Sample Essay

In the year 1996 McDonald’s opened their first outlet in the capital of India, New Delhi and after that they never looked back and till 2004 about 58 outlets were opened in India. In the similar manner this international chain grew rapidly and numerous outlets were opened in different states of India. As far as the competitive environment is concerned competitors of McDonalds were increasing day by day and McDonalds is facing stiffer competition in India. The major competitors in India are Pizza Hut, Subway, KFC, Barista, Hyderabad House, Subway etc (Chandra 2002). In order to assess the competitive environment in India Porter’s five forces model is used. The elements of this model are Industry competitors, Potential entrants, substitutes, buyers, bargaining power of the suppliers (Porter 1998). These elements are discussed below:

a)      Industry competitors-Intensity of the Rivalry

The industry of fast food business in India is quite competitive and these competitors offer direct and indirect competition to McDonalds. In India McDonalds face a tough scenario because there are certain other international chains that also offer tough competition to McDonalds (Chandra 2002). These international competitors are Pizza Hut, KFC, Dominos Pizza, and Subway. However, Indians prefer their local manufactures and that is the reason why the local fast food chains are growing in numbers that are also giving competition to McDonalds. The local fast food chains in India are Hyderabad House, Ohri’s, Jumbo King, Narula’s etc. The competitors that are present in India are quite diverse in many aspects as this can be considered as one of the biggest issue for McDonalds. In the similar manner it can also be said that in India the competitors are so diverse that they compete in aggressively and in certain scenarios they also compete in non-price dimensions like innovation, marketing, etc.

b)      Potential entrants- Threat of new competitors

The new entrants in the industry will definitely decrease the profits of the company and if the entry of new incumbents is not blocked than this situation would not favour the current players. However, in India new competitors can easily enter the fast food business and the threats of the new entrants for McDonalds in relatively high.

c)      Substitutes – Threat of Substitute products

People in India are considered as price sensitive individuals and that is the reason why substitute products for McDonalds are more in India. The substitute products can range from a fast food restaurant that offers similar as well as diversified products, family restaurants that offer local Indian foods and even home cooked meal can be considered as the substitute of McDonalds (Chandra 2002).

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