Porter's Five Forces model- McDonald's

The fast food industry is huge and growing. McDonald’s, KFC, Burger King, Subway, Domino’s Pizza are certain names that pop out in everyone’s mind when they talk about fast-food. But McDonald’s is the one that has maximum market share sales. McDonald’s is the world’s largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries across 35,000 outlets. A McDonald’s restaurant is operated by either a franchisee, an affiliate, or the corporation itself. McDonald’s Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as the salad in company-operated restaurants. McDonald’s primarily sells hamburgers, cheeseburgers, chicken, french fries, breakfast items, soft drinks, milkshakes, and deserts. In response to changing consumer tastes, the company has expanded its menu to include salads, fish, wraps, smoothies, fruit, and seasoned fries. The company focuses on marketing strategies that effectively attract a wide variety of people. They especially appeal to children in hopes that they will become lifelong customers.

A good way to analyze the strategies is by using the Porter five forces competitive model. The model helps to analyse the industry condition and helps to decide if one should enter an industry. Furthermore, it helps an existing firm to take measures to find their shortcomings and work on them. 

Rivalry among the existing companies in the industry

The fast food industry is very competitive and dynamic. McDonald’s has many competitors here. The top are Burger King, KFC, Wendy’s, Yum, Subway, etc. Though McDonald’s has achieved to have the maximum sales and market share, but to exist in such a competitive industry, they are always making new moves and trying to differentiate their product. McDonald’s has differentiated their product by keeping the price lower than their competitors. They are always trying to bring out new items or promotions as the high level of competition results in copying the ideas.

So we can conclude the rivalry among the existing companies in the industry is very high.

Threat of new entrants

McDonald’s and other existing big companies have set certain entry barriers for the new entrant in the fast-food industry. As for McDonald’s, it has the economies of scale, brand image, 35000 restaurants worldwide- which made the entry of new companies really hard. Other than this, McDonald’s low price and operations in Wal-Mart’s and sports stadiums have also created entry barriers.

So, we can say the threat of new entrant for McDonald’s is quite low.

Threat of substitutes

For McDonald's, any other food industry is a substitute. From class restaurants, to hot- dog stands, to grocery stores, McDonald's faces a very large amount of substitutes. However, convenience and availability are the main drivers for choosing fast food. McDonald's deliver a great service and make it easier for customers to buy their items as their stores are available at many places and open all the time. Furthermore, the value they provide at cheap price work as a driver to not shift to any substitute. 
So, the threat of substitute for McDonald's is moderate. 

Bargaining power of customers

The fast food industry has a huge number of customers. McDonald’s relies on a strong customer base. It is very important to know about the customer’s demands and expectation. So far, McDonald’s has differentiated their product by low price. But if their price increases or other companies lower their price, McDonald’s might lose their customer base. There are similar products in the market, the buyer’s cost is low and also the customer’s are becoming health conscious, which are threats for McDonald’s. They have started offering salads and changed their oil to healthier substitute as a result of consumer’s health consciousness.

So, bargaining power of customers of McDonald's are pretty high. 

Bargaining power of suppliers

Based on the good relationship that McDonald's has with the suppliers, the bargaining power is fairly stable currently. Being in the industry for such a long time and being such a big corporation, both McDonald's and their suppliers rely on each other. McDonald's has a good supply chain of quality materials at fair prices and suppliers are surely content with supplying to a large consuming company such as McDonald's.

So, bargaining power of suppliers is moderately low for McDonald's. 

References:

http://en.wikipedia.org/wiki/McDonald's 

http://misznina17.blogspot.com/2008/12/porters-competetive-forces-model-on.html 

Malala Yousafzai- talk of the world

Malala Yousafzai- a young Pakistani girl, who gained the attention of the whole world at the age of 15 for being shot in the head and nearly killed by the Taliban. What made her more “talk of the world” is that on Friday, October 10^th 2014, she was announced the Nobel Peace Prize Winner at the age of 17. This made her the youngest recipient in history to be awarded with the Nobel Peace Prize. As the global spokesperson for girls’ education, Malala has been continuously fighting on behalf of her cause, continuing to speak out even after increased Taliban threats. She even travelled all the way to the United States of America to meet President Obama in 2013. She has also co- founded the Malala fund which generally invests on early age girl’s educational initiatives or on small non- profitable organizations in countries like Pakistan, Nigeria, Kenya and Jordan.

Malala was only 15 years old when she was shot by the Taliban. She was on a bus on 9^th October 2012, campaigning for education of girls in Pakistan, when the Taliban hijacked the bus and singled her out, shooting her in the head and the neck.

In the year 2008-2009, BBC planned to start a blog by any girl from the Swat district of Pakistan. Malala was the one to write the blog by her father’s order and BBC’s supervision. She used to write those blogs at the age of 11 under the pseudonym of “Gul makai”. In 2012 she was introduced to the world by a journalist of New York Times. On 8^th October 2013, “I am Malala”, a book written by her was published. The co-writer of this book was a British journalist named Christina Lamb. "I am Malala" had been banned in her own country and to be far more precise, by the All Pakistan Private Schools Federation in its 152,000 member institutions, because of having speeches against the Islamic religion.

