Starbucks : A Non Coffee Drinker

1724 Words7 Pages
Coffee Madness

Andrea Gonzalez

Economics 5 (2122)
Tina Esparza-Luna
22 November 2015

Gonzalez 1 As a non-coffee drinker it is mind boggling how much revenue is earned from coffee sales. In 1971 the first Starbucks started opened in Seattle. Today a total of 22,519 stores are open in different parts of the world. The following pages will look at Starbucks Company through an economic lens. It will focus, in the years of 2008 through 2013. This time period starts with the economic crises of 2008 and helped shaped the company into its current state. Locally, Starbucks operates in a monopolistic competition market. As stated in The Micro Economy Today this market structure is define as,” A market in which many firms produce similar goods or services but each maintains some independent control of its own price.” (page 238, Schiller). Indeed, coffee lovers have a variety of options as to where they get their caffeine fix. Due to a large amount of substitute for coffee and beverages Starbucks cannot price their goods higher than others. If they raise their prices too high, consumers will simply turn to other suppliers and Starbucks will suffer a loss in profits. In addition to having an abundance of substitutes another characteristic of having a monopolistic competition is low barriers to entry. The cost to enter the coffee market is relatively low and people who desire to enter the market cannot be kept out. New entrants threaten

More about Starbucks : A Non Coffee Drinker

Get Access