. The organization has taken many technological initiatives to improve
the production related processes (Frynas & Mellahi, 2015). This has helped in the creation of
a more efficient process for the fast food chain. The marketing strategies that have been used

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by McDonalds in the market have been useful for the effective operations of the organization
in the market.
Weaknesses – The unhealthy image held by the food products offered by McDonalds
have made a negative impact on the revenues of the organization. The organization has also
lost many customers due to the fierce competition that is being faced in the market. The
health related issues caused by the food products of McDonalds and wrong effect that these
have on the customers of the fast food chain. The health conscious customers have thereby
stopped purchasing food products from the various restaurants of McDonalds. The fast food
chain has been involved in many legal complications in the last few years which has caused a
major blow to the reputation of the organization in the market (Gamble & Thompson, 2014).
Opportunities – The fast food industry is fast growing in nature and McDonalds has
huge growth related opportunities in this area. The changing needs and lifestyle of people
have further led to the increase of opportunities for fast food based chains like McDonalds.
The fast food chain has opportunities related to globalisation and expansion in other countries
of the world. The expansion related activities have increased the customer base of the
organization. The menu of the fast food chain is based on low priced food items that are
offered to the customers. The organization also offers huge discounts to the customers to
attract them towards the restaurants. The fast food chain can also use the opportunity that is
provided by the various health conscious customers and offer them with products are healthy
in nature (Hill, Jones & Schilling, 2014).
Threats – The competition that is faced by the fast food chain in the industry is also
quite high. The entry of new brands in the fast food industry have caused huge pressure on
the profitability of the fast food chain. The health related crisis that has occurred among the
consumers of the fast food chain in Australia has affected the purchase of the unhealthy items

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that are offered by the fast food chain. The global economic recession has affected the food
industry of Australia which has further reduced the sales of McDonalds in the market. The
fast food chain has faced huge number of issues related to the effects that the operations of
the organization has on the environmental sustainability. This has led to the loss of customers
for the fast food chain (Engert, Rauter & Baumgartner, 2016).
Strategic Options
The strategic options that have been considered by McDonalds are related to the
generic strategies which help in the determination of the basic approach for the purpose of
developing its business and the competitive advantage that it has in the market. The strategies
that have been implemented by the organization are based on the intensive growth of the fast
food chain in the industry. The generic strategies and the intensive growth related strategies
of McDonalds have been changed with the changing needs of the consumers of the
organization. The changes in the growth related strategies are further based on the long-term
viability of the business of McDonalds (Meyer, Neck & Meeks, 2017). The generic strategy
that has been implemented by McDonalds is mainly on cost leadership. The organization
thereby believes in minimizing the costs to offer products at low prices to the customers. The
intensive growth related strategies of McDonalds have been based on three concepts which
are, market penetration, development of the market and development of the products
(Morschett, Schramm-Klein & Zentes, 2015). These strategic options have been the major
reason behind the growth of McDonalds in the food industry. The organization has been able
to enter various markets which include, Middle East and Asia, Africa, Australia. The food
market in Australia has proved to be a star for the growth of McDonalds in the food industry
of the country. The organization has been able to create a different position in the industry
with the help of the low cost items provided to the customers (Rees & Smith, 2017).

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Recommendations
The strategic options that have considered by McDonalds have helped the
organization to penetrate the various markets in the world easily. The cost leadership related
strategy has been helpful for the organization to maintain its position in the industry. The
differentiation strategy of the organization has been helpful for the profit growth of the
organization. The recommended strategic direction for the company will be to establish new
offices in the different locations of the world. The strategic goal that can be recommended to
the organization is based combination of market development and market penetration related
strategies. The organization needs to prepare an international strategy which will be helpful
for them to focus on the big cities and the areas which are highly populated in nature. The
fast food chain needs to create its advantage from the huge brand value that it holds in the fast
food industry of the world. The new production processes that have been used by the
organization need to be developed and made stronger so that they are able to increase the
speed of production. The long lines in the restaurants need to be reduced by the management
of the organization as the customers are not quite pleased with queues that are created in the
stores.

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References
Carroll, R. J., Primo, D. M., & Richter, B. K. (2016). Using item response theory to improve
measurement in strategic management research: An application to corporate social
responsibility. Strategic Management Journal, 37(1), 66-85.
Engert, S., Rauter, R., & Baumgartner, R. J. (2016). Exploring the integration of corporate
sustainability into strategic management: a literature review. Journal of cleaner
production, 112, 2833-2850.
Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press,
USA.
Gamble, J., & Thompson, A. A. (2014). Essentials of strategic management. Irwin Mcgraw-
Hill.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Karadag, H. (2015). Financial management challenges in small and medium-sized
enterprises: A strategic management approach. Emerging Markets Journal, 5(1), 26
McDonald's Australia. (2018). Mcdonalds.com.au. Retrieved 2 May 2018, from
https://mcdonalds.com.au/
Meyer, G. D., Neck, H. M., & Meeks, M. D. (2017). The entrepreneurship‐strategic
management interface. Strategic entrepreneurship: Creating a new mindset, 17-44.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international
management (pp. 978-3658078836). Springer.

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Rees, G., & Smith, P. (Eds.). (2017). Strategic human resource management: An
international perspective. Sage.
Trigeorgis, L., & Reuer, J. J. (2017). Real options theory in strategic management. Strategic
Management Journal, 38(1), 42-63.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic
management and business policy. pearson.