Bargaining Power of Suppliers
Coffee culture needs products and services from other companies known as suppliers in order to operate and sustain the business. The main suppliers for Coffee Culture are coffee beans suppliers, equipment suppliers, suppliers who provide ingredients for breakfast items, real estate sellers and renters. Coffee is the second largest traded commodity in the world. From this, we can say that the supplier power is low as there are numerous suppliers to choose from. In addition, the price of coffee beans has dropped because of a rise in the global coffee production which is mainly due to the large appearance of Vietnam coffee supplier. However, as we offer specialty coffee which is also causing our products price to increase, there is a possibility that we face either a threat to raise the price of certain coffee beans that we require, or by a threat of reduction in the quality of quantity of the coffee beans themselves. For example, there is no direct substitute for the Arabica beans which are used in the production of dark roasted coffee. In such case, production and price of coffee that uses dark roasted coffee beans would depend on their sustained business. The most important ingredient to produce specialty coffee is quality Arabica beans and this allows for differentiation to occur from the other suppliers. This should substantially increase their bargaining power as suppliers. Capital equipments in coffee shop are coffee makers, grinding equipment, and furniture. Suppliers of technological innovations such as automated coffee machines, latte and espresso machines have relatively high bargaining power as there are not many suppliers for such equipments used for coffee beans. These equipments are also unique and essential for the business. From this, we can say that there is a higher bargaining power when regards to the equipments. However, those suppliers are not tied to any existing coffee shops and when it comes to coffee makers...
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