Businesses require supplies to satisfy the needs of the consumers. Consumers demand goods and services, and the business personnel ensures they provide quality and the number of goods required. However, goods and services are not all locally acquired and therefore involve processes of ordering and transportation of goods and services. Exportation and importation have helped create free trade globally by supporting international trade. Countries cannot depend on the products they can provide locally and interact with other countries using the global space to acquire the necessities from other countries (De Wit & Meyer, 2010). The people that provide the goods and services are known as the suppliers. The suppliers ensure that the products are high quality and are acquired from the manufacturer at an affordable price. The suppliers connect the manufacturers and the consumers by creating a channel of the flow of the goods.
In trade, there is the manufacturer, the one who produces and provides the goods, and the retailer who distributes the products to the consumers. Therefore, the supplier ensures proper communication with the manufacturer and the retailers (Bizzarri, 2022). It creates a constant flow of goods for the consumers that are also affordable and meet the set standards in the business sector. Many products are in the international market, such as coffee. Coffee has many beneficial uses, such as lowering the risks of dying, reducing cancer, and improving physical performance. Coffee originated from Ethiopia and was first used by Muslims and was spread to Yemen, Mocha. Coffee is also a cash crop for developing countries and creates employment.
For example, at least one hundred million farmers in developing nations depend on coffee as a source of income. The main exports of coffee in the international market include Ethiopia, Burundi, Uganda, and Rwanda in Africa. In this essay, there is a focus on coffee in Italy. Italians concentrate more on the preparation of coffee and the different blends by using various accessories to create different brands of coffee (Food News, 2022). In Italy, Trieste is the leading coffee processing industry. Since it is Italy, there is a lot of demand for coffee since it is estimated 1500 cups for one person in a year. Many coffee types in Italy include double espresso, marocchino, ristretto, caffelate and cappuccino. Italy is ranked the second largest imported coffee after Europe. Coffee is part of the culture in Italy, and therefore, there are at least eight million bags that are imported every year from other countries.
Starbucks is a multi-national company recognized as the world’s number one coffee provider. The company first operated in Seattle in 1971 under the original name “Starbucks Coffee, Tea and Spice,” later changed to Starbucks by Herman Melville and Moby Dick Book. Since its emergence, the organization’s primary goal has been finding quality coffee and delivering it to people who are not yet exposed to it (Food News, 2022).
In 1982 the company recruited Howard Schultz as the new director of marketing and retail operations. With the director’s new ideas, the company grew by emphasizing fresh coffee to customers. Additionally, Howard ensured that the best coffee was provided for free hence by 1985, the company’s products had expanded to some parts of Europe. By 2012, the company had located in more had 80 countries with over 33800 stores globally. With almost 200000 employees worldwide, the company is very famous due to its ability to bring high-quality beverages and coffee to its customers globally. Millions of people on a daily routine do visit Starbucks to get the ultimate feeling of tasting quality coffee. It serves cold and hot drinks, micro-ground instant coffee, whole bean coffee, caffe latte, among other types of coffees (Food News, 2022). Besides, the company provides an upbeat environment of helpful and friendly staff to aid customers in any problem or challenges they may have faced within or outside the company. Consumers are loyal to Starbucks for its brand, status, and what it offers to customers.
Over history, Starbucks has been recognized for its aggressive and fast expansion of developing new stores to keep up with the demand quickly. Besides, it is interesting how the company still is the world’s leading coffee supplier. It faces significant challenges, including real estate issues, special operations, and competition from other fast-food organizations. In 2008 the company faced a period of the financial crisis until the appointment of Peter Gibbons transformed the services of the industry (SRL, 2022). Gibbons typically detected the challenges that undermined Starbucks ‘ supply chain and developed a new plan that enabled the firm to keep up with the global competition.
On the contrary, Caffe borbone is a local coffee producer in Italy that started in 1998. The company is located in Caivano, Napoli, and it contributes to a portion of the food and manufacturing industry in Italy. Unlike Starbucks, Caffe borbone contains 253 employees and has not spread to other countries with the exception of the United States and some parts of Europe. In terms of revenue, the industry generates $259.30 million in sales (Garvin, 2021).
Over the years, this local producer has transformed into a globally recognized brand by coffee lovers. Interestingly, the company operates by a vital mission and vision statements that emphasize creating a family with a taste of Neapolitan traditional coffee (Garvin, 2021). Besides, it is adopting the dynamic market by embracing marketing ideas such as partnerships to strengthen its supplier-retailer relationship. Again, it relies on pure price-based competition and advertisements to sell its products. Caffe borbone does not have a robust supplier-retailer relationship and lacks an effective market strategy. However, as much as it is a growing firm in the market, it faces competition from global and local producers like Starbucks, McDonald’s, and Peets coffee. Therefore, this paper will examine and evaluate the supplier retailer relationships of the companies. Also, it would provide an appropriate rec commendation for the Caffe borbone company.
