McDonald's and Hungry Jack: Economic and Financial Growth Strategies

This case study provides a comparative analysis of McDonald's and Hungry Jack's, two prominent players in the fast-food industry, focusing on their strategies to differentiate themselves in the market. It examines the market structure, growth strategies including product diversification, expan...Read More

Running head: ECONOMICS AND FINANCE FOR BUSINESS
ECONOMICS AND FINANCE FOR BUSINESS
A case study of McDonald’s and Hungry Jack
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ECONOMICS AND FINANCE FOR BUSINESS 1
Abstract
The two selected organisations as case studies for this particular study are McDonald’s and
Hungry Jacks belonging to the fast food industry. The aim of the report is to carry out a
comparative analysis of the strategies undertaken by the organisations. It has been observed
that both McDonald’s and Hungry Jack also concentrated on this strategy and has largely
depended on product diversification or the new product development or product
diversification. With a detailed evaluation from the various secondary sources, it has been
found that McDonald’s attained an increase in the market share not only by the means of
offering different kinds of food but also by other factors like building a true leadership within
the organisation and transforming the in-store product offerings to its customers. The suitable
growth strategies of McDonald’s include better promotional technique of the brand that
implies the fact that why the particular brand is better than other brands in the business. it is
recommended that Hungry Jack could come up with a kind of membership car that would
directly or indirectly help to increase the customer base. The company has to come up with
the idea of product diversification and can provide the option of other fast food and not only
being limited to the burger family. The scope of this report is to provide ample information to
the companies in the fast food industry to understand the present situation of the business and
at the same time to derive a better picture of the industry in the recent time.

ECONOMICS AND FINANCE FOR BUSINESS 2
Table of Contents
1. Introduction:...........................................................................................................................3
2. Market structure in the fast food industry:.............................................................................4
3. Growth Strategies:..................................................................................................................6
3.1 Expansion strategies of McDonald’s and Hungry Jack:..................................................6
3.2 Opportunities for growing the business:..........................................................................7
4. Pricing and non-price strategies:............................................................................................8
4.1 A contrast of the pricing strategies of the selected organisations:...................................8
4.2 Non pricing strategies of the selected organisations:.......................................................8
4.3 Opportunities to be exploited by Hungry Jack:................................................................9
5. Conclusion:..........................................................................................................................10
Reference list:...........................................................................................................................11
Appendices:..............................................................................................................................13

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1. Introduction:
The aim of the report is to carry out a comparative analysis of the strategies
undertaken by the organisations in a market in order to differentiate itself from the other
existing competitors in the market. The two selected organisations as case studies for this
particular study are McDonald’s and Hungry Jacks belonging to the fast food industry. Both
these companies are famous for their burgers and have captured the markets effectively
among its other competitors. McDonald’s has been known to be the second largest fast food
restaurant and has established its market all over the globe with over 37, 000 stores and has
been serving hamburgers to its customer base (Mcdonalds.com.au, 2018). Established in
Innaloo, Perth in 1971, Hungry Jack’s is the Australia owned company and has more than
420 restaurants in the country (Hungryjacks.com.au., 2018). The company has the vision of
serving the best quality food to its serving community with all real integrity.
In order to carry out the research, the major focus of methodology was made on the
secondary research and the detailed literature review and the secondary data collection have
been done with the help of the secondary data available over the internet and from the library
database. It has to be included in this context that although regular visits to the chosen fast
food organisations are being made but no such primary data has been collected to support the
analysis of this study.
The report provides an overview of the market structure of the selected organisations
in the fast food industry will be given. In the next section, the growth strategies of the
business organisation will be discussed along with the pricing and the non-pricing strategies.
In addition to this, the present opportunities for the organisations to explore in the recent
market will also be discussed.

