Micro Analysis project on Starbucks
Subject: Managerial Economics
Professor: Karen Spohn
Term: Spring 2015
Introduction Starbucks is a global coffee company and coffeehouse chain based in Seattle, Washington since 1971. It is the largest coffeehouse company in the world ahead of UK rival Costa Coffee, with almost 21,366 stores in 63 countries. A recent survey says that in last 30 days 32 million people visited the store across the globe. Thus, it is a highly busy and in demand coffee shop. Here I am going to do microanalysis of Starbucks as a largest coffeehouse chain/industry in the world considering its demand and supply in the market.
Market…show more content… This drives the demand of the product , shifting the demand curve to right. Buyers expectation strongly affects the consumption . Expectation of technology for a consumer , wifi, card, mobile , e-commerce adds up to the demand. With increase in technology by the company the demand increases leading the demand curve to move to right. (http://www.forbes.com/sites/rahimkanani/2012/05/24/chief-digital-officer-for-starbucks-on-technology-change-and-community/) Supply is the functional relationship between the price of a good or service and the quantity that producers are willing and able to supply in a given time period . The Numbers of factor that are responsible for a supply might include price factors of production, technology used , number of sellers , natural events . Coffee is considered a commodity to be watched upon after oil. Bumper harvest of the coffee in Brazil caused the price of coffee to go down in international market. Due to reduce of price in the commodity market , Starbucks was able to get more profit which could lead in to more supply, shifting the supply curve to right. (http://www.ibtimes.com/coffee-beans-market-watch-2014-1436836)
Demand Side: Before I talk about demand curve elastic, let me describe elasticity of Demand. The responsiveness of the quantity of a