Introduction
The first McDonald’s restaurant began operations in the 1950’s. Since then the company has grown by leaps and bounds opening its chain of restaurants around the world. The success of McDonald’s as a global leader in the fast food restaurant business is due to a large part to the company’s effectiveness in monitoring its performance, identifying its competitors and remaining overcoming the threats while capitalizing on its opportunities.
Today, McDonald’s is selling burgers, French fries, chicken, milkshakes, soft drinks, coffe, salads, and desserts under its umbrella globally. The company has introduced various local flavors in all its countries of operations so as to cater to a diverse clientele with different tastes.
Porter’s …show more content…
This move alone will help the company succeed and grow dynamically.
Five Forces Chart
Barriers to Entry Rivalry Supplier Power Buyer Power Threat of Substitutes
Low to Moderate Moderate to High Moderate to low High Moderate
High Brand image Similar products in the Fast Food Industry. Cost effectiveness of suppliers many of whom are in existence due to McDonald’s Can Choose between various other fast food chains or opt for healthier alternatives Other brands in the Fast Food industry who might offer healthier alternatives eg: Subway or alternative cuisines eg: Dominoes
Customer loyalty Low regulations and cost of entry into the business World’s largest restaurant chain Limited quantity of buying and strong influence of peers, ambience, etc. can make them choose alternates Local fast food chains in each country of operations Advertising capabilities of competitors
Barriers to …show more content…
Regardless of the high level of advertisement, and the tapping of new customers, the fast food restaurant is dependent on buyers. They are the major factor that influences the profitability of the company. McDonald’s being highly dependent on customers who can be easily swayed by elements like peer pressure, need to cater to various types of clients. Low switching cost makes it easy for McDonald’s to lose customers to other competitors.
Threat of Substitutes:
An important element of the Five Forces analysis, the threat of substitution is high since there are many possible substitutes from local bakeries, alternative cuisines (like Dominoes), healthier alternatives (like Subways) and so on. Many of these substitutes are priced much lower than McDonalds, while being competitive in terms of quality and customer satisfaction. Therefore, substitutes are a major issue that the company needs to address through competitive pricing, newer products and high quality. Thus, the threats of substitutes are high for McDonald’s.
Strategic Plan for Future
The first McDonald’s restaurant began operations in the 1950’s. Since then the company has grown by leaps and bounds opening its chain of restaurants around the world. The success of McDonald’s as a global leader in the fast food restaurant business is due to a large part to the company’s effectiveness in monitoring its performance, identifying its competitors and remaining overcoming the threats while capitalizing on its opportunities.
Today, McDonald’s is selling burgers, French fries, chicken, milkshakes, soft drinks, coffe, salads, and desserts under its umbrella globally. The company has introduced various local flavors in all its countries of operations so as to cater to a diverse clientele with different tastes.
Porter’s …show more content…
This move alone will help the company succeed and grow dynamically.
Five Forces Chart
Barriers to Entry Rivalry Supplier Power Buyer Power Threat of Substitutes
Low to Moderate Moderate to High Moderate to low High Moderate
High Brand image Similar products in the Fast Food Industry. Cost effectiveness of suppliers many of whom are in existence due to McDonald’s Can Choose between various other fast food chains or opt for healthier alternatives Other brands in the Fast Food industry who might offer healthier alternatives eg: Subway or alternative cuisines eg: Dominoes
Customer loyalty Low regulations and cost of entry into the business World’s largest restaurant chain Limited quantity of buying and strong influence of peers, ambience, etc. can make them choose alternates Local fast food chains in each country of operations Advertising capabilities of competitors
Barriers to …show more content…
Regardless of the high level of advertisement, and the tapping of new customers, the fast food restaurant is dependent on buyers. They are the major factor that influences the profitability of the company. McDonald’s being highly dependent on customers who can be easily swayed by elements like peer pressure, need to cater to various types of clients. Low switching cost makes it easy for McDonald’s to lose customers to other competitors.
Threat of Substitutes:
An important element of the Five Forces analysis, the threat of substitution is high since there are many possible substitutes from local bakeries, alternative cuisines (like Dominoes), healthier alternatives (like Subways) and so on. Many of these substitutes are priced much lower than McDonalds, while being competitive in terms of quality and customer satisfaction. Therefore, substitutes are a major issue that the company needs to address through competitive pricing, newer products and high quality. Thus, the threats of substitutes are high for McDonald’s.
Strategic Plan for Future