McDonald's Analysis
Autor: Starlovehappy • October 4, 2016 • Case Study • 2,186 Words (9 Pages) • 493 Views
McDonalds Case Analysis
Week 3
DeVry University
Leslie Roberts
McDonalds Case Analysis
Week 3
COMPANY NAME: McDonald’s Corporation
WEBSITE: www.McDonalds.com
INDUSTRY: Restaurant, Fast Food
BACKGROUND and HISTORY
Brief History of McDonald’s
McDonald’s is one of the largest corporations in the fast food industry. They have been around since 1955 when Ray Kroc started the chain of McDonalds. The McDonalds concept was created in 1948 by Richard and Maurice McDonald. They sold hamburgers, fries, and milk shakes. In 1955 Ray Kroc franchised a McDonalds in Illinois in the hopes of promoting his milk shake mixer, because of the success Ray had, he decided to buy out the brothers for 2.7 million dollars.
The first McDonald’s Drive-Thru opened in Sierra Vista, Arizona in 1975. McDonalds started going global in 1968 when they added stores in British Columbia, Japan, Tokyo, and Germany to just name a few. Happy Meals were added to McDonald’s menu in 1979. McDonald’s launched the new worldwide Balanced Active Lifestyles public awareness campaign in 2005, and McDonald’s celebrated its 61st Anniversary on April 15, 2016.
Per a 2014 Survey done in 2014 McDonalds employs roughly 1.9 million people. They have over 35,000 locations in over 100 countries and 80% of the McDonald’s franchises are owned by individual franchisees. Their primary competitors are other fast food chains such as Burger King and Wendy’s, but the McDonalds Brand is one of the most well-known brands in the world.
ANALYSIS VIA PORTER’S FIVE FORCES MODEL
- Competitive rivalry or competition
McDonalds has a lot of competition due to the fact that the fast food industry is marketed to be cheap and fast. So if someone does not like McDonalds they have a lot of other options to choose from. Some of the competition that McDonalds has include:
Burger King, Wendy’s, In & Out, Smash Burger and other fast food burger places.
- Bargaining power of buyers or customers
This area is perceived to be fairly low risk for McDonald’s as consumers have little control over the variations in the product offerings, price and place of distribution. Customers will stay loyal as long as they are happy.
- Bargaining power of suppliers
McDonald’s power of suppliers is low because they have a loyal set of suppliers and due to the scale of McDonald’s operations, suppliers are likely to stay with them as it is a long commitment. McDonald’s international presence could also mean greater sales potential for suppliers. The more stores that McDonalds has the better the supplier is willing to stay with the brand as it brings in tons of profit for the supplier.
- Threat of substitutes or substitution
A substitute product is one that can be used as an alternative to what a business already sales and produces. It could be argued that the threat of substitutes to McDonald’s comes from pizzas and other fast food places that offer other than burgers, such as Cain’s, Chick-Fil-A, Arby’s, Subway, and Jersey Mikes all of which do not serve burgers. McDonalds has a brand that is well known so competition is still there but not in the same concept due to not being burgers. Burgers are the classic all American food.
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