Mcdonalds
McDonald’s Corporation
McDonalds’s was first introduced in Des Plaines, Illinois in 1955. It has grown strongly to become ranked number one in fast food service on the Fortune 500 list. In recent years the company has faced quite a few changes with changing CEO’s three times in one year. As of September 30, 2012, McDonald’s has 34,010 restaurants in 119 countries. Due to increased competition, a failing economy, and a changing environment McDonalds reported a loss in sales. How can McDonald’s adapt to changing market conditions to sustain the growth it once experienced? Michael Porter developed the five forces model for formulating organizational strategy that is applicable across a wide variety of industries. The focus is to devise a means for the company to gain a competitive advantage. An analysis via Porter’s five forces model includes: the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, substitute products/services, and competitive rivalry. The barriers for entry are low for the fast food industry. New competitors are always on the horizon. Consumers make purchasing decisions based on price and convenience. This gives the consumer buying power. There are new outlets being built each year. The power of suppliers should not be an issue for McDonald’s. Consumer’s can demand what type of products they want to see from McDonald’s. Consumers are starting to trend towards healthier food and beverage choices. McDonald’s is trying to reclaim their name and show America that the company cares about the health of their consumers. The threat of substitutes is greater now than ever due to the convenience food industry growing. Many gas stations and convenience stores now carry hot dogs, cheeseburgers, chicken and several beverage choices. McDonald’s is suffering with their competition. Chains such as Subway are offering harder competition due to the healthier offerings. McDonald’s has tried both cost leadership
McDonalds’s was first introduced in Des Plaines, Illinois in 1955. It has grown strongly to become ranked number one in fast food service on the Fortune 500 list. In recent years the company has faced quite a few changes with changing CEO’s three times in one year. As of September 30, 2012, McDonald’s has 34,010 restaurants in 119 countries. Due to increased competition, a failing economy, and a changing environment McDonalds reported a loss in sales. How can McDonald’s adapt to changing market conditions to sustain the growth it once experienced? Michael Porter developed the five forces model for formulating organizational strategy that is applicable across a wide variety of industries. The focus is to devise a means for the company to gain a competitive advantage. An analysis via Porter’s five forces model includes: the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, substitute products/services, and competitive rivalry. The barriers for entry are low for the fast food industry. New competitors are always on the horizon. Consumers make purchasing decisions based on price and convenience. This gives the consumer buying power. There are new outlets being built each year. The power of suppliers should not be an issue for McDonald’s. Consumer’s can demand what type of products they want to see from McDonald’s. Consumers are starting to trend towards healthier food and beverage choices. McDonald’s is trying to reclaim their name and show America that the company cares about the health of their consumers. The threat of substitutes is greater now than ever due to the convenience food industry growing. Many gas stations and convenience stores now carry hot dogs, cheeseburgers, chicken and several beverage choices. McDonald’s is suffering with their competition. Chains such as Subway are offering harder competition due to the healthier offerings. McDonald’s has tried both cost leadership
Cited: www.mcdonalds.com Peter, J. Paul: Donnelly, Jr. James. Marketing Mangement: Knowledge and Skills. Tenth Edition http://businesscasestudies.co.uk/mcdonalds-restaurants/the-marketing-process/introduction.html#ixzz2J1PuRpMc http://blog.nola.com/business_impact http://www.nytimes.com/2012/05/06/magazine/how-mcdonalds-came-back-bigger-than-ever Keith O’Brien http://www.bloomberg.com/news/212-11-15/mcdonalds-replaces-its-chief-fields-after-sales-decline http://en.wikipedia.org/w/index.php?title=McDonald’s