Introduction

A. Issue & Problem Statement

          McDonald’s is one of the biggest fast food chain in the world. The two brothers, Dick and Mac McDonald opened the first restaurant, McDonald barbeque restaurant in 1940. It was first open in San Bernardino, California. In 1948, McDonald was founded where the brothers closed and reopened the restaurant. The new restaurant features different menu which is hamburger, soft drink, French fries, coffee and so on. Ray Kroc, a multi-mixer salesman visited the restaurant in San Bernardino in 1954. In 1955, Ray Kroc opened the first McDonald restaurant in Des Plaines, Illinois and 100 millionth hamburgers were sold in 1958. Later, the two brothers sold their rights to Ray Kroc at $ 2.7 million. Recently, Shamrock Shake, a mint flavoured milkshake has been offered in United States in 2012. (McDonalds, n.d.).

 

         The excellent result and performance of McDonald are reasoning this company is chosen as the brand of our investigation. Since McDonald is the strongest fast food company, the extraordinary performance told us that the guidelines are reliable. Through its announced strategy and data we can actually get the guidelines from the company helping us on our sales performance.

 

         McDonald falls under monopolistic competition which has the characteristics of large numbers of sellers, product differentiation, and low entry barrier. Firms have little percentage of market shares and market price control. Firms cannot collaborate together to charge price and limit their output due to many sellers and thus no collusion. Firms are independent when it comes to pricing strategy because there are no effects in competitors. Moreover, product is different in terms of product attributes, service, location, brand names and packaging and price control. Every firm has their own service strategy when serving customer. A nearer location will attract customer more. Brand and packaging also affect customer decision. Customers believe that branded goods represent their social status. Firms are unable to control much in prices as there are many substitutes for the products. New firms enter and exit the market easily during short-run to gain supernormal profit and leave when they earn normal profit. (McConnell, Brue and Flynn, 2012)
 

 

 

B. Objective    

          The objective of conducting the survey and doing the analysis is to manipulate the applications and concepts of economics. Based on the research, the demand theory has vividly proved the mind of consumers. Understanding the principle of market equilibrium, as the investigator we found that the situation occurred when the quantity supplied met the quantity demanded at the current market price. The principle of elasticity is demonstrated in the research which is caused by various factors. Through the case studies, pricing strategies are known via the price theory.

 

c. Limitation

        There are a few problems while conducting this survey. Corporation is not given by the public due to the inconvenience, moreover, time-consuming is also the factor of limitation. The answers obtained from the interview are sometime inaccurate.