Tuesday, September 17, 2019
McDonalds is A Competitive Fast Food Firm Essay -- Fast Food Industry
A Competitive Fast Food Firm Firms within the fast food industry fall under the market structure of competition. Market structure is a classification for the key traits of a market. The characteristics of a market that is competitive would include: a large number of buyers and sellers, easy entry to and exit from the market, homogeneous products, and the firm is a price taker. Take McDonalds fast food restaurant for example. In 1954, Ray Kroc became the first franchisee appointed by Mac and Dic McDonald in San Bernadino, California. He opened his first restaurant in De Plaines, Illinois (near Chicago), and the McDonaldÃ¢â¬â¢s Corporation was created. By 1959, the 100th McDonaldÃ¢â¬â¢s had opened in Chicago. In the early years of the 1960Ã¢â¬â¢s, Ray Kroc had bought all rights to the McDonaldÃ¢â¬â¢s concept from the McDonaldÃ¢â¬â¢s brothers for $2.7 million. In 1963, the 500th restaurant had opened. By the end of the decade, McDonaldÃ¢â¬â¢s was listed on the New York stock exchange, had opened restaurants in every state of the union and also outside the USA. By 1972, assets exceeded $500 million and sales surpassed $1 billion, a new McDonaldÃ¢â¬â¢s restaurant was opening nearly every day. In 1984, Ray Kroc died, but his company was then serving 17 million customers a day, equivalent to serving lunch to the entire population of Australia and New Zealand. If McDonaldÃ¢â¬â¢s lined up all the hamburgers sold since 1955, they would have circled the equator 103.75 times and reach to the moon and back 5 times. Today, McDonaldÃ¢â¬â¢s remains one of the most competitive franchises ever created because they still have a large number of buyers and sellers, easy entry to and exi... ...dustry is the ease of entry into the market. Start-up franchises within this market structure can begin operating with relatively low initial investments (compared to other industries). This is not the case where monopoly companies, such as Microsoft is concerned. There are numerous barriers to entry into a Monopolistic market structure, capital being one of the most prominent barriers. If a new franchise offered the consumer a quality product at a reduced price, then the chance of success are greatly increased. McDonaldÃ¢â¬â¢s established a name for themselves by offering quality food and fast, friendly service. This is a very important concept in the fast food industry. Once they established themselves to the consumers and became more visible, they created more demand, which lead to a greater revenue for them.