6. Porter’s five forces
McDonald’s position as the global leader in the fast food restaurant market is partly a result of the firm’s effectiveness in responding to the Five Forces in its industry environment. Porter’s Five Forces analysis model identifies the most relevant external factors that influence business organizations. In McDonald’s Five Forces analysis, the focus is on the fast food restaurant industry. The environment of this industry interacts with McDonald’s to affect the firm’s potential and success. Nonetheless, its current global success indicates that McDonald’s remains effective in addressing these five forces and in overcoming related issues.
McDonald’s strategies must align to the external factors in the global fast food restaurant industry’s environment.
Overview: McDonald’s Five Forces Analysis
In this Five Forces analysis, McDonald’s experiences the effects of external factors at varying intensities. The company must implement strategies to meet these external factors and minimize negative impact. In summary, McDonald’s Five Forces analysis yields the following intensities of the five forces:
1. Competitive rivalry or competition (strong force)
2. Bargaining power of buyers or customers (strong force)
3. Bargaining power of suppliers (weak force)
4. Threat of substitutes or substitution (strong force)
5. Threat of new entrants or new entry (moderate force)
The results of the Five Forces analysis shows that McDonald’s needs to prioritize the issues related to competition, consumers, and substitutes, all of which exert a strong force on the company. A possible course of action for McDonald’s to address these issues is product innovation. New McDonald’s products can attract and keep more customers. Also, this Five Forces analysis shows that McDonald’s can implement higher quality standards to address competition and substitution in this saturated market.