BUS300: Strategic Market Plan for McDonald's in Australia

This report presents a strategic market plan for McDonald's in Australia, examining the fast-food industry's trends, including the growing demand for home delivery and technology integration. It assesses McDonald's financial and corporate performance, highlighting its strengths, weaknesses, opport...Read More

Running head: STRATEGIC MANAGEMENT

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Executive Summary
The rivalry between the fast food restaurants has intensified over the last years and fighting for
increasing market share and growth. The main aim of this research is to develop the strategic
market plan for McDonald, Australia. This report evaluated the trends in the Australian fast food
industry like boosting demand for home delivery facilities, web-enabled applications between
others, and gaining consumption of technology internationally. The key issue in the Australian
fast food industry involves the inadequate fresh ingredients, rising competition, boosting
consumer demand for healthy food. Financial performance of McDonald is sound whereas
corporate performance is satisfactory. SWOT analysis is used to assess the strength, weakness,
opportunity, and threats for McDonald and gain competitive benefits. There are different
strategic options for McDonald such as market development, product development, market
penetration, and diversification. There are different strategic choices to McDonald for gaining
competitive benefits. Furthermore, implementation plan includes the 10 weeks for executing the
marketing strategy. Feedback, marketing initiatives, and return on investment are used to
evaluate and control the performance of McDonald's.

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Table of Contents
Executive Summary.....................................................................................................................................2
Market Size & Trends.................................................................................................................................4
Financial and Corporate Performance.........................................................................................................5
SWOT & Competitive Advantage...............................................................................................................6
Strategic Options.........................................................................................................................................8
Final Recommended Strategy......................................................................................................................9
Implementation of Final Strategy..............................................................................................................11
Monitoring and Control of Future Performance........................................................................................12
References.................................................................................................................................................13

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Market Size & Trends
Rapidly modification in the preference of consumer and the entry of premium products, gourmet
burger shops help in the growth of revenue for the fast food burger store industry over the last
five years. In spite of the availability of industry heavyweights, McDonald’s and Hungry Jack’s
have led the industry to shift from the traditional burger shop to niche market in the fast food
industry. But, a weaker economic atmosphere has kept the pressure on revenues of overall fast-
food and trends with regards to healthier eating (Hill, Jones, and Schilling, 2014). It has also
constrained the growth of revenue. Over the five years, revenue of industry is projected is grow
by 2.7% annually, involving 0.5% revenue gain in 2017-18 to a total of $7.0 billion.
(Sources: IBIS world, 2018).
From the above chart, it can be stated that share of McDonald’s is 19.5% that is high as
compared to its key market players. It also deals in the perfectly competitive environment. The
share of this company is high as it can easily enter or exit from the stock market. Investors can
also obtain the data regarding the stock from magazines, newspapers, annual reports, and brokers

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or friends. There are certain big investors like fund managers who can impact on the price of
certain shares by their selling and buy judgments. Institutional investors, company director as
well as a stock analyst has right to access more data regarding the company as compared to
individual investors. Therefore, information cannot be equally distributed in the stock market
(Barney, 2014).
(Sources: Moutinho, and Vargas-Sanchez, 2018).
In the fast food industry, the company deals in relatively small margins and also faces flat
revenues due to constant price war amid the restaurateurs in the highly competitive environment.
There are different trends in the Australian fast food industry like boosting demand for home
delivery facilities, web-enabled applications between others, drive-thru options, and gaining
consumption of technology is set to drive the growth in fast food industry internationally. Apart
from trends, different challenges are faced by the fast food industry like inadequate fresh
ingredients, rising competition, boosting consumer demand for healthy food and prompt food
choice like ready to eat meals with products that can cause chaos and result in low margins for
the restaurant owners (Wheelen, Hunger, Hoffman, and Bamford, 2017).
Financial and Corporate Performance

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Financial performance
(Sources: Rothaermel, 2015).
As per the above financial performance, it can be stated that return on revenue is increased as
compared to previous years. Furthermore, return on shareholder’s funds and return on asset is
also increased from 7.7 to 14.4 and from 6.7 to 11.7. The current ratio of Mc Donald is 1.6:1
which shows that liquidity position of the company is sound as well as it also indicates that
company’s financial performance is good.
Corporate performance
(Sources: Meyer, Neck, and Meeks, 2017).
As per the above corporate performance, it can be stated that revenue is increased in 2016 as
compared to previous years. But, at the same time, it is assessed that asset is declined in 2016 as
compared to previous years. Thus, it shows that performance of corporate is satisfactory.
SWOT & Competitive Advantage

