lOMoARcPSD|19025131

SM Industry Analysis Assignment 1

Strategic Management (University of Northampton)

Studocu is not sponsored or endorsed by any college or university

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)
 lOMoARcPSD|19025131

Module: STRATEGIC MANAGEMENT

Contents
INTRODUCTION.....................................................................................................................................3

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

DRIVERS AND BARRIERS THAT AFFECT THE DEVELOPMENT OF THE INDUSTRY........3

PORTER’S FIVE FORCES.....................................................................................................................4
PESTLE ANALYSIS.................................................................................................................................7
CONCLUSION..........................................................................................................................................9
REFERENCES........................................................................................................................................11

INTRODUCTION
The environmental control instruments are used to control the harmful behavior of
the companies. There are barriers and drivers that affect the company and hinder
in the developmental process and success in the future. These factors are

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

responsible and to cope up with competition, it is necessary to apply business

strategies and corporate strategies in the business. For a fast food industry, the
company has to face obstacles and with each strategic operation that takes place
for developmental purpose has to be applied by the company and the industry. The
report states the industrial level drivers and not confined to specific companies. Due
to competition, it becomes necessary for a company to change according to the
industrial level rivals. The new consumer trends have made important challenges
for the companies to mold itself as per the demand. Customer satisfaction, though
an integral part which takes into account the main objective of each company. The
quality of the product and health concerns are the key challenges that the fast food
industry takes a primary step (Crowther, 2008).

Some of the challenges are considered as the threat of the different company and
for some it states the opportunity for expansion of its activities in globalization. The
fast food companies are trying to restructure their environment and the work
culture they work. Improving competitiveness and managing a market position may
be difficult if these barriers are intensely affecting the growth structure. There are
factors that affect the growth of the company and the industry itself. These can be
classified as internal and external factors. Apart from these factors, there are five
forces that need to be understood and their impact over a particular time, these
instances have to be managed appropriately for successful implementation of
change and strategies in the business and the fast food industry.

DRIVERS AND BARRIERS THAT AFFECT THE DEVELOPMENT

OF THE INDUSTRY
As classified, the important drivers are the forces that affect the development of the
industry. The fundamental changes affect the society and the needs that are
attached with the demand of the product. There are some companies that do not
only focus for the market share, rather they have an impact over the operations
and the sociocultural context that are broadly mentioned. The drivers and the
barriers of the industry include the internal and the external factors at large. These
factors can be categorized and affect the choice of operations among the company.
While considering the internal and external factors, it states that SWOT analysis can

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

be undertaken and the industry’s strength and weaknesses can be examined. There
are internal and external factors at this end, whereas strength and weaknesses are
the internal factors that can be controlled and opportunities and threats are the
external factors that cannot be controlled at any point of time (Hitt, Ireland &
Hoskisson, 2013).

PORTER’S FIVE FORCES

Even the five forces that determine the current position of the company by
analyzing each factor is a complete gain of knowledge that can be useful for
internationalization. Applying the five forces in the industry will be useful for
analyzing the demand and supply of the product because of the concepts that are
mentioned for competitive strategy. For globalization, one needs to attain
knowledge and understanding of business strategies and the corporate level
strategy. This is challenging when the five forces of the framework are analyzed to
find out the results as they are the drivers at some point of time that affect the
development of the company. Drivers of business are the factors that affect the
company. There are misapplication of the framework and Porter himself admits the
truth. At some point there are managerial disabilities that come forward to make
changes in the business and in depth knowledge is lacking if the framework is not
carried on as per the research. The five forces are the key challenges that will help
to demonstrate the use of factors. The long variances are observed by the
researcher while comparing the driving force in this industry. The economic returns
of this industry are compared in contrast with the profit and the development of the
industry (Grant, 1991).

These are the forces that determine the industry level and the profitability of the
industry. This is actually a simple micro economic concepts and theory that are just
mentioned in the five major influence factors. The five forces are effective and it is
applied in the system thinking to verify the effectiveness and the developmental
process. On the central box, it even shows the competitive rivalry which is an acute
function of the other five forces that are mentioned on each side. This helps to
predict the long term rate of the industry. By determining the industry
attractiveness, the market is relative and focuses on the same understanding.

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

These are some of the advantages that are mentioned and to prove that these
forces do affect the fast food industry for the development purpose. These five
forces largely help to combine the both the concepts of input and output for certain
level and analysis the boundaries of substitutes and barriers of fast food industry.
The fast food industry has many barriers and the competitors who are stagnant and
have future trends to be analyzed. The external environment is analyzed whereas
less importance to SWOT analysis is observed here by. The industry has certain
gains and the losses that shall be mentioned to find out the real situation and the
barriers of developmental stage (Grundy, 2001).

