Wednesday, 27 August 2008

The McDonald's Truck


The McDonald’s Truck is an economic strategy known as Vertical Integration. Vertical integration is an agreement two companies make to sale non related products with each others help and later splitting the profits. How does this work in the case of the truck? very simple. McDonald's is nowadays most popular brand, meaning that wherever McDonald's puts its logo on, there has got to be a lot of money and sales in the way, and of course Matchbox is a toy company, key for McDonald's success amongst the children with the famous Happy Meal. Matchbox pays McDonald's to let them put their logo on their trucks which increases the popularity of the product for example causing the children buy the truck, since McDonald's is probably their favorite brand or at least the one they know the most, all equal to profits. In exchange, Matchbox makes toys for McDonald's to sell with their famous Happy Meals, which also creates a lot of Buzz for other products like Disney movies, everybody wins. Vertical integration if often used in today's economy by many companies in order to bring themselves all to the same status level, hence the name horizontal, and so by cooperating earning more profits than they would gain working individually.

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