McDonald's An Oligopoly
An Oligopoly is a type of firm that can be classified by a few characteristics. The technical definition of an Oligopoly is that in which a situation is consists of a small number of interdependent sellers. Each firm in the industry knows that other firms will react to its changes in prices, quantities, and qualities.
Firstly, an oligopoly can only exist when a few firms are dominating the industry and have the ability to set prices. McDonald's can't be considered a Monopoly firm as it is not a single seller of a good nor has a particular good that is unique. McDonald's however, is clearly one of the leading companies in the fast food industry in the United States as well as internationally in countries such as the Philippines, Canada, and Japan. In the United States, McDonald's in one of the leading companies in the selling of hamburgers along side Burger King, KFC and others. (never use short-form. Change to “and others”, “to name a few” or any such words.)
McDonald’s use a key component known as interdependence to rely on the actions of other businesses.Strategic dependence occurs in the fast food industry. McDonald's has to be able to predict the nature of other businesses in order to become a successful (Danielybarra, 2013). McDonald's is always predicting the reactions of other firms which ensures them to be always strategize.( The restaurant industry is known for yielding low margins that can make it difficult to compete with a cost leadership marketing strategy.McDonald’s has been extremely successful with this strategy by offering basic fast-food meals at low price.McDonald’s usually sets prices which other companies then base their own pricing on.McDonald’s started a price war with Starbucks as Starbucks has expanded as a growing chain.In 2008,McDonald’s lowered coffee prices even more to compete with Starbucks.Using 100 million dollars McDonald’s has improved the quality of the coffee yet uses automated machinery to...