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2. Market structure in the fast food industry:
The fast-food industry distinguished by the inexpensive food that can be dispensed to
the customers quickly and is equally effective for the take-away purpose has seen a thorough
increase in its business in the global market. As commented by Sacks et al., (2015), factors
like the convincing locations, the quality and price of food along with a wide range of food to
select from, helped the companies in going through the competition in the market. The
existing companies in the fast food industries those have captured the existing market include
McDonald’s, KFC, Taco Bells, Burger King, Subway and others. All these fast food
companies are well known for their signature burgers served at their signature styles. The fast
food industry in Australia stands with a revenue of $20 billion and sees an annual growth of
3.7% (Mcdonalds.com.au, 2018). The industry has given employment to millions of people
and has helped in building up businesses. If the market share of these fast food companies for
the last year is taken into account, it has been found that McDonald’s holds the largest share
with around 52% share of customers, followed by KFC with 40% (Thornton, Lamb & Ball
2016). Again Subway and Hungry Jacks remain at the similar level with around 30%
customer base (Refer to appendix; A1). Thus, it is clear that the competition in the fast-food
industry is highly competitive and there is no scope of oligopolistic or monopolistic market
condition for the fast food industry.
In the view point of Watson et al., (20017), certain factors like the easy ability of
franchise operation and the easy accessibility for the customers along with the proximity to
the key market have helped the industry to grow. In fact, other companies can join the
industry at any country without facing any kind of barrier to entry. Few companies that
entered the market of Australia are Krispy Kreme in 2010, Long John Silver in 2011, and
Chilli’s in 2007. The success of these companies largely depends on attracting the consumers
lucratively with its fast food products. Being an American company (Refer to appendix; A2),

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McDonald’s entered Australia in the 1800s and has been successfully operating in the fast
food industry market competing with the other rival companies.
The Herfindahl-Hirschman Index is a common measure used to measure the
concentration of the market in order to determine the existing competition in the market,
generally before or after a merger and acquisition of the companies. The Herfindahl-
Hirschman Index is 390 and it is extremely low. In the view point of Malhan, Dalal and
Khatri, (2016), any index below 1000 can be considered as a competitive marketplace and the
fast food industry is at much lower score and there is indeed huge scope of other companies
to enter in this market.
If the historical development of the fast food industry in Australia is taken into
consideration, it has been seen that the culture of fast food grew in the market with the easy
availability of various kinds of food along with easy means of dining or take away. The
chains of fast food companies like McDonald’s and KFC have started increasing abruptly as
the demand of the food increased. Combining the reason of tasty food, it has been found that
the fast food industry has also been focusing on the health benefits of the customers and
aimed at providing healthy food (Richards et al., 2015). In addition to this, the development
in machinery that resulted in innovative and faster ways of serving customers also helped the
fast food industry to grow at its current pace. McDonald’s has around 60 million customer
base who are using McDonald’s daily and it present in almost every corner in Australia
(Mohsin & Lengler, 2015). Compared to this American food giant, Hungry Jacks has lesser
number of stores but is equally popular among the consumers. If the future of fast food
industry in Australia is taken into account, it can be easily said that there is huge scope of this
industry in the market. With flexible legal and political factors like opportunity to enter the
market by franchise, opens the door of new companies in Australia.

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3. Growth Strategies:
3.1 Expansion strategies of McDonald’s and Hungry Jack:
Reading Thornton, Lamb and Ball (2016), it has been observed that the fast food
companies have always focused on the diversification of the products in order to match with
the ever changing taste habits of the consumers. It has been observed that both McDonald’s
and Hungry Jack also concentrated on this strategy and has largely depended on product
diversification or the new product development or product diversification. There has always
been a horizontal growth in the business to ensure that the chain of food products keep going
on (Mazidi & Speakman, 2017). Although, the strategies adopted by the global fast food
chain businesses aims at building a competitive strategies, but these ultimately results in anti-
competitive as similar approaches are being undertaken by other companies in the market.
With a detailed evaluation from the various secondary sources, it has been found that
McDonald’s attained an increase in the market share not only by the means of offering
different kinds of food but also by other factors like building a true leadership within the
organisation and transforming the in-store product offerings to its customers. In fact, the
signature style of serving the customers in the restaurants has also earned enough fame that
directly helped in improving the market share of the company (Sacks et al., 20015). The
growth strategies undertaken by Hungry Jacks are sustainable positioning in the consumer
market in order to make sure that the consumers are satisfied with the food offered to them.
The company has also set up relational standard with the suppliers and distributors by the
various means of loyalty program or different formats of partnership.

