Competitive Analysis in the Fast Food Market
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As the owner of a new fast-food enterprise seeking a loan from a bank to finance the construction and operation of three new store locations, you have been asked to provide the loan officer with a brief analysis of the competitive environment in fast-food. You need to research the necessary points from Internet to expand your understanding of competition in the fast-food industry and do a competent five-forces analysis.
The analysis should show that the five forces are: (1) firms in other industries offering substitute products, (2) buyers, (3) potential new entrants, (4) suppliers of raw materials, parts, components, or other resource inputs, and (5) rivalry among competing sellers in the industry.
Suggested student responses : (1) competitive pressures stemming from the attempts of companies outside the industry to win buyers over to their products - other food providers such as Sheetz and Denny's - strength is strong, (2) competitive pressures stemming from buyer bargaining power and seller-buyer collaboration - different consumers and varying preferences - strength is high, (3) competitive pressures coming from the threat of entry of new rivals - any new restaurant or food service business - strength is moderate, (4) competitive pressures coming from supplier bargaining and supplier-seller collaboration - provider of food items - strength is moderate, and (5) competitive pressures created by jockeying for better market position, increased sales and market share, and competitive advantage - established competitors such as McDonald's - strength is high.
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Solution Summary
The solution contains a brief analysis of the competitive environment in fast-food market, there by detailing out nature and strength of each of the five competitive forces in fast food.
The five forces are: (1) firms in other industries offering substitute products, (2) buyers, (3) potential new entrants, (4) suppliers of raw materials, parts, components, or other resource inputs, and (5) rivalry among competing sellers in the industry.
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