Conducting A Competitive Forces Analysis Of Fast Food Industry And Strategies Adopted By The Industry

Competitive Rivalry

Competitive forces analysis refers to Porter generic strategies that help in analyzing the strategic strength and market penetration of the food industry. The analysis is as follows:

Competition amongst the rival companies is responsible for reducing the profit of the fast food industry company. The competition in the food industry is high since there are many companies that offer similar services (Gupta 2013). In order to pursue the competitive advantage of the industry, the food industry should improve the services provided through the introduction of new products. In addition to this, the food industry must adopt new ways for servicing and at the same time improve the general operation s of the company. Moreover, since there is huge competition therefore companies belonging to this industry should merge in order to reduce competition and gain competitive advantage.

The food industry must consider the power of the customers. The Porter’s five forces analysis however helps in understanding the demands and influence of the consumers. However, in case of the food industry there are certain external factors that contribute to the strong bargaining power of buyers that includes low switching cost, large number of providers and high availability of substitutes (Segal-Horn and McGee 2012).  Customers possess ease of changing from one restaurant to another without any incurrence in cost. Moreover, the consumers have the choice of choosing their products from the restaurant of their liking without opting for a fast food chain due to market saturation. Further, emergence of various other food outlets and bakeries also provides many substitutes.

The number of suppliers can also influence the fast food industry. The competitive forces analysis helps in understanding the impact of suppliers. However, weak bargaining power of the suppliers for the fast food industry depends on large number of suppliers, high overall supply and low forward vertical integration (Amit and Zott 2012).

Sometimes the large population of suppliers for the fast food industry results in weakening of the influence of an individual supplier. Moreover, it is seen that the fast food industry is not vertically integrated which means that they are not responsible for controlling the distribution network linked to the facilities of the industry (Öberseder, Schlegelmilch and Murphy 2013). The relative abundance of materials in the food industry also sometimes reduces the influence of the suppliers. Therefore, supplier power holds a minimal issue for the food industry.

Substitutes refer to the products from other industries that might pose as a threat. Threat of substitutes usually occurs when the product demand influenced by the price change of the substitute product (Belasco 2014). The threat of substitutes also results from low switching cost and high performance to cost ratio.

Bargaining Power of Customers/ Buyers

Various substitutes’ products are available in the market that poses as a threat to the products offered by the fast food industry. The threat of substitutes might pose as a major challenge for the fast food industry and therefore care taken through approaches that include improvement and product quality.  

The external factors on which the moderate threat to new entry depends includes, low switching cost, moderate capital cost and high cost of brand development.

However, the low switching cost enables the consumers to make a move from the fast food industry toward the restaurants (King and Baatartogtokh 2015). The cost of establishing a restaurant is also moderate for medium and small sized firm that affects the fast food industry. Thus, threat of new entrants can be a major issue for the fast food industry.

The fast food industry is not only highly competitive but also dominated by larger companies (Igumbor et.al 2012). Thus, the industry must adopt certain strategies for improving the chances of the industry for being persistently profitable. These strategies are as follows:

The fast food companies through the introduction of collectibles can help in driving traffic mostly enjoyed by the kids. The strategy for choosing the collectibles should depend on a theme that the other companies do not follow.

The fast food industry uses market segmentation as a tool as it helps the industry in identifying the buying group that it is catering (Wedel and Kamakura 2012). However, the information obtained not only through market research surveys but also through collection of demographic information from people that include income, age and household size.

The fast food industry can also initiate loyalty programs with the help of frequency cards. This involves inviting the people for filling out applications and rewarding them based on frequency of the visits.

Fast food industry also adopts societal marketing through volunteering, collecting items for charity or collecting money. This increases the industry chances of being persistently profitable.

The global strategy adopted by Apple is the differentiation strategy that helps the company in delivering high customer value through the innovative brand in the global markets. With the help of this strategy, the company has been able to develop a stronger market share (Johnson et.al 2012).  

Therefore, the differentiation strategy has enabled Apple with the following:

i. Acceptance at a Wider Level: Product offerings like iPod, iPad, iPhone, and iTunes of Apple have found huge acceptance in the target market at the international level.

Bargaining Power of Suppliers

ii. Developing a Brand Value: The strategy helps the company to attain a brand value of the through the development of a stronger position in the overseas markets compared to its rivals

iii. Ensures Competitive Advantage: Differentiation strategy of the company helps it in handling the issues and challenges put forward by its rival firms like Google, Dell Computers, Research in Motion and Microsoft in the global market(Rothaermel 2015).

iv. Lower Percentage of Imitation:  The differentiation strategy enables Apple to face lower rivalry in terms of imitation since Apple mostly delivered high products.  

The global strategy adopted by the virgin group is emergent strategy. The thrust of this strategy has been in finding opportunities in the new market where the company and its brand name can lead to creation of a competitive advantage (Grant2016).

Thus, the strategy helps Virgin Group in achieving:

a. Understanding the Institutionalized Market: 

The global strategy adopted by the Virgin Group helps the company not only identify complacency in the market but also capitalize from the new opportunities.

b. Helps in Overcoming Barriers:

Identifying new opportunities in the new market helps in overcoming the challenges across by the barriers.

c. Ensures Innovation

The adoption of the emerging strategy not only makes helps Virgin Group to get a better market share but also bring in certain innovation that might lead to better profitability(18). For instance the company went into partnership with existing telecommunication operates for retailing in mobile services.

The global strategy adopted by British Petroleum is the differentiation strategy that involves identification of possibilities based on competences through the addition of new features and benefits (Painter 2012). The company has made use of its various brands and involved its segments and capabilities for developing a differential strategy.

