Porter's 5 Forces

What is the primary purpose of Porter's Five Forces model?

• To analyze competitive dynamics within an industry

• To determine the financial health of a company

• To evaluate employee performance

• To assess technological advancements

Which of the following is NOT one of Porter's Five Forces?

• Threat of new entrants

• Bargaining power of suppliers

• Technological innovation

• Rivalry among existing competitors

Which of these refers to threat of new entrants?

• The ability for new companies to enter the market

• The availability of substitute products

• The ability for customers to influence prices

• The ability for suppliers to influence prices

• Considering current rivalry in the market

Which of these refer to 'Supplier Bargaining Power'?

• Availability of Substitute Products

• Ability for suppliers to influence prices

• Ability for buyers to influence prices

• Referring to rivalry in the industry

Which of these refer to 'Buyer Bargaining Power'

• Ability for customers to influence prices

• Looking at the current rivalry in the industry

• Ability for customers to find substitute products in the market

Which of these refer to 'Threat of Substitute Products'

• Looking at the current rivalry in the market

• Looking at ability for customers to find an substitute products

Rivalry amongst established competitors is more likely to affect businesses where there is

• No competition

• Some competition

• Lots of competition

McDonalds' Porters 5 forces

Groups:

(a) Buyer Bargaining Power

,

(b) Supplier Bargaining Power

,

(c) Threat of New Entrants

• Regulatory barriers are minimal for new fast-food establishments.
• Consumer trends favoring new and diverse dining options encourage new entrants.
• The availability of substitute inputs can weaken supplier bargaining power.
• Low capital requirements for starting a fast-food business.
• Loyalty programs and discounts can sway customer decisions, increasing their bargaining power.
• Consolidation among suppliers can reduce the number of options for buyers, increasing supplier power.
• Customers have access to online reviews and price comparisons, influencing their choices.
• Bulk purchasing by large groups can lead to lower prices, enhancing buyer power.
• Suppliers can dictate terms if they are the sole source of a critical component.
• Suppliers offering unique products can charge higher prices due to lack of competition.
• High switching costs for companies can increase supplier power.
• Customers are increasingly demanding healthier options at competitive prices.
• Customers can easily switch to other fast-food chains if prices rise.
• Customers are expecting McDonalds products to stay cheap and have a limited spend

• Suppliers can threaten to forward integrate into the market, increasing their leverage over buyers.
• The presence of many small competitors makes market entry easier.

• Franchise opportunities allow new entrants to leverage established brand recognition.
• Technological advancements reduce operational costs for new entrants.

McDonalds' Porter's 5 Forces

Groups:

(a) Threat of Substitute Products

,

(b) Competitive Rivalry

• Domino's delivers pizza and sides that can serve as substitutes for fast food burgers

• Other companies are also looking to compete with McDonalds' global expansion

• Pizza Hut offers pizza and sides that can substitute for burgers

• Burger King also offer an beef burger, nuggets, chips and soft drinks

• Subway serves sandwiches and salads that compete with fast food options

• Companies are also looking to stand out on JustEat

• Wendy's and McDonald's frequently compete for market share in the burger segment

• Other companies try to offer lower prices than McDonalds

• KFC provides fried chicken and sides as an alternative to burgers

• Taco Bell features tacos and burritos that can replace traditional burger meals

• Burger King's promotional campaigns often target McDonald's customers

• Wendy's provides a range of burgers, salads, and beverages

Do you believe your proposed start-up business is threatened by new entrants? (Explain why referring specifically to your industry)