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    Strategic Decision Making in the Fast Food Industry

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    When McDonald's Corp. reduced the price of its Big Mac by 75 percent, if customers also purchased french fries and a soft drink, The Wall Street Journal reported that the company was hoping the novel promotion would revive its US sales growth. It didn't.

    Within two weeks sales had fallen. Using your knowledge of game theory, what do you think disrupted McDonald's plans?

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    Solution Preview

    McDonald's operates in an oligopoly, so it makes sense that game theory would apply here. In fact McDonald's, as the largest of the fast food chains, is likely the price leader. Its competitors, such as Burger King and Wendy's, were watching its promotions ...

    Solution Summary

    Value menu pricing and how it impacted McDonald's profitability is discussed in 173 words.