Thus, the strategy helps British Petroleum in achieving:

a. Helps in Creating Value:

The differentiation strategy adopted by Bharat Petroleum helps in the creation of the perceived value of the products of the company amongst the potential customers as well as consumers.

b. Enables Non-Price Competition:

The adoption of the differentiation strategy by Bharat Petroleum helps the company for competing in areas beyond price.

c. Identification of Brand Loyalty:

This particular strategy of Bharat Petroleum creates an identification of brand and ensures loyalty amongst its customers.

d. Non-Existence of Perceived Substitute:

The company produces certain high-end products by focusing primarily on the design and quality of products that might not have a substitute in the market (Nworu 2017). Moreover, the adoption of the strategy helps the company to maintain a monopoly in the market.

Threat of Substitutes

McDonalds

The global strategy adopted McDonald is Uniformity that helped it to serve successfully in 117 countries thereby feeding millions of customers on a daily basis (Meyer and Estrin 2014). The strategy also enabled McDonald become a brand which became an undeniable success.

The global strategy helped McDonalds in Achieving:

a. Focus on Heavily Emerging Markets:

The company makes a heavy move towards the emerging markets in order to ensure a sizeable market share

b. Offering Wider Variety of Food for Attracting More Segments:

The company not only focuses on desserts and food items but it is also focusing on expansion of the items in the nontraditional menu.

c. Delivery of Food to the Customers at the Places the Demand for:

McDonald’s believes in delivering around not only the markets but also the franchise stores also believe in adopting a strategy where the food delivered to the customers.

d. By Making the Stores More Attractive:

The company has strategies for improving physical locations of the stores that would make the stores more attractive to the customers.

e. Importing the Successful Products Internationally

The company has also adopted strategies for importing its niche products that are available in the overseas market.

f. Expanding the Dollar Breakfast Menu

McDonald discarded its breakfast menu as a part of the strategy due to economic downturn and supplemented it with the usual fare that in a way helped the company in enhancing its sales.

The multinational company discussed here adopted a localization strategy that it can continue to follow the emergence of competitors (Solorzano and Carneiro-Pla 2014). Localization strategy also known as “adaptation strategy” considers the inherent diversity existing in the overseas market and thereby treating individuals as “cultural beings”. This particular strategy meant for the understanding the preferences of the local as well as non-local customers and thereby adapting the business strategies and other marketing mixes for satisfying the consumer demands and needs.

  This is because of the following advantages that the localization strategy put forwards:

• Helps in Increasing the Market Share:
• Enables the Company Have A Competitive Advantage
• Improve the Ranking of the Company
• Helps in Avoiding Cultural Taboos
• Helps in Popularizing the Brand Globally

Structure 

Organization is required for a successful and orderly business operation. However, every person of the company should possess awareness about his/her role within an organization. Thus, the structure of a small manufacturing company visually demonstrated with the help of organization charts(Storey et.al 2014). This chart therefore, represents the chain of command of the manufacturing firm. Thus, an appropriate flow of responsibility is necessary from top to the bottom so that it can run effectively. However, the organizational structure of a small manufacturing company includes:

Threat of New Entrants

1. Executive Management who remains at the top of the organization

2. Production Manager who is the leader of the workers responsible for production and at the same time supervises the production facilities. 

3. Production Line Supervisors acts as a connection between the production manager and the workers. 

The control of the small manufacturing company should on the following aspects

1. Keeping a Track of the company’s Growth that will serve as a solution to various problems

2. Adequate Cost Analysis that will help the company to keep a track of the dirext cost that, is attributable for a certain activity or productivity.

3. Concerning about the Balance Sheet will help the small manufacturing firms to discover the hidden cost. 

The small manufacturing company needs to incorporate a culture that involves established dress codes, ensure clean facilities, communication process and employee engagement. The company should initiate the culture at the early stages of training.

Structure

The company structure of a chain store in important for determining the success of its business plan. Thus, it is important to lay out not only a clear but well-defined reporting and operational structure that will help in establishing individual responsibilities along with a chain of command (Xiao, Choi and Cheng 2014). However, the chain store complexity depends on the kind of management, management philosophy and size of operation. Thus, some possible elements of the structure however include executive, sales, marketing, finance and operations.

The control of the chain store depends on:

• By Occasionally Connecting to the  Clients
• Ensuring Deployment
• Ensuring Centralized Setting
• Ensuring Regular Update

 The chain store should possess a culture that enables in providing the best customer service (Thompson, J.B., 2013). The place should not only be pleasant for shopping but the staffs should ensure a customer service that leaves a lasting impression on the customers.

Structure 

The large international bank is believed for playing a transformational role that will be effective in influencing the economies of the host country economies. These banks play a vital role in channelling foreign investments. Moreover, the structure also ensures efficiencies and boosts the competitive spirit among the entities of the financial resulting in enhancing the efficiency bar for the domestic players. Structure of large international bank in geography will get influenced with the help of financial architecture existing in a particular economy. The level to which the foreign banks play a role in domestic sector is dependent on the specific market needs of every economy.

The control of the Large International Bank depends on:

• Designing policies for the Long Term
• Starting at the Top
• Prioritizing Rationalization
• Gaining Operational and Financial Control
• Remembering All Business are Local
• Ensuring Banking Decisions are a Reflection of Universal Policy

Strategies Adopted by Fast Food Industry for Improving the Industry’s Chances of Being Persistent Profitable

In the banking sector, culture seems to be a very complex issue since it involves the attitudes and behaviours of the employees in dealing with the clients (Cohn, Fehr and Maréchal 2014). Therefore, financial institutions must convey the institutional culture amongst the employees in a manner that it affects the soundness and safety of not only the company but also its employees.

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