Porter's Five Force Model on Mc Donald Essay

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Porter’s five force model – USA fast food industry analysis A business has to understand the dynamics of its industries and markets in order to compete effectively and intensively in the marketplace. The forces which derive competition and attractiveness of a market, contending that the competitive environment is created by the interaction of these five different forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into the market, there are also the forces of supplier power, the power of buyers, and the threat of substitute products or services (The Figure1 Porter’s Five Forces Framework). Michael E. Porter suggested that the intensity of competition is determined by the relative strengths of these forces. Figure 1 Porter’s Five Forces Framework Source: Splash map on the five competitive forces The Five Forces directly are interconnected with the effect on the company’s ability to serve its customers and to make a profit. A change in any of these forces generally requires a company to re-assess its competitive strategies. Competitive rivalry According to Porter’s Five Forces Model, if entry into a market is easy then rivalry is likely to be high. Considering McDonald’s competitive rivalry, there is intense competition in fast food industry that many small fast food businesses fight with each other to improve their customer base. This makes a competition the major focus between businesses. Although, McDonald’s, with more than 32,000 local restaurants serving more than 60 million people in 117 countries each day, has a number of fast food outlet competitors across the countries such as Burger King, Taco Bell, KFC, Wendy’s, it is currently the leader of the industry in market capitalization with a cap of $39.31 billion. The Threat of new entrants The threat of new entrants in the fast food industry

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