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Submitted by srich105 on May 24, 2006
Category: Miscellaneous
Words: 2114 | Pages: 9
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Executive Summary
Wendy’s offers a variety of fast food. The food selection ranges from hamburgers, French fries, salads, chicken, potatoes, and chili. Wendy’s income is based on the sale of fast food. The demand of Wendy’s service is highly elastic. A change in price will affect demand for products. Wendy’s market structure is an oligopoly and has two main competitors; McDonalds and Burger King. In an oligopoly, the market is dominated by a few large producers of a homogeneous or differentiated product. Because of their “fewness,” oligopolies have considerable control over their prices, but each must consider the possible reaction of rivals to its own pricing, output, and advertising decisions (McConnell & Brue, 2005). Since there are many substitutes, Wendy’s has to be willing to keep their prices and quality of food relative to competitors.
McDonalds and Burger King offer substitutes to Wendy’s food. Advertising and promotional offers can help Wendy’s stay competitive. Wendy’s also has to be observant of economic trends. Raises in inflation and food costs will affect the demand for fast food. However, inflation and food costs should also affect McDonalds and Burger King. Therefore, Wendy’s market share should not be affected if they raise prices collectively with McDonalds and Burger King.
In the future, there is a chance for a healthy fast food restaurant to enter the market. Society is leaning towards a more health conscience population and the fast food industry will have to adjust. Wendy’s and its competitors currently offer salads. Wendy’s should consider offering healthier menu items and increase advertising to gain market share. Investing in advanced technology will also keep Wendy’s competitive. More technology will result in higher productivity and lower average total cost.
Description of Utility of the Good or Service
Wendy’s is a fast food restaurant that provides an alternative to home...
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