The fast food industry

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Assignment 2:


General Environment:

▪ PEST analysis

PEST stands for Political – Economic – Social – Technological and describes a framework of macro environmental factors that can influence an industry or a sector. Let’s apply this analysis to the fast food industry.

| |Positive influence|Negative influence |
|Political factors |* Political ties with the US and free trade policies |* Public mobilisation against obesity and unhealthy food. |
| |((agreements like the NAFTA or the MERCOSUR that eliminate||
| |tariffs on goods shipped between Member States). | |
|Economic factors |* Rising per capita incomes worldwide (( more money |* Rising per capita incomes worldwide (( preference for full |
| |dedicated to eating outside home).|service restaurants). |
| | |* High costs and poor availability of real estate. |
|Social factors |* Higher divorce rates and weddings happening later |* Increased demand for healthy products.|
| |(rising number of single households more likely to eat in |* Slower growth rate of the population ( teenage workforce |
| |fast-foods. |shortage. |
|Technological factors |* Computer as number one tool to improveefficiency. | |
| |* Development of the Internet (breaks down communication | |
| |and language barriers. | |▪ Global Factors: what is going on at the international level that might factor into our business?

Different elements can influence the fast food industry in its attempt to internationalize.

As far as economic issues are concerned, operating costs are more or less important depending on the size of the foreign market: it is much harder to spread the costs on a small one. Besides, insome countries, the situation is really uncertain, especially for exchange rates and inflation, which can weaken the firm’s health.

Regarding political factors, frequent changes of governments and regulations also unhinge a company.

Finally, the cultural gap between countries is also an obstacle and compels the firm to adapt to local tastes and eating habits.

Industry environment:

▪Industry segmentation: JULIE

▪ Industry competition:

 Porter’s five forces:

A threat of substitutes in the fast food industry exists to a certain extent. Indeed, substitutes can impact the industry through price competition. However, this is mostly unlikely that fast food get challenged by lower costs type of restaurants since fast foods already are at the bottom of the price ladder.Substitutes can also constitute a threat regardless of the pricing factor, in the form of alternatives customers can use, such as full service restaurants or home meals. However, this type of substitutes does not possess some of the key success factors of the fast food industry (good location, fast service, diversified product line).

The power of buyers is considered as weak because customers...
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