Mcdonalds porters five forces model

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Mcdonalds porters five forces model

By | October 2008
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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 traditional rivals is intense and should never be over looked.

Threat of New Market Entrants
There are many new market entrants emerging all the time but not on the same scale as McDonalds. Some of the newer entrants include chains of Sushi...