True / False Starcrocks Coffee is in the midst of a major and rapid national and international expansion plan,with the goal of placing one of its coffee shops nearly everywhere in the world. In contrast, BlueCup Coffee has decided to operate primarily a small collection of coffee shops in the large cityMetropolis, whose residents are accustomed to and prioritize the finer things in life. Both chainsare responding to the growing social trend of being perpetually caffeinated.Running a coffee shop requires both an espresso machine (used to make espresso coffee which isserved alone or as part of a latte or cappuccino) and baristas (who prepare and serve the coffee).Baristas differ in terms of natural ability and training. As far as espresso machines, both userecently developed technological marvels. Starcrocks has decided to use a "super automatic"espresso machine that simply requires the barista to press a single button to make a coffee drink.Blue Cup Coffee has decided to use the Complexo3000, an Italian machine that is difficult to use(Requiring many small and technical adjustments by the barista over the course of the day) butwhich allows the very best flavors to be extracted from the coffee beans. For both Starcrocks andBlue Cup Coffee, decisions about which types of espresso machines and baristas to use are madeat a corporate level and so all shops within a chain must use the same machines and types ofbaristas as all other shops.1. Suppose that the time spent waiting for a drink at Blue Cup Coffee is longer than atStarcrocks. This means Blue Cup Coffee is "operationally inefficient" (that is, not on thecost-quality frontier).2. Blue Cup Coffee recently hired a consulting firm that reported that Blue Cup Coffee spendssignificantly more money than Starcrocks on training and wages for its baristas (in "realmoney" terms, that is controlling for any cost-of-living differences between Metropolis andother locations around the world). To stay competitive with Starcrocks, Blue Cup Coffeeprobably should not reduce its expenditures on baristas.3. Michael Butler, who writes a popular blog on strategy, recently observed that Starcrockscould, if it wanted to, change its corporate decision and install Complexo3000 machines inall of its locations worldwide. Michael Butler added that "If Blue Cup Coffee makes anymoney, Starcrocks will just copy Blue Cup Coffee. I suggest selling any stock you hold inBlue Cup Coffee." Michael Butler's reasoning and conclusion are probably correct.

In this case study, we explore the competitive strategies and expansion plans of two major coffee…

Answered: 1. Suppose that the time spent waiting…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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