Analysing Mcdonalds (Fast Food Outlets) Using the Porters 5 Forces Model – Sometimes Called the Competitive Forces Model.

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Introduction McDonalds Corporation truly began in 1954 when Ray Kroc decided that he would turn the successful Californian store owned by the McDonald brothers into a chain. Today McDonalds is the world’s largest restaurant chain, worth over $70 billion (Yahoo7Finance 2008). McDonalds has grown via constant refinement of business practices and by knowing their customers needs. They have placed great importance on their long term relationships with suppliers and their aim is to ensure customers receive a consistent product quality. Analysis of McDonalds Corporation using the Porters 5 forces model to asses its competitive position in the fast food industry. As the name suggests the Porters 5 Forces model focuses on 5 key…show more content…
This health option has served to give McDonalds are point of difference from its competitors. Power of Suppliers Suppliers are essential to business have greatest power when are no substitute products or it is costly for a business to change suppliers (Porter five forces model). To assist with maintaining control over supply and quality, McDonalds uses suppliers which have systems dedicated to production for the company (McDonalds Australia Corporate Social Responsibility Report 2007’). In this way McDonalds can stipulate quality and it becomes very costly for the supplier to cease its contract with McDonalds. This leaves McDonalds in a commanding position regarding suppliers. Power of Buyers Buyers can exert control over an industry when, there is little differentiation over a product and substitute products can easily be found, customers are sensitive to price and switching to another product is not costly (Porter five forces model). Substitute products of similar price and quality are easily found in the fast food industry, giving buyers great power and influence. There are a number of programs which McDonalds engages in to help set its self apart from others. They have there own charity organization Ronald McDonald House, they say
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