Strategic Environmental Analysis of McDonalds in Australia

This report sheds light on the internal environment of McDonalds in Australia, its financial and corporate performance, SWOT analysis, competitive advantage, and strategic options. It concludes with recommendations for improvement.

Running head: STRATEGIC ENVIRONMENTAL ANALYSIS
STRATEGIC ENVIRONMENTAL ANALYSIS
Name of the Student
Name of the University
Author Note

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EXECUTIVE SUMMARY
The following report attempted to shed light on the internal environment of McDonalds as well
as the several strategies that have been employed by the organization in order to gain an
improvement in the competitive advantage within the given markets. The report proceeded to
analyze the financial and the corporate performance of the company in a detailed fashion. The
report further discussed the strategic options that have been implied by McDonalds. The report
concluded with the recommendations that would have helped in the improvement of the revenues
that are earned by the company in the Australian market.

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Table of Contents
Introduction..........................................................................................................................3
Trends and Market Size.......................................................................................................3
Financial and Corporate Performance.................................................................................4
SWOT Analysis and Competitive Advantage.....................................................................4
Strategic Options.................................................................................................................6
Recommendations................................................................................................................7
References............................................................................................................................8

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Introduction
In 1971, the fast food chain in discussion, McDonalds, has inaugurated their first store
within the Australian territories in a suburb of Sydney named Yagoona. In the present day, the
fast food chain is known to hold over 900 outlets all over the Australian territories and is known
to have provided employment to over 90,000 people across all the stores of the fast food chain.
The head count of the employees includes the employees who have been serving in the
managerial roles within the company. The client base of the concern comprises of around one
million people who are observed to have been visiting the several outlets on a regular basis. The
employees of the organisation are observed to strive their best to provide the clientele with the
best of their services. The major aim of the employee rest in the maintenance of the hard work,
the cleanliness, quality as well as the value that should be provided to the clientele.
The following report is mainly based on the analysis of the internal organisational
environment as well as the competitive advantage that is gained by the concerned company in
the Australian market. The report concludes with a discussion on the strategic options and the
measures that are recommended for the overall development of the company.
Trends and Market Size
The company in discussion, McDonalds is one of the giant fast food chains that have
been operating in the United States of America. The company is known to operate through over
950 restaurants that are present within the country. The company is known to have earned a
revenue of around 5 billion dollars in 2016. The fast food chain is observed to have demonstrated
an increased of around 3.5% in the sales that were completed by all the outlets in the
international markets. There has been a continuous and consistent growth in the Australian

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markets in the past years. The predictions state that the growth would be consistent in the future
years as well. The recent studies on the matter further suggest that there has been a consistent
growth in the expenditure of Australians in the terms of the people who have been interested in
takeaways. According to the studies conducted by Carroll, Primo and Richter (2016), the client
base that is catered to by McDonalds within the Australian territories consist of almost 15.6
billion clients. This has helped the company to obtain a unique positioning in the market. The
company owns around 29.5% of the fast food market in Australia. Thus, it is observed that the
other international fast food companies like Dominos, Hungry Jacks, KFC and Subway tend to
follow McDonalds in terms of the market share that is held by the company.
Financial and Corporate Performance
The Australian market has proved to be one of the most beneficial markets among all the
international operational markets of McDonalds. The Australian market has assisted in the
doubling of the profits earned by the company in every year in the international markets and
almost 40% of the growth of the company within the Australian frontiers as well. Trigeorgis and
Reuer (2017) state that the steady growth and improvement in the sales of the company has been
the result of the changes and the increase in the options on the menu that is served by the
company in order to cater to the varied demands of the clientele. Karadag (2015) states that the
company aim at the change of the perspectives of the clientele through the improvement of the
images of the restaurant. The changes that were put forth by the management of the institution
helped in the improvement of the employees as well as the revenues of the company as well.
SWOT Analysis and Competitive Advantage
Strengths – The company is known to have a great brand equity on the Australian fast
food industry. The clientele all over the world tend to recognize McDonalds to be an important