Threat of new entrants

New entrants in the market are like threat to an industry and company itself. There
are changes in price, rate on investment and costs that are varied competitively.
This happens when fast food industry suffers again a new competitor in the market.
When it is observed that new entrants are largely diversified as compared to other
markets, the existing capabilities are leveraged and thereby the cash flows do
shake up for this instance due to rise in competition. This is a circle as it starts to
gain some interesting strategies that shall be used and the other side is the failure
of some strategies that do not work at a certain level. There holds a cap on the
potential profit of the business when the entrants threat is high. At this time, the
industry needs to hold down the prices and largely boost the investment at some
level. The height of entry barriers is depends upon the threat of industry vice e
versa, it states that threat of industry is dependent upon how the entry barriers
come up with potential market. The profitability is moderated if the newcomers
expect some retaliation that entrenched the competitors. This happens just because
of the threat of entry in an industry. Example of this seems that McDonald’s poses
threat of entry for other industries if it moves in other markets like beverages. The
Pepsi company can be a threat to McDonald’s as it enters the food and beverage
industry (Avila, 2001).

Power of buyers

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

The power of buyers depends upon a certain level as it is among five forces that
hinder the growth of fast food industry as mentioned. This is actually a flip side of
what we call the power of suppliers. Buyers are powerful if they have an intense
bargaining power and are the experts as considered the price sensitive issues. They
emphasize their bargaining power as per the reduction of price and the overall
structure of what the industry seeks to maintain. Price is the only element which is
considered as the foremost thing in the industry. If vendors find themselves too
profitable, buyers can themselves start to produce the products and gain profits,
this happens and the power of buyer lowers the demand and its effectiveness at
some cost. The procurement budget and the cost structure matters when the buyer
is implicit with some of the services and the incredible demand over some prices
that matters in the industry. At some point many buyers are concerned with the
quality, and in the fast food industry as mentioned the quality of the product is
more important that the price. Health is the main issue which is concerned with this
industry, so buyers prefer more quality and secondary the price element that is
mentioned as far as possible.

Power of suppliers

As compared to the power of buyers, the suppliers power is even equivalent over
the five forces. A supplier can charge high prices in the fast food industry and
captures the value at the same time. They can limit the quality and services while
shifting some of the costs to the industry participants (Muhlbacher, Dahringer and
Leihs, 1999).

Threat of substitutes

Another force that affects the profitability of the fast food industry is the threat of
substitutes that has a similar sort of function as of industry. Substitute products are
actually a threat to industry because of the alternative that a company provides to
the buyers at any reasonable price and matters a lot while the economic condition
of the country and the industry is low or a recession period breaks out instantly.
Organic products are now a substitute that has a huge demand recently and in
years people will try to shift their demand to a total of organic products from farm

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

to eatable products. The threat of substitutes may decrease the demand of the
current products in the market and the market share varies constantly as per the
change in demand of a product. The profitability of the industry will shift to organic
products and again the change in demand will create a change in the products that
are opted in the market. The fast food industry is all about junk food that is not
healthy and creates an obsessed diet that will create obesity among youngsters so
the demand curve in the future may change to the organic products.

Industry rivalry

Competition is the main key factor which will change as per the new entries and the
products that need to be revitalized. Due to competition, the market position may
face a downward slope which may affect the development of an industry. Many
forms of rivalry take place such as new product, price discounting, advertising and
service improvements. Due to high rivalry concept, the profitability of the industry
is affected and thus the growth structure affects. The intensity and the basis of the
competition that a competitor competes depends upon the potential dependent
(Pearce & Robinson, 2013).

PESTLE ANALYSIS
The PESTLE analysis is the factors that affect the development of fast food industry
and need to be examined for future trends and growth in an industry. Identifying as
the market leader, the fast food company such as McDonald’s has a name and still
exists by making a market entry in a consequently different manner than expected.
The success factors are analyzed by this entrant and the marketing mix has some
focus on the internationalization branding. International standardization,
distribution and communication were other marketing mix strategies that paved a
role in the market. Identifying the strengths and weaknesses of the industry, the
internal analysis is made, rather an external analysis considered the threats and
opportunities. The comparisons of the US and the UK fast food industry will
emphasize change over each factor and it is essential to note that the demand of
fast food industry in the US is higher as compared to the UK (Marcus, 2011).

