Porters 5 Forces and MCDonalds By Arshed Aydrose University of Wollongong
Porters 5 Forces• Threat of competition HIGH – Very competitive Fast Food industry – Competitors Advertising Capabilities – Location of outlets – Major competitors- Burger King and YumBrand INC.• Threat of New Entrance HIGH – Regulation of Limit – Easy Access Market and Low start up cost – Example of SubWay’s market penetration• Threat of Substitutes Low-Moderate – Availability of the MCD products – Choose MCD for Easting and Entertainment – Narrows Threat of Substitutes due to introduction of local taste products.
• Power of Suppliers LOW – Worlds largest restaurant chain in sales – High bargaining power over its suppliers – Most of them owe MCD for their own existence – LOW the power of suppliers- LOWer the cost of raw materials and HIGH competitive price.• Power of Buyers LOW – Industry limitations – Low quantity purchases – Less chances of switching, high brand image thru differentiation and uniqueness – Buyers don’t have bargaining power
Issues faced by Mcdonalds• Nutritional issues – MCD taking away the traditional nutrition values – Replace the fresh and healthy food by mass production – Projection the product nutrition values – Comparison of daily consumption and MCD products – Serves 30million people daily• Advertising Issues – 2billion dollars for Advt annually – Concentrated on Children- Parental Concerns – MCD has a better advertising than its customers – Follows the advertising codes of each country – Making aware of MCD’s charity activities, events and learning programs
Issues faced by McDonalds cont..• Employment ethics and issues – Criticized as low paid jobs- named ‘McJobs’ – Low paid, non-union, part time jobs with low rights and conditions – Giving importance on individual goals than organizational goals – Fact of 1.5million workers with above 70% job satisfaction rate – Introduction of collective tips system