Organization Selected – Starbucks
Starbucks is a publicly traded company that has been a main competitor in the coffee and in the special eatery industries. This document will give a brief description of the company, an Analysis of the economic implications of operating in global markets and different market and industry structures, and an assessment of the impact of ethical and regulatory considerations of Starbucks. It will analyze the macro and micro economic environments and then give a conclusion and recommendation of how the company can improve in the future.
Introduction Starbucks Corporation is an American global coffee company and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world. According to their 2012 Annual report, they have 18,066 stores in over 60 countries, including 12,903 in the United States, 1,324 in Canada, 989 in Japan, 851 in the People's Republic of China, 806 in the United Kingdom, 556 in South Korea, 377 in Mexico, 291 in Taiwan, 206 in the Philippines, 179 in Turkey, 171 in Thailand, and 167 in Germany. In addition, Starbucks is an active member of the World Cocoa Foundation (starbucks.com).
Starbucks locations serve hot and cold beverages, whole-bean coffee, micro ground instant coffee, full-leaf teas, pastries, and snacks. They have over 30 blends and single origin premium coffee. They sell coffee and tea brewing items as well as mugs, accessories, packaged goods, music, books and gifts. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores (starbucks.com).
Starbucks' was founded 1971 as a Seattle coffee bean roaster and retailer. The company went public on June 26, 1992. Starbucks was incorporated under the Washington State law on November 4, 1985. They have common stock listed on NASDAQ and their trading symbol is SBUX. They pride themselves on being a socially responsible company where they focus on ethical sourcing, being environmentally friendly, and being involved in the neighborhoods where their stores are located (Starbucks.com)
Analysis of the Economic Implications Starbucks is in the Specialty Eateries Industry. Their competition in the Special Eateries industry are Dunkin Donuts, Nestle, and McDonald’s. Currently, Starbucks has almost 14.5 billion dollars in revenue. Nestle has over 100 billion dollars in revenue where as Dunkin Donuts has over 600 million in revenue. In their coffee market, the market itself is branching into several sub markets such as home brewed market, single cup coffee, and retail stores. The top competitors in the home brewed market are Folgers, Maxwell House, Private Labels, Green Mountain Coffee’s, and Starbucks. Folgers and Maxwell house still dominate that market with Starbucks accounting for only 4% of sales. In terms of the Single Cup Coffee’s such as K-cups and pods, Green Mountain Coffee dominates that market accounting with 1.2 Billion dollars of sales, Smucker’s has almost 411 Million dollars of sales with Starbucks coming in third with 303 million dollars worth of sales (Bloomberg.com).
Because there is little control over the price of coffee, it would almost appear to be a perfect competition market structure. However, taking a closer look at it, the coffee business appears to me more of an oligopoly. There is limited control over price due to mutual interdependence. Coffee products are both standardized and differentiated and there are significant obstacles in the industry, all indicative of an oligopoly (McConnell, 2012). The price of Coffee can fluctuate by issues as simple as the weather. For instance, when the coffee region of Brazil has an increase in the amount of frost, there will be a price spike. We also grow much more coffee