...Business Economics GM545 Summer Session A July 2011 One Question One: Everyone’s Gasoline Problem Gas prices are constantly fluctuating with reviewing the text we see where the United States has depended on the Middle East to purchase the crude oil to manufacture the gas needed to fuel our cars. (Stone, 2007) It was evident that there were issues during the years of 2006 and 2007 when we seen the biggest rise in gas at that time there was not much we could do we needed to purchase the gas to use for everyday functionality throughout the United States we seen here in the state of Florida (Jacksonville) particularly that the prices went from $2.10per gallon to an all time high of $3.06 this increase was not gradual it was almost overnight when this increase was a period just about a month. This tended to come from some events that occurred in the following countries Mexico, Iran, Iraq, Israel, India, and North Korea that have energy markets on edge and the crude oil prices were heavily elevated at that time. (Jacksonville Bussiness Jornal, 2006). When looking at recent information that has been collected on gasoline prices we tend to look at earlier month May 2011, Jacksonville Florida was getting near the $4.00 per gallon with that we then seen a drop in prices from $4.00 down to $3.85. Typically this is when the summer driving season is starting and the elasticity for fuel starts to rise and continues to do so along with that need for gas the prices rise along with it...
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...Changing America through Coffee Yes, it is true, hunger in the United States is on the rise since the early 2000’s. Today hunger knocks on the front door of many families in America today. According to a study taken by the United States Census Bureau, 14.8 of Americans are in an impoverished state. Fixing this issue is as simple as a cup of coffee. From gas stations to coffeehouses, Americans can easily purchase their favorite drink. McDonalds, Dunkin Donuts, and Starbucks, are just a few of the companies taken advantage of this roasted bean. Standing in line at Starbucks, seeing the delicious breakfast “essentials” and pastries is an excellent market idea. But how does a coffee shop turn into a multibillion dollar company? According to Forbes, Starbucks (a worldwide coffeehouse chain) is listed at #80 as one of the largest businesses with a revenue of 17.1 billion dollars....
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...specialty coffee retailer, Starbucks sells coffee drinks, food items, coffee beans, and coffee-related accessories and equipment. In addition, Starbucks sells whole-bean coffees through a specialty sales group and grocery stores. Starbucks has grown beyond coffee into related businesses such as coffee-flavoured ice cream and ready-to-drink coffee beverages. The purpose of this paper is to analyze Starbucks business strategy, customer value proposition, company’s operations and the risks to financial results and reporting in the short term. BUSINESS STRATEGY The Starbucks former strategy was centered in offering a high quality product to a narrow consumer segment (coffee lovers), therefore, a focus strategy. Later on, primarily thanks to the vision of Howard Schultz, the company moved to the differentiation strategy which is defined by Porter as “differentiating the product or service offering of the firm, creating something that is perceived industry wide as being unique” . Some of the advantages of this strategy are: customers have a lower sensitiveness to price, opportunity for higher margins, creation of entry barriers thanks to customer loyalty and brand uniqueness CUSTOMER VALUE PROPOSITION The brand strategy was best captured by the phrase “live coffee.” From a retail perspective, this meant creating an “experience” that people would want to incorporate into their everyday lives. There were also three components to the branding strategy: Coffee - Starbucks...
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...expansion. Starbucks has been at the pinnacle of the coffee industry for years however; they are constantly being pursued by its competitors. To remain at the top, Starbucks has been required to change with the times. With the advent of social media, and online shopping, many people are introduced to new products through avenues such as Facebook, and other media outlets. Customers are no longer required to leave the comfort of their homes to order some of their favorite products. Businesses have been required to map out their plans for the future both strategically, and financially. Strategic planning involves an organization to do an honest and truthful analysis of where it is in the business. This required studies of various data from a number of sources to include customers, investors, and employees. Once this data is gathered and analyzed, the organization can begin moving into the financial planning phase. The financial planning phase consists of the organization determining how it will push itself forward to ensure it still able to provide customers what they require. Both the strategic and financial planning portions require each other to operate and keep an organization moving forward. In recent years, the advent of the Keurig coffee brewing system has provided customers a way of ordering and enjoying their favorite brands of coffee without having to leave the comfort of their homes. Many coffee industry leaders such as Dunkin Donuts have enthralled...
