Starbucks is mostly known to be a retailer of coffee drinks that are brewed in-house using

coffee beans and other equipment sourced in the market. Starbucks is now considering

vertical and horizontal integration beyond coffee drinks retail. Using the theory of the optimal

boundary of the firm, discuss the make-or-buy decision as well as the scope for horizontal

integration and diversification of Starbucks. What stages of the vertical chain should it

consider conducting in-house? What other horizontal markets may it integrate into and why? (10 marks)