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

[Abdur Rehman khan]

[KN] Large chains benefit from there brand image and economies of scale, this means that they can reduce costs more efficiently.
[APP] For example, Starbucks purchases coffee beans in massive quantities at discounted prices, while a small independent coffee shop must buy smaller amounts at higher costs.
[AN] This means the small shop faces higher costs per unit reducing its profit margins compared to Starbucks which limits its ability to reinvest in marketing or customer experience causing it to lose customers over time ,hence making it difficult to survive.
MODERATOR COMMENT:
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[Mamoona Hussain]

KN: The coffee shop cannot compete as Starbucks has the advantage of economies of scale.
APP: This means that as they buy coffee beans or their electronics on bulk, they get discount per piece.
AN: Due to this their average cost decreases, enabling them to offer their products at a lower cost to the customers as well, which attracts them and their sales increase, due to which they earn more revenue and higher profit margin, ensuring long term survival. However, this is difficult for the small coffee shop as they do not have the benefit of economies of scale and therefore cost cutting is harder.
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[M huzaifa jillani]

(KN)
Large chains like starbucks have economics of scale meaning they can produce and sell at a lower average cost .
(APP)
For example Starbucks buys coffee beans and equipment in bulk so it gets discounts that a small coffee shop cannot.
(AN)
This allows Starbucks to sell coffee at lower prices or spend more money on marketing attracting more customers. As a result the small coffee shop may lose customers or struggle to earn enough profit to survive because it cannot match starbucks prices or advertising power.
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[Shuraim Arif]

(KN) Starbucks enjoys the luxury of economies of scale, whereas a small coffee shop may not.
(APP) For example, a large chain may buy coffee beans in bulk from its suppliers, who may offer them trade discount for buying in bulk. On the other hand, a small coffee shop would most likely buy a lot fewer coffee beans as compared to the large chain, meaning its suppliers may not offer it trade discount.
(AN) This means that because the large chain is receiving trade discount, it would achieve economies of scale, allowing it to reduce costs through this stage of production, unlike the small coffee shop that would have to pay for high costs as there is no discount and it therefore, has to set higher prices to satisfy those costs, leading customers to buy from the large chain instead to avoid a high price. This proves very costly for the small coffee shop and makes survival difficult.
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[hassanalizafar]

[KN]It is harder for a small coffee shop to achieve economies of scale because it operates on a much smaller scale.
[APP] For instance, Starbucks buys thousands of tonnes of coffee beans in bulk allowing it to get big discounts from suppliers while a small cafe can only afford to buy limited stock at higher prices.
[AN]Smaller cafe find it harder to compete and may lose their market share as big guns like Starbucks gets a lower avg unit costs so it can offer cheaper prices which leads to high consumer retention/ attract new customer hence higher revenue which it can invest its funds in advertising and expansion making its brand stronger.
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[Shaliza khawaja]

a small independent coffee shop might have problems in competing with a large busienss like starbucks bc of there loyal customer and better brand reputation
for example many customers go there bc of there trust in the brand and know exactly what to expect when they order it
this makes it hard for small busienss to attract customers or even have a chance to present there product, small business would have to spend more on marketing and offer lower prices so that they can gain sme customers, which also reduces there profit margin Furthermore there there steady flow gives they a better advatages like if they present a new drink, it would automaticly sell out bc of its reputation
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[Areeba Arshad]

[KN] Large businesses benefit from economies of scale, which means they can reduce average costs by producing or buying in bulk.
[APP] For example, Starbucks can purchase coffee beans and packaging in huge quantities at discounted prices.
[AN] This lowers Starbucks’ overall costs per cup, allows it to sell coffee at lower prices while still earning profit and makes it difficult for a small independent coffee shop to compete on price and attract customers.
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[sarah_naeem]

[KN]: A small independent coffee shop might be unable to compete with a large chain like Starbucks as it is harder for small coffee shops to achieve economies of scale because it operates on a much smaller scale.
[APP]: For example, Starbucks can buy coffee beans in huge quantities and sell them at a discounted price while a small coffee shop can only afford limited stock and sell them at higher prices to survive.
[AN]: Thus, this shows smaller coffee shops find it difficult to compete against larger firms as larger firms can offer lower prices even after spending high cost as they are already a stable business that has been gaining profit which helps them maintain customer loyalty which further strengthens their brand image resulting in high revenue and long term success.
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[Tuqwa]

KN:Large businesses benefit from economies of scale, which means they can reduce costs by producing or buying in bulk.
app:A small independent coffee shop may struggle to compete with a large chain like Starbucks because Starbucks can buy coffee beans and other supplies in huge quantities at discounted prices.this allows Starbucks to lower its average costs and sell coffee at cheaper prices.
kn:therefore the small shop may lose customers due to higher prices and find it difficult to match the pricing and marketing power of a large chain.