Question

iscuss the key forces in the general and industry environments that affect McDonald’s choice of strategy. ( 800 words)

General environments ( Demographic , SOCIOCULTURAL , Political and legal forces , TECHNOLOGICAL FORCES . Economic , Global)

Key forces are  Competition in the Industry ,Potential of New Entrants Into an Industry , Power of Suppliers , Power of Customers , and Threat of Substitutes

Answer 1

Here McDonald's Choice of Strategy:

McDonald is the world-wide known fast food chain, which entered Belarus in 1996 and since then has established and maintains a strong position in the market. An environmental factor has a major role in the economic factors that play an important role in operation of a corporation. If an economy of a country is doing well, the industry will burgeon specially those producing luxury goods but if an economy faces recession these industry will face negative impact on their sales.

Brand Equity:

63% trust McDonalds for quality Service hygiene and value. In general McDonald is the first choice of burgers. More than 48% feel comfortable at McDonalds. Kids feel excited and happy when at McDonalds as they are provided with a kid’s meal with any toy on their own selection. Finally this is a fun place to go along with associates. McDonald has a total of 36000+ locations and it is a world famous leading fast food service chain which is originated from United States. This is well-known for Burgers and Fries.

Marketing strategy for promotion:

   Marketing strategy is very much significant for developing any of the business. Without it, the effort of the industry to attract the customer is random and very inefficient. The main focus of a strategy is to make sure that their product should fulfil the demands of the consumers and as well as it maintains the long-term relationship with those consumers. To achieve this one should have to initiate the flexible strategy that responds to the change in the customer demand and perception. This may also give brand name to the product which will help a person to run on his own business in the new markets these results in providing a smooth and well-organized manner. Initially the purpose of a marketing strategy should be to identify the target customer's are satisfies with a product and the service of the business. Once this is created and implemented on the terms of strategy this needs to identify the feed from a customer and if any changes or improvement is required we need to apply it for the maximum satisfaction of customers. This helps us to identify that where our plan needs to be improved and how it can be developed, so that it can be implemented for effective action. Before applying any strategy in the business a proper planning programs must be organized within the members of the organization.

Competition:

   1. Threat of Competition - HIGH

   -   Very parallel products in the fast food industry

   -   High competitors advertising the capabilities

   -   Location of outlets are closed sufficient ex., KFC, Star Bucks etc.,

   2.   Threat of New Entrants - MODERATE

   -   Low switching cost

   -   reasonable capital cost

   -   High cost of Brand Development

   3.   Bargaining Power of McDonald's Customers/Buyers (Strong Force)

   -   Low switching costs

   -   Large number of providers

   -   High availability of substitutes

McDonald's introduced the McCafe to select stores, wheh the customers can purchase expresses and cappuccinos prices in the $2-3 range. In response, starbucks teamed up with the Burger King and began selling Starbucks'Seattle Best Coffee in about 7,250 US outlets selling for $1 - $2.79 replacing Burger King's BK Joe Brew. Dunkin Donuts is another major competitor, with nearly 5000 stores in the US overlapping with Starbucjs but their customer familiarity is more coffee-t-go model rather than the "third place to work and relax" model.

Potential of New Entrants into an Industry:

   Threats of new entrants a company analysis from McDonald states that

   -   The threats of new entrants in the fast food industry is high because there are no legal barriers

   -   The economies of scale and the access of the distribution are the major barriers that firms face of the industry

   -   Firms must spend a large amount of capital on advertising and marketing in order to enjoy successful existence and long life of a fast food outlet

   -   Large established companies with strong brand names such as McDonald's make it make it more difficult to enter the market because new entrants are faced with price competition from existing chain restaurants.

   -   Thus it takes a pretty much time for a novel business to establish in the fast food industry

Power of suppliers:

   -   McDonald is the world’s largest restaurant chain in sales

   -   High bargaining power over its suppliers (Volume)

   -   Most of them owe MCD for their own existence

   -   Low power of suppliers - Low the cost of raw materials and high competitive price

Power of Customers:

   -   Less chances of switching, high brand picture through differentiation and uniqueness

   -   Attractive price

   -   Buyer don’t have bargaining power (Low Volume)

Risk of substitutes:

   -   This has high substitute availability in the market

   -   They have a very low switching cost

   -   High performance to price ratio can be monitored and maintained

Please give an Up-vote, this will be quite encouraging for me, thank you! If you have any doubt, kindly comment. I would love to help you!!!