Political factors

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

By considering the political factors of the industry, there are certain laws and
regulations that affect the growth of the industry in internationalization level. There
are government regulations that impact over the packing and labeling of products
and going green is the foremost objective. Government hindrance can create
certain discrepancy that cannot be handled in the introduction stage. The
regulations on rates do impact over the employment opportunities that are
categorized.

Economic factors

As far as the economic condition of the country is meant, the recession period is
difficult for an industry to cope up with the demand and supply system. During a
recession, the income of an individual is affected and thus it takes into account the
change in demand on a negative slope as considered to be at a decreased phased
as compared to the boom period. The demand of the product is dependent and has
a classic change over the prices that are mentioned over the recession stage. The
domino effect and the financial crisis are good examples that satisfy the competent
demand of products in the industry (Barney, 2011).

Social factors

The social factors possess the health conscious needs of the society and society at
large are considered because of the moderate threat is possessed over time.
Society is the main and primary group that has to be targeted by social
responsibility has to be fulfilled by the industry, if such is the case and the company
doesn’t fulfill the responsibilities towards society than it becomes difficult for the
industry to strive in the competitive market as substitute products can change the
demand.

Technological factors

Technological factors may affect an industry if an industry does not support change
over some of the advanced technologies, such as billing and delivery system that is
maintained in the fast food company like McDonald’s. The industry has to make
changes as per the rivals strategies when and where needed. This is an example

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

where social media outlets have played a significant role in e business. The comfort
levels for customers increase with increase in technology. This is a significant
opportunity if an industry is going through some recession stage. Due to the
technology factors, the industry has faced a relevant breakdown, but changing as
per the technology can be a beneficial opportunity.

Legal factors

There are some legal suits that affect the rules and regulations for the public at
large. Considering advertisement regulations, the industry can lose its publicity in
the market. Health lawsuits are measured that gives an opportunity when health
factors are taken as a positive feedback from customers. At a certain level it is a
major threat when analyzed in a fast food industry because there is no such health
benefit from McDonald’s.

Environmental factors

The environmental factors can be an opportunity for the industry as eco-friendly

environment can give positive materials that are used in the final products.

CONCLUSION
The driving forces and the barriers have affected the development of the fast food
industry, whereas there are steps that can be taken to fulfil the demand of the
products in the industry and thereby implement the effective planning as per the
industry. Taking into account the technological factor, the demand of the product
can be increased as per the finding because using the specified technology that
makes things possible within less time may be effective. This was according to the
discussion of the factors that affect the development of the industry. Other criteria
that can be noted is taking due care about environmental factors which may consist
of using paper bags rather than plastic bags. The health concern has the quality
concern which is important for any industry to take charge of the health of the
public. These are strategies that can improve the development of an industry
(Narver & Slater, 1990).

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)

 lOMoARcPSD|19025131

REFERENCES
 Pearce, J.A. & Robinson, R.B. (2013), Strategic Management: Planning for
Domestic and Global Competition, 13th ed., McGraw-Hill Irwin, New York,
NY.
 Marcus, A.A. (2011), Management Strategy: Achieving Sustained
Competitive Advantage, 2nd ed., McGraw-Hill Irwin, New York, NY.
 Barney, J.B. (2011), Gaining and Sustaining Competitive Advantage, 4th ed.,
Pearson Prentice-Hall, Upper Saddle River, NJ.
 Crowther, P. (2008), “The five competitive forces that shape strategy”,
Harvard Business Review, Vol. 86 No. 1, pp. 78-93, Editor’s note, edited by
M.E. Porter.
 Hitt, M.A., Ireland, D.A. and Hoskisson, R.E. (2013), Strategic Management:
Competitiveness & Globalization: Concepts and Cases, 10th ed., South-
Western Cengage Learning, Mason, OH.
 Grundy AN. (2001). Competitive strategy and strategic agendas. Strategic
Change 10(5): 247–260.
 Grant RM. (1991). The resource-based theory of competitive advantage:
implications for strategy formulation. California Management Review 33(3):
114–135.
 Avila EA. (2001). Competitive forces that drive engineer recruitment and
retention. Leadership and Management in Engineering 1: 17–23.
 Narver, J. C. & Slater, S. F. (1990). The effect of a market orientation on
business profitability. Journal of Marketing, 10 (1), 20-35
 Muhlbacher, Dahringer and Leihs (1999) “International Marketing”. London:
Thomson Business Press. Pg: 1-201

10

Downloaded by NAZNIN SULTANA RINI (nazninsultana-23rd-2016812910@ais.du.ac.bd)