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Market and environmental analysis of McDonalds Corp – 2003.

Market and environmental analysis is an essential part of an organization’s External Analysis.

The main objectives of a market analysis are;
a)To determine how attractive a market is.
b)To understand the dynamics of the market and amend strategies accordingly.

Here we apply the dimensions of a Market Analysis to McDonalds corp.

1)Emerging submarkets;
McDonalds failed to recognize the changing trend in customer’s preferences to better tasting, fresher food. This trend led to new sub markets emerging for tastier, fresher and fast food perceived as healthier. A few of the smaller/privately owned competitors (Cosi and Quizno’s) were able to operate in niche markets selling gourmet sandwiches and salads. The emergence of smaller restaurants offering easy access to exotic foods such as sushi and burritos created a more specialized niche market.

2)Size and Growth;
With the emergence of these sub-markets and niche markets, McDonalds started losing market share. It now had to share its fast-food mass market with these newly created markets. Even though these restaurant chains were small in size, their growth opportunities presented a potential threat to McDonalds. They operated on service that was better than McDonalds at the same time providing better tasting food, which led to an increase in its sales. This sector was in the early stages of growth where as McDonalds was past the maturity stage.

McDonalds profitability can be gauged by using Porters 5 factor model.

a)Intensity of competition among existing customers was relatively high. Direct competitors like Wendy’s and Chik-Fil-A were able to out perform McDonalds based on service quality by providing quicker service. In comparison McDonalds had a large number of franchises, but will falling service time. b)Threat of new entrants: Other market niches like quizo’s, cosi and small restaurants offering exotic...
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