2.0 Market Structure of the industry
The fast food industry for example, McDonald, Domino Pizza, Dunkin, Starbuck, Wendy's, Papa John, Burger King, YUM and so on. All of this company is a monopolistic market. This is because these fast food companies fulfill the characteristic of monopolistic. The number of firms in monopolistic is less than perfect competitive market, but larges than the oligopoly market. The fast food industry is the franchiser, no all people able to open this franchise company in the market because need a larger money to buy the product brand name. For example the costs of starting an entirely new McDonald's restaurant can be anything between RM2.0 million to RM4.5 million. The costs also depend on the restaurant size and type, its location, style of decoration and landscaping. (Appendix 6.1)
At the monopolistic competitive market, the producers sell a product that different from each other, but there are no perfect substitutes for their products in term of quality, brand name and location. There are many aspects of product differentiation such as by advertising, packaging, design and services. The fast food of McDonald, Burger King, Wendy's, Papa John, Dunkin were very different with each other. Base on their brand name, advertising and design we can differentiate which product is produced by the different firm. (Appendix6.2) Besides that, from the services such as delivery services, some fast food company may not provide delivery service for example Starbuck.
The monopolistic has a barrier to entry in the market, for example copyright, technology, capital and economies of scale. McDonalds is the biggest chain food store in the world and they provide franchising, then need to prevent others firm entered ...
... middle of paper ...
...In the third is Starbuck, the revenue was increased every except in year 2009. In year 2009 it was drop 6.75% compare with last year. Furthermore, the Burger King in 2008 is third higher revenue but in the following year Wendy's are higher than Burger King. Burger King revenue is increase in 2009 but was a start decline in 2009 until 2012 to 22.51% or $571.1 million. Conversely, Wendy's revenue was increased from 2008 to 2009 that is increase 1758.035million or 96.45% after that revenue was dropping in year 2009 until 2011 which is 32.1% or 1149.48million after that it increase again in the year 2012 which is 2505.242million. The company who gain lower revenue is Domino Pizza, it revenue was drop from year 2008 until 2010. We can conclude that McDonald is a top one in the fast food industry because they total revenue is more that 50% compare with other companies.
This company is known to be a monopolistically competitive, because there are still many firms and consumers, just as in perfect competition, but they still have control over what price they charge in their company, because Ben and Jerry's ice cream is differentiated from the other ice cream companies and they provide a lot of non price competition which will be mentioned later in the paper.
Food industry can be chartered by low margin industry, while along with the shift of power from the manufacturer to the purchaser, the price and demand became flexible, and the product variety increased.
Wendy’s is one of the world’s third largest hamburger companies that is quick service. There are over 6,500 company and franchise restaurants worldwide. Wendy’s mission is to stand for honest food, higher quality, fresh wholesome food, prepared when you order it, prepared by Wendy’s kind of people, do it Dave’s Way, we don’t cut corners. This company believes in fresh and non-frozen products so the customers are satisfied and now they bought from an honest restaurant. The foundation believes in long term success that include there core values in every production. The core values are “Quality is our Recipe” “Do the Right Thing” and “Give Back”. Wendy’s focuses on the responsibility that the stakeholders are also the key to success.
Internal resource is the first consideration that can lead to sustainable competitive advantage and Resource –Based View (RBV) is a theory that usefully helps a firm focus on internal resources (Kraaijenbrink, Spender & Aard, 2010). According to RBV (Valuable, Rare, hard to imitate and non-substitutable), companies have different tangible and intangible resources, these resources can be transformed into unique ability, this special ability cannot flow between firms and rival firms and difficult to reproduce. These unique resources and abilities are the source of enterprise sustainable competitive advantage. In this part, Starbucks and Apple are worth to be analyzed by RBV.
The fast food industry was introduced to America in 1921, when White Castle was founded. They reinvented the burger, and made cheap, convenient food, which caught the attention of Americans. Thirty years later, McDonald’s was introduced and many more fast food chains followed. The industry has been booming ever since. There are over 200,000 fast food restaurant locations in the United States. “According to the National Restaurant Association, American sales of fast food totaled $163.5 billion in 2005” (Wilson). The fast food industry’s total earnings are moving at a fast rate. Statistics show that the earnings are drastically increasing each year. According to Statista.com, “By 2018, this figure [industry earnings] was forecasted to exceed 210 billion” ("Topic: Fast Food Industry").