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Strength
 Good innovation and development of the product. It also continually makes innovation
for retaining the customer in the business.
 The brand of McDonald's facilitates the choice to customers, effective facilities and
reasonable value.
 It also focuses on the difference of culture with regards to region in which the restaurant
is developed.
 It has positioned itself in major highways, airports, theme parks, tourist locations, and
cities (Lasserre, 2017).
Weaknesses
 Core product line with trends of a healthier lifestyle for children and adult in Australia.
Product line highly emphasizes on hot food with burgers.
 Seasonal
 Quality concern across the network of the franchise.
Opportunities
 Joint ventures with retailers such as supermarkets
 It can respond towards social alteration by innovation within healthier lifestyle foods. It
can also move into healthier snacks (fruit) and hot baguettes to create its new positioning.
 It also strengthens the value proposition as well as offering in order to encourage the
customers who can visit coffee shops into McDonald's.
 It can also focus on corporate social responsibility in order to decline the impact on
community relations and environments (Bettis, Ethiraj, Gambardella, Helfat, and
Mitchell, 2016).

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Threats
 There is an inadequate growth opportunity domestically.
 There is the threat of social modification like consumer group, 5-day fruits and
vegetables, government and encouraging balanced meals (Michael, Storey, and Thomas,
2017).
 Consumer focuses on the healthier lifestyle and nutrition.
Competitive advantages
The strength of this company is beneficial to obtain the competitive advantages. These strengths
are Good innovation and development of the product and keep the position on major highways,
airports, theme parks, tourist locations, and cities.
Strategic Options
McDonald's can boost its sales volume by targeting the current customers such as increasing the
frequency of consumption, increasing consumption per occasion, offering them new customers
or by winning the competitor’s customers and by entering into the new market segment.
(Sources: Morschett, Schramm-Klein, & Zentes, 2015).
Market Penetration:

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McDonald can attract the competitors of customers in the current market with current products
by intensive distribution, the lower rate with the heavy advertisement. It can also reduce the
issues by developing the low-cost structure via using lower labor costs, restricted access to raw
material and elements and economies of scale. It can also block the new entrants by providing
highly distinguish products and by focusing on high switch costs for customers (Bryce, 2017).
Market Expansion:
McDonald can try to enlarge their market by transforming the non-users into users of its
products. It is a lucrative strategic option for the company to use it in the new environment.
Under this, a large number of non-users may willing to try the McDonald’s product in case of
getting the appropriate encouragement such as lower prices as well as extra benefits (Bettis,
Gambardella, Helfat, and Mitchell, 2014).
Product Development:
McDonald's can manufacture new products into the current environment. It can enlarge the
current product line to facilitate the existing customer high choice. It can also add the new
benefits and features into the new products and prices at a higher rate as compared to trading the
existing product (Stead, and Stead, 2014).
Market Development:
McDonald can promote the new uses of current products for current customers. It can also
market its current products to the innovative segments of the new country.
Entry into New Markets:
A corporation can develop the new products into the new markets. It is risky approach and
should be relied on core competencies of the corporation.
Final Recommended Strategy

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Corporate level strategy
Expansion strategy
McDonald’s has practiced the market development approach for expanding the business into
growing nation particularly in the Asian nation. It can penetrate into Asian market to obtain high
potential income. McDonald's enjoy unqualified success in United Arab Emirates, Tokyo,
Beijing, and Seoul and Asian markets. There are different markets through which Asian region
ensures of getting high revenues, profits and market share for creative fast food company
(Frynas, and Mellahi, 2015).
Franchising
McDonalds Corporation can use the franchising strategy in order to carry on the expansion
strategy at a worldwide level. It has effectively pretended its business model, not only in the
USA but also in the international market. In the current scenario, there are above 80% of
restaurants, which deals in the franchisees (Carroll, Primo, and Richter, 2016).
Business Level Strategy
Customer Service
McDonald's can focus on its service excellence in order to offer customers with high-quality
food services promptly with clean atmospheres. But, restaurant can experience the delay services
due to longer time required for preparing menu items, increasing demand, and complex food
menu system. The speed of services is also one of a significant aspect of fast food. Customers
may expect to get their order within about one minute for their orders after placing the order.
During the waiting time, customers may willing to wait two to three minutes for their orders after
that they may start to create pessimistic opinion regarding corporation (Durand, Grant, and
Madsen, 2017). McDonald’s has felt that a return of former reputation for delivering the quality

