14 Analyse one reason why a small independent coffee shop might be unable to compete with a large chain like Starbucks.

[Sir Afzal Shad]

14 Analyse one reason why a small independent coffee shop might be unable to compete with a large chain like Starbucks. [3]
Hint: Economies of scale > Starbucks can buy coffee beans in huge quantities at a discount > This means Starbucks can afford to sell its coffee at a lower price.

[Abdullah Baig]

Kn
A small independent coffee shop may struggle to compete with a large chain like Starbucks because large firms benefit from economies of scale
App
For example, Starbucks can buy coffee beans and packaging in massive quantities at discounted prices lowering its average cost per cup which allows it to sell coffee at lower prices or spend more on marketing making it difficult for smaller shops to match its prices or visibility
An
Therefore, economies of scale give large chains a cost advantage, reducing competitiveness from small businesses that operate on a much smaller scale with higher unit costs

[Aarib Saad]

(KN)Because it will be more difficult for small coffee shop owner to be able to achieve economies of scale.
(APP)Since, Starbucks is a business that operates world wide, it means that it has to buy coffee beans in the thousands of tonnes, and these bulk purchases allow it to achieve purchasing economies, which a small coffee shop can't do, as it will only buy be able to afford beans for a few hundred people.
(AN)Thus, this will decrease Starbucks' productions cost, so it will charge lower prices as compared to even a small coffee shop, so the majority of the society will be able to purchase it's products, which will lead to higher consumer base.

[Fatima ibtehaj]

[KN]Because of lack of resources/capital.
[APP]For example, while Starbucks can run national advertising campaigns and offer loyalty apps, a local café might only rely on word-of-mouth or local advertising, limiting its reach and customer base.
[AN]As a result, Starbucks can keep prices lower or offer more promotions, while still maintaining profit margins. The small coffee shop, which buys in smaller quantities, has higher costs per unit, so it may need to charge higher prices to stay profitable hence this makes it difficult for the smaller business to attract price-sensitive customers and match the marketing power or brand recognition of a large chain, reducing its competitiveness.

[EmmanWaseem]

It is due to the economies of scale
The large coffee business like Starbucks can buy more high quality beans than a small coffee shop
That is the reason business like Starbucks have more quantity beans compared to a small coffee shop

[Naveen fatima]

[KN] Large coffee chains often have more resources and advantages than small independent shops.
[APP]For example, Starbucks can buy supplies in bulk and spend more on advertising.
[AN]A small coffee shop might struggle to compete because it cannot match the low prices or wide marketing reach of a big chain. Large firms benefit from economies of scale allowing them to lower costs and attract more customers. The small shop may also have less brand recognition, making it harder to keep up with well-known companies like Starbucks.

[Arham Qadri]

[KN] Because of economy of scale/because it has not been recognized locally.
[APP] For example Star Bucks is a coffee shop that is known and operates worldwide so this means it has to purchase a lot of coffee beans which a small coffee shop cannot do.
[AN] Hence this will lower the production cost of star bucks so low prices would be charged and sales would increase.

[Abdullah Mohsin]

[KN] A small coffee shop might be unable to compete with large chains because they achieve economies of scale.
[APP] for example, a small coffee shop with just one branch in a country will have very less demand if compared to a multi-national company like starbucks that has many branches in many countries and sells a large quantity of coffee daily, enabling it to buy coffee beans in bulk and earn trade discounts while the small coffee shop is unable to buy in bulk due to low demand.
[AN] Purchasing economies of scale enables the business to decrease the cost of producing each cup of coffee, helping increase the profit margins and allowing it to re-invest in expansion or R&D, while the independant coffee shop is unable to sell at high profit margines due to higher COP, making it harder to re-invest in expansion/R&D.

[shamaim shakeel]

(KN)
Large chains like Starbucks have more money and resources, which gives them a strong advantage over small independent coffee shops.

(APP)
For example, Starbucks can buy coffee beans in bulk and spend a lot on advertising, while a small local coffee shop cannot afford that.

(AN)
Because Starbucks buys in large amounts, its costs per cup are lower.
This means it can sell coffee at a cheaper price or offer discounts that small shops can’t match.
As a result, customers are more likely to choose Starbucks, making it hard for the small coffee shop to compete and earn enough profit.

[Aayan Zaidi]

KN: Large chains like Starbucks have more money, recourses and brand recognition than small independent shops.
APP: Starbucks can buy supplies cheaply in bulk and spend more on marketing, while a small shop cannot.
AN: So the small coffee shop might struggle to match prices, quality and promotion, making it hard to compete.

[abdurrehman waseem]

KN: Large firms benefit from economies of scale, meaning they can reduce average costs as production increases.
App: Starbucks can buy coffee beans in bulk and advertise globally at lower per-unit costs.
An: This enables Starbucks to offer competitive prices and consistent quality, making it hard for smaller shops with higher costs to compete and attract customers.

[Mustafa Khan]

kn]starbucks have the advantage of economies of scale.
app]avg and variable cost of a small coffee shop will be more as compared to starbucks, as starbucks is a big and established brand because of which they can buy the raw material in larger quantity which will get them discounts and achieve economies of scale.
an]this allows the starbucks to consistently provide better coffee which will improve the brand image, make the customer loyal and further allow them to charge higher prices.