Members:Hayat Omer MalikSana Habib Dar

INPUT STAGE

INDUSTRY STRUCTURE

Threat of new entrantsLOW due to established brand identities and performance advantage of established fast food service companies.

Bargaining power of buyersLOW because large numbers of buyers with relatively small purchases and are also not highly sensitive to price.

Threat of substitutesLOW because no real substitutes of fast food.

Bargaining Power of SuppliersLOW because standard product, inputs are commodities and therefore can easily switch between suppliers.

Rivalry Among CompetitionHIGH because the industry is growing in the US, competitors are diversified, there are significant product differences among rivals and established brand identities.

OVERALL, INDUSTRY IS ATTRACTIVE

COMPETITIVE PROFILE MATRIXMCDONALDS YUM BURKING WENDY’S

Critical success factors

Weight Rating Weighted score

Rating Weighted score

Rating Weighted score

Rating Weighted score

Market share

0.05 4 0.2 3 1.15 3 1.15 3 1.15

Financial position

0.2 4 0.8 3 0.6 3 0.6 2 0.6

Price 0.1 3 0.3 3 0.3 3 0.3 4 0.4

Location 0.2 3 0.6 4 0.8 2 0.4 2 0.4

Customer service

0.3 3 0.9 4 1.2 4 1.2 4 1.2

TOTAL 1 2.8 4.05 3.65 3.75

McDonalds should pursue horizontal integration by buying wendys facilities of low-priced menuMc Donalds should pursue market development in AMEA and Europe eg. China and India

IFE MATRIX

Strengths Weight

Rating

Weighted Score

Regional sales growth(Latam sale) 0.05 2 0.1

Very strong brand name 0.05 4 0.2

Customer service & value based pricing 0.06 3 0.18

Strong financial position 0.3 4 1.2

Innovation & standard product & process technologies

0.05 4 0.2

Decor for redesigning brand 0.1 3 0.3

Substantial Cash Flow 0.05 3 0.15

Increase in dividend to shareholders 0.05 2 0.1

Weaknesses Weight

Rating

Weighted Score

No significant diversification 0.15 3 0.45

US centric performance 0.1 2 0.2

Negative reputation of an unhealthy food provider

0.04 2 0.08

TOTAL 1   3.16

STRATEGIES

McDonalds should play on its financial strength and pursue horizontal diversification

McDonalds can do product development by providing less fat content products to health conscious consumers

Opportunities Weight

Rating Weighted Score

Growth in Chinese and Indian markets 0.19 4 0.76

Growth of the fast-food industry 0.12 3 0.36

Population growth and growing trend of a faster life

0.09 3 0.27

Less risky option of opening new franchises 0.07 3 0.21

New market for more health conscious customers

0.09 2 0.18

Threats Weight

Rating Weighted Score

Conversion to franchises can create differences in services

0.07 3 0.21

Swings in local currencies 0.12 2 0.24

Global recession 0.09 2 0.18

Litigation on health issues 0.16 1 0.16

TOTAL 1   2.57

EFE MATRIX

STRATEGIES

Increase number of stores in growing markets of India and China (market development)

Diversify into non-US markets to reduce impact of swings in local currencies

MATCHING STAGE

TOWS matrix

STRENGTHS1. Regional sales growth2. Very strong Brand name 3. Customer service & value based pricing4. Strong financial position5. Innovation & standard product & process

technologies6. Decor for redesigning brand7. Substantial Cash flow8. Increase in dividend to shareholders

WEAKNESSES1. No significant diversification2. US centric performance3. Negative reputation of an unhealthy

food provider

OPPORTUNITIES1. Growth in markets in

India and China2. Growth of Fast food

industry3. Population growth and

growing trend of a faster life

4. Less risky option of opening new franchises

5. New market for more health conscious customers

SO strategies• Increase number of stores in

growing markets of India and China (S4, O1)

• Increase stores in US and Europe (S4, O2, O3)

• Convert more stores in to franchises (S5, O4)

• Provide a newer and wider range of products in regional markets (S5, O2)

• Offer new products with less fat content for health conscious customers (S5, O5)

WO strategies:• Increase number of stores in

growing markets of India and China (W2, O1)

• Offer new products with less fat content for health conscious customers (W3, O5)

