Market Structure
If you are hungry and need a quick meal to go before heading to work or school in the morning, going to a fast-food restaurant is the way to go. Many people do not have the time in their tight and busy schedules to prepare or cook food at their homes, so they drive to the nearest fast-food restaurant of their choice. Time and speed are two critical factors that the fast-food industry uses to market itself. Workers and employees of this type of industry have to work extremely quick in order to serve and prepare food for hungry customers. Examples of the largest international competitors of the fast-food industry are McDonald’s, Wendy’s, Burger King, Kentucky-Fried Chicken, and Sonic. These restaurants top the list because of their rapid growth throughout several countries around the world. Out of the top five restaurants, one well-known organization called McDonald’s tops the chart. McDonald’s market structure was decided upon for several reasons, and it differentiates from the other alternatives. McDonald’s uses three or more competitive strategies to maximize its profits over the long run. To further maximize McDonald’s profits, there are a few recommendations I would like to make in relationship to its strategies.
Fast Food Industry: Perfect Competition Market Structure Perfect competition is the market structure that firms in the fast-food industry in general fall under. In a perfect competition, firms consist of a large number of buyers and sellers, an easy entry and exit from the market, homogenous products, and price takers. Having no control over the product’s price, a price taker is a buyer or seller that possess minimum market power and must “take” or accept the ongoing price. Based on the price determined in the market, a perfect competition sets a production level. Market supply and demand conditions as well as the competition within the industry set the price of the goods sold. This causes a perfectly competitive firm to face a perfectly elastic
Fast Food Industry: Perfect Competition Market Structure Perfect competition is the market structure that firms in the fast-food industry in general fall under. In a perfect competition, firms consist of a large number of buyers and sellers, an easy entry and exit from the market, homogenous products, and price takers. Having no control over the product’s price, a price taker is a buyer or seller that possess minimum market power and must “take” or accept the ongoing price. Based on the price determined in the market, a perfect competition sets a production level. Market supply and demand conditions as well as the competition within the industry set the price of the goods sold. This causes a perfectly competitive firm to face a perfectly elastic
References: Berra, D. Y. (2012). How is McDonald’s considered a oligopoly? McDonald 's , 1. McDonald 's-An Oligopoly. (2013, March 22). Retrieved from Libbyaanoosterr: http://libbyaanoosterr.wikispaces.com/McDonald%27s+-+An+Oligopoly McDonald 's-Our Story. (2013, March 22). Retrieved March 22, 2013, from McDonald 's: http://www.mcdonalds.com/us/en/our_story.html