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...7.8 The Hecksher-Ohlin proposition is, simply put, two countries producing two goods and having two factors of production (2*2*2). The differences between the countries’ factor endowments result in comparative advantages when trading, assuming universal production technology and no trade restrictions. What’s also assumed is a CRS production, perfect competition and an equal demand in the the two countries. Looking at the export statistics from 1998 and more recent years, and comparing the countries of Turkey and Sweden, the goal is to decide whether the export patterns are in accordance with the Hecksher-Ohlin theorem. We chose to look at these two countries because, when looking at the excel file with differences in resources used for production, there was a big difference between Sweden and Turkey. Because of this, we thought it would be good economies for showing the differences when it comes to what and why a country uses what it does, in terms of resources, when producing. According to the data on the exports from countries from 1998, there is quite a large difference between Sweden and Turkey in terms of what kind of resources the products they export use. Turkey’s biggest export was unskilled labor intensive products, whilst Sweden mostly exported technology and human-capital intensive products. Looking at the table on the bottom of the page, one can see how big of a difference there is between Sweden and Turkey when it comes to the difference in resources used...
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...Tim Hortons expanding the franchise has many opportunities, however, it can create challenges. After reading the articles listed in question one and studying the lecture notes, I can confidently say that there is a culture barrier that will come with the expansion. An example of this is the products that they will sell. Currently the products created are made to please Canadian and American consumers. However, what is pleasing to these consumers might not be as appetizing to people of the Philippines or United Kingdom. One way to adjust to the culture difference is by researching an traditional Pilipino dessert and presenting into the Philippines. In additional, the CBC article Tim Hortons expanding into England, Scotland, Wales states that...
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...Industry and Strategy Analysis Porters five forces are an effective tool to assess the attractiveness of an industry, thus an indicator of future profits. Here is an analysis of the coffee shop industry. Power of buyers There is no, or very limited switching cost for customers, and there is an abundance of other substituting products that the ones offered by Starbucks. Even though this is a threatening fact for Starbucks business, this is what makes them unique buy offering the "Starbucks experience". This have shaped their success. However coffees addictive nature can also result in less rational decision which can overrule the need for a "Starbucks experience". Taking the arguments above into consideration, the buyers power is considered high. The threat of substitute products and services for Starbucks is substantial. Specifically, substitutes for Starbucks Coffee might include drinks like tea, juices, soft drinks, water and energy drinks, whereas pubs and bars can be highlighted as substitute places for customers to meet someone and spend their times outside home and work environments. However, Coffee is an important part of many people's lives and habits why coffee might be considered to be hard to substitute. Also Starbucks has shown their strengths in innovating related products why they are able to cover most related products in their product portfolio. Consequently, the threat of substitutes are considered moderately low. Suppliers power are considered relatively...
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...shaping competition within the industry consist of the intensity of rivalry among the competitors, the risk of entry of new competitors, the bargaining power of buyers, bargaining power of suppliers and the threat of substitute products and services (Sinkovics and Ghauri, 2009). The nature of the relationships among these forces is best presented in the following figure. Threat of new entrants (barriers): Mediium The higher the barriers to entry are within any given industry the smaller the threat of new entrants to that industry. (Porter, 1998, p. 7) The specialty coffee industry does not put a high premium on economies of scale and has a low start-up costs. However, the barriers to entry seem high in the late 1980s due to high product differentiation, saturated market, high specialized capital requirements, high switching costs and disadvantages to new entrants in the form of limited access to premium Arabica coffee, limited choice of locations and a moderately steep learning curve and high amount of financial resources associated with buildings and properties. There is room for new entry into the coffeehouse market, but new entrants face formidable barriers to entry to compete with Starbucks directly in the coffeehouse segment. Starbucks has developed significant knowhow, skills, and information that would take years for new entrants to create. Given Starbucks’ scale and competitive positioning, there are formidable barriers to entry. It is unlikely that a competitor with...
