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Analysis of Distribution Channel of Starbucks

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Analysis of Distribution Channel of Starbucks

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Complete the following tasks as a group and share with the class:

Read/ Research about Starbucks’ commitment to helping out indigenous farmers in underdeveloped countries (www.starbucks.com).

After reading,

a)  write up your interpretation of the full distribution channel-from beans in the field to company headquarters,

b) Discuss any possible channel conflicts that you can see arising, and/or any disintermediation/re-intermediation issues involved in.

c) Please upload your findings on the padlet.

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Both questions have been answered to some extent. However, some irrelevant discussions on the local community can be seen. You are expected not to include any irrelevant element in your answer to make your answer 'to the point'.

Moreover, question (a) was only for the upstream distribution channel. So, you are requested to look at the question carefully before answering it in the future.

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a.       Starbuck utilise multiple distribution channels worldwide. This means the coffee beans produced by the farmers in Costa Rica are imported and processed by Starbuck, the processed product is sold by the company-owned stores (direct retail system), as a result Starbucks have full control over the distribution channel. In addition, Starbucks sells its product to other retailers such as supermarkets and shopping centres.

b.       The channel conflict of Starbucks includes breach of agreements with another distributer (Kraft). In this case Starbuck want to change the change their distributor; Kraft which have the role of creating the packages of Starbucks’ product.

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Both the questions have been answered to a great extent.However, question (a) was only for upstream distribution channel. So, you are requested to look at the question carefully before answering it in future.

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a.  Firstly Starbucks direct buy the beans from farmers and sells its products through a direct retail system in company owned stores. And their products also sells in supermarkets. Additionally Starbucks has distribution agreements with some office coffee suppliers.

b.  First channel conflict is that Starbucks has many of competitors in the market. (horizontal ) Second conflict is the supply of the beans are change like quality or quantity. (vertical)

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Answer to question (a) seems adequate to a large extent.Nice effort!Moreover, question (a) was only for upstream distribution channel. So, you are requested to look at the question carefully before answering it in future.

However, the arguments given in question (b) is not clear.Relevant examples would have made it more clear.

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Starbucks is a worldwide well-known American coffee roaster that has about 25,000 stores in over 60 countries to date. The aim of the research is to analyze the full distribution channel-from beans in the field to company headquarters. Moreover, the report will focus on possible channel conflicts and possible disintermediation issues. Thus, the report seeks to attempt to answer these questions.

Starbucks uses multiple channels of distribution for its products. More specifically, Starbucks uses more than one channel. That type of distribution structure is called hybrid. Starbucks is well-known for their corporate socially responsibility activities, and therefore Starbuck have a good relationship with farmer to collector, collector to miller, miller to exporter or broker, and finally to importer. This is gives Starbucks a competitive edge among its rivals. American famous coffee roaster sells their products, for example beans through a direct retail system in company-owned stores.  On another hand, Starbucks also sells their product in different shopping centres and supermarkets. Therefore, customers can access Starbuck’s products in every convenient place. In addition, Starbucks have distribution agreements with companies and industries, such as various hotels, airlines and office coffee suppliers. As Starbucks using multiple distribution channels, this allows Starbucks to a better globalization, access wider markets. However, Starbucks should be careful with its approach due to possible arising conflicts.

There are two main types of channel conflicts in the market channel system, which are horizontal conflict and vertical conflict. Horizontal conflict happens when a company or channel member merge or acquisitive another one on the same level, and vertical conflict happens with channel members who are not on the same level. Starbucks has numbers of competitors and some of them have strong profits like Costa. Thus, Starbucks needs to be careful with its approach on profits due to the possible channel conflicts

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Both the questions have been answered to  a great extent. Good argument with relevant examples are evident in your answer. Very nice effort!!However, question (a) was only for upstream distribution channel. So, you are requested to look at the question carefully before answering it in future.

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Starbucks makes use of the intensive distribution channels because coffee is a convenient product that consumers demand.  This item should be made widely available.  The company takes advantage of doing business with farmers in underdeveloped countries because their costs will be reduced in comparison to suppliers in the developed countries who may be supplying to their competitors. It may also be that faster to acquire beans in undeveloped countries since they take advantage of collaborative relationships with those farmers.

Possible conflicts in the horizontal  supply chain might be competing with retailers such as Sainsburys, that is the act of disintermediation. Vertical conflicts may be suppliers in developed countries demanding a higher price.

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Answer to question (a) seems adequate to a large extent.Nice effort!

However, the arguments given in question (b) is not clear.