Methodology
Case Selection
Besides, case study research was applied to increase the understanding between Starbucks supplier-retailer demand chain. The study was directed to formulate a testable hypothesis adopted in further investigation. From a personal perspective, interviews, surveys, and observations would help develop theories that would provide a good analysis of the company’s performance (Italy Espresso, 2022). The surveys and interviews consisted of five major questions about its business environment and background.
The study utilized both primary and secondary sources of data. The secondary data collection source comprised journals, books, and electronic books. On the contrary, the primary data collection techniques involved quantitative and qualitative methodologies such as interviews, surveys, and experimental research. In quantitative methodology, data was collected via surveys whereby questionnaires were distributed via social media platforms and respondents’ attitudes, and opinions about Starbucks supplier retailer relationship noted (Chuang, 2019). Additionally, interviews were conducted at random, and the response was noted.
The data collection technique involves using the Statistical Package for social sciences (SPASS) and South Texas Art Therapy Association (STATA) software programs. STATA and SPSS are vital for producing quality data. Also, the programs are easily affordable and enable statistical analysis and drawing of graphs (Chuang, 2019). Besides, the Longitudinal technique would be utilized to determine the time horizon, which is essential in measuring the financial performance of both companies. Consequently, the use of different data sources helped enhance the validity and reliability of the data.
Research Findings
Analysis of data was done at two levels. One is the within-case analysis, where the significant insights of data were established. Typically, within-case analysis constitutes the explanation of the company supplier -retailers as per the collected data. Such explanations gave the unique patterns of the cases. It provides a brief description of the within-case findings. Additionally, cross-case analysis was performed using the data to determine the cross-case pattern in the supplier-retailer association (Pascucci, 2018). The level of supplier retailer association was gauged by six dimensions: trust, interdependence, duration, inventory, long-term orientation, and information sharing.
Analysis
The cafes in Italy have 90% of the market concentration while the international coffee markets occupy the 10%. Hence there is a retail store specializing in brewing brands of coffee to satisfy the demand from the consumers. Due to the demand for coffee, international players distribute coffee in Italy. There is high competition in the suppliers of coffee which the brands only differentiate. The international suppliers differentiate in prices, packaging, and the innovation of products. When coffee companies have supplier-retailer solid relationships, they influence the quality and sustainability, not depending on the cost of the goods. Since Italians are keen on making the different brands of coffee, it is essential to ensure that the coffee distributed is of high quality and can sustain the demand in the market.
The relationship between the suppliers and retailers should be vital to ensure the flow of coffee in both the local and the international markets. For example, Starbucks encourages the suppliers to work hard through awarding points to those who preserve the environment and pays the suppliers for the coffee they supply. The points help ensure that Starbucks and its suppliers remain intact and the products are of high quality (De Wit & Meyer, 2010). The sustainability of products is essential since sustainability principles are social, economic, and environmental. Although coffee is essential, the three principles are vital as they ensure that the ability of future generations to provide for their needs is still secure. Some challenges face the supply of coffee. They include climatic changes, dynamics in the community, and sociopolitical conditions.
When people search for suppliers, they consider the sustainable and ethical standards that influence their decisions on purchasing. Consumers are willing to spend more money to get access to premium products. Similarly, the consumption of alcohol should not endanger the environmental standards of the market. Starbucks is a globalized producer of coffee, while Caffe Borbone is a local producer of coffee in Italy. Both the companies have either retailers or wholesalers to provide quality coffee. Therefore, both companies ensure sustainability by conserving the environment through packaging, conservation of water, and reducing carbon in the air. It, therefore, safeguards the health of the consumers and ensures a safer generation.
Starbucks is the leading coffee producer and therefore requires products that meet the standards to ensure quality coffee. The leading suppliers of coffee are Mexico, Brazil, Kenya, Saudi Arabia, Columbia, Tanzania, and Guatemala. Starbucks uses a vertically integrated supply chain that allows the company to get involved in the step by step of the coffee supply chain. The supply chain is from the coffee beans to the consumers’ coffee. Starbucks, therefore, works directly with 300000 suppliers globally. Starbucks ensures quality suppliers as the suppliers are selected through the Coffee and Farmer Equity guidelines and Coffee Sourcing Guidelines. Starbucks makes 70,0000 deliveries in a week to different retail shops that act as distribution channels that complete the chain from suppliers to consumers (The Traditional Foodie, 2022). Starbucks also uses e-commerce retailers to deliver the products to the consumers.
