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Scale of Economies

In: Business and Management

Submitted By Martha2283
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1. Scale Economies and Diseconomies at McDonalds: How does having a menu that is uniform around the country provide McDonald’s with economies of scale? How is menu planning made more complex by expanding into other countries?

Having a menu that is uniform around the country provides McDonald’s with economies of scale because when people order their food they can order more to make it cheaper. According to Investopedia, “an economy of scale is the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are shared over a larger number of goods.” (Investopedia, 2014) Also, no matter where you go around the country people know what they have on their menu. They already know what they want. By knowing already, people might order more because they know what to expect and what food McDonald’s already has. Menu planning gets more complex when they expand into other countries. This is because certain countries do not eat certain things. They have to be careful not to offend anyone by their products they serve. For example, in India they do not eat cow. Cow is sacred to them so McDonald’s would not be able to be there and serve hamburgers that are made from cows. The people from India would be highly offended by that. Another example of this would be Israel that is predominately Jewish. Jews do not eat bacon because it comes from a pig. Therefore, McDonald’s would not be able to serve hamburgers with bacon. They also would have to make sure that all their food is Kosher. 2. Scale Economies and Diseconomies at the Movies: Movie theater concession sales account for well over half the profits at most theaters. Given this, what are the benefits of the staggered movie times allowed by multiple screens? What is the benefit to a multiscreen theater of locating at a shopping mall?

The benefits of having staggered movie

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