Mcdonalds Porters Five Forces Model Essay

The case is about Loblaw companies Inc., a highly successful grocery chain in Canada. Loblaw is Canada’s largest food distributor. The major issue is the emergence of Wal-Mart, who is looking to pursue expanding their grocery line chain in the Canadian market. According to Yunna (2014), porter’s five forces model has been widely applied to analyze industry competition in various markets. Using Porter’s 5 Forces to analysis the issues of the case can be a useful tool in summarizing the attractiveness of the market or industry. According to Dobbs (2012), the five forces are the threats posed by competitive rivalry, powerful buyers, powerful suppliers, potential new entrants, and substitute products. The analysis of Porter’s five forces framework can be viewed in figure 1. The case describes the retailer-supplier relationships as power plays. As the scale would tilt in favor of the one wielding the most clout at a point in time. There are numerous manufacturers with various substitutions among the grocery store. However, a supermarket would lease out shelf space for rent. The manufacturers would pay the grocery store a combination of different allowance to obtain secure shelf and warehouse positions for its products. Ultimately the category manager had the final word, which left the manufacturers with little to no bargaining power.

Nowadays the competition in fast food industry is becoming stronger and stronger as more and more new brands with new and creative ideas. In this written assignment, we will be focusing on why McDonald is so successful as it is currently the strongest and largest global fast food chain.(---) This written assignment will revealing McDonalds’ company background, and its background in Malaysia, and a PESTEL analysis and Porter's Five Force analysis will also be included in this written assignment.

McDonalds is a role model for other industries regarding its dominance over the value chain. The company is both vertically and horizontally integrated. McDonalds is known for purchasing farms, to raise and ultimately slaughter animals, to produce the meat for their products. This type of dedication to the value chain is what has made McDonalds so successful. McDonalds also owns the logistics and transportation lines that bring products to the restaurant. McDonalds has even created their own health insurance company to supply employees with health insurance, for a cost. It appears McDonalds is attempting to control the entirety of its value chain to, reduce its cost while maintain quality and in turn pass along some of that cost, these savings can be turned into a perceived value by the customer resulting in brand loyalty.

Furthermore, McDonald’s is not a normal fast food chain, it is versatile. For example, it has spreaded into the

McDonalds is a corporation that has great success because of good strategy and planning. In the next five years, McDonalds needs to keep up with the changes of the consumer and social

McDonald’s has been a staple in the restaurant business for as long as most of us can remember. It has achieve around the globe, but not without overcoming a fair amount of challenges in its pursuit of the title “King of Fast Food”.

McDonald's franchise operates in oligopoly market since the fast food industry is one of the major industries with this type of markets. Some of the common features of oligopolistic markets are price rigidity and price war that have significant impacts on the firm's pricing strategies. The reason for the operation of this franchise in oligopolistic markets is that fast food industry is characterized by a small number of large producers or sellers. As a result, every large seller in the industry has a perceptible impact on other sellers as they influence the market.

The bargaining power of suppliers; I believe the suppliers have a decent amount of bargaining power, due to the fact that they are the life line of the company. Without the suppliers there is no way a business such as this will survive.

REFERENCES•www.mcdonalds.com, accessed on 18 July, 2008•www.mcdonldsindia.net, accessed on 18 July, 2008•en.wikipedia.org/wiki/McDonald's, accessed on 19 July, 2008•http://www.associatedcontent.com/article/263943/mcdonalds_strategic_marketing_mix.html?cat=4, accessed on 19 July, 2008•www.kfc.com, accessed on 25 August, 2008

Based on the interview of our group members with the owner of Marrigorri Boutique Café, Mr. Muhammad Zulhilmi bin Hanapi, we have go through an analysis on the café using Porter’s Five Forces Strategy. There are five forces that can be used to analysis on this café house which is the competitive rivalry force, bargaining power of supplier force, bargaining power of customers force, threat of new entrants force and the threat of substitute products or services force.

Threat of substitute products and services is the last of Porter’s Five Force Model. For Tesco, the threat of substitute products and services is medium. Switching costs may reduce the threat. Besides customers shop in physical stores they also can shop in online services wherever they are. Switching cost give every customers a good services, provide good quality products to all customers and also will the long-term contract with financial penalty will achieve.

Porter 's Five Forces Model is a critical instrument to break down an outer aggressive environment of the business. The model incorporates threat of entry, the threat of rivalry, the threat of suppliers, the threat of purchasers and threat of substitutes.

This paper addresses the use of Porter’s Five Forces model and how it can benefit Broadway Cafe by identifying and analyzing the effect of these forces on its business. The benefits include improved decision making, faster time to market, better productivity, improved competitive advantage, more profits and greater customer satisfaction. It also helps in achieving operational excellence.

The second force that acts on the industry is the threat of new entrants. Fortunately for McDonald’s and it’s over 30,000 restaurants world-wide, the corporation has set itself in a position of dominance. Using a growth strategy, “McDonald’s is continuously expanding its reach which makes it increasingly difficult for new fast food restaurants to enter the industry, through franchising, McDonald’s is able to reach nearly every corner of the globe” (Shell, Ellen Ruppel).

Since McDonald’s is the most well know fast food chain in the world with a market cap of 69.35 billion, brand recognition is their biggest strength. The secret of McDonald’s success is its willingness to innovate and maintain consistency in the operation of its many outlets. In recent years McDonald’s has introduced Premium Salads, Snack Wraps, fresh Apple Dippers in the United States, and Corn Cups in China. Also, McDonald 's products are priced so low that economic conditions are almost insignificant.