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3.2 Opportunities for growing the business:
Between McDonald’s and Hungry Jack, it can be said that McDonald’s has the higher
chances of increasing its existing customer base because of a number of factors. As stated by
Thornton, Lamb and Ball (2016), the opportunity of growth of a business does not only
depend on the market share or the customer base but there are other factors as well. The
suitable growth strategies include better promotional technique of the brand that implies the
fact that why the particular brand is better than other brands in the business. In this respect,
Reynolds et al., (2015) commented that hiring the right group of people also adds to the
growth of the organisation. Also, for a fast food company, the location of the store and the
easy availability of the food to a large customer base also add to the opportunities of the
growth in the business. All these strategies can be easily adopted by McDonald’s because the
company has been long existent in the market and has successfully managed to open several
outlets in the major areas of operation.
In case of Hungry Jack, the growth of the business can be comparatively challenging
because the company is limited in the geographical location of Australia. However, the
company also aimed at growth of its business in the African and the Asian countries. In order
to do so, it is expected that the company focuses on the international promotional techniques
that would eventually help in attracting investors from the internal location (Richards et al.,
2015). Other suggestive measures are flexibility in providing service to the customers like
dealing with them in different languages or carrying out the operational activities after
understanding the attitudes of the people in the foreign land.

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4. Pricing and non-price strategies:
4.1 A contrast of the pricing strategies of the selected organisations:
After a visit to the stores of the selected fast food companies, McDonald’s and
Hungry Jack, it has been found that the prices of the products offered by these companies are
contrasting. As identified by Mohsin and Lengler (2015), the burgers in McDonald’s cost
around $3.99 but a similar burger in Hungry Jack cost around $8. This type of pricing has
been identified as psychological pricing and premium pricing respectively. The premium
pricing create a vision that the product serves something extraordinary and will surely be
worth of paying the higher amount of money. On the other hand, the psychological pricing
creates a psychological satisfaction among the consumers and they believe that it is the best
product available within this amount (Wellard-Cole et al., 2018). The pricing strategy of the
companies involves providing better offers to the customers and discount on the existing
price of the products. The meal value packs and the combo offers often designed by
McDonald’s is a unique pricing strategy that has been able to attract a large customer base.
At the same time, as identified by Mazidi and Speakman, (2017), these pricing strategies
directly help in more selling of the products and as a result of this, the companies again gains
higher profit margin.
4.2 Non pricing strategies of the selected organisations:
The non-pricing strategies of both McDonald’s and Hungry Jacks include the
promotional techniques used by the companies. McDonald’s has been endorsing its brand as
a family restaurant and has been successful in attracting families for celebrating the birthdays
or any special occasions of their children at the various outlets of the companies (Garcia et
al., 2014). The self-serving facility adopted by McDonald’s in few of its outlet where the
customer can select its own kind of burger with the right selection of ingredients and can

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place the order. This has eventually helped in reducing the effort of the customer service and
at the same time has given the opportunity to customer to treat themselves on their own
(Wellard-Cole et al., 2018). Thus, innovative strategies accompanied by the technological
advancement have helped in enhancing the non-pricing strategies of the companies and to
compete with other companies in the market.
Considering the non-pricing strategies of Hungry Jack, it has been found that the
availability of the option of take away or the home delivery system of the company has been
helpful in increasing the customer base. The app of the company gives the opportunity to the
user to customise the kind of burger of their choice and also to pick up a particular time of
delivering the product (Watson et al., 2017). This has definitely helped the customers to
avoid the log queue and the wait for getting a burger.
4.3 Opportunities to be exploited by Hungry Jack:
Like McDonald’s, Hungry Jacks also needs to explore the business opportunities and
come up with better pricing and non-pricing strategies. For instance, as suggested by Malhan,
Dalal and Khatri (2016), any type of business that aims to hold the customer base by different
means will definitely add to the value organisation. Therefore, it is recommended that
Hungry Jack could come up with a kind of membership car that would directly or indirectly
help to increase the customer base. The company has to come up with the idea of product
diversification and can provide the option of other fast food and not only being limited to the
burger family. In the view point of Lamb et al., (2017), the companies facing the highest
competition in the market can overcome the competitiveness only by adopting better
innovative ideas in terms of service as well as pricing strategies. Thus, it is highly
recommended that Hungry Jack explore the various directions of technology and innovative
methods to increase the number of customers visiting the outlets on a daily basis.

