1.What are the chief economic and business characteristics of the fast-food industry?
First, fast food restaurants represent one of the largest segments of the food industry. In 2003 sales for US consumer food-service market totaled approximately $408 billion. The sandwich sales represented $64 billion and the future growth in this segment was expected to be only around 2% annually.
McDonalds and Burger King were the earliest and most aggressive hamburger chains to begin to expand around the world.
Lasr few years , there was an explosive growth in foreign markets offset slowing growth in the United States and with the economic downturn, more people are ...view middle of the document...
Product and Marketing innovations are necessary to the changes in the fast food industry.
The use of the Internet and emerging new Internet technology applications increase globalization and changes in the long-run food industry growth rate.
Manufacturing process innovation and diffusion of technical know-how across companies and countries also help to change the fast-food industry.
4. What factors do you see as critical to competitive success in the fast food industry?
There are different factors, which are important to achieve success in the fast-food industry. First of all, the location because these kind of restaurants need to be in a high traffic area.
Then, diversification. The very high competition needs to suggest different menus and give the customers the choice. Moreover, it’s important to have our own image. So, the signature for example, the Big Mac for mc Donald’s allows recognizing the brand also colors and the big M with gold arches.
Moreover, fast-foods have to choose their target and make good communication like Mc Donald’s which was associated with Justin Timberlake for adds or the famous “ I’m lovin’ it”
Because of the very high competition the innovation is important on the market, so fast foods need to be innovative in the products and services.
What is also crucial is the quality of the products, stores need to be clean and the decor can’t be old-fashioned.
· Service: fast foods need to be fast and employees have to be efficient by minimizing waste of time of the customers. “Make the customer the boss” Idea of the drive-in allows customers to gain time.
· Value: because of the competition, there is a price war, that’s why having a range of different prices; low prices and a little bit more expensive menus allow coping with the competition.
5. Is the fast-food industry attractive? What factors make it attractive? Unattractive?
· Rising population
· Diversification, substitute products or services are high.
· Increase of prices
· Trend of healthy food became a way to innovate.
· High average return on investment
· Eating habit of customers: the busier lifestyle makes workers and students eat fast at lunch.
· Number of consumers decreases
· Competition increases : Mc Donald’s revenue in 2002 was about 2.112$ million in 2003 it was about 963$ million
· Health controversy: obesity, fats, hearts disease, spongiform crisis
· Earnings dependant on franchisees
· Tendency of the customers to switch from one product to another
· Food quality is highly affected by consumer’s trends, demography and patterns.
6. Describe how McDonald’s strategy has evolved under each of its CEOs. Did Ray Kroc have the most influence of any CEO on McDonald’s strategy? Do you agree that Greenberg should have resigned in response to McDonald’s loss in 2002? To what extent do you...