Food Industry
The five competitive forces (Porter's framework) as applied to this industry
McDONALD’S
1. Threat of substitute products
Low-Moderate
– Availability of the MCD products
– Choose MCD for Easting and Entertainment
– Narrows Threat of Substitutes due to introduction of local taste products. 2. Threat of new entrants
HIGH
– Regulation of Limit – Easy Access Market and Low start up cost
– Example of SubWay’s market penetration 3. Intense rivalry among existing players
HIGH
– Very competitive Fast Food industry – Competitors Advertising Capabilities – Location of outlets – Major competitors
- Burger King and YumBrand INC
4. Bargaining power of suppliers (LOW)
– Worlds largest restaurant chain in sales
– High bargaining power over its suppliers
– Most of them owe MCD for their own existence
– LOW the power of suppliers
- LOWer the cost of raw materials and HIGH competitive price.
5. Bargaining power of Buyers (LOW)
– Industry limitations – Low quantity purchases – Less chances of switching, high brand image thru differentiation and uniqueness
– Buyers don’t have bargaining power http://www.slideshare.net/ArshedAydrose/porters-5-forces-mc-donalds SUBWAY 1. Threat of substitute products
There are many substitutes for eating fast food such as eating fruit, preparing food at home or fine dining. However, apart from grabbing for example a banana, these options would probably consume more time than if one chose to order a sandwich, hotdog or burger. In this case, substitute attractiveness would depend on the buyer‟s willingness to substitute, meaning if the consumer is willing to buy some fruit instead of a sandwich. The attractiveness will also depend on the relative price and performance of the substitutes. For instance, do you feel as satisfied eating a banana as you would have if you had eaten a burger instead?
Alternatives to fast food do not necessarily pose a threat, but instead they might
McDONALD’S
1. Threat of substitute products
Low-Moderate
– Availability of the MCD products
– Choose MCD for Easting and Entertainment
– Narrows Threat of Substitutes due to introduction of local taste products. 2. Threat of new entrants
HIGH
– Regulation of Limit – Easy Access Market and Low start up cost
– Example of SubWay’s market penetration 3. Intense rivalry among existing players
HIGH
– Very competitive Fast Food industry – Competitors Advertising Capabilities – Location of outlets – Major competitors
- Burger King and YumBrand INC
4. Bargaining power of suppliers (LOW)
– Worlds largest restaurant chain in sales
– High bargaining power over its suppliers
– Most of them owe MCD for their own existence
– LOW the power of suppliers
- LOWer the cost of raw materials and HIGH competitive price.
5. Bargaining power of Buyers (LOW)
– Industry limitations – Low quantity purchases – Less chances of switching, high brand image thru differentiation and uniqueness
– Buyers don’t have bargaining power http://www.slideshare.net/ArshedAydrose/porters-5-forces-mc-donalds SUBWAY 1. Threat of substitute products
There are many substitutes for eating fast food such as eating fruit, preparing food at home or fine dining. However, apart from grabbing for example a banana, these options would probably consume more time than if one chose to order a sandwich, hotdog or burger. In this case, substitute attractiveness would depend on the buyer‟s willingness to substitute, meaning if the consumer is willing to buy some fruit instead of a sandwich. The attractiveness will also depend on the relative price and performance of the substitutes. For instance, do you feel as satisfied eating a banana as you would have if you had eaten a burger instead?
Alternatives to fast food do not necessarily pose a threat, but instead they might