McDonald-Case Study

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McDonald-Case Study

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McDonald-Case Study

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Discuss about the Regulatory Framework in Australian Fast Food Industry: McDonalds’ Case Study.

McDonald is a chain of fast food restaurant with limited service. The company has a chain of approximately 35000 restaurants distributed in more than 100 countries across the globe (Jurevicius 2017). Globally, the company has employed more than 4 million people. The firm, through its services is able to serve more than 70 million people in a given day. These populations are close to three times the total population of Australia. Based on the research that was carried out by the IBISWorld, the firm had a 17 % market share, which is the highest market share in the whole of US’ fast food industry (McDonalds 2017). The firms headquarter is situated in Oak Brook, Illinois, USA. In terms of market share, the closest rival is the Yum brand, which has an estimated market share of 11% (Jurevicius 2017).  The firm operates and franchises restaurants which observes the menu that is locally relevant. The relevant food menus should be quality food, and it is served in all the 100 global countries (McDonalds 2017). The company’s global system consists of the franchised restaurants and company-owned restaurants. The franchised subsidiaries are owned and under an affiliate, conventional franchise, and developmental affiliate or license.
Primarily, the firm perceives itself as a franchisor. This is because close to 83% of the McDonalds’ majority restaurants are totally owned by private and independent franchises (Thompson 2017). Through franchising an individual is able to own and maintain control over marketing, purchasing, pricing, and purchasing decisions affecting the restaurant. Also, at the same time, the person benefits from the company’s operating system, global brand, and financial resources (Julia Anaf 2017). One of the main advantages of applying this model of franchising in business operations is that the company is able to apply the expertise accrued from operating the company-owned restaurants to improve the success of all the chains, at the same time, the positive experiences of one chain can be implemented in all chains to improve efficiency.
McDonalds Australia (Maccas)
McDonalds Limited in Australia is popularly known as Maccas. It is a McDonalds’ corporation subsidiary. The subsidiary is in charge of overseeing the franchising and operations of the McDonald’s Australian restaurant (Jurevicius 2017). The firm serves varied beverages and foods. Examples of the food served by this restaurant include the Cheeseburger, French Fries, Hamburgers, Chicken nuggets, Chicken sandwiches, Cream sundaes, Desserts, Egg muffin, and Milk shakes. The subsidiary also serves Bottled water, Premium salads, Dinner meals, Packed lunch, Coffee yoghurts, and Premium salads. The firm commercializes and markets its commodities under brand portfolio. The brand portfolio includes Big Mac, Happy Meal, McWrap, Greene Angus, among other brand portfolios. The Australian’s subsidiary has its headquarter located in Thorn Leigh, New South Wales.
 McDonald’s restaurant was first opened in Australia in 1971, in the western Sydney suburbs. As per the date of writing this article, there are approximately more than 900 McDonalds restaurants in Australia serving an average of more than 1.8 million people in a day (Jurevicius 2017). The average number of McDonald’s restaurants being opened in Australia annually, is 30 restaurants.
The Australian McDonald’s is a public unlisted company in Australia, and limited by shares. Just like in other countries where McDonald’s operates, in Australia, the franchises are owned individuals, with an average rate of private ownership standing at more than 70% of the total franchise in Australia (Jurevicius 2017). The company’s framework ensures that each franchise is able to effectively and efficiently meet the needs of the community they serve, through observation of quality, accountability, and safety standards. McDonald’s and its franchise has created employment for an average of 900000 individuals (McDonalds 2017). These people work in management offices and restaurants in Australia.
Regulatory Framework Affecting the Company
The issue of advertising food to the children has received wide attention in Australia and Internationally. This is in the context of the ever-growing concern of the public in relation to the highly increasing percentages of childhood obesity and overweight. The consumer and health groups in Australia have lobbied the government to abolish food advertisement (www.alrc.gov.au 2017). According to this group this will be an appropriate measure to curb the ever-increasing rate of child obesity and overweight. The health and consumer groups debate that advertising food makes the children to pester parents, prefer, and consume the advertised food (www.business.qld.gov.au 2017). Hence, by effectively regulating these kinds of adverts, the problem of obesity will be curbed. However, on the other viewpoint, the players in the food industry, and who advertises their products, argue that there is no any evidence that links obesity and food advertising, and that the already existing food advertising regulations are enough.
The National Association of the Australian Advertisers (NAAA), which is the body representing the advertisers in Australia, agrees with the food advertiser (Mackay 2010). The body insists that there have never been any proofs that links, advertisements with the child obesity. The body challenges the experts to present the evidences that demonstrates that the seriousness of their allegations. Nonetheless, the body, in 2016, came up with Food Code, the self-regulatory Food and Beverages Advertising and Marketing Communications Code (Mackay 2010). The code comprises specific food advertisement provisions directed towards the children. According to the advertisement regulatory body, the code was designed to address issues relating to obesity and advertisement, and to avoid exaggerated regulations in the field of commercial communications and advertisement.
The food code was effected in 2006, as part of the regulatory body’s national scheme of self-regulatory. Recently, the body released a revised version of the Children advertisement code after engaging the consultants of public relations to conduct an external review of the initial Code (McDonalds Australia 2017). The organization claims that reviewed Code will aid in ensuring that marketing and advertising communications to children is as per the set standards of the Australian society. Though the Food and advertising to children was not reviewed in the new version, the NAAA announced to the public that its main beverage and food members were working on a program that relates directly to beverage and food advertising to children (McDonalds Australia 2017). If the initiative is successfully adopted, it will have affected in the revised Beverage and Food Advertising and Marketing Communications Code.
