Hamburger †Fast food Essay

Market and environmental analysis is an essential part of an organisations External digest. The main objectives of a mart analysis ar a)To hold back how attractive a market is. b)To sympathize the dynamics of the market and amend strategies accordingly. here we apply the dimensions of a Market epitome to McDonalds corp. 1)Emerging triggermanmarkets McDonalds failight-emitting diode to recognize the changing trend in fashioners preferences to better preference, hot provender. This trend led to bran-new sub markets emerging for tastier, fresher and tumultuous regimen perceived as better.A few of the smaller/privately owned competitors (Cosi and Quiznos) were up to(p) to operate in inlet markets interchange gourmet sandwiches and salads. The emergence of smaller restaurants pass easy access to foreign solid foods such(prenominal) as sushi and burritos created a more than specialise niche market. 2)Size and Growth With the emergence of these sub-markets and niche m arkets, McDonalds started losing market c ar. It now had to share its extravagant-food view market with these newly created markets. Even though these restaurant chains were small in size, their growth opportunities presented a potential menace to McDonalds.They operated on service that was better than McDonalds at the same 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 profitability target be gauged by using Porters 5 factor model. a)Intensity of competition among existing customers was comparatively high. Direct competitors like Wendys and Chik-Fil-A were equal to out perform McDonalds based on service quality by providing quicker service. In comparison McDonalds had a volumed digit of franchises, but will move service time.b)Threat of new entrants Other market niches like quizos, cosi and small restaurants go exotic foods withal provided a high degree of competition to McDonalds by offering food that appealed to changing customer preferences. The only barrier to origination that McDonalds used was to open a large number of franchises and offer an nickel-and-dime(prenominal) notice this is however changing as franchisees are leaving McDonalds, lowering the barriers to entry. c)Substitute products would include unwavering food options available in leading supermarkets, and cafes offering exotic foods like sushi. d)Bargaining power of customers.Customers are the main source of income for McDonalds. Customers were not joyful with the menu offered at McDonalds and hence took their custom to other restaurants, leading to a snitch in sales. e)Bargaining power of suppliers McDonalds aimed to keep their menu determines low (source more details close suppliers) 4)Cost structure McDonalds strategic focus was on cost and service. In order to rig out service quality new kitchens were installed. How ever, this creation was done for nigh franchises that did not consume it and where the new additions did not help mitigate business.In order to keep the value of its burgers low, it asked the franchises to sell at a loss. typesetters case Promoting a $1 burger when the cost to act upon it was $1. 07. This lack in foresight giveed in rising costs to franchise owners who responded by leaving McDonalds and going over to competitors. This snowballed into sticking investor confidence resulting in falling equity. another(prenominal) cost issue was investing in too many takeovers which it couldnt encompass at the same time as improving service quality and revamping the menu. 5)Distribution Systems McDonalds distribution system was the large and growing number of franchises.However not many of the franchises were board profits and as per Exhibit 1, more than 500 would check to be closed. unrivalled of McDonalds strengths is its distribution system, where in customers come in a nd have the same have sex that they have at any other store. However, this batch in addition be a helplessness as providing a consistent experience soon becomes ordinary. 6)Market Trends The fast food episodic market was quickly breaking up into fragments. With the rising immigrant population customers now had a choice of items. McDonalds run across this too modern and try to counter this effect by introducing new burgers.However, the testing of the new menu does not gauge strongly exuberant the changing customer preferences and this poor grooming led to its failure. Internally changing trends were also blindsided. Franchisees who were the closest to customers were not included in decision making and were thus disg get goingtled. present was the need to change the management dash 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 come about 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 scale. This however contrasted to the small is beautiful imagination of the niche markets. b)Complete training for franchisees to begin and run their own McDonalds proved to be a good team building 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 bread co. The company also failed to acknowledge competition from the niche markets parcel 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 heathen forces that influence marketers a) persistence of pagan values, b) subcultures and c) shifts in petty(a) cultural values. Of the three, secondary cultural values carry the largest influence on the fast-food market. When the market is enkindle 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 spirit 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 whitethorn 2008. http//www. monash. edu. au/lls/llonline/writing/business-economics/marketing/3. 3. 2. xml Newman, K, 2002. McDonalds seeks close together(predicate) electronic relations, iStart. comTechnology in business, www. istart. co. nz, retrieved on 06 May 2008. http//www. istart. co. nz/index/HM20/PC0/PVC197/EX245/AR22537.