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Industry Analysis: The Fast Food Industry

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Industry analysis:The Fast Food Industry (McDonald’s)

NAICS 72221: Fast Food Restaurants. This industry is made up of establishments focused on the sale of prepared food and drinks for immediate consumption on or near the premises. Institutional and caterers and industrial organisations are also included in this business.

Related Industries:

Full-Service Restaurants

Grocery retailers

Grocery wholesalers

Packaged food manufacturing

Sub industries include:

Eating places Ice cream, soft drink and soda fountain stands, Coffee shop, Concessionaire Delicatessen (eating places) Frozen yogurt stand, Drive-in restaurant, Hamburger stand and Hot dog stand.

(Barnes, C. (2014))

McDonald’s is the global leader in the fast food industry. …show more content…

In order for McDonald’s strategies to operate effectively they must align with the external factors in the fast food restaurant industry.

Competitive Rivalry (Strong Force)

McDonald’s faces high levels of competition because the fast food industry is highly condensed. This element of Porter’s five forces analysis examines the effect of competing firms in the industry. There is a strong force of competitive rivalry for McDonald’s due to the following factors:

•High number of firms (strong force)

•High aggressiveness of firms (strong …show more content…

New Competitors coming into the industry can affect McDonald’s market share.In McDonald’s case, the following external factors create a moderate threat of new entry:

•Low switching costs (strong force)

•Moderate capital cost (moderate force)

•High cost of brand development (weak force)

low switching costs enables consumers to easily move from McDonald’s to new fast food restaurant companies. Also, the moderate capital costs of establishing a new restaurant makes it moderately easy for small or medium-sized firms to affect McDonald’s at a local level. However, it is expensive to build a strong brand that could compete with McDonald’s brand globally. This element of the Five Forces analysis illustrates that the threat of new entrants is a considerable issue for McDonald’s. (Kasi, A. (2017))

Bargaining Power of McDonald’s Customers/Buyers (Strong Force)

McDonald’s must address the significant power of customers. This element of Porter’s Five Forces analysis is concerned with the demands and influences of consumers. In McDonald’s case, the bargaining power of buyers is strong because of the following external factors:

•Low switching costs

•Large number of

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