Mcdonalds Porters Five Forces Model Essay

1194 Words Sep 19th, 2008 5 Pages
Analysing McDonalds (fast food outlets) using Porters 5 Forces model – sometimes called the Competitive Forces model.

Introduction

McDonalds Canada opened in 1967, thirteen years after McDonalds had taken the United States by storm. This was the first restaurant to be opened outside of the United States.
It was in 1965 that McDonalds went public and offered shares on Wall Street.
Since then it has been important for McDonalds to continually monitor its performance, to make sure it is competitive and profitable while also being aware of its immediate community responsibilities. This can be achieved by using the Porters 5 Forces model so the company is able to determine where its business needs to change or improve in order to stay
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McDonalds maintains a close relationship with its suppliers (being one leg of the stool) so as to ensure that the overall product does not fall below the standard set. McDonalds prefers to source its products and supplies locally and, in Canada, they use over 120 local suppliers. This helps to provide a stable supply of consistent products, reduce costs and provide local employment. Their Canadian purchases represent more than 90% of total purchases in any given year (McDonalds Canada, 2006). While McDonalds suppliers are generally large and successful businesses in their own right they each have a solid understanding which enables McDonalds to consistently buy at the most economical prices, thus reducing the bargaining power of their suppliers.

2. Recommend a strategic direction for its future growth

McDonalds currently has a significant competitive advantage in its industry due to the longevity of the company, its careful marketing and convenient locations. By presenting a ‘greener’ image in all aspects of its structure the threat of new entrants and substitute products into the market place would be reduced as they appear to be the most dominant components in the model.
One aspect which may help to achieve this in the Canadian market would be the provision of organic alternatives and the reduction in packaging. By encouraging its current suppliers to follow suit McDonalds can maintain its relationship with them while catering to the

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