Assignment

Assignment

Assignment 2

Introduction

Starbuck is well known largest Coffee house that opened in year 1971. Companies operate in more than 50 countries all around the world. Company offered its customer whole coffee beans, pastries and coffee related items. Starbuck facing struggles and saw their sales slipped before their competitors did in recession period that means they starts think about new strategy to increase revenues and lowering cost (Smith, 1996). This report analyze micro and macro economic conditions and evaluates how well organization remain successful in recession period to manage business risk and suggest them managerial strategy to overcome their hurdles,

Macro Economic conditions

Every business is heavily affected by the external environment especially due to its competitors. It is important for Starbucks to be aware from the external environment changes in order to become successful in industry. Various macroeconomic factors however influence Starbuck business.

Economic growth

Economic activities can changes rapidly and affecting the business (Salvatore & Brooker, 1993) . Starbucks business has great influence by the economic activities. In recent recession period when GDP rates falls, there was also the fall in Starbuck demand that cost them to close around 900 stores all around the world due to fall in demand offered by business. Although company have an opportunity is that price of coffee contract is currently down 38% from 1 year ago. Therefore, it would be cheaper for Starbuck to buy coffee. These savings could results very competitive prices in business.

Inflation

In inflation time, price of products has become rise for a specific time period. Starbuck also suffered in inflation time period that results starbuck have occurs higher time operations cost. Because, company employees demand increase their wages.

Micro Economic Analysis

The market structure especially for industry of catering service falls in to the monopolistic market structure (Salvatore & Brooker,1993). There are number of competitors that competing to sells their beverages in terms in their retail locations. Coffee is considered as such commodity with marginal differences in flavour, quality and texture. Starbuck are normally very stable in their price and does not rely on large degree influence on their product price. However, they are required to attempt influence consumer demand by promoting and positioning different products such as flavour, quality or atmosphere.

Demand

Although it has been found that financially strong Americans drinks Starbucks coffee and they have enough income to purchase it at least occasionally as well as they has ability to visit shop.

Cost

There are many green techniques are considered as most costly to companies such as paper made products that becomes after 100% recycled. As Starbuck offers of customer's facility of discounted refills for their own travel mug from the shop could eventually prove as more costly (Goldman, 2008). If such cost passed along the customers than number of customer did not able to recognize the environmental benefits and might choose to become customer of their competitors.

Production

New software and hardware in business can helpful to improve the business efficiency. Such as, payment through barcode system from smart phones that will reduce time ...