Question

This should integrate ideas from week 4 with your own personal strategy safari - go out into the world and find strategy first hand, then tell the class about it!

Find a company that has to deal with significant pressure from either supplier power or threat of substitutes - state what the issue is and the points you considered to arrive at the conclusion.

Answer 1

The company chosen here is MacDonalds that deals with significant pressure from the threat of substitutes.

SHE ISSUE

availability of substituts is the greatest concern for the success of McDonald's as this puts pressure on the growth of the firm. There are many substitutes available in the market like local bakeries and other big competitors as well. nowadays, people are cooking fast food at home as well. The switching cost from MacDonalds to other substitutes is very low, that's why people do not hesitate to do so. Moreover, the quality and the price of the substitute goods attract more customers and that is the main reason for the shift from Macdonalds.

THE POINTS OF CONSIDERATION ARE:

A large number of substitutes available in the market: Strong Force

Low switching cost from MacDonalds: Strong Force

Effective competitiveness of substitutes: Strong Force

All the above-mentioned points are considered to reach the conclusion that MacDonald is facing a great threat of substitutes.  

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