Economic Indicators

Essay by k-to-the-cUniversity, Master'sA, April 2007

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In this paper, the members of team B have chosen 10 different economic indicators that can be used by Starbucks as an aid to forecasting future events. The 10 chosen events have a direct correlation to the company. In the paper, team members will explain why each chosen indicator is important to Starbucks while also explaining how the company will use the information provided.

PricesPrices affect Starbucks in a multitude of ways. The coffee bean grower demands more money from Starbucks. When this happens, Starbucks can choose to pay more money for the coffee beans or look elsewhere for a comparable supply of high quality coffee beans. On an individual basis, Starbucks could purchase other coffee beans for the pre-existing price but if poor weather conditions arise in the coffee belt, Starbucks will have no choice but to pay more money for the supply as the entire region is affected by the weather.

Starbucks would more than likely pass this added expense onto the consumer.

Coffee is traded on the New York Stock Exchange as a commodity. Individuals and institutional groups can invest in coffee futures. See the chart below for price projections for coffee beans.

Prev. Stl. TimeMay '07 (KCK07)109.45s+0.20109.50109.90109.30109.2515:00Jul '07 (KCN07)112.35s+0.20112.50112.60112.25112.1515:00Sep '07 (KCU07)115.20s+0.25115.30115.50115.30114.9515:00Dec '07 (KCZ07)118.80s+0.25118.70119.00118.70118.5515:00Mar '08 (KCH08)122.20s+0.25122.20122.20122.20121.9515:00May '08 (KCK08)124.40s+0.30124.40124.50124.40124.1015:00Jul '08 (KCN08)126.50s+0.35126.50126.50126.50126.1515:00Sep '08 (KCU08)128.40s+0.35128.40128.40128.40128.0515:00Dec '08 (KCZ08)131.05s+0.50131.05131.05131.05130.5515:00Retrieved on 4/11/07Another example of pricing relates to reduced prices; competing firms such as McDonalds have affected Starbucks in the form of lost revenue. A cup of coffee like any other product has a profit margin attached to the sales volumes. If a majority of consumers choose to buy McDonalds coffee versus Starbucks coffee, McDonald's profits will increase and Starbucks profits will diminish if Starbucks does not change pricing.

WagesWages affect the financial records of Starbucks as they would in any other corporation. Wages...