Threats

Global fight against obesity

Even though the first wave of obesity attention have roamed the world and fallen a little back again, then the subject will not soon be forgotten. Obesity has become a lifestyle disease and more than 300 million people are clinically declared obese, and a total of 1 billion people around the world are overweight. And the development of these numbers is not positive (WHO 2003). So there is no reasonable idea in believing that the focus on obesity will get any better. If McDonald’s does not escape the bad image around the traditional fast food industry, then it will continue to posses a great threat.

Uncertainties in developing markets

In a lot of emerging markets fast food is considered a luxury good. Since some markets are at political unrest or maybe suffering from weak national economies, then McDonalds could easily be put in a situation where they have invest further to remain in the market. The uncertainties surrounding the emerging markets gives a greater risk, and makes it harder to evaluate how many resources it will take to keep the position in the market. Furthermore it will be hard to project when it is the right time to make further investments and when turn-around will be.

Increasing competition

All companies are on their toes at the moment, watching every move being made in the industry. After a long time of constant growth without having to do anything out of the ordinary, all the large companies have now found out that it pays to be agile in a situation as the suddenly increased health focus. In a matured marked, they suddenly have to fight each other and expanding to new countries to keep the company growth at a respectable level.

It is necessary to keep up with the competition; if companies do not do this, then they will suffer from being left behind in the product innovation and rebranding and loose market shares.

Rules against advertising for kids

In the UK there are at the moment investigations being made on whether or not the fast food industry can market themselves towards children. If this suggestion falls into place and becomes passed as a new bill, it would on the short term mean a severe stroke to the fast food marketing done in the UK, at it would affect the bottom-line. Furthermore on the long term it would probably be spread to other countries as a way to prevent obesity to escalate.

Increasing price competition

McDonald’s are at the moment in a price competition on the popular “value meals”. The margins on these products are low, and a further enhancement on this price war would take a cut into some already small margins. Since the general competition is heating up, then an increase in the price competition would not be to unlikely.