DIRECTIONS: Using the case below ,

1. Make a positive and normative analysis.

Positive Analysis:
To begin with, in a minority, the early clients who appreciated the club-like climate
of unwinding over a quality mug of coffee wound up. In order to grow, Starbucks
gradually spoke to get in and out customers for whom administration implied speed
of request conveyance instead of acknowledgement by a barista and conversation.
Starbucks launched new store formats such as Express to try to take a position this
second fragment without subverting the first. However, many Starbucks regular
customers have switched to other brands.
In addition, as McDonald's and Dunkin Donuts expanded their coffee offerings at
far cheaper prices, the price premium for a Starbucks coffee became less justifiable
for grab and go consumers. These new products weakened the credibility of the
Starbucks brand for coffee purists.
Such strategies eliminate the objective of top administration from improving year-
on-year same store sales. Eventually, the purpose of immersion is reached and the
cannibalization of set up store deals undermines the strength of the organization as
well as the spirit of the administrator. This is the truly difficult work of retailing,
where a nearby senior supervisor needs to win brand reliability and increment the
volume of buys at a time.

Normative Analysis:

Starbucks used to be a closed corporation and it was the embodiment of their

exclusivity, but the management opened investments for it to potential investors other
than the family-related shareholders. If Starbucks had remained private and expanded
at a more regulated pace, none of this need would have existed. It is very demanding
to continue to bear premium-priced brand when trading as a public corporation.

2. Determine 3 Microeconomic issues and 3 Macroeconomic issues.

Microeconomic Issues

 With the withdrawal of 600 Starbucks stores, lesser competitions with related
firms will be overviewed. The competing business of Starbucks might price
higher causing irrational behavior of these firms.

 In a microeconomic scope, suppliers of the closed stores are also affected and
may attain profit decline and imbalance of operations (inefficient distribution
of resources) since a major and exclusive brand has to withdraw from their
deals

 Demands of coffee will shift to the left that will cause decrease in income of
the company.

Macroeconomic Issues
 According to Reuters Publication, 12,000 crews will be unemployed due to
the closing of 600 stores. Unemployment will result to poor standard living of
the people who are affected by it.

 The closing of 600 stores has the possibility to slow down the economic
growth of United States. The tax imposed and collected by the government to
the close stores and before will be compared and it will expect a decrease.

 The U.S economy also faced a recession (a period of negative economic

growth) during 2008 due to unemployment, not just for Starbucks, but also to
other firms. Starbucks contributing to recession will also cause inflation or
sudden overpricing of goods unbalanced to the minimum wage that also
arises poverty.