Mcdonalds Porters Five Forces Model

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Analysing McDonalds (fast food outlets) using Porters 5 Forces model – sometimes called the Competitive Forces model.

Introduction

McDonalds Canada opened in 1967, thirteen years after McDonalds had taken the United States by storm. This was the first restaurant to be opened outside of the United States.

It was in 1965 that McDonalds went public and offered shares on Wall Street.

Since then it has been important for McDonalds to continually monitor its performance, to make sure it is competitive and profitable while also being aware of its immediate community responsibilities. This can be achieved by using the Porters 5 Forces model so the company is able to determine where its business needs to change or improve in order to stay competitive in the fast food industry.

Using Porter’s competitive forces model to achieve a competitive advantage

1. Analyse McDonalds using a well known model to assess the competitive position that it occupies within its industry

Porter’s competitive forces model includes five forces that need to be analysed. These forces include the intensity of rivalry from traditional competitors, threat of new market entrants, threat of substitute products and services, bargaining power of customers and bargaining power of suppliers (Laudon & Laudon, 2007). See diagram below;

Traditional Competitors (competitive rivalry)

McDonalds traditional competitors include many of the other fast food outlets across the country, i.e. Burger King, Taco Bell, KFC, Wendy’s. It has been shown by Professor Michael Waterson (2004) that the presence of a Burger King, for example, will increase the likelihood that McDonalds will open near by. Thus it can be seen that the threat of competition from traditi...

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...ndustry well established in Canada, McDonalds’ traditional competitors have all found their own niche. Their constant changes are more directed at customer satisfaction then keeping inline with their competitors.

New market entrants, although small and initially insignificant, are exerting the most force over McDonalds Canada. They are able to cater to individuals a lot easier than a multinational company is and it should be these that McDonalds model any future changes on. As mentioned above, the introduction of organic products and the presentation of ‘greener’ images are essential for McDonalds to compete in a changing consumer environment. As environmental concerns become more of an issue for consumers they will be more aware of the impact that a company has on themselves and the environment and therefore be more conscious of who they support with their dollar.

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