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brand. The markets share that has been gained by the company in the Australian markets is the
highest as compared to the other companies in discussion. Wheelen et al. (2017) state that the
managers of the organisation are provided with the specialized training which helps them to deal
effectively with the clients. McDonalds is also observed to have implemented a number of novel
ways to produce the food in a speedy manner. The company has also demonstrated an
acceleration in the time that is required for reaching the concerned client. Frynas and Mellahi
(2015) claim that the company has implemented various technology related developments that
has helped in the improvement in the processes of production. The effectiveness of the
organisational operations is majorly observed in the marketing strategies that have been adopted
by the company.
Weaknesses – The revenues of the organization are highly affected by the unhealthy
nature of the food that is marketed by the fast food chain. The extremely high competition has
also led to the loss of the clients on the part of the company. The company further lost clients due
to the health issues that were being faced by the products that were marketed by the company.
This led to the stopping of the clients from buying the products that were marketed by the
company. Gamble and Thompson (2014) further state that the company has also faced legal
issues in the which proved to be a huge setback for the company.
Opportunities – The fast food industry is observed to have been one of the fastest
growing industries within the given market thereby providing the company with the proper
opportunities for growth. The rapid changes in the lifestyle of the people tend to provide growth
opportunities for the organizations like McDonalds. The fast food chain is also known for the
opportunities that it is offered in terms of the expansion in the global markets. This has also
helped in the increase in the development of the client base of the company. The company might

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also face opportunities due to the low prices that are offered to the clients on the menu. This is
further aggravated by the discounted prices that are offered by the company. Hill, Jones and
Schilling (2014) opine that the offers of the healthy substitutes might also help in attracting the
health-conscious clientele to the organisation.
Threats – The company faces a huge amount of competition from the other companies of
the industry. The profitability of McDonalds is threatened by the entry of the new brands in the
given industry. The health-conscious nature of the clientele based in Australia has also led to the
reduction in the sales of McDonalds. The company as also faced a number of issues due to the
recession in the global economy which had led to the reduction in the sales. Engert, Rauter and
Baumgartner (2016) opine that the issues in the environmental sustainability has led to the loss
of the clients of the company.
Strategic Options
The development of the business as well as the competitive advantage on the part of
McDonalds are broadly based on the generic strategies. These strategies are known to have put
forth an intensive growth in case of the fast food company in discussion. The strategies that were
implemented by the organization are known to have faced change on the basis of the change in
the demands of the clients. Meyer, Neck & Meeks (2017) opine that the long-term viability of
McDonalds form a basis for the growth-related strategies that are adapted by the organisation.
The company is known to implement the cost leadership within the operations of the concern
which implies that the company intends to minimize the production costs in order to offer the
products at lower prices. Morschett, Schramm-Klein and Zentes (2015) opine that the market
penetration, market development and product development influence the strategies adopted by
McDonalds for the intensive growth in the industry. These strategic options are held responsible

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for the phenomenal growth as is depicted by the company. The major areas of expansion of
McDonalds include the markets of Africa, Australia Asia and Middle East. The Australian food
market has proved to be one of the major growth areas of McDonalds. Rees and Smith (2017)
opine that the distribution of the low-cost products has helped the company to develop a unique
positioning within the country.
Recommendations
The implementation of the above discussed strategic options have helped the company to
penetrate the global markets with great ease. The strategy of cost leadership within the company
has helped in the attainment and the maintenance of the position of the company in the industry.
The profit growth of the organization is known to have been positively affected by the
differentiation strategy as is maintained by the organization. The organization might be advised
to form a goal from the combination of the market penetration and development strategies. An
international strategy should be prepared for aiding the focus on the densely populated cities.
The high brand value of McDonalds should be utilized for creating the advantage. The company
should also develop the production processes that are required for improving the production
speed. The organizational management also needs to focus on the reduction of the wait time that
is faced by the clients, who are reportedly not very happy with the long queues that they have to
face at 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.