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Business Case Study: Coffee

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Case Study: What price coffee? a) Why might coffee businesses be described as multinational companies? A multinational corporation (MNC) is an organization that operates its production and delivers services in 2 or more countries. Similarly, coffee business such as Kraft, Nestle, Procter & Gamble, Sara Lee and Tchibo are described as multinationals because they have a single international base (head office) in the home country, and manages its operations in several other countries. b) Explain reasons why multinational companies in the coffee business operate on a global basis. Multinational companies in the coffee businesses operate on a global basis in order to widen customer base, avoid protectionist policies, benefiting from cheaper production costs, spread risks and globalization of markets. By operating on a global basis, multinationals have the ability to increase their sales turnover, as a result of widening their customer base. ...read more.


Examine the factors which have affected the globalization of this market. The three factors that have contributed to the globalization of this market are liberalization of international trade, technology progress and deregulation. Global businesses use liberalization in encouraging more trade in their exports and imports. Several trade protection methods have reduced through the cooperation of regional trade blocks. Technological progress basically reduces the cost of information interchange. For example, the advances within the internet have changed buying habits (e-commerce). Businesses now sell their products online. On an overall basis, technological advancements have reduced barriers to international trade as costs of production are decreased. Finally, deregulation in businesses mean that transportation and storage costs have reduced. Deregulation has also encouraged the growth of multinationals corporations to enjoy more of a global presence. ...read more.


e) Evaluated the impact of the global coffee business on coffee farmers in developing countries. There are several positive as well as negative impacts of global coffee businesses on coffee farmers in developing countries. In developing countries, high unemployment rates are becoming a growing concern. Multinationals help in eliminating unemployment by creating a heck lot of jobs, in thousands. This not only reduces the burden of the host country's government, but also increases the national income of these countries, thereby improving standards of living. However, global businesses have been criticized for paying low wages in developing countries. They have also been criticized for their treatment of those in these countries. Anti-globalization and environmentalists are concerned about the social responsibility of these businesses. They often attempt in expanding and exploiting the scarce resources. Furthermore, due to the market power of such businesses, there are some concerns about the ability of the government in controlling their actions. ?? ?? ?? ?? Rahul Ganji Business, Mr.Hounsell ...read more.

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