Starbucks is one of the largest franchise companies in the world, operating over 30,000 stores globally. In addition, the company has maintained financial stability and sustainability, posting it shares at USD 89 per share (Shwartz, 2018). In the last decade, Starbucks has experienced exponential growth, leading to its expansion of over 17,000 stores globally. Its revenues have also increased by approximately 10 percent, maintaining an average growth rate of 11 percent in the last five years (Shwartz, 2018). The revenue streams generated by the franchise have a positive impact on the American economy. Accordingly, the document critically evaluates various economic actors, including those with power, those without power as well as the power negotiated in relation to Starbucks.
Actors With Power
In the case of Starbucks, various actors influence the performance of the organization. Firstly, Star bucks Franchise Company has power over the markets as it controls a significant portion of the market share. Also, Starbucks contributes to the economy, providing it with the ability to influence economic factors in the market place. Secondly, Starbucks greatest competitor, Caribou Coffee, has significant power over the markets as the company also has substantial control of a portion of the market share (Shwartz, 2018). Consequently, it poses a major risk to Starbucks’ success and future as Caribou has the power to put Starbucks out of business. Thirdly, the government sets a variety of regulations that companies should follow. Furthermore, the policies it has set means the state can control the allocation of licenses and taxation. Accordingly, the government can either create a positive or negative business environment for Starbucks that can lead to its success of collapse.
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Actors Without Power
Due to numerous suppliers available in the market, Starbucks’ suppliers have limited or no power over the franchise giant. The suppliers scramble to supply for the company due to the quantity and consistency in the demand of the company (Shwartz, 2018). As a result, Starbucks can control the supplier prices as they are spoilt for choice. Low-level competitors and new entrants into the sector also have little or no power due to their inability to compete with Starbucks. The massive size of Starbucks, numerous resources, brand image, and control make new entrants into the business a negligible threat to the organization.
Power that is Negotiated
Mainly, negotiated power refers to the influence or ability to control the markets and economy. Usually, it varies between different actors. For example, the power negotiated between Starbucks and Caribou lies in their ability to influence the markets in terms of prices and product offering, hence, power over market share (Shwartz, 2018). The second type of power negotiated is between Starbucks and its suppliers, which focuses on the firm’s ability to control the prices of raw materials. The third type of negotiated power is between the government and Starbucks, whereby each aims to control the industry. Through various regulations, the government hopes to influence the way the coffee making industry operates. Similarly, through its revenue streams and its positive impact on the economy, Starbucks hopes to control the coffee industry. Their contribution to the economy gives them power as industry leaders.
Indeed, Starbucks is a force to reckon with in the coffee industry. The company controls a significant share in the market. Although its competitors and government regulations threaten its operation, Starbucks remain unrivaled. Moreover, actors without power such as suppliers strive to have the chance to supply products to the firm. Starbuck can negotiate for power owing to the influence it has on the economy and society.
References Shwartz, E. (2018). The impact of the Starbucks effect. EconLife. Retrieved from https://econlife.com/2018/09/housing-price-starbucks-effect/