Starbucks is analyzing how to strengthen its supply chain sustainability goals by sourcing directly from coffee farmers instead of regional brokers. While this increases control and transparency, it also adds complexity and risk. Which strategic framework best supports this decision?

Question

BlackTom AI · Accepted Answer

Let's evaluate each strategic option in light of Starbucks' move to source directly from coffee farmers to strengthen supply chain sustainability.
Option 1: 'Channel expansion to reach new retail markets.' This choice focuses on widening distribution channels to access more customers, not on changing the ownership or governance of the supply chain itself. It doesn't address the decision to source directly from producers or the associated control and ethical oversight concerns.
Option 2: 'Diversification into new industries.' Diversification means adding new product lines or entering unrelated markets to reduce risk. Starbucks’ decision is not about entering a different business area; it’s about altering upstream supply chain structure, so this option mischaracterizes the strategic aim.
Option 3: 'Horizontal integration across competing chains.' Horizontal integration involves merging with or acquiring competitors at the same stage of the value chain. Starbucks is not acquiring other coffee chains; it is changing supplier relationships and governance within its own supply chain. Therefore, this framing is incorrect.
Option 4: 'Multi-brand franchising.' Multi-brand franchising pertains to expanding the brand portfolio and using franchised stores to grow presence, typically in downstream retail operations. It does not capture the upstream strategic shift toward controlling sourcing and ethical standards with producers, so this is not the best fit.
Option 5: 'Vertical integration to improve control and ethical oversight.' This option directly describes gaining greater control over the supply chain by moving closer to producers, reducing reliance on intermediaries, and enabling stricter oversight of sustainability and ethical practices. It aligns with the described move to source directly from farmers, despite the accompanying increase in complexity and risk, and captures the governance and coordination benefits of owning or tightly coordinating upstream activities.
In summary, the scenario centers on altering upstream governance to enhance sustainability and transparency, which is characteristic of vertical integration rather than the other strategies listed.

FA25-BL-BUS-M370-11927 Marketing Final Exam- Requires Respondus LockDown Browser

Starbucks is analyzing how to strengthen its supply chain sustainability goals by sourcing directly from coffee farmers instead of regional brokers. While this increases control and transparency, it also adds complexity and risk. Which strategic framework best supports this decision?

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FA25-BL-BUS-M370-11927 Marketing Final Exam- Requires Respondus LockDown Browser

Starbucks is analyzing how to strengthen its supply chain sustainability goals by sourcing directly from coffee farmers instead of regional brokers. While this increases control and transparency, it also adds complexity and risk. Which strategic framework best supports this decision?

View Explanation

Log in for full answers

Similar Questions

Part 1What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a​ distributor?Part 2 A. vertical integration B. horizontal integration C. virtual companies D. outsourcing

Question at position 38 Backward Vertical Integration refers to a company acquiring one or more of their customer organizations.TrueFalse

The best reason for investing company resources in vertical integration (either forward or backward) is to

For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company

Vertical integration means:

Question at position 10 Companies today are focused on vertical integration encompassing the ownership and coordination of all supply chain activities while also outsourcing their core competenciesTrueFalse

Question at position 7 When Luckin acquires coffee farms to secure its bean supply, this is an example of:Market diversificationforward integrationHorizontal integrationvertical integration

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Making Your Study Simpler

Part 1What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor?Part 2 A. vertical integration B. horizontal integration C. virtual companies D. outsourcing