The retail ecosystem of Australia is fast changing. This is in sync with the global business scenario where business is more about connecting with the customers rather than just selling the products in a flat commercial objective. The customers are more interested in interacting with the brand they are using. The system of business of just presenting the product the product to the customers and they are just paying for it is gone, now it is time to interact and inspire the customers and this is what is also called by some entrepreneurs as omni-chanel retail. Even if the customer is sitting at their homes, they must be able to interact or shop or do whatever they may like with the brand which they prefer. McDonalds is one of the world’s largest fast food chain and also one of the largest in Australia. McDonald’s is forerunner and pioneer in a large number of business innovations that are later being adopted by many of the other companies across the world. In Australia disruptive forces are the future of retail and each company is competing with each other to bring innovations that will ultimately disrupt the retail sector and be ahead in the competition.
McDonald’s is the world’s largest restaurant chain in terms of revenue. Currently the company is operating more than 40000 restaurants throughout the world. The most lucrative and profit making business of the restaurant chain happens in USA and more than 15000 of the company is located in this particular country. In 2017 the global revenue of McDonald’s was 22.82 billion U.S dollars. The highest amount of revenue was collected in the year 2013 when the company achieved a remarkable 28.11 billion dollars business throughout the globe (Statista.com 2018). The brand value of the company is presently 88 billion US Dollars. The nearest competitor is Starbucks with 43 billion US dollar brand value.
The first Australian McDonalds was opened in 1971 in Sydney. The restaurant chain has come a long way since then in the country presently having more than 970 restaurants in the country and employing more than 1 lakh people across the various levels of the organization. The present number of customers daily walking in the various restaurants of Australia are presently more than 2 million daily and this number is increasing quite heavily with the passing years. So it can be said that the present operations of the restaurant chain in this particular country is one of the largest.
The company in Australia is a public company and a franchise business and 80% of the restaurants of the chain is owned by independent entrepreneurs. The company has presented the following as the vision and values (Mcdonalds.com.au 2018):
Presently the company is having tough competition with the new players in the market and in the present scenario it is quite possible to forget about the company’s great achievement when it first opened its doors in Australia and almost changed the fast food experience in the country. The fast food chain is one of the pioneers in the presently thriving and growing fast food business in Australia. Australian revenue of McDonald’s is more than 5 billion presently with near about 1000 restaurants and fast food centers operating within the borders of the country. The present CEO of McDonald’s in Australia is Andrew Gregory who insists that the company is still the foremost when it comes to innovation in the fast food sector. The very famous “Extra Value Meals” can be mentioned in this regard which became very famous in the country and was well received. According to a report in Business News Australia, the success of the business of McDonalds in Australia lies in the history of the company and the way in which it conducted business using innovation as the chief resource to go ahead of the other competitors in the field.
“The simple consistent thing that we did was disrupt the market or lead the market, we didn’t follow,” says Gregory. “We did things that were new for our customers, we listened to our customer and we did them as one McDonald’s system. It is an incredibly powerful part of our business when 955 restaurants move as one” (Mcdonalds.com.au 2018).
According to Christensen, Raynor and McDonald (2015) the theory of disruptive innovation in business that was introduced in 1995, has been accepted by many business innovators and is regarded as a guiding light which changed the course of business process. Intel, Southern New Hampshire University and Salesforce.com are some of the companies which started embracing disruptive innovation in the first place. The authors speak that many people are talking about disruption presently who do not have much idea about the process. They are in dark about how actual disruption can be brought in the field their company is working in. However the idea of “disruptive innovation” have become so much popular and integral part of business thinking that the concept is in the fear of being misapplied and misunderstood (Cortez 2014).
According to Pantano (2014) the three main areas where further attention must be given in the field of disruptive innovation are “the innovation management approaches in retail industry, the degree of innovation heterogeneity, and the innovation drivers. Starting from these evidences.” Among these three factors the factor of innovation driver is the most important and effective. The innovation drivers are the basic movers and shakers and can be termed as the reasons behind disruptions in innovation in the retails sector (Raynor and McDonald 2015).
Christensen et al (2016) states “foundational research on disruption has produced extensive citations and provoked vibrant debates, but empirical research in management has not kept pace. Such inconsistencies warrant deeper reflection and provide the impetus for evaluating research on disruptive innovation in management and strategy”. The authors have traced the historical evolution of the theory of disruptive innovation and how it has played important role in the field of retail sector. The authors have stated that the disruptive innovation that initially started in the field of technology mainly has now expanded into the fields of marketing even more than technology.
Rowley and McMurtrey (2016) points out how McDonald’s has used innovation and sustainability in order to remain steadfast in the business all over the world. McDonald’s disrupted the restaurant business in Australia when it first started the restaurant and the concept of fast food at a corporate level was first conceived in the country. McDonald’s is having a very well developed supply chain management system. The company has given utmost importance in maintaining the quality of the food they produce. The “Extra Value Meal” is one of the most disruptive business innovations brought by the company in Australia.
