Team members- Class Visk2011B 1. Nguyen My Hanh 2.Tran Thi Huong Giang 3.Nguyen Manh Long 4.Dong Quang Lam
a) The McDonald's Corporation, the leader in the fast food war, is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries across 35,000 outlets. It has defied recent difficult economic conditions and continued to experience strong sales and profit growth, and has been able to successfully increase revenues and profits in spite of much negative publicity and an increasingly health conscious public. We apply Porter's 5 Forces as an analytical framework for assessing McDonald’s competitiveness strategies in fast food market.
1. Threat of New Entrants: Low
Although it is not too expensive to start up a fast food restaurant, but fast food industry is already a well-established market. Therefore, infant businesses which want to enter into this market would have to face huge challenges:
McDonald’s is one of the world’s strongest and most recognizable brands for its “world’s best quick service restaurant service experience” (Vandenbosch and Mark), so their products are considered to be one of the most famous and familiar with customers. They have gained a huge number of loyal customers who are satisfied with their products. While new entrants have to wait for a long time to build brand recognition and customer base.
In 2012, McDonald’s remained number one with $35.6 billion in sales, almost one-quarter of all sales by the top-50 restaurants and almost three times the sales of its closest competitor. Obviously, they own a significant market share which will create difficulty in gaining economy of scale for new entrants to enter the market.