1. Porters 5 Forces and MCDonalds
By Arshed Aydrose
University of Wollongong

2. Porters 5 Forces
• Threat of competition HIGH
– Very competitive Fast Food industry
– Competitors Advertising Capabilities
– Location of outlets
– Major competitors- Burger King and YumBrand INC.
• Threat of New Entrance HIGH
– Regulation of Limit
– Easy Access Market and Low start up cost
– Example of SubWay’s market penetration
• Threat of Substitutes Low-Moderate
– Availability of the MCD products
– Choose MCD for Easting and Entertainment
– Narrows Threat of Substitutes due to introduction of local taste
products.

3. • Power of Suppliers LOW
– Worlds largest restaurant chain in sales
– High bargaining power over its suppliers
– Most of them owe MCD for their own existence
– LOW the power of suppliers- LOWer the cost of raw
materials and HIGH competitive price.
• Power of Buyers LOW
– Industry limitations
– Low quantity purchases
– Less chances of switching, high brand image thru
differentiation and uniqueness
– Buyers don’t have bargaining power

4. Issues faced by Mcdonalds
• Nutritional issues
– MCD taking away the traditional nutrition values
– Replace the fresh and healthy food by mass production
– Projection the product nutrition values
– Comparison of daily consumption and MCD products
– Serves 30million people daily
• Advertising Issues
– 2billion dollars for Advt annually
– Concentrated on Children- Parental Concerns
– MCD has a better advertising than its customers
– Follows the advertising codes of each country
– Making aware of MCD’s charity activities, events and
learning programs

5. Issues faced by McDonalds cont..
• Employment ethics and issues
– Criticized as low paid jobs- named ‘McJobs’
– Low paid, non-union, part time jobs with low
rights and conditions
– Giving importance on individual goals than
organizational goals
– Fact of 1.5million workers with above 70% job
satisfaction rate
– Introduction of collective tips system