Business Economics

Only available on StudyMode
  • Download(s) : 180
  • Published : November 7, 2010
Open Document
Text Preview
The economic downturn and competition from rival Costa Coffee deepened the UK losses of coffee chain Starbucks to £9.9m in the year to September 2009, compared with a pre-tax loss of £1.9m in the previous year. The tough trading climate in Western Europe was predicted last year by Starbucks chief executive Howard Schultz, who said: "Unemployment, the sub-prime mortgage crisis, and I think consumer confidence, particularly in the UK, is very, very poor." (, 2010) However, a spokesperson for Starbucks said that heavy investment was paying off in terms of a record number of customers and a return to solid sales growth. The group has put aside £24m this year to continue refurbishing its UK stores. It is also focused on rolling out free Wi-Fi, sourcing Fairtrade coffee for its espresso-based drinks, and experimenting with an instant coffee brand to fight off competition from JD Wetherspoon and McDonald's. Starbucks competes in the Service Sector, Specialty Eateries Industry and is the dominant player in the Gourmet Coffee segment. This essay is going to explain its major external and internal environmental factors impacting upon its operations in its appropriate market structure.

US companies invest in UK success. With its depth of talent and global reputation as an international financial centre, the UK remains a crucial destination for large and small American firms. The challenging global economic situation has created financial turbulence across the world; yet investment in the UK from international firms, including large and small US companies, remains strong. The UK has always proved an attractive and important destination for US firms. Hundreds have located here including globally popular mainstream brands such as Google, Microsoft and Starbucks. And, despite the challenges of the global economic downturn, US financial services companies continue to choose the UK as a basic, viewing it as an important investment location. Structural Change is often discussed in terms of the even more widely drawn “primary”, “secondary” and “tertiary” (service) sectors. Starbucks is part of the service industry because, they provide a service, thus they are part of the tertiary sector. The tertiary sector of industry (also known as the service sector or the service industry). Services are defined in conventional economic literature as "intangible goods". According to some economists, the service tends to be wealth consuming, whereas manufacturing is wealth producing. The tertiary sector of industry involves the provision of services to businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer as may happen in wholesaling and retailing, or may involve the provision of a service, such as in best control or entertainment. Goods may be transformed in the process of providing a service, as happens in the restaurant industry. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods. The personal services are provided specifically to individuals, but what is most important, every business also seeks to offer goods or services which better meet the needs of consumers than those of rival firms. “The goal of competitive strategy for a business unit in an industry is to find a position in the industry where the company can best defend itself against these competitive forces or can influence them in its favour … The key for developing strategy is to delve below the surface and analyse the sources of each.” (Porter, 1998) Analysis and investigation of decision-making in the business environment must take into consideration a number of influential and competing factors, both at the macroeconomic and microeconomic level. The economics is how the society deals with the problem of scarcity and the resultant problems of how to produce, what to produce and how to distribute. Macroeconomics analysis,...
tracking img