II. Examine Starbucks supply and demand conditions. A. Evaluate trends in demand
ID: 433038 • Letter: I
Question
II. Examine Starbucks supply and demand conditions. A. Evaluate trends in demand over time and impact on industry and firm. Include annual sales figures for products. B. Analyze information and data to support your recommendation. Include graphical representation of the data and information used in your analysis.Please share any citations.
Thank you!
II. Examine Starbucks supply and demand conditions. A. Evaluate trends in demand over time and impact on industry and firm. Include annual sales figures for products. B. Analyze information and data to support your recommendation. Include graphical representation of the data and information used in your analysis.
Please share any citations.
Thank you!
Please share any citations.
Thank you!
Explanation / Answer
Starbucks is the major corporation which controls the major supply of coffee in the coffee industry. The important concept in microeconomics is supply and demand in market economy. Supply is concerned with what seller sells and how the products and services are sold at different prices. The supply is related to the seller and how he/she is willing for selling the product or services at various prices. The demand is related to the consumer and how much he/she is willing to pay for the service or product. Whenever there is supply of coffee and it exceeds the demand then there will be a drop in the equilibrium of the product and increase in the demand. When there will be exceeding demand as compared to supply then there will be increase in the equilibrium price and decrease in the quantity of demand.
(Understanding of the graph in words) Here the equilibrium price is shown as P1 which is (2.50 dollars) and equilibrium quantity is referred as Q1 (1000 cups) of coffee. When there is decrease in the price to P2 (1.50 dollars) then there will be increase in the quantity of demand to Q2 (1800 cups). The quantity of supply will also decrease to Q3 (600 cups). There is a shortage related to 1200 cups of coffee and there is more quantity of supply than the quantity of demand. There are few factors that tend to influence the demand curve. This is related to the income level, the price, market equilibrium, taxation and quality. The impact here for starbucks is income elasticity wherein there is increase in income and quantity of demand too. However with the decrease of demand there is also decrease in the income. If there is lower income for the consumer then there will be second throught given to consideration for buying the product.
For example if the original price is P1 and original quantity is Q1. Then the original equilibrium point is the intersect point of supply curve and demand. When there is no change in the price of the coffee and the income of the consumer increased then there will also be demand in the coffee price. There will be shift in the demand curve to right. P2 is the new price of coffee and the new quantity of demand is Q2. The intersect point of supply curve is equilibrium point. It is important for starbucks to analyze the essential changes in the productivity, supply, and demand curve. The amount used in economics for revealing the elasticity of quantity which is demanded for service or good for change that happens in the price is known as Price Elasticity of Demand. Inorder to determine the price elasticity of demand there is comparison done with the change in quanity which is demanded and the change in price.
There has been a growth in the ratio and growth of starbucks and its financial analysis from 2008 to 2013. There has been a drop of -5.9 percent during 2008 and 2009. The recession affected the revenue growth. There has been increase in operating income margins from 4.9 percent in 2008 to around 15% in 2012.There has been a revolution in the trends of demand and supply in starbucks. It is the epicenter of various coffee flaours and there is growing demand for more exotic flavours resulting in invention of more flavours. The evaluation shows its development and success over the years. The assessment is concerned with the origin and history. The conditions concerned with supply and demand which allowed perspective related to past trends.