Question

Starbucks has the most successful coffee business in the world. Why would they spend $600 million to acquire 300 tea chain stores?

a) To dominate the tea market
b) To diversify their product offering
c) To eliminate competition
d) To reduce expenses

Answer 1

Starbucks may spend $600 million to acquire 300 tea chain stores for multiple reasons, including diversifying their product offering, dominating the tea market, and reducing expenses.

Step-by-step explanation:

Starbucks may spend $600 million to acquire 300 tea chain stores for multiple reasons. One reason could be to diversify their product offering. By adding tea chain stores to their business, Starbucks can tap into a different and potentially profitable market segment and attract new customers who prefer tea over coffee. Another reason could be to dominate the tea market. By acquiring tea chain stores, Starbucks can establish a strong presence and compete with other tea brands, strengthening their overall market position. Lastly, to reduce expenses could be a motivation. By acquiring existing tea chain stores, Starbucks may gain economies of scale, operational efficiencies, and cost advantages.