Hamburger †Fast food Essay

Market and environmental analysis is an essential part of an presidencys External Analysis. The main objectives of a food market analysis are a)To con how attractive a market is. b)To understand the dynamics of the market and revive strategies accordingly. Here we apply the dimensions of a Market Analysis to McDonalds corp. 1)Emerging submarkets McDonalds failed to recognize the ever-ever-changing movement in customers preferences to better tasting, fresher pabulum. This trend led to new sub markets emerging for tastier, fresher and agile food perceived as healthier.A few of the slighter/privately possess competitors (Cosi and Quiznos) were able to operate in deferral markets selling gastronome sandwiches and salads. The topic of smaller restaurants passinging easy access to exotic foods such as sushi and burritos created a more specialized niche market. 2)Size and Growth With the emergence of these sub-markets and niche markets, McDonalds started losing market share. It now had to share its fast-food mass market with these newly created markets. plain though these restaurant chains were small in size, their growth opportunities presented a potential threat to McDonalds.They operated on service that was better than McDonalds at the similar time providing better tasting food, which led to an increase in its sales. This field was in the early stages of growth where as McDonalds was past the maturity stage. 3)Profitability McDonalds favorableness roll in the hay be gauged by using Porters 5 factor model. a)Intensity of disputation among existing customers was relatively high. Direct competitors like Wendys and Chik-Fil-A were able to extinct perform McDonalds based on service quality by providing faster service. In comparison McDonalds had a large number of franchises, but entrust falling service time.b)Threat of new entrants Other market niches like quizos, cosi and small restaurants offering exotic foods also provided a high degree of argu ment to McDonalds by offering food that appealed to changing customer preferences. The only obstacle to door that McDonalds used was to open a large number of franchises and offer an inexpensive menu this is save changing as franchisees are difference McDonalds, lowering the barriers to entry. c)Substitute products would include fast food options available in leading(p) supermarkets, and cafes offering exotic foods like sushi. d)Bargaining provide of customers.Customers are the main source of income for McDonalds. Customers were non happy with the menu offered at McDonalds and thusly took their custom to other restaurants, leading to a fall asleep in sales. e)Bargaining power of suppliers McDonalds aimed to keep their menu prices low (source more details about suppliers) 4)Cost organize McDonalds strategic focus was on cost and service. In vow to repeal service quality new kitchens were installed. However, this installation was done for some franchises that did not need i t and where the new additions did not help improve business.In order to keep the price of its burgers low, it asked the franchises to sell at a loss. Example Promoting a $1 burger when the cost to make it was $1. 07. This lack in foresight leave aloneed in rising costs to franchise owners who responded by leaving McDonalds and going oer to competitors. This snowballed into falling investor confidence resulting in falling justice. Another cost theme was investing in too many takeovers which it couldnt handle at the same time as improving service quality and revamping the menu. 5)Distribution Systems McDonalds dispersion system was the large and growing number of franchises.However not many of the franchises were posting profits and as per Exhibit 1, more than 500 would exhaust to be closed. One of McDonalds strengths is its distribution system, where in customers come in and earn the same experience that they construct at any other store. However, this can also be a weakness as providing a reproducible experience soon becomes ordinary. 6)Market Trends The fast food casual market was rapidly breaking up into fragments. With the rising immigrant population customers now had a excerpt of items. McDonalds realize this too late and try to counter this effect by introducing new burgers.However, the testing of the new menu does not gauge powerfully enough the changing customer preferences and this poor planning led to its failure. internally changing trends were also blindsided. Franchisees who were the closest to customers were not included in finish making and were thus disg springtled. Here was the need to change the management call from top-down to bottom-up. This would have solved some of the issues plaguing McDonalds, by providing data on what customers want and what products would have a greater chance of success.7)Key success Factors McDonalds did have some strengths or key success factors a)Large number of franchises that led to economies of scal e. This however contrasted to the small is beautiful concept of the niche markets. b)Complete training for franchisees to begin and run their own McDonalds proved to be a good team construction exercise. c)Cost of food was low due to economies of scale and economies of size. Moreover, McDonalds was able to negotiate a reasonable price for high quality food products.McDonalds failed to realize the changing trends in the casual fast food markets, as a result of which, a large part of the market share was taken over by existing brands like Wendys and new players like Panera dent co. The company also failed to acknowledge competition from the niche markets serving gourmet and exotic foods. This lack in analysis led to lowering of entry barriers for new entrants, loss of market share to competitors (Wendys, Chick-Fil-A. ), disgruntled franchisees, and a drop in sales leading to a fall in equity value. Environmental Analysis 1)Political.2)Economic 3)Socio-Cultural There are three ethnica l forces that bring marketers a) persistence of cultural values, b) subcultures and c) shifts in secondary cultural values. Of the three, secondary cultural values carry the largest influence on the fast-food market. When the market is interested in convenience, they are more likely to buy fast food if the markets secondary values shift and become interested in fitness and health, they will be less likely to buy fast food. (Monash university, 2006) The case shows this shift to gourmet and healthier foods.4)Technological McDonalds had begun to notice the importance of technology. The organization was looking at new technological solutions like ERP to improve their supply chain (Newman, 2002) 5)Environmental 6)Legal.References Monash university, 2006, Briohnys Report, Language and Learning Online, Retrieved on 06 May 2008. http//www. monash. edu. au/lls/llonline/writing/business-economics/marketing/3. 3. 2. xml Newman, K, 2002. McDonalds seeks closer electronic relations, iStart. co mTechnology in business, www. istart. co. nz, retrieved on 06 May 2008. http//www. istart. co. nz/index/HM20/PC0/PVC197/EX245/AR22537.