Questions & answers Starbucks

Starbucks

  1. Starbucks is known for its chain coffee stores in the global market.  This is the best coffee seller in the world. Moreover, this also sells the customize mugs in the stores with tags of Starbucks. With the growing trend and making, the profit there is race between the competitors. The best option for the company is to buy the raw material from the suppliers. The raw material is the fresh and quality coffee beans from different suppliers. The difference between the make and buy decision is the production cost and transaction cost. The transaction cost is low in buying as compare to the making. For the self-production it has require new staff, salaries, managing them therefore, this shares the attention of the top management. The transaction cost related only with the carriage, purchase and storing cost of the coffee beans. Therefore, the buying is good for the Starbucks. The ratio of tax is also decreased and it raises the profit for Starbucks.
  2. The backward integration means Starbucks owes the farms of the coffee beans, the company is getting involved in making its own coffee beans instead of purchasing form the suppliers of coffee. The possible or potential issues that face by the Starbucks includes in the expenses, high taxes, more burden on the management, decrease in the profit and many others. If it becomes the grower then he has to maintain another department. If the coffee is buying from the suppliers then there will be lot of qualities and varieties of the coffee beans. Own growing coffee is itself a challenge. The company is famous for its quality. This is the observation that it may affect the quality of the coffee. However, if the production cost should less as compare to transactional cost then backward vertical integration. In addition, the current position of the company is strong therefore no need to go for the backward vertical integration.
  3. Starbucks is working internationally and it is a global company. The reason not to make extensive contract s with the suppliers is due to the surety of continuous supply. Moreover, this also reduces the bargaining power of the suppliers. If the company makes extensive contracts, it has to pay a large budget to the suppliers. Moreover, this also makes bound the company with the suppliers. This also helps to maintain the quality of coffee. The less purchase from a single supplier helps to get a fresh and quality raw material. If the supplier is not able to provide the quality coffee beans then the company can make contract with other suppliers. Moreover, this also maintains the relationships with suppliers. Starbucks has many suppliers therefore; it can be from the supplier of its own choice. The bargaining power of suppliers is less so the company does not have any kind of threat of disturbances to get coffee beans. The raw material purchased and process by the company for providing the best coffee to the customers.

Assignment on Questions & answers: Starbucks By ABC Dated: Starbucks Starbucks is known for its chain coffee stores in the global market. This is the best coffee seller in the world. Moreover, this also sells the customize mugs in the stores with tags of Starbucks. With the growing trend and making, the profit there is race between the competitors. The best option for the company is to buy the raw material from the suppliers. The raw material is the fresh and quality coffee beans from different suppliers. The difference between the make and buy decision is the production cost and transaction cost. The transaction cost is low in buying as compare to the making. For the self-production it has require new staff, salaries, managing them therefore, this shares the attention of the top management. The transaction cost related only with the carriage, purchase and storing cost of the coffee beans. Therefore, the buying is good for the Starbucks. The ratio of tax is also decreased and it raises the profit for Starbucks. The backward integration means Starbucks owes the farms of the coffee beans, the company is getting involved in making its own coffee beans instead of purchasing form the suppliers of coffee. The possible or potential issues that face by the Starbucks includes in the expenses, high taxes, more burden on the management, decrease in the profit and many others. If it becomes the grower then he has to maintain another department. If the coffee is buying from the suppliers then there will be lot of qualities and varieties of the coffee beans. Own growing coffee is itself a challenge. The company is famous for its quality. This is the observation that it may affect the quality of the coffee. However, if the production cost should less as compare to transactional cost then backward vertical integration. In addition, the current position of the company is strong therefore no need to go for the backward vertical integration. Starbucks is working internationally and it is a global company. The reason not to make extensive contract s with the suppliers is due to the surety of continuous supply. Moreover, this also reduces the bargaining power of the suppliers. If the company makes extensive contracts, it has to pay a large budget to the suppliers. Moreover, this also makes bound the company with the suppliers. This also helps to maintain the quality of coffee. The less purchase from a single supplier helps to get a fresh and quality raw material. If the supplier is not able to provide the quality coffee beans then the company can make contract with other suppliers. Moreover, this also maintains the relationships with suppliers. Starbucks has many suppliers therefore; it can be from the supplier of its own choice. The bargaining power of suppliers is less so the company does not have any kind of threat of disturbances to get coffee beans. The raw material purchased and process by the company for providing the best coffee to the customers.

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