Management Economics 2: Analysis of Burger King's Market Structure

This report analyzes the market structure of Burger King and its impact on the company's profitability. It explains different types of market structures and suggests that Burger King should stay in the same market structure due to its brand recognition. The report also discusses government interventions and their impact on the market.

MANAGEMENT
ECONOMICS-2

Table of Contents
INTRODUCTION...........................................................................................................................1
Describe the company.................................................................................................................1
Analyse the market......................................................................................................................2
Different market structure...........................................................................................................5
Suggestions for the company operate in a different market structure and the government
interventions................................................................................................................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Economy is the system in the specific area which understand the nature and the level of
economics activities in the particular area. Economics is the study of production, consumption,
and transfer of wealth in the market(Wang and et. al., 2020). This is the main consideration of
the business to earn the higher profits so that they can be the market leader but owning to the
facts that resources are limited and ever films wants to establish in the market. For this, they are
apply management theories so that they can solve their problem and be the effective decision
taker in the marketplace. Market is depends upon the demand and supply which execute the
overall functionality. Burger king is the chosen organisation for this report, It is the American
fast food chain of restaurant which is founded in 1953 and their headquarter is in Miami-Dade
country, Florida. This report will cover the different type of market structure which is being used
by the companies and also explain the characteristics of the market structure which is being used
by the company at its inception.
Describe the company
Burger king is the leading company which is the multinational fact-food chain which is
serving their services globally. The company is operating their business in 17, 796 locations and
operating 40 subsidiaries across the world (Shoukat and et. al., 2020). They are opening their
business on larger scale and giving various job opportunities to the society. They are working by
giving franchises in the world so that they can be the market leader. They have expanded their
menu from basic offering of burgers, sodas and milkshake to a larger and diversified product to
the menu.
They have stared with Insta-Burger King, A restaurant chain which had faced financial
difficulties in 1954 ans their two franchisees David Edgerton and James McLamore have
purchased the company and they renamed it “ Burger King”. Over the period of time, company
have changed their hands for their long term sustainability. They are offering wide range of
product which includes Whopper, Big King, Premium Burger, Speciality Sandwiches,
milkshakes and Rodeo sandwiches and many more. Domino's and subway are the leading rivals
of the Burger King so they always try to offer the product which can meet the changing demands
of their potential customers.
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Analyse the market
Market is the place where buyer an seller meet in order to make sell or purchase their
goods and services with the motive of generating profits for the seller sand buying desire goods
for the buyer(Wang and et. al., 2019). There are various market structure which is being used by
the business which results inn meeting the needs and wants of their potential customers. In
context to Burger King, they have got failed many time as they was financial crises but over a
period of time they are the market leader by conducting effective market research in order to full
fill the needs and wants of their potential customers.
They have targeted the people aged between 18-35 who use to eat fast food 9 to 16 times
per month and they are just 18% of the total customer base of Burger King. Customers for the
restaurant are the individual who wants to enjoy safe and tasty fast food. They are having all
group of people in the developing nations who is preferring the fast food.
They are approaching to the people who love to have fast food with proper hygiene and
in pleasant environment. This helps the Burger King to establish the good brand image across the
world by meeting the needs and desire of the individual.
Various type of market structure
Market structure is refers to how different industries is being classified or differentiated
based on their degree and nature of the products and services. It is also divided on the basis of
number of buyer and seller, behaviour that impact the particular majority of customers. This
helps them to sustain in the business for long period of time by using appropriate strategy for the
growth. Various type of market structure are explained as follows:
 Perfect competition market: It is a type of market structure where large number of
buyer sand seller is taking place and there is no single firm which is having control over
the market so all the firm are offering homogeneous products as they are the price taker
according to the emerging competition in the market. There is free entry and exist of firm
due to no restriction in the marketplace. Such business is working on their own principles
as they are free to launch the wide range of products. There is no barrier for the buyer and
seller so that they can make better choice according to their taste and preferences and also
based on their purchasing power.
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 Monopoly market: It is the type of market structure in which single seller present in the
market who is offering price differentiation in their products as they are the price maker
who set the prices of the product according to their wish (Potočnik, Šilc and Papa, 2019) .
Buyers are not having any alternation for such products and services so they have to pay
the actual price of the product. In this market, Company offer unique products and they
do not have any rival in the market which ensure their long term survival.
 Monopolistic market: It is the type of market which is having more realistic and existing
in the real world. There are large number of buyer and seller which is offering
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differentiated product on the basis of their colour, design and manufacturing so consumer
is having the vast choices for purchasing the product backed with their purchasing power.
They can higher the prices of the product as they can enjoy the market power in order to
offer products and services which helps them to have the higher profits in the market.
Burger King is working is this type of market structure as there are large number of buyer
and seller but they are offering differentiated product as they are having large number of
rivals such as McDonald's. They are offering differentiated burger and slight change in
the prices.
 Oligopoly market: It is the type of market structure in which there are only few seller in
the market as there are numerous barrier for the entry or the exit of the new start-up firm.
These firms are dominated by other firms and having higher level of interdependency as
well. For instance, If the other firm lower the prices of their goods and services then the
competitors have to respond them so that they can sustain in the market in long run. They
are having higher capital and funds which results in offering the premium quality
products.
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Different market structure
