Starbucks Econ

4058 Words17 Pages
Introduction:
Starbucks Corporation, a global coffeehouse that reformed the coffee industry by introducing high-quality coffee under a pleasing and attractive environment. Coffee is the 5th most widely traded commodity in the world and it is believed that nearly 2.5 billion cups of coffee are consumed every day. Millions of people are directly and indirectly depends on the production, consumption and sales of coffee for their livelihood. The global market for coffee is characterized by volatile prices and production levels which impacts directly on the incomes of producers and prices facing consumers. Starbucks is the number one coffee retailer in the world market. Starbucks markets its coffee through grocery stores and licenses its brand
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The strategies of MNEs to sustain their competitive advantage over their rivals are unique and specific in nature.
Based on the recession indicators, this current recession is considered to be the worst in the last 40 years. This global economic meltdown severely affected all business in United States. Starbucks is of no exception. The tough economy, with consumers focused on stretching their paychecks and also with sales at established locations declining and profit sliding — the company is in the midst of a cost-cutting campaign that forced the closure of more than 600 underperforming stores in the U.S and 61 stores in Australia. It was really a very tough year for the company. Starbucks profit margin was severely hit during recession and rebuilding the company seemed to be the toughest challenge to the CEO Howard Schultz. While in United States and China, the sales were quite strong, but the sales for Starbucks coffee fall drastically in European market. Europe was considered to be the single market that poses a number of challenges for Starbucks.
Apart from the challenges on sales and profitability ground, Starbucks had to confront challenges on the ethical issues at their overseas business operations. In the year 2005, Starbucks had to face serious criticisms in Ethiopia as the Ethiopian government shed the negative lights on the company’s business ethics.

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