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Business Strategy Analysis
•why won’t the company’s
products/services become a commodity
priced at the marginal cost of production?
Rivalry Among Threat of Threat of
Existing Firms New Entrants Substitute Products
fixed/variable costs
excess capacity PROFITABILITY
Bargaining Power Bargaining Power
of Buyers of Suppliers
switching costs switching costs
differentiation differentiation
A Strategy or a Platitude?
Excerpts from the 1994 GE annual report
– “We've described these three behaviors in past
letters: boundarylessness, speed and stretch.”
•Boundaryless behavior, an odd, awkward phrase just a
product introduction, speed, more often than not, ends up
being the competitive differentiator.
•Stretch, in its simplest form, says, "Nothing is impossible,"
and the setting of stretch targets inspires people and
captures their imaginations
Boston ChickenCompetitor Competitor
BC fact 1 BC fact 2 BC fact 3
http://0-
www.netadvantage.standardandpoors.com.lib.bus.umich.edu/
Name the largest US restaurant chains
McDonalds 20051 13099
Burger King 8823 8248
Taco Bell 4900 6444
KFC 4700 5399
Subway 4480 13247
Sales ($M) Units
Total 54195
Top 100 69205
5.3% spent on food x 8000 B disposable income = $424 billion
$2137/household in 2000 (bls survey)
From Bureau of Labor Statistics Annual Consumer Expenditure Survey
Restaurant Industry Overview
Restaurant Industry Overview
•full service
growing faster
than fast food,
but “quick-
casual” is best.
