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McDonalds in the Australian Economy

by Evolved

The following is an attempt to show an unbiased look at McDonalds contribution to the Australian economy. Feel free to make your own judgements on McDonalds based on these facts. Also, this article does not reflect my own personal beliefs about McDonalds.

The McDonalds chain began as a single restaurant in Des Plaines, Illinois, which was opened in 1955 by Ray Kroc. Today McDonalds has become the world’s largest food service retailer with over 25,000 restaurants serving people throughout the world and constantly adding new stores everyday. It is estimated that McDonalds open one store every four to fives hours. McDonalds is available to people in almost 120 countries including China, Philippines, Germany, Spain and Hong Kong.

McDonalds is the sixteenth biggest employer of people in the world. Each store tends to employ between 80-100 people in addition to a management staff of 6-8 people. McDonalds is also one of the largest employers of young people in the world.

McDonalds can attribute most of their success to their marketing and advertising concepts. In addition to vast amounts of television advertising, McDonalds use such things as promotions, local store marketing, sponsorships and public relations to teach customers about their service. They use strategic planning and market research to ensure that their advertising is as effective as possible.

Since the opening of the first McDonalds in the Sydney suburb of Yagoona, 1971, McDonalds has been very successful in Australia. Today you will find a McDonalds store in each and every Australian state. There are approximately 670 stores throughout Australia, and most trade for around 18 hours a day. McDonalds serve approximately 1.2 million Australians daily.

McDonalds contribution to the Australian Economy is not very large in comparison to the contribution it makes to the American Economy. Because McDonalds in Australia is only 8.46% owned by Australia, Australia’s stake in McDonalds is worth about $106 million. This is a lot of money, but considering that the US stake in Australia’s McDonalds stores is worth about 10 times this amount, Australia really isn’t benefiting as much as it could be if more Australian owned restaurants dominated the food industry.

Although McDonalds does draw a lot of money out of Australia through sales, they do contribute money back into Australia in other ways. These include such things as wages, advertising, charities, sponsorship, property purchasing and taxes. Although these contributions are vastly smaller then the amount of money that McDonalds is making in Australia through sales, it does mean that Australia is partially benefiting from America’s success.

McDonalds had a number of problems in going ‘International’. These included adjusting McDonalds to suit the different customs and cultures of countries, maintaining McDonalds standards of quality service, cleanliness and value in every new store and introducing new foods such as hamburgers into countries.

Because of extremely varying degrees of cultures and customs among different countries, McDonalds has had to conduct extensive research to establish different codes of practice for stores in each country. An example of this is at any McDonalds store in India, they serve a Big Mac with lamb. Another example is at McDonalds in Jerusalem, they do not serve dairy products and stores close on Saturdays, the Jewish Sabbath. These are examples of how McDonalds has had to adjust to be able to become successful in other countries.

McDonalds believe that they have standards that must be maintained in each and every store; these standards being quality service, cleanliness and value. In order to maintain these standards in all stores around the world, McDonalds has had to train potential franchisee vigorously to ensure that the standards would be lived up to. McDonalds want every store to be alike in most aspects all around the world so that people could expect quality service, cleanliness and value wherever they visited a McDonalds.

Many countries hadn’t heard of many of the products available before the introduction of McDonalds into their country. In Japan and other far Eastern countries, not only were hamburgers unheard of, beef wasn’t even a common food and McDonalds was faced with the problem of introducing it. This made going international a very complicated process for McDonalds, but they have done it successfully, and McDonalds now has around 5300 stores in the Asia-Pacific region. McDonalds quest to become ‘international’ has been a very complicated and time consuming one, but it has defiantly paid off, as they are becoming a household name in many countries.

There is great argument in whether McDonalds makes a positive or negative contribution to the Australian Economy and Australia in general. Some would argue that McDonalds provides employment for around 66,000 Australians and that the company generates sales of approximately $1.5 billion dollars a year in which a small portion of is donated to charities. Also, McDonalds has become a household name, which you will find in many towns across Australia and will be assured of quick and reliable food. However, those who oppose McDonalds say that because McDonalds is 90% US owned, which means that most of the money generated will go back overseas. Also, because McDonalds can afford to advertise nation wide, and because the name has become so greatly known, it is hard for smaller Australian businesses to grow and expand. McDonalds can afford to have their prices very low compared to prices of independent restaurant owners, which is another problem for Australian owned businesses. I have mixed feelings on McDonalds effects on the Australian Economy. I think that they have done a great job of creating employment for some 66,000 people. But the problem with this is that McDonalds is so financially strong that other restaurant owners can have a lot of trouble trying to compete with the low prices and high amounts of advertising that McDonalds can afford to have. I think that many people would prefer to go elsewhere rather then eat at McDonalds, but because of the quick service and low prices, choose to go to McDonalds.

But the economy is not the only issue that Australians are concerned with in regards to McDonalds. Many Australians fear that we are becoming to ‘Americanised’. That is, we are losing our own Australian identity, and instead adopting that of what Americans have become. Many people would say that the growth of McDonalds in Australian contributes to the ‘Americanisation’ of Australia. I believe that Australia is following in America’s footsteps. I think that Australia’s food industry has great potential, but because many people’s attitudes, mainly the youth of Australia, have already been forged, it would be a very hard task to draw people away from McDonalds and towards other restaurants.

McDonalds realise that they have many critics of there stores; people who believe that McDonalds products are symbols for ‘plastic food’ and ‘a throw-away consumer society’. To counter such perceptions, McDonalds worldwide pursues policies designed to increase its identity as a ‘local’ company. These include:

Local suppliers being preferred
The company employing local labour
Giving back to the community in conjunction with the Ronald McDonald House Charities program

This shows that although McDonalds is greatly increasing in size every year, they are at least partially concerned with the attitudes of customers.

 
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