Porter's Competetive Forces Model on McDonald.

  1. The threat of entry of new competitor

· McDonalds, has make an entry barriers that others competitor cannot enter the fast food industry easily because, McDonalds have good product and service that customer has learned to expect from fast food industry.

· As we can see, people more choose McDonalds compare to others fast food like KFC, Burger King or A&W because McDonald's has cheaper price, a lots of menu that suitable with Malaysian taste and good service like MC Delivery compare to others fast food restaurant.

· The greatest strength was creating an image in the minds of the people and introducing them to the fast food culture. Delivery speed, customer care and cleanliness are the core strengths on which these stores expanded. They created a corporate symbol and their advertisement campaigns were highly successful in establishing the brand image and logo in the minds of the millions. Two main competitors generally identified with McDonald are the Burger King and the KFC. McDonald marketing strategy is concerned with the internal resources.

· A large amount of product differentiation exists in the industry. The McDonald brand ranks as 8th in Business Weeks Scoreboard over global brands. Furthermore the brands KFC and Pizza Hut are also represented (with place nr. 61 and 63 on the scoreboard). This signifies a large consumer preference to the global brands, and would create somewhat of a barrier for new entrants.

  1. The bargaining power of supplier

· Different suppliers have different bargain powers in the fast food industry. There is the soft drink industry where mayor supplier brand names supplies products and brand value to the fast food industry. Then there is the large amount of smaller suppliers that delivers other products to the fast food industry. For example, Coca Cola and Pepsi.

· The market for soft drinks is dominated by a few companies. Mainly Coca Cola and Pepsi. These soft drinks suppliers are the only ones who have the capacity to match the needs of the global fast food chains. The domination of a few suppliers in an industry with more customers sets a high bargaining power for the suppliers.

· The fast food industry is interested in having the soft drink producers being a part of their own branding. The Pepsi and Coca Cola brand have a global brand ranking of respectively 23 and 1.

· With the smaller fast food places the soft drink suppliers are holding all the bargaining power, since the individual fast food companies does not form a significant part of the supplier clientele, and their business could be partially dependent of the suppliers willingness to provide necessary equipment for the company.

  1. The bargaining power of customers (buyers)

· Since the industry is flooded with many different kinds of fast foods and many different suppliers of fast food, then the buyer are in a situation where many suppliers are offering products that have a certain similarity.

· Since the global fast food chains have been trying to match each others successful products and product packages, then the buyers can actually buy similar products from multiple suppliers, and that is a situation the empowers the buyer.

· Furthermore, if the fast food industry does not match the demands of the buyers and the general consumer trends, then the buyers can choose not to buy their product and convince others to do the same.

· A good example of this is the movie Super Size Me’ in America. It is a movie showing an ordinary consumer trying living of McDonald’s fast food, and the purpose of the movie was to see what the traditional fast food from MC Donald could do to your health if you were to eat their products for every meal. This movie shows what the buyers possible reactions could be if not satisfied or not being pleased. The reactions from the whole market were a large change in consumer preferences and brand preferences.

  1. The threat of substitute products or services

· The generic products of fast food are mainly considered as convenience. Convenience and availability are the main drivers for choosing fast food. However, this is backed up by focus on value. Since the market as a whole consists of many differentiated fast food companies, then the customers are used to having the option of choosing the best value products.

· The value of the substitute products in general matches the fast food products and the consumer preferences of the consumers. The substitute product offers both cheap value meals and quality products for both ends of the quality scale that the fast food industry normally targets. Furthermore, it offers healthy alternatives to match the consumer needs and wishes.

· The differences between McDonald and their others competitive are services of delivery that is Mc Delivery that give a good service, faster and make customer easy to buy from any kind of set of menu at McDonald's.

  1. The rivalry among existing firms in the industry

· McDonald however is far larger than most in the industry with 31,000 outlets compared to its nearest hamburger competitor Burger King, with 11,500 (Reuters, 2008). KFC (owned by 2nd largest competitor Yum! Brands (Yahoo7finance, 2008), Burger King and countless others sell similar product to McDonald.

· McDonald traditional competitors include many of the other fast food outlets across the country has been shown that the presence of a Burger King, for example, will increase the likelihood that McDonald 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.

· In general, McDonald and its main competitors (Burger King Corporation, Wendy's International, Inc., Hardee's, and Jack in the Box) are active in making fresh moves to improve their market standing and business performance by introducing their product innovation and launching many outlets franchise.

· A good example of this would be the price competition between multiple fast food chains’ value meals.

· Price dumping is normally a good way to attract new customers, or stealing customers from competing companies, and since it have been a growing consumer trend to go after these value meals, then it is a product category that have been adapted from most of the global fast food companies.

· The high level of competition forces the individual competitors to copy of each others are products and ideas quickly since the competitors are always keeping an eye out for new ideas for themselves, and so far there have been no way of protecting a burger or sandwich recipe. In Malaysia, every Chinese New Year, there will be a prosperity burger. Thereby they have found a way to differentiate, which gives them a bit more space to move in, and thereby a little less fierce competition.

· The main competition goes through the branding. In addition, the competition to create the strongest brand is fierce. Firstly, normal advertising through TV, posters radio-commercials are regular. However, the biggest brands like McDonald’s and Burger King have been branding their own brand through piggy backing on other brands power.

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