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Big Mac, case study

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Banker
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General public
Study
accounting
School/University
SZABIST

About the document

Ahmed T.
Published date
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documents in English
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presentations
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3 pages
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General public
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  1. Introduction
  2. Several factors that affect the demand and supply
  3. Profitability of organization
  4. High unemployment level
  5. Conclusion

McDonald's is the largest food chain of the world. It is present almost everywhere in the world. It has so wide global presence that decision makers often use the products of McDonald's to devise economic measures of well being. One such measure is purchasing power parity. BigMac index is used to measure the purchasing power parity of various different currencies all over the world. Incidentally, this paper is also going to use Big Mac (a product of McDonald's) and will consider various micro-economic and macroeconomic factors that determine its demand and supply. The paper will be purely economics and will make use of theories that were developed in the past and will apply them to the present scenario. The paper will be deductive in nature as it will test various theories that were developed sometime back. (Daft 1994)

Big Mac was developed by one of McDonald's earlier franchisees Jim Delligatti. The product in the early years was positioned as a burger with two beef patties. Later the product was positioned as a hip hop product which is liked by everyone. In 2004-2005, McDonald's realized the importance given by people to the nutritional value of what they eat and they positioned the product as a ?healthy product?. This is how McDonald's has achieved high growth rate of the brand and achieved great sales. The product is a classic and has been churning in great amount of money for the company.

[...] Big Mac, case study McDonald's is the largest food chain of the world. It is present almost everywhere in the world. It has so wide global presence that decision makers often use the products of McDonald's to devise economic measures of well being. One such measure is purchasing power parity. BigMac index is used to measure the purchasing power parity of various different currencies all over the world. Incidentally, this paper is also going to use Big Mac (a product of McDonald's) and will consider various microeconomic and macroeconomic factors that determine its demand and supply. [...]


[...] (Brigham & Ehrhardt 2010) Big Mac can experience cross elasticity of demand. Big Mac's substitutes and complements can affect the overall demand of McDonald's. If there is a fall in the price of Big Mac substitutes there are chances that people will shift to the substitute if McDonald's does not decrease its price. Similarly, a rise in the price of soda or fries is going to dampen the demand for Big Mac because the overall package would become expensive to them and they will search for new alternatives. [...]

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