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Business firms use different strategies to maintain market power, and they mainly revolve around the prices of commodities they offer. An example is that of McDonalds and how its strategy boosts their sale force.

McDonalds' decision to create McCafe was meant as a business strategy to help the brand grow its financial performance. There are different strategies used by companies and organizations to improve or maintain their market power, such as commodity bundling, price discrimination, and two-part pricing. In this case, McDonalds chose commodity bundling, which involves the packaging or bringing into the market two products from the same firm and selling them at an aggregated price. This strategy ensures that the firm or company maximizes the profit. This strategy also allows the company to maintain its market power even though there is stiff competition from other firms. For McDonald's' case, the plan was to ensure that consumers purchase their products at bundled prices, which will ensure that people buy as many product units from the firm(Orovwiroro & Nwinee, 2019).

The creation of the brand McCafe was an excellent economic decision since it was meant to maximize profits by enabling the company to extract surplus from the consumers. The strategy was also meant to help the company over the challenges of monopolistic competition. This is because firms such as Starbucks and Dunkin Donuts were all producing the same products making it a monopolistic competitive market(Yuan, Lu, Tian, & Yu, 2020).

In conclusion, any business firm's success over the competition, especially in a monopolistic competitive market, highly depends on the pricing strategies it takes. The most efficient pricing strategy is commodity bundling, as in the case of McDonald's.

References

Orovwiroro, G. O., & Nwinee, B. F. (2019). Understanding the Link Between Managerial Economics, Business Strategies Formulation, and Implications.International Journal of Science and Business, 199-209.

Yuan, Y., Lu, L. Y., Tian, G., & Yu, Y. (2020). Business Strategy and Corporate Social Responsibility.Journal of Business Ethics, 359-377.