Factors Influencing Demand and Price Elasticity of Demand for MacDonald's

This report discusses the factors influencing the demand and price elasticity of demand for MacDonald's, the largest fast-food chain in the world. It provides an overview of MacDonald's, factors influencing demand, and factors influencing price elasticity of demand. The report also highlights the market equilibrium and the competition faced by MacDonald's.

Management Economic

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Overview of the MacDonald’s.....................................................................................................3
Factors influencing the demand...................................................................................................4
Factors influencing the price elasticity of demand......................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................8

INTRODUCTION
Market equilibrium is the having the clear assumption based on subject of economics where the
supply and demand curve have the clear intersections is termed as economic or market
equilibrium. This defines their interdependence relationship between the supply and demand to
have the identification of the price and quantity of he given products in the service markets place
(Andari, Subali and Trisnawati, 2018). The fast food industry is quite completive industry as
some of the firm have the clear enjoying their monopoly of some of their products in which
MacDonald have been chasing there first position.
As per the recent analysis it can be stated as the consumer have the major preference of the
McDonald over burger king. In this report , there will be clear discussion on the demand, market
equilibrium, factors influencing demand and price elasticity for the product and services for
the MacDonald company.
TASK
Overview of the MacDonald’s
McDonald’s, in full McDonald’s Corporation, American fast-food chain being the largest
in the world famous for there it wonderful hamburgers headquarters in the Oak Brook, Illinois.
On the recent data the firm have there more than 36000 restaurants in over 100 countries under
employees along 2 million of people worldwide which have the inclusion of the employees at
company owned stores and corporate office employees. According to Euromonitor International
data, the company have their 7.1 % revenue of the share in the year 2017.
The firm have the offering of the inform menu which have the inclusion of the fries, the Big mac,
chicken sandwiches, chicken nuggets, hamburgers, wrap and shakes in order to ensure the
greater connectivity’s with the international markets along with offering the locally relevant food
menus as well (Chia and et.al., 2020). The company have the global adaptability as the serving
the gazpacho in Spain, Black white burger in china and veggie pizza McPuff in India so that’s
the company can have better level of competition at local operations to adopt the different food
local choices.
The firm have it major level of competitors YUM brand and burger kings which have
their usage of the franchise model as well as the company operated models in the restaurants
industries. He firm have the revenues in the company operate store and the franchised store
which helps the form to generate rate 44% of the revenue in year 2019 for the company
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operated restaurant plus there remaining revenues form franchises. This have been growing
significantly in last six years.
The firm have the beginning the value of delivering the great level of restaurant
experiences very times with all its owners’ operators, suppliers and the employee to work
together to meet the customer needs in there way the firm have decided (Coleman, 2018). The
firm in the year 2017 have their developed the growth strategy by introducing the velocity’s
growth plans.
In order to maintaining the demand of the company in the markets, the firm have the developed
the delicious and sustainable food for the customers, producers and the environments which have
the turned-out MacDonald as the leading restaurant trends to make its vison a part of reality.
Factors influencing the demand
As per the economic term, demand have been stated as the economic principles which is
referring the costumer desire to have the purchasing of goods and services with the willingness
to pay the certain prices for the specific good on the pertains time.
Demand
Demand for the specific items have the dependence of the functions of the item perceives, pies,
prescribe level of quality, conscience of times visible materials, purchases and taste. This is been
identified as the underlying forces which derives the economic growth and expansions as without
no business would have the bother of producing the different product and generate the significant
reference in perfect manner.
Market equilibrium
Market equilibrium is the having the clear assumption based on subject of economics where the
supply and demand curve have the clear intersections is termed as economic or market
equilibrium. This defines their interdependence relationship between the supply and demand to
have the identification of the price and quantity of he given products in the service markets
place. Macdonald have been the once which is among the talents hamburgers in Americas which
is increasing casual as restaurants (Hamilton, and Réquillart, 2017). The firm have their
abounded level of core brand being there fasts and cheap attempted to make the copy paste
upscales hamburgers palaces to have woo backswing the consumer in perfect manner. There firm
have been focusing in improving the quality of the core products which should have the addition
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in more locally sources ingredients, organic food and high standard utility which is first things
consumer wants form the MacDonald.
The company have the allowing there fast and precising ordering, secure payments options and
the free up workers to make the improvement in the customer services do not necessary have the
need to make the human and human interactions.
The demand has the goods have the inclusion of several factors which have factors which are
affecting the demand of the products of the MacDonald’s in the markets which are such as
Income of the consumers- as the increase in their disposable income of the consumer
will be enabling to afford the more goods as the higher incomes will have, he occurring there be
varsity of reasons such as the higher wages and Lowe taxes. The better in companies of the
customer will increase urge purchasing power as the MacDonald have been falling in the
category of there luxury produce’s
Credits facilities – This have turned to be make the easier purchases and cheaper to
borrow as this will have the encouraging the consumers to make the buying of experience items.
Quality- The increase in their quality of goods which make the proper identification of the
demand graphs of the customer following the recent trends of the social’s groups will surely
have the increase in demand of the MacDonald’s product in perfect manner (Ilomäki, Laurila and
McAleer, 2018). This have the authentic brands in that’s respect in perfect manner. the firm have
tried to compliment the countering the reputations by removing the fatty, unnatural junk such a
the chicken nuggets and launches the campaign the to allow the consumers regarding the
delivering company food.
Advertising have the help in the increasing the brand loyalty of the customer towards
the brand as to goods have the increase the brand loyalty and increase in the demand of
consumer in effect manner. There firm have the efficient level of development of the SIPOC
that’s is (supplier-Input-Process-Outputs-customer) model integrating the suppliers, customer
preferences and better improving the service quality levels in order to gains the strategic
advantages over the other food chains.
Substitute goods
The increase in the substitute goods from the create the negative impact of the product of
