Porter's Five Forces Essay

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Porter’s Five Forces Model Competitive rivalry or competition- High Force The fast food industry in New Zealand is contemplated on its intense competition involving international franchises for example, McDonald’s and local firms such as BurgerFuel which continue to expand with additional outlets across New Zealand. Wherein the competition between the surviving competitors has a strong force in the industry due to the high number of outlets, low switching and high aggressiveness between firms. The fast food rivalry amid prominent chains, for instance, McDonalds, Burger King, and countless others have strengthened as they “fight to offer the cheapest meal deal ever” (Marino, 2016). In fact, the main competition in this industry is cost-based …show more content…

Wherein, starting up in this competitive industry in New Zealand is not straightforward since several aspects need to be reflected on before commencing a fast food franchise. In fact, it demands a significant amount of investment for example, purchasing property, plant and equipment, following the laws and regulations and numerous other factors. Last year McDonald maintained their strong position as New Zealand’s leading franchise due to their controlling position in the burger category, “where it accounted for 49% of value sales during the year” (Euromonitor, 2016). So, when new companies contest with leading outlets like McDonalds, their trademark brand is unfamiliar to many consumers compared to immensely popular outlets. In which, brand development, such as advertising campaigns can be extremely expensive and has a low force in this industry. Since, reputable chains have the capital to retaliate forcefully through pricing, promotions, as it will discourage the new entrants from entering the marketplace. Wherein new businesses cannot compete with well established firms. Given that, the new entrants lack economies of scales, which present outlets have formed over the period, and only exploit it to remain competitive in this high turnover, low margin industry. Hence, entering into the fast food industry is quite difficult which ensures that the threat of new entrants has low force but a positive force. Since, there are no legal barriers put in place by the New Zealand Government. Thus the overall force is positive for the existing fast food industry since the likelihood of additional competitors is

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