Porters Five Competitive Forces - Paper Example

Being that McDonald's is one of the leading global fast-food chains, the companys revenue has gone up to $ 23 million annually with the company achieving a higher level of employment and recording more than 1.8 million workers globally(Vrontis & Pavlou, 2017). The company success has been in the past resulted in distinctive competitive strategies, superior products and a higher level of integrity that their employees have built in the past. Conducting an analysis of competitive forces on McDonalds, the analysis of these forces is significant in realizing its present position and the companys general performance in the competitive market.

Threat of new entrants

With the first force being the treats of new entrants, the new entrants in the market is viewed to be making some considerable treats for some the existing organizations. In case the new entrants is carrying greater brand value, then the general market share, profit, and general value will be affected. For example, in case of Subway opens up their new outlet in various areas where McDonald have existed before, then there will be some barrier to doing business on McDonalds side (Fitzsimmons & Fitzsimmons, 2017).

Buyers Power

Customers and restaurant business are playing the role of buyers. This demonstrates why the buyers are so significant since they have different means in which their money can be spent. Through fair prices, McDonalds have managed to create a competitive market by producing some of the outstanding services.

Threat of substitute product

In business, substitute products play an essential role, and to some extent, they are regarded as one of the major threat to a business organization. An example is when another restaurant is capable of producing the Big Mac that has no different taste with that of McDonalds; then it will end up losing most of its customers. This demonstrates that a company should thrive to maintain great specialty.

Buyers power

In any business, buyers power is the determinant when it comes to level of profitability and the general sustainability of the business. Since customers have various means available to spend their money, McDonald is continually working on gaining maximum customers from a market which is quite competitive (Dey, 2016). They have managed this by choosing to produce quality food with outstanding services.

Threat of rivalries

The number of competitors determines the general competitive position that a company has, and their power demonstrated by their competitors. Since competitors are the main barrier to achieving one hundred percent revenue, Mc Donald has taken the significant challenge as their mission is on achieving their general objectives.

Reference

Dey, K. (2016). The fast food industry in the UK. Analysis of McDonalds with PESTEL, VRIN and Porter's Five Forces.

Fitzsimmons, J. A., & Fitzsimmons, M. J. (2017). 0perations, Strategy, lnformati0n Techn0l0gy.

Vrontis, D., & Pavlou, P. (2017). The external environment and its effect on strategic marketing planning: a case study for McDonald's. Journal for International Business and Entrepreneurship Development, 3(3-4), 289-307.