What seemed confusing to me- how can a girl of just 11 be so matured to write such blog on female education? More confusing was that, she used to write those blog and a journalist of BBC typed them. I do not know how authentic the blogs were at the end of the day. Moreover, whether it’s her blog or her book, someone from the western world is always there. I can’t be the only person having certain questions in mind here! There are so many people who have been working their whole life for peace in the world. I wonder where their names and prizes are!

Alfred Nobel, founder of Nobel peace prize has clearly stated that the prize should be awarded every year to those who have "done the most or the best work for fraternity between nations, for the reduction or abolition of standing armies and for the holding and promotion of peace congresses.” Firstly, Malala was only 11 years old then and 17 years old now; hence she is too young to make any actual contribution to global education at all, other than making speeches mostly in the West, arranged by Western corporate and non profit organizations. And secondly, Malala's passion and effort for spreading education awareness has nothing to do with global disarmament on world peace as stipulated by Alfred Nobel in his will.
If the Norwegian Nobel Committee were really serious about promoting global education, maybe they should have created a Nobel "Education" Prize instead.

I love that someone is working for female education. Of course this is an important issue. I have nothing against Malala or her work. But considering her work and their results, getting a Nobel Peace Prize seemed obnoxious to me. Moreover, I felt everything she does is controlled by the western world. But in the end, everything comes down to perception. Mine might have flaws.

References:

http://en.wikipedia.org/wiki/Malala_Yousafzai 

http://english.pravda.ru/opinion/columnists/23-10-2014/128882-nobel_peace_prize-0/

McDonald's

McDonald's is one of the leading firms that are operating in the fast food industry and serving around 68 million customers daily in 119 countries across 35,000 outlets. It has been successful because of its low price. It has offered nutritional value while raising awareness about health. Additionally, it has expanded into different markets through the use of innovative and creative strategies. The key strategy of McDonald's is to provide very nutritious healthy food in a highly affordable price while maintain its service and the adequate standards of hygiene and safety.

McDonald's give their customers hamburgers, cheeseburgers, chicken, french fries, breakfast items, milkshakes and deserts. In respect to changing customer change they have expanded their menu to have salad, fish wraps, smoothies, fruits and seasoned fries.

McDonald’s is sometimes referred to “McDonalization” of society because of their immense participation in globalization. The Economist newspaper uses the “Big Mac Index”. The cost of Big Mac is used as a scale to compare the purchasing power parity of different country’s currencies. McDonald’s aggressive business strategy is based upon the premise that its restaurants should be located at strategic locations and provide cheap, affordable but very healthy food- maintaining quality and service.

McDonald's has a policy of low prices and volume, which are the major elements of its competitive advantage. To deliver all meals daily, prices must be affordable. We don't go to McDonald's like we go into a classic restaurant. McDonald's goal is to attract consumers and turn them to the most regular ones; hence they do not propose menus at high prices. Product prices are not identical in all countries and within countries there are also different prices depending on the location. So they vary according to local competition and promotions. They have gained a good number of competitive advantages which make to hold their position in the industry.

Cost:

The biggest competitive advantage for McDonald’s is cost. They buy their supply in bulks which allows them to get lower prices. They also lease land and property they own to franchise. They are the cost leaders in the market and offer their food at prices that cannot be matched by the competitors.

Differentiation:

The best thing about McDonald's is that they does not believe in opening its restaurant without any knowledge of local culture and tastes. Their taste, price and promotions are not similar everywhere. These are varied from place to place based on culture. For example the McAloo tikki is available only in India as the people here don’t have meat and prefer vegetarian food. 

Customer Service and speedy deliver:

McDonald's has one of the best customer services in a food chain network. They interact profusely with their customers and note down their feedback by heart. Their CEO Thompson has acknowledged that his company is sending executive representatives in for a “factory service reset” which could possibly include more workers being assigned to new innovative tasks to existing ones. The company is said to be redesigning its European Kitchens for faster food assembly. Another big competitive advantage of McDonald’s is their speedy delivery. All the employees follow a standard way of cooking and the processes of cooking food are simple. The perfect training ensures the speedy delivery of McDonald’s.

Brand Image:

McDonald's brand image has been a great competitive advantage for them. McDonald’s enjoy a great form of customer captivity emanating from their brand image. The name McDonald’s has become so common and popular and Ronald McDonald's is such a well known mascot that people of all ages know about this brand. They can afford to do lesser advertisement than the competitors just because of such a brand image.

Availability:

The huge number of stores all over the world does provide them a huge advantage. People in the middle of nowhere will still find a McDonald's store. Their availability everywhere and anytime influences people to have their foods. 

References:

http://en.wikipedia.org/wiki/McDonald's 

https://sites.google.com/site/mcdonaldsfranchisestrategy/home/mcdonald-s-competitive-advantage 

http://fagansusanto.wordpress.com/2012/11/22/value-chain-and-competitive-advantage-of-mcdonalds/