How is Starbucks diversifying itself by purchasing La Boulange?

a.By increasing its product offerings to include bakery items.

b.By decreasing its product offerings to focus primarily on bakery items.

c.By maintaining its product offering of premium beverages.

d.By eliminating its current product offerings and offering bakery items instead.

Question Content Area

How does Starbucks' current market power increase its chances for success in expanding its product offerings to include bakery items?

a.Starbucks is able to sell its products below its competitors' price point because it already brings in enough profit from coffee to keep growing.

b.Starbucks is able to sell its beverage products and new bakery products at a lower price point than its competitors because it has a diverse product offering.

c.Starbucks is able to sell its beverage products at a lower price point and its new bakery offerings at a premium price point.

d.Starbucks is able to sell both its coffee and bakery products above its competitors' price point because it has a strong differentiation.

Question Content Area

By purchasing La Boulange and operating the bakery as Starbucks' sole supplier, Starbucks is able to control the value, quality, and costs associated with its products. These value chain efforts to increase profitability are called:

a.tapered integration.

b.vertical integration.

c.horizontal integration.

d.vertical disintegration.

Question Content Area

What form of vertical integration is Starbucks using in purchasing La Boulange?

a.Forward vertical integration

b.Middle vertical integration

c.Backward vertical integration

d.Horizontal integration

Question Content Area

Starbucks' previous attempts to include food in its product offerings have met with mediocre results. Currently, only one-third of customers buy food products at Starbucks. How does using vertical integration increase Starbucks' financial risk by buying and operating its own bakery supplier?

a.The bakery supplier will begin to take precedence over the development of its beverages.

b.Demand is predictable.

c.Demand is unpredictable.

d.Starbucks can establish market power in the bakery industry.

Question Content Area

Starbucks is implementing a corporate-level strategy to diversify its product offerings by purchasing La Boulange in an effort to:

a.increase Starbucks' value to customers by improving its quality and overall performance in its industry.

b.maintain Starbucks' value to customers by continuing to offer bakery products.

c.decrease Starbucks' value to customers but improve its profitability through cost cutting.

d.increase Starbucks' value to customers and lower its cost structure.

Question Content Area

What is a value-increase reason for Starbucks to diversify its product offerings to include bakery items?

a.To help Starbucks executives receive higher compensation as a result of implementing more complex operations.

b.To help Starbucks develop a more competitive position.

c.To help Starbucks match and neutralize a competitor's advantage.

d.To help Starbucks develop less of a competitive position.