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...Comparative Advantage and Absolute Advantage ______________________________________________________________________________________________ absolute advantage: A country, individual, or firm has an absolute advantage in producing a good if production of the good absorbs fewer resources (or less time, in the case of an individual) than are required in other countries or by other individuals or firms. comparative advantage: A comparative advantage in producing or selling a good is possessed by an individual or country if they experience the lowest opportunity cost in producing the good. ______________________________________________________________________________________________ Comparative Advantage The division of labor facilitates production of a given good, but how do individuals or groups determine which specific goods or services to produce? The maximum potential gains from trade tend to be realized if you specialize in that activity which you can do at the lowest cost relative to other people’s costs. In 1817, David Ricardo, an influential early economist, focused on international trade when he generalized this idea into an economic law. The law of comparative advantage: Mutually beneficial exchange is possible whenever relative production costs differ prior to trade. This law applies to all exchanges, whether between individuals or nations. Opportunity cost is the key to comparative advantage: Individuals and nations gain by producing goods...
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...that (Porter-1980) identifies as having an impact on a company’s behaviour in a competitive market are as followed: * The threat of new entrants to the market * Bargaining power of suppliers * Bargaining power of buyers (customers) * Threat of substitute products * Competitive rivalry Starbucks have the real threat of competitive rivalry by competing with some major competitors like McDonalds, Dunkin Donuts, Costa and other small coffee shops and cafes. With competitor’s low prices and the opportunity to break into the speciality coffee market pose a real risk to Starbuck’s. Substitute products such as tea, juices, water and energy drinks pose a real threat to Starbucks as with pubs and bars because of the threat of being a substitute place for customers to meet outside of the home and work environments. Customers buying power also poses a threat to Starbucks due to the wide abundance of offers that are available for them. Suppliers to Starbucks have high bargaining power as the demand for coffee beans are high on a global level. Also as...
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...Paper received 100% grade. The Coffee Crisis “In 2004, the governments of coffee producing countries were considering how to respond to the dramatic decline in coffee prices” known as the coffee crisis (Capella University, 2011, p. 1). This coffee crisis was a result of four main factors: (1) the breakdown of the International Coffee Agreement (ICA); (2) the increased supply of coffee resulting from Vietnam’s entry into the market and Brazil’s technological advancements; (3) inelasticity of demand for coffee; and (4) movement from an oligopoly to a competitive market. The result, unfortunately, was a gap between the product market and resource market that needed—and still needs—to be addressed. Economic Implications of Operating in Different Market and Industry Structures In 1989, “roasters in the United States faced declining demand with the exception of gourmet coffees, but the ICA quotas required them to buy large quantities of relatively lower quality Brazilian beans” (Capella University, 2011, p. 3). As a result, “consuming nations, let by the United States, and high-quality producers, led by Costa Rica, demanded new quotas, and the negotiations over a new agreement deadlocked” (Capella University, 2011, p. 3) and the agreement ultimately broke down. Prior to the breakdown of the ICA, the coffee market resembled that of an oligopoly, which is defined as “a market dominated by a few large producers of homogeneous or differentiated product. Because of their...
