Threat of New EntrantsThe threat of new entrants is low even fast food industry is made up of large chains that already count with economies of scale, distribution channels, and technological advances. Because it is not too expensive to start up a fast food restaurant but it is difficult to compete with established leaders in the industry like McDonalds. There are no legalhindrances which would keep them away from entering themarket. Its also low threat because of McDonalds popularity all over the world and its big market share that controls the industry and make new entrants less likely to enter the industry.Bargaining Power of SuppliersThe bargaining power of suppliers is low. Since McDonalds is such a huge corporation, serving so many customers worldwide, it greatly relies on its suppliers. Supplier relations are very important to this industry, because the prices charged by suppliers are the major factors that affect net income. Based on the good relationship that McDonalds has with suppliers, the bargaining power is fairly stable currently. McDonalds and its suppliers have equal reliance. It means that suppliers rely on McDonalds because of being a well-known brand while McDonalds relies on its suppliers for quality products and services at fair prices. The supplier power is limited due to many options of McDonalds and because the suppliers of McDonalds is not dominated by one or few companies. Bargaining Power of BuyersThe bargaining power of buyers is low. Mcdonalds keep competitive prices because customers do not have the power to influence price directly and there are no switching costs for a customer to leave McDonalds and go elsewhere, McDonalds has to do things that will keep the customers coming back. Due to brand and customer loyalty many buyers exist. The greater the number of customers, their power becomes smaller.

Industry RivalryThe intensity of rivalry among competitors in the fast food industry is at a high level. Competitive rivalry is high in fast food industry because of its many current and potential competitors. Competitors like Burger King, KFC, etc are highly competitive because they can intensify its promotion and innovate their products and investments. Also, the price difference of McDonalds to its other competitors is relatively low thats why price wars occur. Due to its lower degree of product differentiation and close price the intensity of competition in this industry is very high. And in this kind of industry, Exit barrier is high. It means that it keeps companies from leaving an industry even they are not profitable or may even be losing money. Therefore it is difficult or too expensive to exit an industry so companies will remain and will add to the intensity of competition.

Threat of Substitutes and Complements

The threat of substitutes and complements is high because of its great numbers of substitutes and readily available substitutes and complements in industry. The cost of changing or switching cost is low and customers are willing to switch to one product to another anytime.