Starbucks

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1 Introduction 1.1 Purpose of report The economic impact of Starbucks on the UK economy June 2013 The objective of this report is to investigate the economic contribution of Starbucks to the UK economy. This contribution is quantified in terms of impacts from:  The operation of Starbucks in the UK;  The supply chain effects created by Starbucks purchases of inputs from elsewhere in the UK economy.  The consumer expenditure of Starbucks’ staff and those employed directly in its supply chain spending their wage income. The report also discusses aspects of Starbucks UK operations that are likely to play a more diffuse role in supporting the performance of the overall economy and the localities in which Starbucks has a presence.…show more content…
1.3 An introduction to economic impact analysis A standard economic impact assessment identifies three channels of impact that stem from an activity:  The direct effect encompasses the economic activity generated at Starbucks stores’ and other operational locations in the UK.  The indirect effect encapsulates the activity supported in Starbucks’ UK-based supply chain as a result of its procurement of inputs of goods and services. It should be noted that this supply chain impact relates to current expenditures only. In Starbucks case this channel of impact includes the supply chain behind the operation of its outlets in the UK, plus the inputs UK suppliers sell into other parts of Starbucks’ global business.  The induced effect captures the impact of staff employed as a part of the direct and indirect effects spending their wages. This supports activity at the retail and leisure outlets they visit and their supply chains. 1.4 The metrics of economic impact In accordance with standard economic impact assessments, the scale of Starbucks’ impact is measured using two key metrics:  Gross value added – Gross value added (GVA) is the contribution an institution, company or industry makes to Gross Domestic Product (GDP).1 GVA is most simply understood as turnover (i.e. value of sales) minus the cost of bought-in goods and services used up in the production process. 

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