STRATEGIC BUSINESS UNIT-

McDonalds

Submitted by:Shally hundal

CMBA 5

Porter Competitive Model

Intra-Industry Rivalry

Strategic Business Unit

BargainingPower

of Buyers

Bargaining Power

of Suppliers

Substitute Products

and Services

PotentialNew Entrants

RIVALRY AMONG COMPETITIVE FIRMS

• Focus on competitive advantage.• Strategies by firm.• Conditions that cause rivalry

among competing firms:High number of competing firms.Consumers switch brands easily.Rivals sell similar

products/services.

POTENTIAL ENTRY OF NEW COMPETITORS

• Barriers to entry are important.• Quality, pricing, and marketing can

overcome barriers.• New firms sometimes easy to enter

the industries because of high quality products, lower price and substantial marketing resources.

SUBSTITUTE PRODUCTS

• Refers to products in other industries.

• Its threat occurs when a products demand is affected by the price change of a substitute product.

BARGAINING POWER OF SUPPLIERS

• Suppliers are the business that supply material and other products.

• If supplier has high bargaining power company is less attractive.

BARGAINING POWER OF CONSUMERS

• Bargaining leverage• Buyer volume• Brand information• Price sensitivity

INTRODUCTION• Founded in 1948• Mr. Ray Kroc in San Bernardino,

California sold 100 millionth hamburger in 1958 and bought the rights to the McDonalds Corporation name.

• 58 million customers all age all gender per day

• Found in 119 countries.• Operates over 31000 restaurants.• Current strategy is cutting labour, food

and utility costs through implementing Technology and Innovation.

POTENTIAL NEW ENTRANTS

SUBSTITUTE PRODUCT OR

SERVICE

BARGAINING POWER OF

BUYERS

BARGAINING POWER OF SUPPLIERS

•Threat of new entrance HIGH•Regulation of limit•Easy access market and low start up cost

•Power of suppliers LOW•Industry limitations•Low quantity purchase•Less chances of switching, high brand image thru differentiation and uniqueness

•Bargaining power of suppliers LOW•Worlds largest restaurant chain in sales•Most of them owe MCD for their existence•LOW the power of suppliers-lower the cost of raw materials and HIGH competitive price

•Threat of substitutes low-moderate•Availability of MCD products•Choose MCD for eating and entertainment•Introduction of local taste products

•Threat of competition HIGH•Very competitive fast food chain•Location of outlets•Major competitor- BURGER KING and KFC

SWOT ANALYSIS Strengths

• Has a good image in the minds of consumers.

• Strong product value• Innovative in

producing new product lines.

Weaknesses

• Children as their main target audience.

• Slow drive-thru services

SWOT ANALYSIS Opportunities

• Partners with UAE government to reduce carbon footprint.

• Advertising strategy.• Have ability to add healthier

lines of food

Threats

• Changes in commodity prices.

• Emergence of other fast food.

• Competitor BURGER KING and KFC

• Heavy investments on promotional campaign

“IN BUSINESS FOR YOURSELF, BUT NOT BY

YOURSELF”