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

write a report on the general environments and forces  

Answer 1

Answer: There are various General Environments factors that affect McDonald's choice of strategy. These are as follow:

• Socio-cultural Factors: This includes lifestyle changes, growth rate to population, regional shift in population etc. McDonald's is doing business worldwide and caters its menu in different countries around the world. They cater specialized menu to suit different culture. McDonald's need to think about cultural, religion rules and tradition. For Example - In India the non-vegetarian menu have the option of fish and chicken only and not beef as they consider cow as sacred.
• Political/Legal Factors: This would involves tax laws, government subsidies, foreign trade regulations etc. Different political decision, rules are impacting McDonald.
• Technological Factors: McDonald's has added improvement for food processing such as filet o fish and burgers. So, the use of equipments, special control devices, temperature regulators, inventory upkeep etc. are linked to different technologies. In this way technology is impacting McDonald's choice of strategy.
• Economical Factors: Economy is important factor which is impacting McDonald. Company need to think about profitability, expansion. So, they need to consider countries demand, supply, production, exchange rate around the world. When disposable income is reduced then demand for food items would also reduced that affect McDonald adversely.

Five Forces Analysis of McDonald: These five forces are as follow:

• Bargaining Power of Suppliers: In case of McDonald Bargaining power of suppliers is LOW because of their small size and being scattered globally. It does not give them much bargaining power. McDonald have several option to source from. There are very few supplier that cannot be replaced or can be replaced with difficulty can give them some bargaining power.
• Bargaining Power of Customers: In case of McDonald Bargaining power of customers is HIGH because of several reasons. One reason can be increased competition and customers in the 21st century are more health conscious. There are so many brands in the industry and they are investing a lot in marketing as well as customer service. Since each customer is valuable and everyone is trying to become more customer oriented. So, it has given customers high bargaining power.
• Threat of Substitute: The Threat of Substitute product for McDonald is MODERATE. It is because several brands are offering similar product and threat is not only from international brands but also from local brands. In case of McDonald threats gets to be moderate by the brand image as well as it also holds large market share.
• Threat of New Entrants: The threats from new entrants for McDonald is also MODERATE. It is because McDonald is a large global brand and having a string brand image. It also holds the largest market share in the fast food industry. As we know there is no significant barrier but to grow into major brand is not easy as it required large investment in marketing. These all are the factors that moderate the threat from any new brand.
• Competitive Rivalry among the Existing Brands: The level of competitive rivalry among the existing brands in the fast food industry is VERY HIGH. It is because number of International brands in the fast food industry has kept growing which as a result adding to the intensity of rivalry in the fast food industry. Dominos to Burger King there are several brands that are aggressively competing for market share in the fast food industry.