In the initial time, they have stated their business with few investment and funds due to
which they had to sell their business to two franchisees David Edgerton and James McLamore
and they renamed it. They have gone through with huge loses due to their week marketing
strategies, they were not earning profits. There were many competitors in the market who is
offering fast food services so the company is having the certain police and give franchises
globally But they are sticking to perfect competition due to large number of buyer and seller in
the market having no barrier in the entry and exit for the new start-ups.
At the initial stage, they were working under the perfect competition market in which
buyer and seller is having complete knowledge of the market and they are offering homogeneous
product and high independence for buyer and seller as they can launch wide range of product to
establish their market and buyer can have many options for making better choices for meeting
their satisfaction.
 Homogeneity of the product: It is the main feature of the market which is offering same
product and they are identical in design, identity and nature. Such product can be easily
substitute by other product due to large number of buyer and seller(Ketokivi and
Mahoney, 2017). Price is the factors which makes product differentiation by which
customer can make the effective choice between the goods so that they can defectively
full fill their need. In context to Burger King, At the initial time, there was huge
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competition in the market and firms that are offering premium quality of food than
Burger king.
 Large number of buyer and seller: In this type of market structure, thee are many buyer
and seller who is having customised needs and wants. There is no single buyer who is
having control over the market, sellers are like the drop of water in the ocean due to large
market size. As per the changing technology and advancement in the company's product
impacting the behaviour of the buyer so organisations also emphasis on offering unique
product so that they can get their loyal customers.
 Free Entry and Exit of firms: In the market, there is huge competition due to large
number of seller and no restrictions on the entry and the exit of firms(Martinho, 2019).
New start-ups can easily start their new venture as there is no such barrier and when the
firm is not seeking to profits or owner wants to invest in other business due to looses in
the current business so they can easily exist form the existing market. This helps the
young generation to start their new venture so that they can sustain in the competitive
market.
 Perfect Knowledge of market: Seller is the one who understand the market demand any
analyse the change tends in the market and the needs and wants of their potential buyer so
that they can effectively meet the higher profitability. Hence, seller is having the
complete knowledge of the market. On other hand, Now a days, buyer is also having full
interest in the product and the upcoming launch of new product as there are fully awarded
about the product and services in the target market by which they can take the full
consideration while making the best choice out of available options.
 Perfect mobility of the factors of production and goods: It is the factors which defines
the elasticity of the factor if product which are labour, machine, raw material, land and
capital. There is no barrier for the employees that they can change any of the organisation
as per their interest and their accessibility so that they can enhance their career.
Organisation can also higher the high working individual by paying them more so that
they can retain in the business for long period of time(Teece, 2019). These factors can
move to any firms as per the reachability and the accessibility or the individual interest.
 Independent relationship between buyers and sellers:As these are the market, buyers
are having integrated needs and wants and they are not bound to buy the particular
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product or services as they re free baked with their purchasing power so that they can
effectively make the better choice between the products. On other hand, In context to
seller, seller are free what they want to sell according to their capital and the technology
used so that they can effectively sustain in the market for long period of time. They also
helps in meeting the huge competition in the target market.
Suggestions for the company operate in a different market structure and the government
interventions.
It is cleared from the base discussion that company is operating their business in
monopolistic market in which they are large number of buyer and seller with no restrictions in
entry and exits of the firms. They are offering differentiated product by which buyer can make
the better choice out of many options available in the market. Burger King is already inventing
huge capital and funds so if they wants to enter in the monopoly market then they have to offer
the type of product which is not existing in the current market so that they can be the market
leader. This require more funds and investment so they can not enter in the monopoly market. On
other hand if they want to enter in the perfect competition market so this also required unique
product and effective customer bas but company already having good brand image and
recognition globally so they do not need to enter or choose new market structure.
It is suggested to the burger King not to switch their market structure by analysing the
current market scenarios for the brand as they re getting higher profits,good brand image and
customer base which make the market leader in the world.
Government intervention is defined as the rules or laws which is being imposed by the
government of UK for the organisations so that they can run their business in lawful manner. The
main consideration of the government is to eliminate the inequalities from the market and every
firm must pay fair taxations. They also set the rules for eliminating the discrimination from the
market so that single firm can not take over the whole market. All these aspect must be in favour
of the society as government have to focuses on changing limited tax so that companies do not
changes huge tax form the general public. This could to maintain their balance in the individual
budget and they will not face difficulty in fixing monthly budget.
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CONCLUSION
It is concluded from the above report that change in the market scenario is the main
factors which is impacting the overall functionality of the business and their profitability. There
are various types of market structure which is being adopted by the company i.e. perfect
competition, monopoly, monopolistic and oligopoly ans the company is operating their business
in monopolistic as there are many seller which is offering same product but they differentiated
from other. The main consideration of choosing specific market structure is hat they ensure the
long term sustainability in the target market. In Initial time, they were operating their business
their business in perfect competition but with the use of innovative and advance technology, they
have established good brand image and now they are operating their business in monopolistic
market. Lastly It is suggested to the company to stay in the same market structure due to their
brand recognition and there must be less interventions of the governments that companies do not
charge huge taxes on their products and services.
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REFERENCES
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Online
Types of Market Structures (2021). [Online] Available through:
<https://www.toppr.com/guides/business-economics/meaning-and-types-of-markets/types-of-
market-structures/>
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