McDonald's Porter's Diamond

According to Michael Porter, growth’s stability is not a heritage but something we need to create. The four factors influencing the competitive advantage are: - Firm strategy, structure and rivalry - Demand conditions - Related and supporting industries - Factor conditions We will explain the international competitive position of McDonald’s Corporation using all those factors. Firm strategy, structure and rivalry: We are going to deal with the presence of several companies in a same place.

Conglomerates are benefic for the economy of a place or for a company.

The presence of different companies working on a same sector but still competing against each others can increase the production and the competitiveness of the companies. Logistic in Rotterdam (Netherlands), Computer industry in the Silicon Valley (US), Outsourcing IT in Bangalore (India) are typical examples of working conglomerates in the world where consumers can take profit of a fruitful competitiveness.

For McDonald’s, this factor is completely true. Indeed, the company would prefer to be located close to its competitors rather than being alone on a place.

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It seems strange that McDonald’s which struggles against its competitors spending millions of dollars each year in advertising and diversification requires the presence of others fast food restaurants. However, the fast food industry isn’t favorable to new entrants. In 87% of the case, there’s a Fast Food Restaurant close to the location of a McDonald’s Restaurant.

Demand conditions: The reason to improve an economy or a product comes clearly from the demand.

If the demand is hard to please, companies or countries will make them best to meet the customers’ expectations and will try to take the lead on the other members. A lot of studies are made every day in order to predict the consumers’ behavior and the first which anticipates it is considered as the pioneer and became normally the leader.