...Costs of Startbucks Coffee By Trina Howell Q1. Why is the price of Starbucks coffee rising? Please explain. Answer: There are many factors to include when considering the economic reasoning behind Starbucks raising its prices. The company, in their news release stated that their costs are going up including energy and fuel, however there is much more to it than that. The coffee beans typically used by Starbucks are Arabica beans that are grown mainly in Brazil, Vietnam and Columbia, yet emerging growers on the Ivory Coast and Ethiopia are beginning to experience higher yield crops and quality beans. The rising cost of the green beans is largely due to a decrease in the available supply due to poor crop output which has driven the cost of Arabica beans to a 13 or 14 year high. While more affordable beans like the Robust beans are frequently more in demand causing their prices to rise considerably as well. Another contributing factor is Brazil’s response to higher global pricing for Arabica beans which has been to withhold crops to push the price of beans higher, resulting in supply and demand imbalances. Add to that the increases in fuel and energy prices and the supply and demand imbalances there, in which inevitability of increases in product prices on a global scale were bound to increase as well. The cost associated with distribution alone could be seen as reason enough for the increase. Q2. What will happen to the quantity of Starbucks coffee demanded...
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...Starbucks is well known as the largest coffee shop chain in the world. It was founded in 1971 in Seattle, Washington by Gordon Bowker, Jerry Baldwin and Zev Siegl. Shortly, The company had made it expansion from coffee bean marketer to sales to restaurants and coffee bars. It went public in 1992 and by 2007 they had about 115,000 employees and sales of $9.412 billion. They have over over 16800 stores in 50 countries based on US, Canada and UK. However, their market capitalization had decreased from $25 to 13 billion and a decline in share price of 50 recent. This is because their expanding strategic and quality control. Statement of Strategic problem In order to get more share of the markets, they came up with expanding idea which is normal in business. But they were expanding too fast which made them couldn’t control the quality at the same time. This caused them facing bad imaged, quality such as services and restaurant environment. Statement of Tactical problem In order to increase the speed of getting the shares of the markets, Starbucks realized the opportunity of issuing license to the shop owners. However, they didn’t realized the importance of controlling the quality of the shops they were going to expand and they didn’t have the clear information about the owners. Identification of issues and Symptoms and Analysis (SWOT) Symptom 1: StartBucks has unique strength and a distinctive market because of its brand. It is easier for them to bring customers...
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...The Effects of Globalization and the Coffee Industry Assignment #5 ECON 401 December 30, 2014 Globalization has had an effect on many aspects of our lives, socially, economically, politically, and culturally. Since the 1970’s trade barriers have been minimized and the coffee industry has been a high import and export for many countries being the second most traded commodity in the world behind crude oil (Chapman, Hodges, 2011). As the industry evolved and large corporations fed on the increasing demand for coffee, it has become a commodity many countries rely on; 20 million people depend on coffee for their livelihood (AAFC, 2010), whether it be the north American coffee retailor to the small farmer, we can say that globalization has and will continue to affect every aspect of the coffee chain. Supply, Demand & Price It is evident today that people need to have their coffee. In the 1960’s and 70’s half of the worlds coffee came from Columbia and it was about $3.00 per pound (Lewis, 2014). The industry was booming and protected by the Columbia Coffee Federation. This was a regulatory party who acted as a mini union for the coffee farmers who basically had no voice to the state. At this time it was good business to be in agriculture in Columbia. Since then demand has only risen as the large coffee retailors such as Starbucks and Seattle’s best have made coffee drinking a major social pastime. The shifts in the coffee supply and demand are not predicted by...
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...INDIVIDUAL ASSIGNMENT Topic: Analyze a culture-specific case study in which a coffee brand (of your choice) in the US, Europe, or Asia has been successfully built. Coffee is big business. The world’s love for coffee has formed some of the most popular globe’s food and drink businesses . Starbucks is one of the most famous chain of coffee shops in the world, mainly making bussiness in selling special coffee beans and other various kinds of coffee or tea beverage. Through out several decades of development, Starbucks is now a global Starbucks logo brand and presents in 64 countries and territories, as of March 2015. Among those regions, Asia is one of the biggest markets that Starbucks has built up its coffee brand sucessfully. (Source: http://Wikipedia.com/Starbucks) One of the big questions is what are the factors that makes Starbucks become an successful global coffee leader. Well, there are a lot of factors. However, in my point of view, the most important thing that makes them to be successful is they are able to adapt and localize if it’s required. According to Hofstede’s national culture theory, Starbucks perfectly suits the cultural characteristics of the host country’s customer. The following paragraphs shall analyze how Starbucks succeeds in Asia, especially aiming to specific countries in that region. Firstly, China is one of two biggest countries having a massive polulation about 1.4 billion in Asia that has Hofstede’s cultural dimension...
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