Monopolies are when there is only one provider of a specific good, which has no alternatives. Monopolies can be either natural or artificial. Some of the natural monopolies a town will see are business such as utilities or for cities like Clarksville with only one, hospitals. With only one hospital and there not being another one for a two hour drive, Clarksville’s hospital has a monopoly on emergency care, because there is not another option for this type of service in the area. Artificial monopolies are created using a variety of means from allowing others to enter the market. Artificial monopolies are generally rare or absent because of anti-trust laws that were designed to prevent this in legitimate businesses. However, while these two are the ends of the spectrum, the majority of businesses wil...
Customers buy when they feel it is necessary giving them the upper hand on the industry. Bargaining power of suppliers: In the quick- service restaurant, the suppliers vary. They really do not rely distributors as large restaurants do. Threat of new substitutes: The restaurant industry is segmented into many parts: full service restaurants ($120 billion); quick- service restaurants ($110 billion); away-from-home managed institutions, examples: food services for schools and hospitals ($21 billion); and other food industries ($106 billion). (Marshall Jones, 1999). Rivalry among competi...
Fast food outlets actually have been existed from millennia in China, India and ancient Europe. In the past, many people cannot afford to have a kitchen and this becomes the main reason they buy their food in fast food outlets (Reverse Your Age, 2013). The perception of fast food started to change in twentieth century. The first company that change the culture and perception of fast food was McDonald’s, followed by their future competitors such as KFC, Burger King, Wendy’s, Taco Bell, Pizza Hut and Subway. As they get a good appreciation from the customers followed by the impact of the globalisation, almost all of the fast food companies have been expanded their restaurant chain in many nations (Wojtek, 2013). Nowadays, with our busy life schedule and the increasing trend where women entering workforce promote an opportunity for the fast food industry to grow bigger. We can see the significant growth from the fast food industry as the industry itself has been generated over $160 billion in 2012 compared to their revenue in 1970 which only around $6 billion (Franchise Help, n.d.). With this significant growth, it does not mean that every company in this industry are successful. Some company has to closed some of their stores due to the lack of environmental research and preparation in entering a new country which commonly lead to the poor selling rate. The deeper explanation and points that is mention below will be also represent as the industry current state.
Fast food restaurants are popular among the consumers nowadays. Many fast food restaurants are trying to serve the needs in the market as people seek for quick and convenient place to eat. Due to the fact that there are a huge amount of fast food chains available in the global market, fast food companies have to strive for success. Just by providing quick and convenient style of eating for the customers is not sufficient to stay competitive. This is why it is interesting to study and learn about a fast food company that stands out in such a competitive environment. What has KFC China been doing to become successful? What marketing strategies did they use to dominate the market? We shall find out in the following sections.
A Monopoly is a market structure characterised by one firm and many buyers, a lack of substitute products and barriers to entry (Pass et al. 2000). An oligopoly is a market structure characterised by few firms and many buyers, homogenous or differentiated products and also difficult market entry (Pass et al. 2000) an example of an oligopoly would be the fast food industry where there is a few firms such as McDonalds, Burger King and KFC that all compete for a greater market share.
Hospitality is about serving the guests to provide them with "feel-good-effect". "Athithi devo bhavha" (Guest is God) has been one of central tenets of Indian culture since times immemorial. In India, the guest is treated with utmost warmth and respect and is provided the best services.
A monopoly is “a single firm in control of both industry output and price” (Review of Market Structure, n.d.). It has a high entry and exit barrier and a perceived heterogeneous product. The firm is the sole provider of the product, substitutes for the product are limited, and high barriers are used to dissuade competitors and leads to a single firm being able to ...
CHANGING PREFRECE depended vastly on the fast food manus. For example we can mention about SALAD. Now salad was never considered as a part of fast food menu. But with the change of taste and preference, fast food chains like Windy, Taco Bell, and McDonald have introduced SALAD into their menus. This preference is not stopping only with salads. In 2002, McDonald’s introduced great tasting new products including premium salads, n salads plus menu; Chicken McNuggets made with white meat; Fish McDippers; Chicken Selects; and new breakfast offerings like the McGriddle sandwiches. Here as a fast food chain, McDonald did not have to introduce new dishes in their menus but with the impression and image in the market analysis, of increasing demand and chan...
The second market structure is a monopolistic competition. The conditions of this market are similar as for perfect competition except the product is not homogenous it is differentiated; thus having control over its price. (Nellis and Parker, 1997). There are many firms and freedom of entry into the industry, firms are price makers and are faced with a downward sloping demand curve as well as profit maximizers. Examples include; restaurant businesses, hotels and pubs, specialist retailing (builders) and consumer services (Sloman, 2013).
Fierce and growing competition – big fast food companies like Burger King and Kentucky Fried Chicken are constantly competing with McDonalds for customers and trying to take the spot as the top fast food chain.