Monday, October 24, 2011

McDonald's Weathering the Storm

The economy has been tough over the last couple of years on everyone, but the fast-food chain McDonald’s has found a way not to just weather the storm but also make a profit and expand. McDonald’s has taken into account all of their costs and adjusted the price of their items appropriately creating an equilibrium for their market. This year they have had to make certain increases in price because their variables costs have gone up. Their products including beef and buns have gone up and the labor cost has gone up as well. McDonald’s has done a great job balancing the extra costs and adjusting the price accordingly trying to make sure not to overprice their products causing excess supply and also not making the price to low resulting in excess demand. What has also made this company so successful is changing with the times. They have updated their look with their buildings, ad campaigns, and the overall feel of the restaurant chain. They have also updated their menu to include more health conscious options and opened more 24-hour locations. Overall, McDonald’s main goal was to adapt to the peoples’ tastes and preferences. If you don’t change to appease tastes and preferences, then your company will go in a downward spiral. McDonald’s has been very smart in most of their decisions to try to stay at the top of the fast-food business. They are expanding even more, trying to reach all the markets they can since Europe is their biggest market now not the United States. All the projections for stock worth and corporate revenue that were made for McDonald’s have been surpassed. In this economy surpassing projections is quite an accomplishment. How they did it was to find their products equilibrium, and in return it has made this a great financial year so far for McDonald’s.

Blair S.


Paxton S said...

This post was very informative. McDonalds' expansion during current economic conditions is a testament to their inginuity when it comes to entrepreneurship. However, I believe there is one missing reason for their success. McDonalds' food, many would say, is an inferior good. The burgers are commonly criticized for being cheap and extremely unhealthy. As peoples' incomes lower due to the recession, the demand for inferior goods rises. This is not to say that McDonalds' lowered prices or sleek new ad campagains don't affect their success because they most certainly do. However, inferior goods may be one of the few products that have "weathered the Storm" during these harsh economic times.

WendyS said...

When i have to go to class on Saturday mornings, i always get McDonald's for breakfast. I always see those grandpas and grandmas drinking coffee there, because at McDonald's senior citizens only need to pay 1$, and they get free refills. This is one way to keep consumers. McDonald's always have kids too, because of the play place McDonald's have. That's another reason how McDonald's get success even when the economy is tough. Everyone knows some of the food at McDonald'd isn't healthy, but when people are in really bad situations, people have to get some cheap and maybe unhealthy food.
McDonald's is a really big business, even in Asia, but they changed the food to more asian, so Asians go eat at McDonald's too.