External analysis: McDonald’s

External analysis of McDonald’s, including threat of buyer from porter’s Five Forces analysis, and  global segment from Environmental Trends. Don’t focus how they affect McDonald’s but the industry (fast food market) as a whole.

about global segment you can talk about:

    Important International Political Events

—Increasing Global Trade

—Trade Agreements

1 page for threat of buyer, and 1 page for global analysis, totally 2 pages.

double-spaced pages. ALL material that is not general/public knowledge information should be cited at the end of every sentence.  If you are in doubt as to whether something is general/public knowledge, cite it.  APA citation style is preferred, but alternate styles will be accepted if requested prior to class.

External Analysis

B AD 4013

University of Oklahoma

Dr. Bartkoski

External Analysis
External Environment
Industry
Firm

2
Column1 Rivals Entry Substitutes Suppliers Buyers 20 20 20 20 20
Analyzing the External Environment
Environmental Scanning and Monitoring allow a firm to look to the world outside for potential opportunities and threats.
Forecasting and Assessing take that information and allow a firm to predict future change, timing and significance of those trends.

Political Processes and Legislation.
Employee Regulations
Tax Policies
Trade Restrictions
Tariffs
Consumer Protection Laws
Stability of Governments

Political/Legal Segment

Interest Rates
Inflation Rates
Gross Domestic Product
Unemployment Rates
Levels of Disposable Income
Growth or Decline of the Economy
Economic Segment

Population Size
Age
Ethnic Mix
Geographic Distribution
Income Distribution
Demographic Segment

Attitudes
Cultural Values
Lifestyles

Sociocultural Segment

Product Innovations
Increases in Automation
Applications of Knowledge
Focus of Private and Government supported R&D Expenditures
New Communication Technologies
Technological Segment

Important International Political Events
Increasing Global Trade
Trade Agreements
Global Segment

Natural Disasters
Weather Patterns
Energy Usage
Physical Environment

Porter’s Five Forces
Rivals
Buyers
Suppliers
Substitutes
Entry
External Environment
Industry

Column1 Rivals Entry Substitutes Suppliers Buyers 20 20 20 20 20
Porter’s Five Forces
When all five forces are low, there’s a possibility for above normal returns

Column1
Rivals Entry Substitutes Suppliers Buyers 20 20 20 20 20
Mitigated by Barriers to Entry
Economies of scale.
Product differentiation.
Capital requirements.
Switching costs.
Access to distribution channels.
Cost advantages independent of scale.
Government policy.
Expected retaliation.
Threat of Entry

Industry Conditions Facilitating Rivalry:
Numerous or equally balanced competitors.
Slow industry growth.
High fixed or storage costs.
Lack of differentiation or switching costs.
Capacity added in large increments.
High exit costs.
Product is perishable.

Threat of Rivalry

Goods or services from outside the industry that provide similar or the same functions.
Must understand the NEED being satisfied by the industry’s product.
Strong threat with:
Low switching costs.
Substitute has lower price.
Close substitutes.
Threat of Substitutes

Industry Conditions Facilitating Supplier Power:
Few large suppliers.
Few substitutes.
Industry is not a significant customer of supplier.
Supplier’s goods are important to industry.
High switching costs.
Supplier’s goods are differentiated.
Supplier may integrate forward into focal industry.

Threat of Suppliers

Industry Conditions Facilitating Buyer Power:
Few buyers or large volume purchases.
Buyer industry earns low profits.
Industry’s goods don’t affect quality or price of buyers’ output.
Few switching costs.
Industry’s goods are undifferentiated
Buyer may integrate backward into focal industry.
Threat of Buyers

Products or services that have an impact on the value of the firm’s products or services.
It is possible to be both complimentor and competitor.
Industry Compliments

Five forces analysis only assesses the profitability of an industry. More is needed to understand the competitive structure of the industry.
Strategic Groups looks at a cluster of industry rivals that emphasize similar strategic dimensions and use a similar strategy.
Strategic Groups

Strategic Groups
Perceived Quality
Breadth of Menu
McDonalds
Wendy’s
Jack in the Box
KFC
Pizza Hut
Taco Bell
Cracker Barrel
Denny’s
Jimmy John’s
Subway
Quiznos
Applebee’s
Chili’s
Ruth’s Chris
P.F. Chang’s