The McDonald is one of the largest fast-food companies operating in different countries. In the UK, its management has been using different strategies to ensure the firm stands out in the market. Although this company has been striving to ensure that it attains its goals, there are various external factors which pose threat to its operations. However, some of them have presented opportunities and the company is trying to make use of them to ensure that it continues maintaining its edge over competitors.
McDonald’s external analysis
IN the UK, McDonald's has positioned itself as a premier business which focuses on satisfying consumer needs. The company uses various strategies to ensure that it thrives in the competitive market and also meets the needs of its customers. For example, it always focuses on inventing new ways of doing things and also coming up with new products to enhance its menu. It also emphasizes on producing high quality products to attain a competitive advantage by maintaining customer loyalty.
In terms of technology, the company has been making great strides to ensure that it implements technology which can make its consumers to have a great experience. For example, it has established an application which enables the customers to view products and their prices, and also to order what they need to be delivered. However, technology has been affecting this company because its constant changes make it to also adjust some of the things in its operations from time to time.
Political factors have not had a significant impact on McDonald's in the UK because irrespective of changes in regimes, most of the new ones do not bring significant changes in this industry. Additionally, politics in the UK are not associated with problems such as clashes as witnessed in some of the other countries. Although the increased governmental guidelines for diet and health is an opportunity for McDonald's, the evolving public health policies seem to pose a threat to its operations.
According to its CEO in UK Paul Pomroy, most of the UK regions experience stable economic conditions and this makes it possible for the company to experience good sales because consumers have high disposable income. The economic condition of this region also favors McDonald's positioning strategies and other operational techniques which it uses to attain its goals.
Although McDonald's has established various techniques to overcome challenges associated with social factors, there are those that still seems to pose threat to its operations in the UK. For example, there have been increased changes in healthy lifestyle trend, which makes the company to change its Menu from time to time. There is also increased changes in cultural diversity, a factor which makes the company to change its marketing strategies especially in terms of targeting and segmentation.
Porters five model
Threats of new entrants
Although this company has been focusing on maintaining customer loyalty by offering high quality products, the threat of new entrants is high because of less regulation in the fast food industry. The growing demand for fast foods have also attracted many investors and therefore most of them have seen this as a potential industry to run successful businesses.
Substitute threat
Competition and rivalry are relatively high and therefore pricing for this company is very crucial. Consumers in the UK are always keen on companies which make them to attain satisfaction and are therefore willing to change their loyalty from one company to the other if they fail to get products which meet their expectations. This means that although McDonald's is one of the reputable fast food companies in the UK, the consumers can easily shift to alternative companies if its management does not value giving them the quality of products they expect.
Supply power
The supply power is weak in the UK unless the primary ingredients of a product are not available. Most of the raw materials such as tomatoes, potatoes, onions, chicken, and others are readily available in the UK and can be provided by a number of suppliers. Therefore, the suppliers can bargain with the company or even try to increase prices. The company can also switch its suppliers easily and also with little switching cost.
Bargaining power of customer
For McDonald's in the UK, the bargaining power of customers is a strong force because they have many options in the market. Although this company tries to do various things such as emphasizing on quality and focusing on producing healthy foods to maintain its consumers, customers in this region can easily switch from one restaurant to the other especially when they are unsatisfied without experiencing any switching cost. The customer loyalty to these company has been decreasing with time due to competition and this is likely to make the bargaining power of consumers to be high.
Competitive and rivalry
Although this company has established a competitive advantage in the UK market, the competitive and rivalry force is high because there are many companies which are also implementing strategies to challenge McDonald's in the market. Some of its competitors have already duplicated most of the techniques used by McDonald's and this may mean that in future the company may lose its competitive power if it does not come up with other strategies.
Conclusion
McDonald's is one of the renowned companies in the hospitality industry. The company uses various strategies such as attractive menu, technology and innovation, good pricing strategies and better customer relationship to succeed in the competitive market. Analyzing the porters five model, the threat of new entrants is moderate, supplier power is weak, the bargaining power of customers is strong, substitute threat is high and competitive and rivalry is high.