The digital input puts Starbucks in the competitive market due to the changes. E-commerce is convenient and efficient for Starbucks. Starbucks is a resource-based company as its success is based on its value on its consumers. Starbucks has money, materials, and land that is the tangible resources, while the intangible resources include the relationship between Starbucks and the customers. Also, the knowledge and capability of Starbucks allow Starbucks to use the resource-based that improve the performance of the organization (De Wit & Meyer, 2010). Besides, the valuable resources of Starbucks enable the company to thrive since they are used to implementing strategies that neutralize threats and improve the company’s overall performance.
On the other hand, Caffe Borbone is a local distributor in Italy. The company signed an agreement with Neapolitan Company that allowed the company to enter the highly competitive market with the prices in the market. Caffe Borbone depends on both national and local transport services (Chuang, 2019). The shops have immediate contacts with the customers and, therefore, are recommended by a higher population in Italy. Caffe Borbone deals with retailers to distribute the coffee nationwide. The suppliers and retailers have enabled Caffe Borbone to be the leading supplier of coffee and among the top named companies in Italy (De Wit & Meyer, 2010).
Recommendation
Caffe borbone should focus more on establishing branches in different countries. When their items are found everywhere globally, the national differences like language, national culture, and management style will positively impact the business approach. For instance: by having branches in the United States, China, and Africa, the social construct would enhance the supplier-retailer relationship.
Additionally, Caffe borbone should abide by or switch to suppliers who share a joint mission and vision. For instance, when concluding a deal or requesting a contract, the company needs to overlook the price and focus on the lowest price. Typically, retailers and suppliers should share similar branding visions and worldviews. This is because most consumers would appreciate the partners aiming to satisfy their needs.
Besides, the firm should select appropriate suppliers following sustainability standards. Typically, it translates to rewarding suppliers’ capability (De Wit & Meyer, 2010). The chosen suppliers should be assessed based on their ability and capacity to enhance the market relationship. Factors like benefits, cost, risks, and opportunities of all the suppliers should be evaluated.
One area that Coffee borbone should focus on is offering different non-coffee beverages just like Starbucks. Moreover, Caffe borbone is a coffee retailer, and other customers may visit their stores without even liking coffee (De Wit & Meyer, 2010). Hence, expanding the beverages would enhance their promotion enabling the firm to serve a broader market. Besides, most people consume coffee in the morning or afternoon; hence when the company introduces other coffee beverages, the sales would rise.
Besides, the local producer company can juxtapose the need for resource leveraging and the demand for marketing. This would enable the company managers to understand and manage market and resource paradox via juxtaposing. Juxtaposing is an ever-evolving protocol of maintaining dynamic equilibrium in resources and market paradox. Other companies are always trying to improve their sales by innovation; hence the approach would create proper awareness. Finally, the company can learn how to formulate strategy operating strategy from the outside in. This would aid in creating customer value and increasing profit by deploying market insights. The first approach under this perspective is through enhancing customer value leadership.
References
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Chuang, H., 2019. Starbucks in the World. HOLISTICA – Journal of Business and Public Administration, [online] 10(3), pp.99-110. Available at: <http:// 10.2478/hjbpa-2019-0031>.
De Wit, B. and Meyer, R., 2010. Strategy An International Perspective. 7th ed. Thompson International, pp.196-231.
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Garvin, D., 2021. The Italian coffee triangle: From Brazilian colonos to Ethiopian colonialisti. Modern Italy, [online] pp.1-22. Available at: <http://10.1017/mit.2021.26>.
Italy Espresso. 2022. Caffè Borbone Wholesale: Authorized Dealers. [online] Available at: <https://www.italyespresso.com/caffe-borbone-wholesale-authorized-dealers/> [Accessed 18 February 2022].
Pascucci, F., 2018. The export competitiveness of Italian coffee roasting industry. British Food Journal, [online] 120(7), pp.1529-1546. Available at: <http://http:/10.1108/bfj-05-2017-0306>.
SRL, S., 2022. Why sustainability in coffee? – blog SpecialCoffee. [online] SpecialCoffee. Available at: <https://specialcoffeeitaly.com/why-sustainability-coffee/> [Accessed 18 February 2022].
The Traditional Foodie. 2022. Italian coffee: The ultimate guide • The Traditional Foodie. [online] Available at: <https://thetraditionalfoodie.com/italian-coffee-the-ultimate-guide/> [Accessed 18 February 2022].