King and Baatartogtokh (2015) has weighed the various usefulness of the theory of disruptive innovation and how it is relevant in the retail context. The theory of disruptive innovation by Christen has been regarded as “one of the most influential modern business ideas”. The author has argued that in spite of such sudden popularity of the theory there has not been much academic research into the area which is required. In the retail sector each of the companies are in great competition to bring offers and products that revolutionize the particular field.
Australia first opened in 1971 in Australia and immediately revolutionized the fast food sector in Australia. The Australian people at once embraced the idea of tasty and faster food on the go. This was the reason of success of the fast food chain in Australia.
According to Erica Berchtold, Managing Director, Rebel Sports, presently the customers are more informed and they have clear idea about what to select and what to reject (Trent Duvall 2018). This is mainly because of the globalization aspect of the market where the global consumer base display similar type of interests across genres. This is the reason behind a particular brand being successful all over the world (Pisano 2015). Apple iPhone has been one of the disruptive innovation product which changed the world of mobile phones. One of the most recent examples of disruptive innovation is Jio Telephone network introduced by Reliance in India. It affected drastically all other telecommunication networks across the country.
A few of the reasons that McDonald’s has been successful in Australia are Franchising, International expansion, Glocalisation, Brand Value, Lower prize more food, Free Wi Fi, Younger workforce. All these have worked together with the innovative zeal of the management in making McDonald’s one of the most successful fast food chains in Australia. McDonald’s is a multinational brand however it adopts the local flavors and cuisines in order to entice the local population. This is also known as glocalisation, the concept of glocalisation is also one of the disruptive innovation that has allowed many multinational companies in becoming locally successful. McDonald’s has picked up local flavors and cuisine and merged them with the international flavors (Businessnewsaus.com.au 2018). This has resulted in the glocalisation of the brand which is yet another disruptive innovation in the field of retail in Australia. The company has launched various offers that has helped the Australians in getting better value for lesser money. MacDonald’s also appoints young people who are enthusiastic and full of ideas and innovative changes within the company, this has allowed for bringing in more young customers for whom new offers and dishes are rolled out by the company.
Conclusion
It can be concluded that disruptive innovation is one of the most relevant and effective theories that has affected the organizations lately. Whether or not the organization can implement and adopt disruptive innovation effectively is dependent on the management of the company. McDonald’s started its journey with a disruptive innovation by revolutionizing the fast food sector in Australia by bringing in good quality fast food in pocket friendly amount. However presently there are various other brands that are giving tough competition to McDonald’s and the only way to keep ahead is to constantly innovate and adopt change. Innovation is the only way through which disruption is possible in the field of retail. Retail sector is a fast growing and changing sector where the requirements of the customer is also changing regularly. The companies must keep up with the changing needs of the customers.
Reference:
Businessnewsaus.com.au., 2018. HOW MCDONALD’S AUSTRALIA REDISCOVERED ITS INNOVATIVE SPIRIT. [online] Business News Australia. Available at: https://www.businessnewsaus.com.au/articles/how-mcdonald-s-australia-rediscovered-its-innovative-spirit.html [Accessed 12 Sep. 2018].
Christensen, C.M., McDonald, R., Altman, E.J. and Palmer, J., 2016. Disruptive innovation: intellectual history and future paths. Harvard Business School.
Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. What is disruptive innovation. Harvard Business Review, 93(12), pp.44-53.
Cortez, N., 2014. Regulating disruptive innovation. Berkeley Tech. LJ, 29, p.175.
King, A.A. and Baatartogtokh, B., 2015. How useful is the theory of disruptive innovation?. MIT Sloan Management Review, 57(1), p.77.)
Mcdonalds.com.au., 2018. Organisation | McDonald’s Australia. [online] Mcdonalds.com.au. Available at: https://mcdonalds.com.au/about-maccas/organisation [Accessed 12 Sep. 2018].
Pantano, E., 2014. Innovation drivers in retail industry. International Journal of Information Management, 34(3), pp.344-350.
Pisano, G.P., 2015. You need an innovation strategy. Harvard Business Review, 93(6), pp.44-54.
Raynor, M.E. and McDonald, R., 2015. What is Disruptive Innovation?. Harvard Business Review, 93(12), pp.44-53.
Rowley, B. and McMurtrey, M.E., 2016. McDonald’s and the Triple Bottom Line: A Case Study of Corporate Sustainability. Journal of Strategic Innovation and Sustainability, 11(1), pp.33-37.
Statista.com., 2018., McDonald’s – Statistics & Facts. [online] www.statista.com. Available at: https://www.statista.com/topics/1444/mcdonalds/ [Accessed 12 Sep. 2018].
Trent Duvall, B., 2018. Future of retail in Australia. [online] KPMG. Available at: https://home.kpmg.com/au/en/home/insights/2018/04/bernard-salt-next-5-years-retail-future-australia.html [Accessed 12 Sep. 2018].
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