the MacDonald as this ill have lowering form the USP of the MacDonald as the hamburger’s the
company have the proper identification of the value of the hamburger which is nobody more
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taster will be prepared by the locals restaurant. This is sometimes consumer of the better
alternatives such as moving to the KFC and burger king as they are offering the better combo
during lunch time (Lynch, 2018). Thus, when the price of product increases, the quantity
demanded will be decreases while the demand of substitute products will be increases.
Complement goods- the fall in the price of the complement goods will increase the
positive impact on the development of the goods of the complementary goods.
Expectation of the future of the price increases
The firm have the pride itself as the consistent level of product values as the strength of the
company. The company have the well understanding of customers regarding the expectation.
The firm have the introduction of the consistent customer preference without compromising the
quality and tase at worldwide level. There is less level of risk in the company have the inclusion
of best supply chains and highest respite from the vendors .
Consumer taste and preferences
The strong brand has been the biggest victims of the shift in the consumer taste and preferences
towards the health and wellness. This have been extended form the food and services as the
beverages and other fast food. This have the healthiest quick serve bring naturals a fresh
ingredient to their consumers (McMurtrey and Rowley, 2016). This have the addition to bring
the interesting and favourable meals to their customer. The minor level of change incoterm
preferences will subset in the change inequality demanded as change in the diet plans to
consumer the healthier food or turning out to become more health conscious will be steep
downfall in demand of the products.
Factors influencing the price elasticity of demand
The price elasticity of the demand there unit free measures of the responsiveness of the quantity
demanded as the good to have the range in the prices when all have the influencing in the buying
pas have the remaining the same aspect of busines. There are the few factor which ae the clear
differentiation for their factor which is determining the price elasticity as the type of goods,
advisability of the subsite goods in level of incomes, time period of the products (Raduzzi and
Massey, 2019)
The luxuries have the goods which are elastics while the necessities goods are inelastic.
Luxuries good are mostly to be considered as the elastic as it have the certain degree of
limitations whereas the necessities have no level of limitation.
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Substitution effects
Substitute goods are the products which have the buying of the consumers more when
there another good becoming to the out of range or less affordable. The more the sustainable
goods have the more elasticity of demands as MacDonald have the many stuffer goods such as
the burger king have the offering their better level of combinations. The firm have offered the se
of lunches and dinner as the lowest prices along with durable timings as that is during lunch
hour 1pm to 3pm and at night 6pm to 9pm. On the other hand, there burger king have their
offered the competitive strategy s along with few choice of burger at the anytime of days.
Burger king have the offering of their promotions with the few choice of burgers on anytime of
the days. In the burger kings have the choosing there few levels of choices of burger lights of the
promotions analysing in term of lower price. Hence their consumer have the mostly like to be the
part of burger kings as it is considered to be cheaper as comparative to the MacDonald’s and
more choices to make the respective decision. Hence their demand is more elastics where the
consumer has the taking the long time to make the respective designs. As the passing price of the
customer provide the respective level of satisfactions (Schramade ., 2019). There has the need to
make the proper comparison to product to different competitors. Macdonald have been
considered as the luxuries goods as it is more level of experiences as the compare to necessities
goods. There for it is considered to be more elastic. Beside that’s their necessities goods are
cheaper as comparative to MacDonald’s. In the time period, the demand is considered be more
elastic as the consumer have the taking the long times to have the thinking where the consumer
has the taking the longer time period regarding the repurchasing of the good.
In the context of MacDonald, the process of the company product increase, the consumer
have the need to take better timings to have the thinking whether the price is watches competitors
like KFC. This have the impact that’s their customer might have the change the mind regarding
the purchase as the KFC have their lower prices that’s the MacDonald. but some will have rather
choose the firm only du to brand loyalty.
Income effects
For there price of the goods, there MacDonald have the increase the prices of products.
This will be resulting in decreases the customer have the looking the cheaper alternatives to
make the replacement. In the situation have the decreases in the prices, the demand of the
MacDonald will be considered to be definitely higher.
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In the term of the income levels, the demand of the product is higher which are inelastic
in natures when the income of the consumer will increase. This is because the ability of
consumers to have the purchasing of product remains the same or even increases in term of
income. On the other hand, the income has decrease, the demand of the product tuned out to be
elastics. The MacDonald’s brand loyalty consumer have the might the changing there cheaper
alternatives such is the burger kings as ger they have Benn loosen the buying power as the
MacDonald when the fall in income have ben observed.
Hence the MacDonald should have the combining the business strategy with utilizing the
better level of combinations of the cost leadership and internationals market expansion strategy.
The firm should have the developing of the franchising and licensing forms with the different
form of entering the mart to get developer to gaining the comparative strategy to the greater
extends in better manner.
Macdonald have been considered as the luxuries goods as it is more level of experiences as the
compare to necessities goods (Singh and et.al., 2016). The company should have the more level
of product developments and service tenderization which have the lies in the corner stones of
identical business strategies. The firm is trying to have the compensate the battles which is the in
increasing the commodity cost with the implication of the menu items. The firm should have
development of strategy regarding the four major pillars as the retain, regains and converts which
are intended to have the driving the growth inverting the firm is pursuing in perfect manner. The
minor level of change incoterm preferences will subset in the change inequality demanded as
change in the diet plans to consumer the healthier food or turning out to become more health
conscious will be steep downfall in demand of the products. Hence their consumer have the
mostly like to be the part of burger kings as it is considered to be cheaper as comparative to the
MacDonald’s and more choices to make the respective decision.
CONCLUSION
From the above file, it can be stated as Market equilibrium defines their interdependence
relationship between the supply and demand to have the identification of the price and quantity
of he given products in the service markets place. The global adaptability as the serving the
gazpacho in Spain, Black white burger in china and veggie pizza McPuff in India so that’s the
company can have better level of competition at local operations to adopt the different food local
choices. Macdonald have been the once which is among the talents hamburgers in Americas
8