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5. Conclusion:
A detailed analysis on the fast food industry in Australia has been carried on in the
study. It has been found the market is blooming and it has opened up various opportunities
for both the existing companies as well as new entrants to enter in the market of fast food
industry. It has been found that McDonald’s has captured the market intensely with its
business strategies that include both pricing and non-pricing strategies. On one hand, the
diversification of the products, availability of family restaurant outlets and the psychological
pricing of the products have helped in building the huge customer base that the company has
in the recent time. There has been a contrast in the pricing strategy of the two companies but
the non-pricing strategies are similar and can be made better with better innovative ideas. It is
expected that in order to increase the customer base and considering the viability of Hungry
Jack, the option of opening new stores or outlet is open to the burger company. This has been
the key move by McDonald’s indeed that has helped in serving the huge customer base
throughout the country.
The scope of this report is to provide ample information to the companies in the fast
food industry to understand the present situation of the business and at the same time to
derive a better picture of the industry in the recent time. Considering the present situation, it
can be easily expected that this industry is blooming and it will provide equal opportunities to
both the existing and the non-existing companies in operation. The recommendations made to
Hungry Jack after analysing and comparing the business activities, it can be said that these
recommendations can give equal opportunities to the company to compete and prosper in the
existing market.

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Reference list:
Garcia, J., Dunford, E. K., Sundstrom, J., & Neal, B. C. (2014). Changes in the sodium
content of leading Australian fast-food products between 2009 and 2012. Med J
Aust, 200(6), 340-4.
Hungryjacks.com.au. (2018). The Burgers Are Better. Retrieved from
https://www.hungryjacks.com.au/home. [Accessed on: 15-10-2018]
Lamb, K.E., Thornton, L.E., Olstad, D.L., Cerin, E. & Ball, K., (2017). Associations between
major chain fast-food outlet availability and change in body mass index: a
longitudinal observational study of women from Victoria, Australia. BMJ open, 7(10),
p.e016594.
Malhan, D., Dalal, S., & Khatri, P. (2016). Fast food: rising demand, pros and
cons. International Journal of Research in Finance and Marketing, 6(11), 140-145.
Mazidi, M., & Speakman, J. R. (2017). Higher densities of fast-food and full-service
restaurants are not associated with obesity prevalence. The American journal of
clinical nutrition, 106(2), 603-613.
Mcdonalds.com.au (2018) Mymacca’s Retrieved from https://mcdonalds.com.au/ [Accessed
on: 15-10-2018]
Mohsin, A., & Lengler, J. (2015). Exploring the antecedents of staff turnover within the fast-
food industry: The case of Hamilton, New Zealand. Journal of Human Resources in
Hospitality & Tourism, 14(1), 1-24.
Reynolds, C. J., Piantadosi, J., Buckley, J. D., Weinstein, P., & Boland, J. (2015). Evaluation
of the environmental impact of weekly food consumption in different socio-economic

ECONOMICS AND FINANCE FOR BUSINESS 12
households in Australia using environmentally extended input–output
analysis. Ecological Economics, 111, 58-64.
Richards, Z., Thomas, S. L., Randle, M., & Pettigrew, S. (2015). Corporate Social
Responsibility programs of Big Food in Australia: a content analysis of industry
documents. Australian and New Zealand journal of public health, 39(6), 550-556.
Sacks, G., Mialon, M., Vandevijvere, S., Trevena, H., Snowdon, W., Crino, M., & Swinburn,
B. (2015). Comparison of food industry policies and commitments on marketing to
children and product (re) formulation in Australia, New Zealand and Fiji. Critical
Public Health, 25(3), 299-319.
Thornton, L. E., Lamb, K. E., & Ball, K. (2016). Fast food restaurant locations according to
socioeconomic disadvantage, urban–regional locality, and schools within Victoria,
Australia. SSM-population health, 2, 1-9.
Watson, W. L., Lau, V., Wellard, L., Hughes, C., & Chapman, K. (2017). Advertising to
children initiatives have not reduced unhealthy food advertising on Australian
television. Journal of Public Health, 39(4), 787-792.
Wellard-Cole, L., Goldsbury, D., Havill, M., Hughes, C., Watson, W. L., Dunford, E. K., &
Chapman, K. (2018). Monitoring the changes to the nutrient composition of fast foods
following the introduction of menu labelling in New South Wales, Australia: an
observational study. Public health nutrition, 21(6), 1194-1199.

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Appendices:
A1:
Fig: Market share of the fast food companies
A2:
Fig: Competition analysis in terms of market entry