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Price Elasticity
Title: Price Elasticity
Category: Literature / English
Details: Words: 891 | Pages: 3.8 (approximately 235 words/page)
Price Elasticity
Starbucks Coffee, Inc. operates in the coffee house industry. Starbucks is the dominant player in the industry, consistently posting higher profits than its competitors. For example, in the year 2000 Starbucks had a net profit of ,564K as opposed to one of its competitors Diedrichs Coffee with a net loss of ,424K. If Starbucks decided to charge one dollar more on all of the products that they sell, would consumers keep frequenting Starbucks? This concept can …showed first 75 words of 891 total…
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…showed last 75 words of 891 total…it 419.8. These numbers also indicate diminishing returns because each store is contributing fewer and fewer profits.
Operating within a service industry, Starbucks is not reliant on technology as many other companies. Additionally, any new technology would likely be adopted by competitors leaving little opportunity to gain a competitive advantage. Judging by the lead Starbucks has over its competitors with profits and consumer loyalty this indicates the firm grasp they have on today’s economic principles.
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