McDonalds Competitor Analysis - Research Paper Example

? Competitor Analysis – McDonald’s Competition drives the market dynamics of an industry. Different strategies are to be effective indiversified market competition scenario. Business managers have an eager eye on the current and potential competition prevailing in the environment. For this purpose, let’s consider Kentucky Fried Chicken (KFC) as an example of competition in the fast food restaurant industry. Similar to McDonald’s, KFC is also amongst the oldest and the most diversified chain of Fast Food restaurant in the world. It operates correspondingly through a chain of restaurants, company operated and franchised across the world. Michael Porter presented a framework for analyzing competitor. The key aspects that Porter discussed are Competitors objective, Competitors assumptions, Competitors strategy and his Capabilities. In simple terms one should analyze his competitor’s strengths and weaknesses to draft his own strategy. Although both the fast food giants belong to the same family, but have specialization in different nature of products served. McDonald’s are famous for their Hamburgers and other’s in the Burger family, while KFC specializes in fried chicken. Both the corporations have the same geographical reach in the world and strong brand recognition. To its added advantage McDonald’s is listed in the NYSE giving it room for more growth through access to an enormous fund pool (McDonald’s Official Website, 2011; Porter, 2004). Toady due to its rapid expansion McDonald’s have its presence in 119 countries with an employee base above 400,000 worldwide. KFC on the other hand has similar presence but with an employee base little above 25,000. It may be small in size but has been the most successful fried chicken chain in the world. Due to his excellence in chicken products it has not faced any social issues till date. Chicken is the most consumed protein in the world with none social or religious restrictions placed upon it. KFC has faced certain protests from animal rights groups. McDonald’s has also seen the same from these organisations. On the contrary McDonald’s apart from animal rights organisation have witnessed many social and religious obstacles throughout the world. McDonald’s specializes in Hamburgers, but the fact that it is completely banned in Islam, Muslims across the world refuse to eat it. Therefore the company has limited its product range in the Muslim world. Further McDonald’s has faced issues with Hindus especially in India who refuse to eat Meat on religious grounds. This again has forced McDonald’s to cut back its product range. None of these issues have been faced by KFC, and hence it has a steady and strong growth trend across the world (KFC Official Website, 2011). KFC is a private corporation and is not listed as McDonald’s; its financial results are unavailable. Still its magnificent power can be witnessed as it is present in almost similar capacity and has maintained its strength in the Fast Food sector all over the world. Based on McDonald’s capacity to capture such revenues and the pace of its expansion, due to exposure to a massive fund pool being listed at the NYSE, it can be said that McDonald’s have overpowered many Fast Food networks on the planet. It can be advocated that KFC’s policy of slow expansion or its ability to have its corporate presence in many countries without being listed, is in itself a remarkable achievement. There is a huge possibility that such policy might change and in a situation of a price war between the giants, KFC has definitely the ability to challenge McDonald’s on all fronts. McDonald’s should show resilience in drafting strategies for corporate expansion; as such moves require a lot of investments. In case of any turbulence in the economic environment or KFC’s idea to get listed materializes, it would ring alarms towards McDonald’s to have in its grip a lot of liquidity so should it be in a price war situation with KFC. As McDonald’s corporation is registered in the NYSE, let’s take a glimpse of its financial statistics to assess the company’s strengths and its powerful standing in front of KFC. Following are the six year graphical representation of McDonald Corporations worldwide statistics in term of earnings per share and increase of its franchises. The information has been extracted from the Financial Statement of McDonald Corporation (Financial Statement, 2011). The diluted earnings per share have almost reached $6 per share. We do see a decline in year 2007, but since then the EPS has significantly grown and has continued its growing trends in line with its revenues and profits. This is a strong signal towards the potential investors, and to its competitors. With such ability at a Corporations disposal, where large group companies have collapsed, McDonald’s have revealed that it is in fact a real leader in its domain. In the stock exchange the MCD is trading at a level of $98 per share. With such exceptional results McDonald Corporation seems committed to excellence. (NYSE, 2011) The Franchise network of McDonald’s has considerably increased in the past six years. From a level of 22,000 outlets to above 27,000 in 2011, has delivered a strong message to McDonald’s competition across the globe, that not only McDonald’s have the ability to produce massive revenues but in fact its existence has been appreciated by the people on the planet. KFC on the other hand does not have such a huge Franchise base. Although it does have its presence across numerous geographical boundaries, it still hasn’t produced the drastic expansion compared to McDonald’s since its birth. (Financial Statement, 2011) The show of strength, between the two Titans of fast food has been witnessed clearly in the area of advertising. KFC has shown to the world that when it comes to selling its fried chicken, its capabilities are second to none. After the death of Sander's in 1980, he remained a symbol for the company for its advertising and branding campaigns. In the advertisements we saw Sander's licking his fingers and talking about his secret recipes. Then onwards from 60's, 70's and 80's saw its rise to great popularity with the KFC brands featuring in television shows and movies. The most famous featuring includes the Peter Seller's vehicle in 1968, Superman 2 in 1980's, Jerry Lewis's Big Mouth in 1967 etc. In 2007 the Kentucky Fried Chicken name was resurrected and started featuring on its Buckets. It can easily be assumed; by the way KFC has moved on throughout its lifetime since 50's, that it is one of the Best Fast Food restaurants in the world. Its exclusive and excessive advertising campaigns have proven fruitful in its strategic growth and have given it a competitive edge over its rivals. Although KFC smaller in size than McDonald's, its capacity to produce enormous revenues cannot be overshadowed. It has its own success stories to tell, and the fact that KFC just keeps on getting bigger and bigger. It is so rightly said by the KFC corporation that its Chicken is "Finger Lickin' Good" (before 2006), "Follow your taste" (2006-2010) and "So Good" (2010-Present). Bibliography Financial Statements, 2011. McDonald’s Corporation [online]. Available at: < http://www.aboutmcdonalds.com/mcd/investors.html//> [Accessed 29 March 2012]. Official Website, 2011. KFC Corporation. [online]. Available at: < http://www.kfc.com// > [Accessed 29 March 2012]. Official Website, 2011. McDonald’s Corporation. [online]. Available at: < http://www.mcdonalds.com/us/en/home.html > [Accessed 29 March 2012]. Official Website, 2011. New York Stock Exchange (NYSE). [online]. Available at: < http://www.nyse.com// > [Accessed 29 March 2012]. Porter, M. E., 2004. Competitive strategy: techniques for analyzing industries and competitors. New York, Free Press. Read More