White Castle Franchise

Essay Instructions:

COMPETITION AND MARKETS

Market Structure

Some firms have a large share of the market while others are just starting. A firm can often create a brand name which gives them market power. Market power is defined as the ability to raise prices without losing all demand. Since you are analyzing franchise firms, we can conclude that the a brand name is somewhat established. Write a 2-page paper about the following issues:

What type of market do you think your franchise operates (perfectly competitive, monopoly, monopolistically competitive, oligopoly)? What are the specific characteristics that make it this type of firm?
What type of competition does your firm face? Who are some competitors? (even if you said your firm is a monopoly, think of some subsitutes)
How do you think your firm can increase its market power?

SLP Assignment Expectations

Use concepts from the modular background readings as well as any good-quality resources you can find. Please be sure to cite all sources within the text and a reference list at the end of the paper.

Length: 2–3 pages double-spaced and typed.

The following items will be assessed in particular:

Your ability to understand an application of imperfect competition.
Some in-text references to the modular background readings (APA formatting required).
The essay should address each element of the assignment. Remember to support your answers with solid references.

Essay Sample Content Preview:

White Castle Franchise
Student’s Name
Institutional Affiliation
White Castle Franchise
The fast food hamburger restaurant chain extends its operation in the Midwestern and southern United States, including in the New York metropolitan area. The franchise operates in a monopolistic competitive market where there are several firms offering similar but differentiated products for sale to many buyers in the market. White Castle objectively differentiates its main product (hamburgers) which improves its market share. Its signature item is tiny, squared hamburgers made of 100% USDA beef (White Castle, 2014). Its pricing strategy is unique in the market since it was initially sold for just five cents apiece. Due to its size and content, customers tend to order multiple burgers (Snell, 2012).
In an attempt to counteract intense competition in the market, (earn more market share), the franchise restaurant offers a special breakfast menu available from 5 in the morning to 10:30Am. Although other firms open their business early, White Castle food chains are open 24 hours a day, but some close at 1AM on weeknights. There is comparative freedom of entrance and exit out of the market, therefore, giving small firms the opportunity to penetrate in the market and free to leave (Cohen & Levin, 2009). It can be proven by the presence of several firms dealing with fast food. However, the barrier to entry are minimal meaning resources are highly mobile. The demand of fast food, especially burgers are very sensitive to prices since there is extensive knowledge of prices as well as technology (Consumer Reports, 2014).
These restaurants face both direct and perceived form of competition in a monopolistically competitive market. Other companies are very similar to White Castle in the manifold aspects of a product or service offering. The success of White Castle facilitated establishment of numerous imitators. Many competitors created confusion in the market by formulating their names with a play on the White Castle name. Some ought to replace the name “Castle” while others replaced “White." Competitors also copy White Castle’s menu items; as a result, making them no longer unique (White Castle, 2014). Competitors reduce their cost down in order to reduce the market share of White Castle.
The firm’s main fast food product is hamburgers, and it faces intense competition from other corporations oper...

Updated on January 26, 2024

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