Internal Rivalry – HIGH In fast food industry, there are some big players such as McDonald’s, KFC, A&W, Wendy’s, and Burger King. McDonald’s has reached the top position as the market leader for several years, but the tight competition among all these companies is still remains the same. This fact can be seen according to the rate of industry’s market shares that indicates the less significant differences between all these companies. The competition happens not only in form of the pricing strategies, but also involves in some factors including products, services, and even the stores’ ambience.
Although based on the exist data, each brand has its own differentiation and uniqueness. In this case, the market of fast food industry can be considered and characterized as the oligopoly market. Power of Suppliers – LOW Power of Buyers – MEDIUM The supply needed by McDonald’s is something that, we might say, doesn’t have to be worried too much. For example, in such countries like Indonesia, New Zealand, China, and Brazil, the natural resources are adequate to support McDonald’s supplies availability need of its foods’ basic ingredients, such as eggs, vegetables, flours, cow beefs, chickens, potatoes, etc.
These supplies are offered in good quality with good prices too. It is also supported by several numbers of suppliers who are highly competence in the farming and hatching fields. Moreover, these kinds of suppliers usually have their own perception about a prospected buyer like McDonald’s as a valuable customer. It happens because of large volume of purchase order possibility that they would have, which will impact their profit as a supplier very significantly. Actually, consumers do have so many options that can be chosen in terms of fast food restaurants selection.
In fact, consumers are even also able to pick their selection besides of fast food restaurants. In fast food restaurants, the price lists are fixed, consumers are unable to do further bargain, and its payment method should be done directly. This industry has becoming all people’s favorite, no matter how old you are. So that is exactly why this industry is timeless and no age-barriers. Threat of Substitutes – HIGH Threat of New Entrants – LOW Nowadays, some menus that almost similar with McDonald’s menu are being offered by other companies.
They create almost the exact same of menu with the fast food restaurants to attract many customers, because they tend to offer lower price. In Indonesia, there are some restaurants which offering good quality and taste of foods with the cheap price. For example are Blenger Burger, Klenger Burger, and Aussie Burger. These restaurants are even offering burgers in much bigger size compared to some fast food restaurants like McDonald’s and Wendy’s. Its flavors are adjusted with the local taste to attract more local customers.
In some traditional markets in Indonesia, we may also find many fried chicken sellers easily, which have got a really similar appearance with what big fast food restaurants have. But still in much lower price. This condition is really benefits some people with the low economic level and has successfully becoming a substitution for some big fast food restaurants. Building a big fast food restaurant is not an easy thing to do. Although large amounts of money could be spent, but there will be some real difficulties occurred during the business implementation process.
For examples are creating stronger brand than the existing players, creating a well-established system that could work perfectly in global market, and the larger amounts of money to be invested. These existing players have learned many things from their experiences. The most important thing for some fast food restaurants is that each of them should be aware with the new expansion of potential competitors to the new locations. StrengthWeakness