Date: August 23, 2010
To: Professor Kopka
From: Veronica Salas
Subject: Strategic Analysis for McDonalds

EXTERNAL AND INTERNAL ENVIRONMENTAL ANALYSIS

External Analysis

There are two conditions that are most significant in McDonald’s external environment that are: 1. The new trend in which customers are changing fast –food restaurants to healthier ones. 2. The arising competition to achieve growth in this industry.
The fast-food industry is very complex and saturated. The key success factors in APPENDIX 1 show that in order to be able to compete there is a need for research and development, achieve differentiation with your competition, create quality with your products, and be price competitive. Large capital is …show more content…

* People have gone from fast food to a healthier choice; for example, sushi. * There is not only competition within the fast food restaurants, but there is also fast food in local supermarkets and vending machines. * Growing in Europe

General Environment * People are more self conscious about what they are eating. People prefer healthier food.

APPENDIX 2: Five Forces of Competition External Analysis

Threat of New Entrants: Low * It is very difficult and costly to build a global brand name. * In order to compete, large capital is needed to invest on the construction of physical locations. * The market is over-saturated, so the new competitor might find it difficult to establish a customer base. * Government regulations * The need of economies of scale * The need for a reliable distribution sector.

Supplier Power: Low to none. * Fast-food restaurants tend to purchase their raw materials from various suppliers. * Fast-food restaurants can switch to different suppliers if they see that other supplier have lower costs.

Threat of Substitutes: High * There are a lot of substitutes for fast food industry; for example regular healthier restaurants, grocery store, another fast food restaurant like pizza. * The threat of