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...Slaves to the smartphone; Schumpeter The Economist[pic]402. 8775[pic] (Mar 10, 2012): n/a. 針對語音瀏覽器，開啟檢索到的項目反白 摘要 (摘要) 翻譯摘要 mart devices are sometimes empowering. They put a world of information at our fingertips. They free people to work from home instead of squeezing onto a train with malodorous strangers. That is a huge boon for parents seeking flexible work hours. Smartphones and tablets can also promote efficiency by allowing people to get things done in spare moments that would otherwise be wasted, such as while queuing for coffee. They can even help slackers create the illusion that they are working around the clock, by programming their e-mail to be sent at 1am. But for most people the servant has become the master. Not long ago only doctors were on call all the time. Now everybody is. Bosses think nothing of invading their employees' free time. Work invades the home far more than domestic chores invade the office. Otherwise-sane people check their smartphones obsessively, even during pre-dinner drinks, and send e-mails first thing in the morning and last thing at night. This is partly because smartphones are addictive. The faster smartphones become and the more alluring the apps that are devised for them, the stronger the addiction will grow. Spouses can help by tossing the darned devices out of a window or into a bucket of water. But ultimately it is up to companies to outsmart the smartphones by insisting that everyone turn them off from time to time. 全文 • 翻譯全文 ...
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...Latin America’s economic development suffered gravely because of the economic dependence of other places like Europe. And while colonizers made themselves richer with these resources, their own colonies were being depleted. In the 17th century, for instance Europe used Latin American’s resources, such as coffee and sugar to create plantations in the Caribbean and Africa in order to secure a richer economy, which is what they were interested in. This kind of exploitation from Europe compelled Latin America to then instead depend on Europe for their economy’s sake. Galeano quotes, “The whole process was a pumping of blood from one set of veins to another: the development of the development of some, the underdevelopment of others” (83). Many reasons led to the underdevelopment of Latin America however, and it was not just because of the exploitation of Europe. Their underdevelopment also resulted because of Latin America’s small-scale population, geographical location, and resources that served as economic growth for other places. Eduardo Galeano’s...
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...Located in high-traffic, high-visibility locations, focusing on pedestrian customers. Company also focuses on drive-thru retail stores for the convenience of non-pedestrian customers. 3). Pe slide: Trying to reduce stores’ impact on the environment and this commitment influences almost every aspect of how they approach design and construction, including landscape, building methods, materials, lighting and more. 1) Mostly Starbucks is in to direct supply channel (producer to consumer). With their line of vision such practice is important and it helps to keep a personal relationship with the customer. In US, particularly Starbucks can be found in any neighborhood where there is a potential high traffic for its stores – especially with “Coffee bar” concepts. Outlets can be found in various large chains. Their primary goal is to locate them in highly visible locations and opened them in clusters. It was the ideal place for the individuals who are on the go, who enjoy music or even looking for a break in a busy lifestyle. By opening "stealth outlets" – street names instead of Starbucks, they attempt to carry out their "localize" projects further. Along with the growing demand, they were able to manage the increased traffic and to keep their competitive edge. Starbucks invested heavily on training their staffs – ensuring and aiming high on customer satisfaction. 2) Shanghai has 256 Starbucks, the most of any Chinese city. But the city with the most Starbucks in the world is Seoul...
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...experience?” no longer cuts it. It just doesn’t do an adequate job of predicting future customer spend. This attack has principally been led by proponents of the Net Promoter Score (NPS) method, which argues that it’s not satisfaction that matters, but rather, loyalty. According to studies by NPS architect Satmetrix, utilizing the assigned loyalty metric of how likely a customer is to recommend a brand or product produces predictive models that do a significantly stronger job of forecasting future brand spend than simply asking how satisfied customers were with their experience. As they rightfully argue, plenty of customers will leave a store completely satisfied with their experience, yet remain entirely unlikely to return based upon an abundance of variables that satisfaction models can’t account for. This results in retailers and service providers who sit befuddled in conference rooms across the country, trying to figure out why their high satisfaction scores aren’t translating into greater sales. NPS evangelists have taken their data on the road to preach the notion that customer satisfaction no longer matters and that clients should no longer bother tracking it. While it’s a compelling and disrupting case, I would argue that it’s the wrong one, as it reflects a considerable...
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