Fast Food Restaurant
McDonalds
Analysis of industry
A business has to understand the dynamics of its industry and market in order to compete effectively and intensively in the marketplace. The forces which derive on competition and attractiveness of a market. The competitive environment is created by the interaction of these five different forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into the market, there are also the forces of supplier power, the power of buyers, and the threat of substitute products or services. Michael E. Porter suggested that the intensity of competition is determined by the relative strengths of these forces. The Five Forces directly are interconnected with the effect on the company’s ability to serve its customers and to make a profit. A change in any of these forces generally requires a company to re-assess its competitive strategies.
Competitive rivalry
According to Porter’s Five Forces Model, if entry into a market is easy then rivalry is likely to be high. Considering McDonald’s competitive rivalry, there is intense competition in fast food industry that many small fast food businesses fight with each other to improve their customer base. This makes a competition the major focus between businesses. Although, McDonald’s, with more than 32,000 local restaurants serving more than 60 million people in 117 countries each day, has a number of fast food outlet competitors across the countries such as Burger King, Taco Bell, KFC, Wendy’s, it is currently the leader of the industry in market capitalization with a cap of $39.31 billion.
Supplier bargaining power
The bargaining power of suppliers of McDonald’s is high because McDonald’s restaurants use the same products from the same suppliers and it doesn’t matter if you are in Rochester, MN or Beijing, China you can get the same Big Mac everywhere. This is a feature McDonald’s want to keep going on by encouraging consistency among its restaurants.
Analysis of industry
A business has to understand the dynamics of its industry and market in order to compete effectively and intensively in the marketplace. The forces which derive on competition and attractiveness of a market. The competitive environment is created by the interaction of these five different forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into the market, there are also the forces of supplier power, the power of buyers, and the threat of substitute products or services. Michael E. Porter suggested that the intensity of competition is determined by the relative strengths of these forces. The Five Forces directly are interconnected with the effect on the company’s ability to serve its customers and to make a profit. A change in any of these forces generally requires a company to re-assess its competitive strategies.
Competitive rivalry
According to Porter’s Five Forces Model, if entry into a market is easy then rivalry is likely to be high. Considering McDonald’s competitive rivalry, there is intense competition in fast food industry that many small fast food businesses fight with each other to improve their customer base. This makes a competition the major focus between businesses. Although, McDonald’s, with more than 32,000 local restaurants serving more than 60 million people in 117 countries each day, has a number of fast food outlet competitors across the countries such as Burger King, Taco Bell, KFC, Wendy’s, it is currently the leader of the industry in market capitalization with a cap of $39.31 billion.
Supplier bargaining power
The bargaining power of suppliers of McDonald’s is high because McDonald’s restaurants use the same products from the same suppliers and it doesn’t matter if you are in Rochester, MN or Beijing, China you can get the same Big Mac everywhere. This is a feature McDonald’s want to keep going on by encouraging consistency among its restaurants.
Cited: Key Ingredients of the McDonald 's Experience 28, November, 2012. <http://www.meettheboss.tv/Article/11/Key-Ingredients-of-the-McDonald 's-Experience/> McDonald’s FAQ 28, November, 2012. <http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html> McDonald’s website 29, November, 2012. <http://www.mcdonalds.com/us/en/home.html> Our company 28, November, 2012. <http://www.aboutmcdonalds.com/mcd/our_company/bios.html> Resource of organization’s history, managers, mission, vision, values, main products and markets 29, November, 2012. <http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html?DCSext.destination=http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html>