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fast food promptly indicates the elimination of some menu items such as French Fries, Big Macs,
Quarter Pounders, Fish, and Chicken.
Digital Marketing
McDonald should emphasize on digital marketing strategy so as to target and engage the young
online audience by social media networks like Twitters and Facebook. The corporation can hire
digital marketing officer to attract the customers. Digital marketing is used to paying off and
demonstrates that a large number of young people may visit on McDonald's as compared to
earlier (Carroll, Primo, and Richter, 2016).
Implementation of Final Strategy
Implementation Plan
As per the above strategic alternative, McDonald’s can develop the following implementation
plan within an organization:
Activity Time
duration Accountable
Formulation of the objective for the entire
campaign 1 week Strategic manager
Assessing the market for a strategic option 1 month Market Researcher
Building the strategic plan for the described
strategic options 1 month Team with strategic
management
Evaluating the local foods with the popularity of
all local food 1 month Food Analyst
Organizing marketing campaign for the new
local food involving menu 6 months Managers for Marketing
Marketing on Twitter, Facebook, and YouTube
with other social networking sites 6 months Managers of Online Marketing
Examining renowned low-calorie foods 15 days Food Analyst
Organizing marketing campaign for low-calorie
food 3 months Managers of Marketing

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Therefore, the above implementation plan may act for McDonald’s is to gain the revenue in the
market.
Monitoring and Control of Future Performance
Marketing initiatives
There are several marketing practices which need to the high amount of efforts before
implementation. In addition, reliable disclosure may provide the better result as marketing
manager of McDonald's should emphasize on a marketing approach that has implemented
several times for 10 weeks. In such situation, a marketing manager should keep the marketing
practices and track the different aspect of the program such as media application, generation of
responses, cost and timing of promotion and return on sales (Durand, Grant, and Madsen, 2017).
Feedback
McDonald's can take the feedback through customers in order to assess the positive and negative
aspect about its products and services. By gathering the feedback via customers, McDonald's can
make necessary modification in the products and services and implement the plan (Morschett,
Schramm-Klein, & Zentes, 2015).
Return on investment
It is analyzed that return on investment is an essential element of implementing the marketing
plan. McDonald's can evaluate whether a large amount of capital was spent on the marketing
plan. It should also evaluate the capital that would be expanding on each marketing activities and
assessing the whole performance. Consequently, it would be feasible to obtain the possible return
on investment (Carroll, Primo, and Richter, 2016).

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References
Barney, J. B. (2014). Gaining and sustaining competitive advantage. UK: Pearson higher ed.
Bettis, R. A., Ethiraj, S., Gambardella, A., Helfat, C., & Mitchell, W. (2016). Creating repeatable
cumulative knowledge in strategic management. Strategic Management Journal, 37(2),
257-261.
Bettis, R., Gambardella, A., Helfat, C., & Mitchell, W. (2014). The quantitative empirical
analysis in strategic management. Strategic Management Journal, 35(7), 949-953.
Bryce, H. J. (2017). Financial and strategic management for nonprofit organizations. UK:
Walter de Gruyter GmbH & Co KG.
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.
Durand, R., Grant, R. M., & Madsen, T. L. (2017). The expanding domain of strategic
management research and the quest for integration. Strategic Management Journal,
38(1), 4-16.
Frynas, J. G., & Mellahi, K. (2015). Global strategic management. USA: Oxford University
Press, USA.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. USA: Cengage Learning.
IBIS world (2018). McDonald’s Plays Catch Up via Re-franchising and Menu Updates.
Retrieved from: https://www.ibisworld.com/media/2015/05/05/mcdonalds-plays-catch-via-re-
franchising-menu-updates/

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Lasserre, P. (2017). Global strategic management. UK: Macmillan International Higher
Education.
Meyer, G. D., Neck, H. M., & Meeks, M. D. (2017). The entrepreneurship‐strategic management
interface. Strategic Entrepreneurship: Creating a new mindset, 17-44.
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Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management (pp.
978-3658078836). USA: Springer.
Moutinho, L., & Vargas-Sanchez, A. (Eds.). (2018). Strategic Management in Tourism, CABI
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Rothaermel, F. T. (2015). Strategic management. USA: McGraw-Hill Education.
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Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management
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