The competitive environment

For businesses to understand adequately the nature of the competition they face, they must define their market accurately. This involves recognising a broad base of competitors. McDonald's has thousands of competitors, each seeking a share of the market. McDonald's recognises that it is up against not only other large burger and chicken chains but also independently owned fish and chips shops and other eat-in or take-out establishments.

A company like McDonald's therefore, has to develop competitive strategies that differentiate it from its rivals.

All organisations need to be in touch with their business environment in order to make sure that what they do fits with customer expectations. These expectations change over time. Moreover, the IEO market in which McDonald's operates is becoming increasingly competitive, as the chart below illustrates.

Recently, in this crowded market place, McDonald's competitive lead came under pressure largely because many fast food outlets have either:

• copied the trail-blazing ideas that previously set McDonald's apart and put it ahead of the field

• promoted new ideas of their own e.g. urban supermarkets and petrol stations that sell convenient, portable mealtime replacements.

McDonald's recognises the need to respond. It is looking to increase the competitive gap by:

• adding greater value through innovation

• making the process of visiting a McDonald's less routine and controlled

• enhancing the overall in-house experience.