Michael E. Porter devised theoretical frameworks for analysing both an Essay

Michael E. Porter devised hypothetic frameworks for analysing both an organisations external environment (the Five Forces Mo - Essay ExampleMoreover, they allow companies to understand the issues or challenges in the environment, supporting them in looking into appropriate solutions (Abuawad, 2013). For this paper, we will be analysing McDonalds through these models in fiat to understand how the two help in developing a successful strategy for the company. Five forces warning Five forces model of Michael Porter is based on the theory that every external environment for a business could be judged based on five primary forces or dimensions. These dimensions are Threat of tilt/Rivalry among firms, Threat of unseasoned entrants, Threat of substitutes, bargain proponent of suppliers and Bargaining power of buyers. The company basically need to understand the external environment surrounding them in each country, city or townspeople they function. This is crucial for formulating a winning strategy given the McDonalds is a franchise being run general (Abuawad, 2013). Rivalry among firms/Threat of competition Since McDonalds operates in the fast food industry, therefore, it faces an intense competition worldwide. the Fast forage industry has experienced a massive growth in just a couple of years. hence the industry is highly warring and McDonalds faces the threat of competition. ... Major competitors are Burger King and the Yum Brand Inc. So, McDonalds experiences intense rivalry within the fast food industry (Aydrose, 2012). Threat of new entrants The fast food industry has no particular regulatory limit of the number of firms to be allowed to enter and is in fact quite a profitable industry. The startup costs for this industry are low, thus making it simpler for new entrants to start up fast food restaurants. Although, the industry has well-known grocery leaders who possess majority of the market share. These market giants are McDonalds, Burger King and Wendys which using their power could hinder the new entrants from introducing their business in this industry. This makes the threat of new firms entering the industry to be moderate (Abuawad, 2013 Aydrose, 2012). Threat of substitutes Numerous substitutes exist of McDonalds product offerings. For breakfast menu, the substitutes hold the cheaper diners providing breakfast, or coffee tree houses like Gloria Jeans. Moreover, for meals like burgers, substitutes include the burgers of Wendys, KFC, Burger King and small diners or restaurants. For beverages like coffee and milkshakes, again diners, coffee houses and beverage companies provide substitutes for McDonalds beverages. So the threat from substitutes is quite high for the company (Aydrose, 2012). Bargaining power of suppliers Since McDonalds is globally the largest fast food chain operating in terms of sales, therefore, it has bargaining power over its suppliers. The suppliers bargaining power thus is low, leading to lower cos ts and ability to charge competitive prices. So McDonalds do not face the threat of being forced to buy costly bare-assed material since