Case Study in Economics I

Demand for the Big Mac on the Rise (NYSE:MCD)

Submitted by:
Daniel B. Pancho BSBA II-B
Mark Salvila BSBA II-B

Submitted to:
Prof. Joena Balladares
Economics I Instructor

October 4, 2018
 CASE STUDY ON DEMAND FOR THE BIG MAC ON THE RISE (NYSE:MCD)

I. Statement of the problem

McDonald’s has to respond to a changing business environment, with

customers changing preferences and the growing number of competitors.

II. Areas of Consideration

a.) Strength (Internal) b.) Weaknesses (Internal)

- Strong brand name, image &
reputation
- Large market share
- Introduction of new
production
- Technology innovation
- Broad geographical locations
- Has been around for long time
therefore important to keep
innovating
- Unhealthy fast food
- Negative publicity
- Customer loses due to fierce
competition

c.) Opportunities (External) d.) Threats (External)

- Growth of the fast food - New competitors
industry - Changing customer lifestyles
- Globalization, expansion in - Economic recession
other countries - Serious environmental issue
- Low cost menu is preferred by - Currency fluctuations
large number of customers
- Appearance of freebies &
discounts
- Diverse tastes & needs of
customers
- Home meal delivery

III. Alternative Course of Action/Recommendation

1. Do not change anything with the current operation standards of McDonald’s

since, it has proven to be effective through the years.
 Advantages
- McDonald’s has no risk of
failing and losing market
leadership
- Having the right price and
loyalty of consumers will
retain
- No need to decrease the
prices of products
Disadvantages
- McDonald’s opportunity for
growth is bounded by its
current standards.
- With the fast paced
advancement in technology,
current technologies used by
McDonald’s will be outdated
soon. This may result in an
outdated McDonald’s
- Losing some of the
consumers.

2. Have some loyalty cards or rewards for the consumer to earn some points,
freebies.
3. Discount coupon can apply if the other competitor is much more visited than
Mcdo.

PROGRAMS ACTIVITIES TIME FRAME

Survey Have an survey to the product 1 week
for them to be focused on
which is the fast moving
products and slow moving,
and have an adjustment on it.

Advertising Trendsetter Use some unique, catchy and 3-4 months

cool advertising techniques
that will caught the attention
of consumers.
Promotion Promote the products on 2-3 months
some areas or places that has
a low sales compare to the
other competitors.
ANSWERS TO QUESTIONS: CASE STUDY ON DEMAND FOR THE BIG MAC ON THE RISE
(NYSE:MCD)

1. Illustrate and explain the changing demand for Big Mac using indifference curve and
budget line.

The scenario is that, there is an offsetting on the income of the stores that
has higher demand from it and income of the stores that have lesser demand. In the
US, there were higher demand but in Eastern Europe countries, they are struggling
on the demand of the Big Mac Product as its competitors are on its track to
compromise their income. It is another consideration that an additional day (in a
leap year) contributed to the increase of their income.

Hence, the increasing demand on the competitors’ products and stocks in

NYSE is still manageable on the part of Big Mac since they have still advantages and
their products on some part of the worlds are in demand.

2. In case study, what do you think are the factors affecting the increased demand for
Big Mac? What about the competitor food chains? How do you think they are
affected by this increase sales of McDonalds?

The factors that contributed to the increase of the demand for Big Mac
Products as compared to its Competitor are the following:
a. The Price – Big Mac Products offer lesser price than that of the
competitors but did not compromising its quality.
b. The Promotion – Big Mac offers expanded value menu to attract more
customers. This is also a way to give the customers options on the
products.
c. They offer healthier menu options than that of its competitor.

Surely, they are affected because of the increase sales of McDonalds but not
all the time consumer wants cheap dining experience, some of them want some
expensive or more highly priced menus and that’s where the other competitors
chance to have a sales. Some customers have also tradition of choosing the
expensive one for they believe that it can give them more satisfaction than that of
the cheaper one.

3. Do you consider the demand for Big Mac elastic or inelastic? Explain.

I consider the demand for Big Mac is elastic because as you can see the
demand for Big Mac is on trend or on high basis and it means that consumer and the
company itself has the satisfaction about the product and the price even if they
increase the price of the product.