Porters five forces of mcdonalds

, 2017, p. The competitive rivalry against McDonalds is strong since there are different firms which provide fast food options. The aggressiveness of these firms and the low switching costs makes the competitive rivalry to be higher. The bargaining powers of buyers as strong as consumers have several choices, which allows them to seek out different competitive options. The threat of substitution is also strong due to the availability of other substitutes from retail stores such as Burger King and Wendy's. 2018, p. The fast-food restaurants that have posed a threat to McDonald's are those that are considered to be offering healthy food options for their clientele in the fast-food industry. On a global scale the threat of new entrants is a weak force, as a massive capital investment is required to effectively compete with McDonald’s.

Other barriers that have prevented fast food restaurants from opening and operating global fast food chains is the lack of access to supplies of raw materials. The extensive marketing campaign conducted by McDonald's to increase its awareness among its clientele has also affected new entrants who may not be able to sustain the operational costs that McDonald's incurs(Dyer et al. , 2017, p. Establishing economies of scale is also an important step to reduce the fixed cost per unit and to increase revenue levels within the organization. McDonald's should focus on spending money on research and development to expand its production capacity. It is likely that new entrants will affect the fast food industry if they provide healthy food options and organic food options as a competitive strategy.

Threat from Substitutes Substitutes have affected the operation of McDonald's Corporation. The substitutes of meals offered in McDonald’s include meals from other fast food restaurants such as Pizza Hut and KFC. Health concerns have also been raised against the products sold in McDonald's causing consumers to switch to other substitutes that they consider to be healthier. In spite of the high threat from substitutes, McDonald's has an opportunity to address the threat of substitute services and products. The organization could increase in service quality to their clientele by focusing on how it responds to their needs instead of being focused on offering products. The organization therefore needs to understand the needs of the clients and the health products being sold (Krishnaswamy, S.

The high amount of food supply has also made it possible for McDonald's to bakeries and to obtain reasonable prices for their required inputs. The high population of suppliers weakens the power of individual suppliers in McDonald’s (Schmidt and Gomer, 2018, p. The weakness of supplies has been caused by the lack of global alliances and regional alliances among suppliers to obtain high input products from fast food restaurants (Krishnaswamy, S. , 2017, p. Most of the supplies of McDonald's are not vertically integrated making it difficult for them to control the distribution network that supplies their products to the company. The decisions of customers impact the revenue levels of the company. Since customers are easily able to shift from one restaurant to another, it has become easier for them to state their demands and stand their ground until McDonald's meets the requirements (Krishnaswamy, S.

, 2017, p. Due to the saturation in the fast food market, customers have been able to select from other restaurants other than McDonald’s thereby ensuring that the bargaining power of buyers is strong. The availability of substitutes from outlets and food kiosk as well as bakeries has also given consumers significant bargaining power. The bargaining power of customers in the company has also become high causing the company to increase its global reputation (Hanson et al. 2016, p. Brand image is also an important factor for the company, which has given buyers a high bargaining power, as they know that McDonald's is interested in maintaining its customer base. McDonald's faces buyers with high purchasing power due to the average demand. Most buyers want to acquire products at the lowest prices possible.

The low switching costs have also affected the operations of the company (Basal 2017, p. The fast-food industry has different competitors as firms of different sizes and different fast food variety continue to expand the global market. The external factor of competitors has strengthened the force of rivalry within the industry. Aggressiveness within the fast food industry has also affected the operations of McDonald's as large firms and medium-sized firms aggressively market their fast food products on the pretext of pricing. As a consequence, McDonalds Corporation has experienced a high degree of intensity in its competitive rivalry (Hamilton and Réquillart, 2017, p. Since the market share for the fast food industry is shrinking due to health awareness that advocates for the avoidance of fast foods, the level of competitive rivalry has become strong and fierce in the past decade.

To counter the rivalry among competitors in the industry, McDonald's has an auction of improving its brand image to enable the company to compete better (Hamilton and Réquillart, 2017, p. The company could also come up with sustainable different its market size. The market share and the revenue levels in the company can be increased through a product diversification strategy. Application of the Recommendations of the Porter's Five Forces to Create Strategic Management Policies Since McDonald's is a multinational corporation, it has faced global pressure from different competitors at a local scale and at a global level. Finally, the introduction of as strategy of introducing quality standards to deal with issues of product substitution and high levels of competition. Conclusion The porter's five forces can be used to understand the competitive factors that affect the operations of McDonald’s.

The company has focused on expanding the multinational corporation to different regions by developing strategies such as innovation and celebrity endorsement to improve its sales levels. To deal with competitive rivalry from organizations such as KFC and Starbucks, the organization must continually seek to understand the needs of their clientele. McDonald's faces strong industry competitors from firms such as Wendy's, Burger King and Dunkin doughnuts. Badal, A. McDonalds Corporation–2015 (MCD).  Academic Journal of Business. Administration, Law & Social Sciences, 3(2), pp. Dess, G. , Singh, H. and Hesterly, W. S. The relational view revisited: A dynamic perspective on value creation and value capture.  Strategic Management Journal, 39(12), pp.  Health economics, 26(12), pp. Hanaysha, J. Physical environment as a key success factor for building strong brand equity: A study on restaurant industry.