Industry Analysis:
Porter’s Five Force Model:
In a Fast Food industry, nature of competition is strongly affected by five forces. By this a company can determines its own competitive behavior which in turn generate profit for the firm.
Ø Competitive Rivalry:
o Fast food industry is one of the most competitive industries. There are so many small fast food outlets which are competing in a single market with a single approach i.e. to extend their customer base. In India McDonalds launched new different products to compete with the existing business. In terms of existing competition there are competitors such as KFC, Burger King, etc.
Ø Threat of New Entries:
o In restaurants business like McDonalds a huge amount of cost of entry in the market is required. But India is an emerging market for Multinationals and as India is developing more and more new competitors are entering with large investment and making competition stiffer.
Ø Substitutes:
o Convenience and availability helps in choosing the fast food. As India is developing the whole convenience industry is growing because now people want to spend less time cooking food in their kitchen. There are a large variety of products that people can choose such as KFC, burger king, etc.
Ø Bargaining Power of Buyers:
o Every buyer in a fast food industry does not have much bargaining power. Whenever the buyer is buying a product from any outlet, he just order and pay the amount of that product. But actual power is when the customer actually chooses a place to buy a fast food. Since the India market is full of different fast food products and brands so the bargaining power of the buyer gets low.
Ø Bargaining Power of Suppliers:
o Bargaining power of Supplier of McDonalds is low. Many of the products offered by McDonalds are not differentiated so they have substitutes in market.
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