Question

Porter Five Forces in a figure for McDonald's current:

1. The threat of new entrants 2. The bargaining power of buyers 3. the bargaining power of supplies 4. the threat of substitute products and services 5. the intensity of rivalry among competitors in an industry

Answer 1

Porter’s 5 Force Model for McDonald’s

• Bargaining power of buyers: Strong Force
  • This force is quite strong as the customers have an array of options available for switching. The customer do have an upper hand as they can switch from one provider to another, without much hassle.
• Bargaining power of suppliers: Weak Force
  • This force is quite weak as there are several suppliers available in the market. The absence of strong alliances among suppliers attributes to this weakness.
• Threat of new entrants: Moderate Force
  • Entry costs in the industry is quite low. Also there is high variability in the initial capital cost involved. Developing a brand power and goodwill for a new player is not quite easy as the customers have a variety of companies to choose from.
• Threat of substitutes: Strong Force
  • There are various fast food substitutes of McDonalds available in the market. As switching cost is low, customers do not think twice before switching to another company.
• Competition: Strong Force
  • There are several companies available in the industry, of various sizes as well as offerings. The overall force of rivalry in the industry is quite high.