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Strategic Analysis

"Choose an industry and apply a suitable external analysis model. Critically analyse the model"

Introduction 1.1

This assignment analyses and examines the different forces influencing the U.K fast food industry "An industry can be defined as a group of companies offering products or services that are close substitutes for each other. Close substitutes are products or services that satisfy the same basic consumer needs" (Hill, Jones, 1995)

Forecasted figures show the fast food industry in the U.K will generate estimated revenue of 8.8 billion pounds in 2006 which would be a 2.8% increase on 2005 figures. Growth is expected to slow down in 2007, with a 2.4% increase (www.keynote.co.uk)

Background on Porter's Five Forces model 1.2
Porter 1982 puts forward the theory that "analysis normally begins with a general examination of the forces influencing the organisation". Michel Porter's contribution has heightened "understanding of the competitive environment of the firm, and its many implications for many organisations (Lynch, 2006). Porter's five forces model outlines five basic forces that can act upon an organisation, the power of the supplier, barriers to entry, threat of substitutes, buying power and the degree of rivalry within the industry. Porter described the five forces model as "the forces driving industry competition" (Lynch, 2006).

Porters Five Forces model Figure 1.1
The diagram below displays how porters five forces diagram is structured


Source: www.tutor2u.net

Analysis of Competition within the industry 2.1
The first stage of Porter's analysis is investigating the "extent of competitive rivalry" within the U.K fast food industry. "The strongest of the five forces is usually jockeying for position and buyer favour that goes on along rival firms" (Thompson, Strickland, 1998). In the fast food industry, particularly among the major companies the competitive rivalry is particularly high. This is due to the industry being highly...