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Legal Factors: Businesses can be affected by many aspects of government policy. In particular, all

A Customized Textbook, Supply Chain Management SCHM2301, ISBN9781308037400 Copies are on reserve in the library

2. Most successful companies like Starbucks have started programs to oversee and make sure their farmers are treated well. C.A.F.E.( Starbucks ' program) is Coffee and Farmer Equality this program ensures the farmers safety and the quality if the product. This program has shown to boost productivity between the company and the grower and between the workers and the owners of the plantations. Even though this program is in place the workers are still paid poorly. An expert picket can collect about 6-7 baskets of coffee berries a day, yet they are paid very little. 71% of farms in Brazil are less than 10 lectares, 25% of them are less than 50 lectares and 4% are more than 50 lectares.*

Political –how changes in government policy might affect the business, like a decision to subscribe building new houses in an area could be good for a local brick works.

Governments establish many rules and regulations that guide businesses. Businesses will normally change the way they operate when government changes these rules and regulations. Government economic policy and market regulations have an influence on the competitiveness and profitability of businesses. Business owners must comply with regulations established by federal, state and local governments.

Illy’s core capabilities lie in its Italian-style, focus on design and aesthetics, high quality, espresso culture. The increasing demand for coffee worldwide represents a huge opportunity for Illy to venture into global markets. I believe Illy has competitive advantages based on “VIRO” analysis. Illy is capable of creating value overseas with its unique, high quality Espresso. Its high-end restaurants and unique culture and customer experience are rare and hard to imitate. Given the success in

Both companies list many of the same risk factors which are inherent in the specialty coffee market as well as many other industries, such as the inability to import coffee beans at a reasonable price, economic conditions in the US as well as in the countries in which they do business, or the loss of key personnel to name a few.

Raw Materials (Coffee Beans): Coffee bean farming is not vertically integrated into Starbucks; the company purchases coffee beans from farmers. Starbucks choose to outsource farming due to the low potential hold-up problem. For its coffee, Starbucks uses only high-quality Arabica beans, instead of regular commodity and lower quality robusta beans. Since there are a lot of market participants trading Arabica beans (i.e. farmers & Arabica beans buyers), there is an established market price. Moreover, farm land has a low degree of asset specificity, and therefore farmers’ investments do not depend only on Starbucks as

Coffee Bean are sensitive to the price issue due to Coffee Bean is target market characteristics. It were targeted the youth generation which had become a weakness for the firm. Another weakness is franchisee's policy. It will not let master franchisees in the Middle East and Asia exporters of any sub-franchise.

Despite the fall in production however coffee earnings continue to grow in Brazil owing to the favorable global prices of the commodity. It should be noted carefully that Brazil is the only great producer of coffee that experiences frosts conditions. This puts its global competitiveness in terms of quantity and quality to be at stake since the other large scale producers do benefit a lot during the periods when Brazilian coffee is affected by frost. Additionally, these frosts are advantageous to the other suppliers in that when Brazilian coffee is affected an extremely large supply gap is felt by the global market. This makes the demand for coffee to outstrip its supply leading to increased prices of coffee in the world market. This scenario was experienced in the year 1994 when heavy frost struck Brazil and destroyed vast coffee estates. This caused a reduced volume of coffee in the market and consequently the prices of the good in the world market skyrocketed, (Ponte, 202).

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

Brazil is a main exporter of coffee, which is a favorite commodity of the world, along with other popular exports needed worldwide. When doing plenty international trade, it is essential to be aware of certain business cultures to ensure a pleasurable and successful experience and to maintain a business relationship with each other.

Portfolio pre-assessment A changing economy impact a country by causing an effect on the citizens. If there is a new government and new laws people would have to adapt to the new way of life. In many places across the country people have been doing things differently. Mainly because of their culture. The government tell us what to do and controls the economy.

Coffee giant Brazil experienced one of their first significant dry spells in 2014 causing the country to lose almost 1/3 of the country's crop (Vigilante, 2017). Brazil's drought adversely effected coffee production. Due to this severe weather condition, Brazil has been compelled to import supplies of Robusta beans (traditionally used for instant coffee and less expensive pre-gound coffee) which are also traded on international markets as a buffer against

As the coffee industry in Brazil grew so did the infrastructure of the country. By the 1900’s coffee made up 70 percent of exports from Brazil. The increased productivity led to an excess in the market that coupled with diminished demand caused a Brazilian depression and created discontent with the current political system that led to dictatorship control (E, 2008) (The Library of Congress, 2010). With the emergence of a more democratic political system and deregulation other crops developed as important exports. This was further encouraged by the government due to a need to have a more diversified economy (The Library of Congress, 2010). Even with shifting production to other crops Brazil remains an important part of the world’s coffee supply as shown in figure 1.