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Inflation, Unemployment and the Business Cycle of Starbucks

by Expert Lilliana | 03 Aug 2016

With enticing advantages apparently based on the company’s perceptions of the business, Starbucks, which has evolved to be the public’s preferred source of costly caffeinated drinks around the world, has challenged the traditional cycle of the industry and continued to expand more rapidly. In short, Starbucks developed too rapidly, established more branches in many countries but unfortunately compromised the company’s business principles just to be able to achieve impractical goals.

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This business phase of branching out immediately has undeniably alleviated the labor issue of unemployment due to the provision of additional jobs to more people or opportunities to capitalists worldwide. However, along with this beneficial implication in the workforce now comes alarming concerns. These concerns include the aggravation of the inflation problem as well as the eventuality of store closures. Katsenelson viewed that the weak spending of Starbucks’ consumers tends to force the company to reconsider its growing number of stores due to its charming impact such as the mounting shutting down of its global branches (Katsenelson, 2008). The unstoppable price increases of the various caffeinated products of Starbucks ultimately reduce consumer spending particularly in this trying times when worldwide economies are inevitably decreasing. Simply put, significant price increases in all Starbucks stores disadvantageously intensify the decline in the company’s sales primarily because consumers’ spending also decreases.

In its option to expand globally, the prices of the company’s products as well as their customers and the organization as a whole were obviously compromised. This is because branches were established to adjacent with each other, stores were opened at the wrong side of the area, costly leases were made and they even employ personnel who are just suitable to be workers of fast-food restaurants. Hence, there is a need for Starbucks to reduce, it does not stop its store obesity otherwise, face more damaging outcomes.

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