The Australian Media and Communication Authority, otherwise known by its initials as ACMA, is reviewing currently the Television Standards for Children. This review is aimed at regulating the running of an advertisement to children’s free to air televisions (McDonald 2014). The authority has suggested several alternatives that can be used to address the issue of food advertising to children. The proposal, among other components, require the advertising authority to scrutinize and report on the impacts of the Food Code (Mackay 2010). On their side, the broadcasters and advertisers maintain that the Children’s Code removes the need for the Authority to enforce any specific restrains on food advertising to children.
Impact of the Regulations on the McDonald’s Products and Services.
In the recent past, there has been an increase in the community and stakeholders’ concern about the practices of marketing to children. At such, McDonald’s Australia signed an initiative known as Self-Regulatory Quick Service Restaurant to cater for responsible Marketing and Advertising to children (McDonalds Australia 2017). There are two major principles that form part of this agreement. The first principle is that when the company is promoting beverages and foods to children below the age of 14 years, the company will only advertise beverage and foods that are healthy (McDonalds Australia 2017). For any particular food and beverage to fit into the category of healthy, it should fulfil the general aspects of healthy eating enshrined in the definitions of the nutrition authorities that are credible. They must also be consistent with the described criteria for saturated fat, sodium, energy, and sugar (McDonalds Australia 2017). These measures were designed by a team of Approved Professional Dietitians in conjunction with the national regulations and authorities on the nutrition of the children.
The other principles require the company to make sure that the nutritional information is on their restaurants, on packaging, and on their websites. These steps were developed to ensure that parents and caregivers can be able to make a decision that is informed when purchasing food for their children. As a way of joint program, there has been an establishment of a mechanism through which complaints can be launched (www.alrc.gov.au 2017). Consumers can file their complaints directly to the Advertising Standards Bureau. The Bureau is able to come up with a way to deal with the complaints quickly.
Additionally, how McDonald’s offers its services and products has been influenced by Healthy Kids, which is an independent organization. The firm was contracted in 2010 to carry out the monitoring of the mentioned initiative in order to make sure that each firm is observing the Code (www.business.qld.gov.au 2017). Contrary to other advertising Codes, this initiative is not restricted to specific television period. In this initiative, the code compliance is based on the three main segments: beverage or food used, the communication placement, and the content of communication. McDonald’s and other companies in the food industries are expected to revise their communications based on this framework.
Another framework that has had a significant impact on the McDonald’s products and services is the Greenhouse Challenge Cooperative Agreement. The company was the first fast food service business to sign the agreement. The firm has also been an active participant of the Greenhouse Challenge Plus (www.business.qld.gov.au 2017). The company has had to adopt different approaches when it comes to the kind of energy the company use to prepare its food. The firm has adopted green energy that is environmentally friendly (McDonald 2014). In the delivery of its services, the company encourages its employees to engage in practices that conserves the environment. In addition, the firm is also required by the federal government to take part in its program of the Energy Efficiency Opportunities. The program requires companies that surpasses a given amount of energy use to take an assessment and report the results of the energy efficiency opportunities. The company publishes an annual report of its energy report on its websites. This regulatory framework has made the company to alter the way it uses the energy.
McDonald is a chain of fast food restaurant with limited service. The company has a chain of approximately 35000 restaurants distributed in more than 100 countries across the globe. Primarily, the firm perceives itself as a franchisor. This is because close to 83% of the McDonalds’ majority restaurants are totally owned by private and independent franchises. McDonalds Limited in Australia is popularly known as Maccas. It is a McDonalds’ corporation subsidiary. The company’ s products and service provision has been affected by the regulatory framework in Australia. However, the company has been in forefront to sign the regulatory acts in Australia.
Julia Anaf, Frances E. Baum, Matt Fisher, Elizabeth Harris and Sharon Friel. 2017. “Assessing the health impact of transnational corporations: a case study on McDonald’s Australia.” 2 6. Accessed 4 30, 2017. https://globalizationandhealth.biomedcentral.com/articles/10.1186/s12992-016-0230-4.
Jurevicius, Ovidijus. 2017. McDonald’s SWOT analysis 2017. Accessed 4 30, 2017. https://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swot-analysis.html.
Mackay, Sarah. 2010. Food Advertising and Obesity.
McDonald, Sharyn. 2014. “Social responsibility clusters arising from social partnerships.” Social Responsibility Journal 10 (2): 331-347.
McDonalds Australia. 2017. “McDonald’s Australia Corporate Responsibility & Sustainability Report 2010.”
McDonalds. 2017. McDonalds_CR&S_OurBusiness. McDonalds.
Thompson, Andrew. 2017. McDonald’s Organizational Culture Analysis. Accessed 4 30, 2017. https://panmore.com/mcdonalds-organizational-culture-analysis.
www.alrc.gov.au. 2017. Ethical Considerations. Accessed 4 30, 2017. https://www.alrc.gov.au/publications/6-ethical-considerations/ethics-regulatory-framework.
www.business.qld.gov.au. 2017. Food and beverage industry regulations and compliance. Accessed 4 30, 2017. https://www.business.qld.gov.au/industries/hospitality-tourism-sport/food/food-beverage/regulations.

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