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Strategic Management Report fast food industry Faculty of Business 1 ASSESSMENT TASK COVER SHEET 1 QUESTION 1: 3 QUESTION 2: 4 QUESTION 3: 5 QUESTION 4: 7 APPENDIX 1: 11 APPENDIX 2: 13 APPENDIX 3: 18 Question 1: Thompson (2005, p. 48) stated that 'Analyzing a company's industry and competitive environment begins with identifying the industry's dominant features' he also provided a table to identify the profile of the industry (2005, p, 49), with which this report conducted an in depth analysis of the fast food industry in the Appendix A and summarized the key economic and business characteristics of the fast food industry as below: 1. Market size and growth rate 'In 2003 the top 30 sandwich chains had US systemwide sales of approximately $64 billion.' (MARINO, 2005, p. 5) Although the case did not clearly indicate the sandwich segment is the fast food industry, The major players in sandwich segment listed by the case are all well known major players in fast food industry, so this report presumed that the sandwich segment represents the fast food industry. As case indicated 'the growth rate for this industry in US market was expected to be only around 2% annually for the foreseeable future.' (MARINO, 2005, p. 5), while the growth rate in international market could be higher than 2%, because 'According to Euromonitor, the global food-service industry was expected to grow by more than $ 200 billion between 2002 and 2006.' (MARINO, 2005, p. 7). From the characteristics described above, the business cycle of fast food industry: In US markets It was 'passed through the rapid growth stage and is looking at only single-digit percentage increases in buyer demand is likely to be experiencing a competitive shake-out stage' (Thompson, 2005, p.48) and adding the fact that 'The US fast-food market was rapidly becoming saturated' (MARINO, 2005, p. 9), So the business life cycle of fast food industry in US market was likely in between shake out and maturity stage. In international markets While in other countries, like China, The business life cycle of fast food industry was in growth stage, probably because of this imbalance, the 2nd key dominant economic feature coming up! 2. Scope of competitive rivalry The case mentioned growth in other countries was expected to be one of the only sources of growth for many top hamburger chains in future years. (MARINO, 2005, p. 9) So having a presence in foreign markets is becoming more important to a company's long term competitive success. 3. Number of rivals According to the data provided by case exhibit 3 (MARINO, 2005, p. 6) , In 2002, Top 5 chains accounted for 72.42 % of total market share (US Fast-Food Markets), from this figures, The US fast food market was dominated by a few large companies. 4. Buyer needs and requirements The first attributes concerned by buyers was price, As case indicated 'customers were increasingly focusing on value' (MARINO, 2005, p. 5), 'but customers were also concerned with quality. In addition, health-conscious consumers were increasing their demands'. (MARINO, 2005, p. 6) 5. Product innovation In response to the ever changing customers concerns described, all the major player in the fast food industry have to focus on production innovation to survive. Question 2: This report in depth analyzed the specific competitive pressures associated with each of the five forces with the 'five-for