Starbucks Vs. Google Market Structure Essay

Since a monopoly is the only seller of a good in the market, the demand curve is the market demand curve. Therefore a monopoly has a downward sloping demand curve, in contrast to the horizontal sloping demand curve of a firm in a competitive market (Mankiw, 2014). Monopolies aim to find the profit-maximizing price for its product. If a firm is initially producing at a low level of output, marginal revenue exceeds marginal costs (Mankiw, 2014). Every time production increases by one unit, the marginal revenue increases again and is greater than marginal costs (Mankiw, 2014). Therefore

1. In the beginning, how was Starbucks different from other coffee options for coffee drinkers in the United States? What activities and assets did Starbucks leverage to differentiate itself from competitors?

In monopolistic competition, there are a relatively large number of firms, not the thousands of firms as in pure competition. The monopolistically competitive firms produce differentiated products, not the standardized products of pure competition. Product differentiation means that monopolistic competitors engage in some price competition because they have some limited “price making” ability based on the less elastic demand for their particular product. This demand, however, is more elastic than the demand for monopolists’ products. Monopolistic competitors, unlike most

Antitrust investigation is of considerable importance because it is utilized in the establishments of mergers, partnerships, acquisitions and other business takeovers/partnerships which when completed might result to an antitrust violation. These laws serve to prohibit services designed to restrain trade and commercial progress such as a monopoly structured market. Monopoly structured market is when there is a single provided product with no close substitutions. As opposed, to a monopoly, a pure competition market is an aspect in which multiple companies offer identical or close to the same products, which will compete with price and quality, and in some case costumer service. Additionally in contrast, oligopoly is a market structure where there are a few firms producing all or most of the market supply of a particular good or service and whose decisions about the industry's output can affect competitors. Oligopolies firms tend to charge reasonably premium prices but they compete through advertising and other promotional means. Simultaneously, possessing an array of market structures safeguard the consumption of basic products and services as supplied by the business community to the rest of the human populace. “When P = MC, society cannot gain by producing 1 more or 1 less unit of the product. In contrast, a monopolist maximizes profit by producing the lower output level at which marginal revenue (rather than price) equals marginal cost. At this MR = MC point, price exceeds marginal cost, meaning that society would obtain more benefit than it would incur cost by producing extra units” (McConnell, Brue, and Flynn, 2012, p.375). Unlike most companies, Google has cornered its market and does not have to contemplate the high barriers to entry or costs. However, these

Barista: This job contributes to Starbucks success by ensuring our service and store standards are met. We do this by providing customers with prompt service, quality beverages and products. Starbucks and partners will experience a friendly, upbeat and clean atmosphere.

In the food or restaurant industry there are many players within each marketplace. When an individual entity does not have full control over the market, related to price or market share, it is described as a monopolistic perfect competition market. Essentially, that is the type of market that Starbucks finds it in. The basic feature of the food and restaurant market is the large number of players in the market produces similar products but not identical products. In other words, there is a bit of differentiation among the products. It is an open market which allows for freedom of both entry and exit. Competition within the industry is very competitive with a limited amount of market control.

Monopolistically competitive markets are those that involve industries such as clothing, eateries, footwear, as well as in the service area. A monopolistically competitive market can be characterized as having an abundant amount of both manufacturers and consumers, consumer’s preferences for purchasing is known; survival in this area consists of the seller trying to distinguish specific products from competitors. A monopolistically competitive market could

•Monopolistic competition- When an industry contains many rival firms, each of which has a comparable but at least slightly different product. Restaurants, are an example, all serve food but of different types of food and in different sites. Manufacture costs are above what could be attained if firms sold equal products, but consumers have an advantage from the variety.

This process continues until each firm’s demand curve eventually becomes tangent to the firm’s average cost curve as the graph below describes. The dynamics of Monopolistic competition is whereby a firm’s demand curve continuously shifts leftward as new firms enter the market until in equilibrium, monopolistically competitive firms no longer make any economic profit.

Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?

Nothing like the fresh scent of brewed coffee in the morning – “Starbucks” a well-known coffee house that is still growing and expanding their operations today is considered the number one specialty coffee retailer around the world and abroad. Therefore, the supply and demand for coffee is on the incline and is regarded as one of the most rapid growing organizations in the world. According to the National Coffee Association, adults between the ages of 18 and 39 are more likely to purchase coffee out-of-home, then older consumers (2016). Even coffee statistics conducted in 2016 indicates “50% of the population, equivalent to 150 million Americans, drink espresso, cappuccino, latte, iced/cold coffee” (E-Imports, 2016). Other statistics numbers show that an estimated of total Americans consuming coffee would be up by 1.5% and specialty coffee up from 20% in this year alone. Even the global consumption will increase by 12% over the next years. Therefore, a key question is how will the “law of demand” predict how the consumers will behave (Lorenzetti, 2016)? Namely, will the higher demand for coffee beans impact what the consumer at Starbucks will pay for a cup of coffee? Therefore, companies such as Starbucks should analyze and understand the microeconomic model to get a clear picture of the price elasticity, cost to produce, and the overall market to make the most effective business decisions and recommendations that will have an

In terms of competition and the forces, which could limit the success of Starbucks it is important they stay ahead or even with other companies concerning innovative products. Many more micro companies are coming up with new products with a similar quality and a lower price/cost. It is important that Starbucks continues to search for innovative products to continually satisfy their customers. At the same time “rivalry” amongst Starbucks and smaller providers of coffee will continue to increase as the demand for coffee continues. The buyers bargaining power is significant as they can determine the cost, type of product, quantity and ultimately

can order and pay for their drinks in a flash while stacking up rewards for each purchase made. This Strategy has significantly drawn people to Starbucks due to its highly anticipated services, products, and marketing strategies that differ from most fast food restaurants. The next service is the Starbucks webpage where the customers can go onto the site and view product and also make purchases. This service is quite excellent for those that want to checkout items online through the site, because it incorporates a similar process as the application on your smartphone. Starbucks also incorporates equipment and drinkware to their massive line of products. First their Drinkware consists of cups and mugs that are affordable to the customers. These cups come in many colors and aesthetic values, which make people interested in purchasing. Starbucks had the right idea when they decided to manufacture these cups out to their customers because not only were they a huge success for the business, but it also made Starbucks distribute more merchandise. Cold cups, which were from stainless steel containers. These containers made a rise once the popularity rose for other merchandise. These containers were sold very often to customers and once again made a surprise since it was from the same line of cups and mugs category. As more popularity grew in their products so did the equipment used to make customers coffee. First Starbucks decided to manufacture coffee makers, presses, and expresso

1. What factors in the global environment provide opportunities or threats for Starbucks? How do Starbuck’s strengths and weaknesses match up to its opportunities and threats?

Corporate Strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of business.[1] In the case of Starbucks the corporate strategy they have implemented is unique to their industry which has allowed them to differentiate from their competitors and is summarized best by Howard Schultz CEO of Starbucks, “We’re in the people business serving coffee,[2]” high quality specialty coffee and related products in a European café environment. It is clear Starbucks is in a growth strategy utilizing three key techniques that support its Mission, “to inspire and nurture the human spirit – one person, one cup and