Thesis: McDonalds and Burger King are oligopoly in the fast food market in Canada. They hold the majority of market power; maintain high barriers to entry in their industry. Some competitors are very hard to capture market from them.
Have you ever be curious about McDonalds and Burger King? Why McDonalds always get many customers? Why A&W sell food with low price but still few people buy it? Focus on Canada market, I found McDonalds and Burger King are Oligopoly in the fast food market. I will prove it in next 3 paragraphs.
Firstly, an oligopoly can only exist when a few firms are dominating the industry and have the ability to set prices. McDonald's and Burger King are 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 alongside KFC etc.
Secondly, interdependence is a key component of an oligopoly. McDonald's and Burger King 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. They are always predicting the reactions of other firms which ensure them to be always strategized.
In order to protect their industry, McDonalds and Burger King prevent the entries of newer businesses into the industry. Their long-run average total cost is declining when the size of its firm is increasing and its operations. They are under the economies of scale because as people are buying franchises, they are expanding their size of their firm while decreasing their average total cost.
According to the product market, consumer group and operation techniques, McDonalds and Burger King are oligopoly in Canada even in the world. They are leading this fast food market. They will adjust their business strategies if other companies adjust. They accept franchisee but prevent develop by yourselves.
References
McChesney, R.. "Oligopoly. " The Progressive 1 Apr. 2009: Research Library, ProQuest. Web. 6 Jul. 2011.
"McDonald's." E Sept.-Oct. 2009: 13. Academic OneFile. Web. 6 July 2011.
Wendy Moncada. "Burger King :The singular--and gloriously greasy--quest of Noel Kersh.. " Texas Monthly 1 Aug. 2009: Research Library, ProQuest. Web. 6 Jul. 2011.
Thorn, Bret. "Burger King." Nation's Restaurant News 7 Feb. 2011: 32. General Reference Center GOLD. Web. 6 July 2011.
Thomadsen, Raphael. "Product positioning and competition: the role of location in the fast food industry." Marketing Science 26.6 (2007): 792+. Academic OneFile. Web. 6 July 2011.
Broder-Singer, Rochelle. "Burger King's franchisees." Florida Trend Feb. 2010: 47. General Reference Center GOLD. Web. 6 July 2011.