which is increasing casual as restaurants. This is sometimes consumer of the better alternatives
such as moving to the KFC and burger king as they are offering the better combo during lunch
time. Consumer have the mostly like to be the part of burger kings as it is considered to be
cheaper as comparative to the MacDonald’s and more choices to make the respective decision
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REFERENCES
Books and Journals
Online
Andari, A.P., Subali, S.B.W. and Trisnawati, J.D., 2018. The analysis of logistics at McDonald's
Restaurant Denpasar Bali.
Chia, X.R and et.al., 2020. Contributing Factors to Organizational Success: A Case Study of
McDonald’s. International journal of Tourism and hospitality in Asia Pasific, 3(2). pp.38-47.
Coleman, A., 2018. United States: McDonald's workers launch unprecedented# MeToo strike.
Green Left Weekly, (1198), p.12.
Hamilton, S.F. and Réquillart, V., 2017. Market competition and the health composition of
manufactured food. Health economics, 26(12). pp.1637-1643.
Ilomäki, J., Laurila, H. and McAleer, M., 2018. Market timing with moving averages.
Sustainability, 10(7). p.2125.
Lynch, C., 2018. Love, leadership and McDonald's. Journal of the European Pentecostal
Theological Association, 38(2). pp.113-125.
McMurtrey, M.E. and Rowley, B., 2016. McDonald’s and the Triple Bottom Line: A Case Study
of Corporate Sustainability. Journal of Strategic Innovation and Sustainability, 11(1).
Raduzzi, A. and Massey, J.E., 2019. Customers satisfaction and brand loyalty at McDonalds
Maroc. African Journal of Marketing Management, 11(3). pp.21-34.
Schramade, W., 2019. McDonald's: a sustainable finance case study. Erasmus Platform for
Sustainable Value Creation.
Singh, N and et.al., 2016. Supply chain demand forecasting and planning. U.S. Patent 7,080,026.
Yu, H., 2019. Long-run cointegration and market equilibrium in large cap stocks. Journal of
Finance and Investment Analysis, 8(1). pp.13-32.
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