Essay: McDonald’s Corporation
McDonald’s corporation is one of the world’s largest hamburger chain restaurants selling its products to almost 47 million people everyday. There was a time in which it was the world’s largest restaurant chain but this was outdone by other corporations which are multi-brands. Apart from selling its main products, it also sells salads, fruits and wraps to fit in today’s world where health has to be put into consideration.
The market structure at McDonald’s corporation is an oligopoly in that only three large sellers saturate the market. Apart from McDonalds, which used to be the leading restaurant chain in the world, it is now competing with KFC and Kings Burger (bized.co.uk, 1996). It is not easy for new firms to enter this market because the three already existing firms have already established theirselves and captured almost all the market share. For instance, it will be very difficult for a firm to succeed when competing with McDonalds, which serves close to 47 million customers.
A new firm will have to spend so much to win any customers and take so much time, which makes it close before achieving any of its aims. The three firms have branches almost everywhere in the world and this makes them win customers all over the world. This implies that the firms are widely spread and thus their distribution channels are extensive. By establishing a firm with only a single branch and competing with others, which are widely, spread is a very difficult task. The firms have already established some loyal customers who are not willing to leave their products to taste others and this makes it hard for a firm to enter the industry.
Pricing at McDonalds Corporation is different depending on the main goal of the pricing. There is product line pricing strategy in which products are priced according to the product lines in which they come from. Promotional pricing is used as a means of advertising in which different products are on promotion at different times. Whenever they are penetrating a new market, McDonalds uses penetration pricing so that they are able to win customers. They also use value pricing to retain sales whenever they anticipate increased competition or recession periods (Pappalardo, 2008).