THREATS1. Conversion to franchises

can create differences in services

2. Swings in local currencies

3. Global recession4. Litigation on health

issues

ST strategies:• Spread the risk by opening more

stores outside US to ward off recessionary threats (S3, T3)

• More control on franchise dealers to maintain McDonald's reputation and quality (S2 T1)

WT strategies:• Diversify into non-US

markets• Apply 0 grams Trans fat in

all worldwide McDonald's products (W3, T4)

T O W S

SPACE matrix

Financial Strength Rating Environmental Stability Rating

Return on investment 4 Rate of inflation -3

Leverage 4 Demand Changes -3

Cash Flow 6 Price Elasticity of demand

-1

EPS 5 Competitive pressure -5

P/E ratio 3 Barriers to entry into markets

-3

Risk involved in business -3

Average 4.4 Average -3 Y-axis 1.4

Competitive Advantage

Rating Industry Strength Rating

Market share -1 Growth potential 5

Product Quality -2 Financial stability 5

Customer Loyalty -2 Ease of entry new markets

4

Control over other parties

-2 Resources utilization 4

Technological know how

 -1 Profit potential 5

    Demand variability 3

Average -1.6 Average 4.33 X-axis 2.73

SPACE MATRIX+6

+1

+5+4+3

+2

-6

-5

-4

-3

-2

-1-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6

FS

CAIS

ES

-7

+7

Aggressive

(+2.73, +1.4)

STRATEGIES

• Increase number of stores in growing markets of India and China

• Increase stores in US and Europe

• More control on franchise dealers to maintain McDonald's reputation and quality

• Offer new products with less fat content for health conscious customers

IE matrix

3

2

1

4 3 2 1IFE total weighted score

EFE total weighted score

2.57, 3.16

STRATEGIES

• Increase number of stores in growing markets of India and China and also in US

• Offer new products with less fat content for health conscious customers

• Introduce new products based on regional preferences

BCG matrix

BCG MATRIX

?YUM

Burger King

Wendy’s

Ind

ustr

y S

ale

s G

row

th R

ate

Relative Market Share PositionHigh Medium

LowHigh

Medium

Low

CASH COW DOG

DECISION STAGE

Strategy 1

Expand further in Asia by adding 500 restaurants

Strategy 2

Applying 0 grams Trans fat in all worldwide McDonald's restaurants

Key Internal Factors Weight AS TAS AS TAS

Strengths Regional sales growth(Latam sale) 0.05 3 0.15 2 0.1

Very strong brand name 0.05 4 0.2 4 0.2

Customer service & value based pricing 0.06 3 0.18 4 0.24

Strong financial position 0.3 4 1.2 4 1.2

Innovation & standard product & process technologies

0.05 3 0.15 4 0.2

Decor for redesigning brand 0.1 2 0.2 2 0.2

Substantial Cash Flow 0.05 3 0.15 3 0.15

Increase in dividend to shareholders 0.05 2 0.1 2 0.1

Weaknesses

No significant diversification 0.15 2 0.3 2 0.3US centric performance 0.1 2 0.2 2 0.2Negative reputation of an unhealthy food provider

0.04 2 0.08 3 0.12

SUBTOTAL 1.00 2.91 3.01

Strategy 1

Expand further in Asia by adding 500 restaurants

Strategy 2

Applying 0 grams Trans fat in all worldwide McDonald's restaurants

Key External Factors Weight AS TAS AS TAS

OpportunitiesGrowth in Chinese and Indian markets 0.19 4 0.76 2 0.38

Growth of the fast-food industry 0.12 3 0.36 3 0.36

Population growth and growing trend of a faster life 0.09 3 0.27 3 0.27

Less risky option of opening new franchises 0.07 2 0.14 2 0.14

New market for more health conscious customers 0.09 3 0.27 4 0.36

Threats

Conversion to franchises can create differences in services

0.07 2 0.14 2 0.14

Swings in local currencies 0.12 4 0.48 3 0.36

Global recession 0.09 2 0.18 2 0.18Litigation on health issues 0.16 2 0.32 3 0.48

SUBTOTAL 1.00 2.92 2.67SUM TOTAL ATTRACTIVENESS SCORE 5.83 5.68

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