Question

Starbucks has embraced ethical sourcing policies and purchases only Fair Trade Certified coffee. That means that if the least expensive and highest quality coffee beans were produced by a source that is not Fair Trade Certified, Starbucks would not purchase them. This position could potentially limit Starbucks' ability to take advantage of what aspect of global expansion?

a. Leveraging products
b. Realizing cost economies from a global market
c. Realizing location economies
d. Leveraging competencies of global subsidiaries

Answer 1

The correct answer is c. Realizing location economies.

Step-by-step explanation:

According to the aforementioned, Starbucks only purchases certified coffee production that is produced by a reduced number of companies, which causes a direct dependence on this type of production, which causes a higher price than the competition and a very reduced cost structure, since if you think about global expansion you will not be able to negotiate with producers from the countries to penetrate due to this internal policy. The location economy ensures a series of advantages and aids in order to achieve a lighter operation for the benefit of the final consumer.