Macdonald's Final Version

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MARKET STRUCTURE ANALYSIS OF MCDONALD'S Essay NAME: ID:

Introduction McDonald's is an international chain of fast-food restaurants best known for its hamburgers, French fries, and beverage options. The number of firms in the market, the type of product (differentiated or commodity), the businesses' power over the product pricing, and the entry and departure points from the market will all be taken into account while examining McDonald's market structure (Lafontaine and Leibsohn, 2005). Number of Businesses in the Market Due to the large number of competitors, McDonald's operates in a distinct market. Burgers, French fries, and soft drinks are some of the items that can be found on the menus of local restaurants and other types of fast-food enterprises in the majority of countries. This shows that an oligopolistic market is controlled by a select group of dominant corporations, one of which is McDonald's, which operates in this market. Type of Product: Commodity or Differentiated McDonald's provides a unique offering. Many fast-food restaurants offer the same staples, including burgers and fries, but McDonald's stands out thanks to its distinctive recipes, branding, and marketing. McDonald's distinguishes itself from products that are similar to commodities with its experience, taste consistency, and iconic Big Mac or Chicken McNuggets. They can command a devoted client base because of their uniqueness. Business's Control Over the Price of the Product Businesses have a great deal of control over the price of their goods in an oligopolistic market. McDonalds and its main rivals choose their prices by taking into account many variables, including demand, production costs, and market placement. These companies keep a careful eye on one another's pricing tactics to prevent price wars that can reduce earnings. Within the fast- food industry, McDonald's can affect market prices due to its pricing power. Entry and exit to and from the Market It can be difficult to enter the fast-food market due to high capital requirements, brand recognition, and economies of scale, especially for well-known brands like McDonald's. This

entrance hurdle adds to the market's oligopolistic structure. There is fierce rivalry for newcomers, and they need to make big investments to get started. However, because of the brand's widespread exposure, leaving the market as a whole would require careful planning. On the other hand, closing a single restaurant site makes leaving the market quite simple. In conclusion , the market structure in which McDonald's works is oligopolistic. The fast-food sector is distinguished by a small number of dominant firms, a unique product offering, price control, and high hurdles to entry (Parcel and Sickmeier, 1988). By sustaining a strong brand, continuously providing high-quality items, and adjusting to shifting consumer demands, McDonald's manages to prosper in this climate. Even though the product's particular selection of chicken sandwiches, for example, has little bearing on the market structure, it does highlight the company's capacity for innovation and customer-focused business practices in this cutthroat oligopoly.

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References Lafontaine, F., & Leibsohn, D. (2005, June). Beyond entry: Examining McDonald’s expansion in international markets. In in International Society of Franchising Conference Proceedings (pp. 0-26). Parcel, T. L., & Sickmeier, M. B. (1988). One firm, two labor markets: The case of McDonald's in the fast‐food industry. Sociological Quarterly , 29 (1), 29-46.

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