Management Economics Assessment 1 - Economics Assignment

Economics Assignment

Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 1.................................................................................................................................................3
Task 2....................................................................................................................................................3
Demand and market equilibrium.....................................................................................................3
Factors affecting the demand of McDonald products......................................................................4
TASK 3.................................................................................................................................................6
CONCLUSION ...................................................................................................................................7
REFERENCES.....................................................................................................................................9

INTRODUCTION
This report will analyse the business model of the quick service restaurant- McDonald's. The
report will start by describing what is the main operation of the business. And how do they position
its products in the market as compared to its competitors. The analysis then goes on to state why
this business was chosen, and establish the relevant factors that will be considered in this report.
The economic analysis begins by establishing what is meant by the concept of demand and market
equilibrium. It further proceeds to describe how the factors such as, prices of substitutes and
complements, consumer's tastes and preferences, and the demographic affect the demand of a
product., and go on to link this to McDonald's business (Agrawal and Vora, 2020). The analysis
further deepens when the concept of price elasticity of demand is introduced in it. The concept is
briefly explained before explaining factors affecting price elasticity, and how it affects McDonald's
directly. Finally, the report provides a recommendation regarding how the top management of
McDonald's should price its products and if the company should continue to employ this pricing
strategy.
TASK 1
McDonald's is the world's leading chain of hamburger fast food restaurants and one of the
world's leading food-service retailers. The US-based company was established in 1954 by
businessman Ray Kroc. McDonald's serves more than 65 million customers every day at his over
35,000 local restaurants in 119 countries (Mcdonalds, 2017). The company employs over 2 million
people internationally. Plus McDonald's restaurants are operated by subsidiaries, franchises or the
company itself.
McDonald's relies on working procedures that enable restricted menus, division of labour,
homogeneous products, assembly line strategies and specialized skills, all of which are applied to
customer-protection, safety and product. Product quality and customer satisfaction are the
foundations that enable McDonald's to create superior fast food service.
McDonald offer a wide variety of product which serves the world. They have a product line
of 145 items in their menu from all over the world. Some of its popular product are the Big Mac,
Big n' Tasty, Quarter Pounder with Cheese, Cheeseburger, French Fries, Egg McMuffin, Apple Pie
and Sundae. This is why they are lending hamburger fast food chain in global and local market.
McDonald's products are better investment than any other burger rivals. McDonald emphasised on
fresher ingredients and healthier once, in addition to this they also gives customer honest,tasty good
and a reasonable price. Reasons why McDonald's company and product are best:
 24/7 Restaurant and Delivery Service- In 2005, McDonald's introduced the industry's first
24-hour restaurant and all-day McDonald's service at restaurants. Customers can dial 86-2-
36 at any time or log on to mcdelivery.com.ph to receive their McDonald's Favourites and
tasty food. In 2014, McDonald's extended his McDelivery service to his mobile devices via
the McDonald phone app, which is free to download from the App Store and Google Play
Store.
 Quality Service and Cleanliness- McDonald's have world class standards in quality,
cleanliness and services. They ensure in maintaining cleanliness within their restaurants as
part of their daily operations. They have proper and fresh sourcing of ingredients for their
products.
Task 2
Demand and market equilibrium
Demand is an economic principle that refers to the desire of consumers to purchase products and