Project Economic Analysis Select a product that you use frequently. Research the company that produces this product as well as the general characteristics of this product. You will then select two...

Running Head: ECONOMIC ANALYSIS 1
Economic Analysis
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ECONOMIC ANALYSIS 2

Economic Analysis
Product Analysis- Sta
ucks Coffee
Sta
ucks Corporation was launched in 1971 and is now the largest coffeehouse company
in the world. It is based in Seattle, Washington and has more than 20,000 outlets all over the
world. It believes in serving the best possible coffee, grown under highest quality standards and
sourced using ethical practices. Sta
ucks offers a range of products, viz. coffee (more than 30
lends and single origin premium coffees), handcrafted beverages (frappucino, smoothies, Tazo
tea, fresh
ewed coffee), Merchandise (coffee and tea
ewing equipment, mugs and
accessories, packaged goods, music, books and gifts), Fresh Food (Baked pastries, sandwiches,
salads, oatmeal, yogurt parfaits and fruit cups) and Consumer Products (coffee and tea, ready to
drink products and ice-creams). The
and portfolio consists of Sta
ucks Coffee, Seattle‟s Best
Coffee, Tazo Tea, Evolution Fresh, La Boulange and To
efazione Italia Coffee (sta
ucks,
2012).
In sta
ucks‟ case, it is actually the whole experience that matters and not just the
product. Thus the
and itself is advertised as follows: “Our stores are a neighborhood gathering
place for meeting friends and family” (sta
ucks, 2012). So what sta
ucks strives for is
providing a complete experience to the customers and not just selling the products. To achieve
this, the best quality coffee is served in the restaurants, which is matched to the tastes of the
customers after carefully assessing what each customer wants. The outlets are designed in a cozy
fashion. In some outlets facilities like wi-fi are available. Sta
ucks aims to create a „third place‟
for the customers apart from home and office. The baristas are trained to be friendly with the
customers. They deal with the customers on first name basis to „create conversations‟. The store
ambience is maintained everywhere in the world. The company also conducts coffee seminars to
ECONOMIC ANALYSIS 3

spread awareness about the coffee that the customers buy. Thus a relationship is maintained with
the customers to make them feel comfortable. Also, Sta
ucks focuses on maintaining highest
ethical standards to be a responsible company by ethical sourcing (fair purchasing practices,
forest conservation programs and supporting farmers), environmental stewardship (water and
energy conservation, green construction and recycling) and community involvement. All this
differentiates Sta
ucks and thus its coffee in the marketplace.
Market structure for Sta
ucks is monopolistic competition; wherein there are many
sellers selling differentiated products and few ba
iers to entry. Given that Sta
ucks is able to
differentiate itself and its products in the marketplace; hence a monopolistic market structure
would help it in expanding its operations. New competitors will be restricted due to presence of
entry ba
iers. The existing firms already have a place for themselves, which de-motivate new
firms to enter. Even the existing competitors will find it difficult to compete with Sta
ucks
ecause of a niche position created for Sta
ucks.
Due to the problems of obesity and diabetes, New York City Mayor proposed a ban on
sugary drinks of size more than 16 ounces. Though such ban was upheld by the court, however
had it been put in place, it would have affected Sta
ucks‟ servings also. Though Sta
ucks said
that it was out of the ambit of this proposal because majority of its products are customized by
their customers, yet it would look into the matter and make appropriate changes to fully comply
with the regulation (Bailey, 2013). This regulation can affect the profit margin positively or
negatively. If the size of the serving would decrease then the profit may decrease because of
decrease in prices co
esponding to the quantity, if such decrease in quantity is not accompanied
y increase in the number of servings. There are chances that the profits may increase if the
prices are not lowered proportionately to the decrease in quantity. Various employment laws also
ECONOMIC ANALYSIS 4

affect Sta
ucks, the most important being the Fair Labor Standards Act of 1938 and the
Americans with Disabilities Act of 1990. These acts determine the labor standards for all the...