According to the news, McDonald is planning to transform Heinz out of its restaurant since the recent detrimental changes of Heinz’s management, which implies that this nearly 40 years relationship is at its end.
According to my analysis, the two main reasons of this situation are Man and Suppliers. The spokesperson pointed out that they end the contract with Heinz since it hires McDonald’s competitive rival—Burger King’s former CEO as new chief. Moreover, Heinz’s weak supplier power also causes this situation. Firstly, it has many competitive suppliers, such as Del Monte and Pampero. Then, ketchup is considered as a basic commodity, which determines that Heinz ketchup has less supplier power from the beginning.
In addition, Heinz provides ketchup to McDonald’s overseas marker. If McDonald’s choose a local supplier there, it can save the money spending on shipping or packaging, effectively decreases the cost. Since most customers would not have a specific preference on the ketchup used in McDonald, it is not arduous to change suppliers based on their cost effectiveness. McDonald should allocate its expenses and resources cost efficiently to maximize their profitability.
source:
http://www.cnbc.com/id/101144721