Trade paper

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Write a paper describing a product that is exported from Washington state.( I would like to be apples)Here's a link to a list of the state's top exports: 

https://www.census.gov/foreign-trade/statistics/state/data/wa.html (Links to an external site.)In this paper, you should answer the following questions:

1. What kind of market is this product in?

2. What countries is it exported to?

3. What are the annual sales of this product?

4. What non-Washington firms compete in this market?

5. Do the Washington firms have a comparative advantage in the production of this product?

Again, if you don't do the assigned reading, you will miss a lot in this paper. 

500-1,000 words, with citations and a list of sources.NO PLAGIARISM, If I'll deduct some your grade automatically will be 0.

Here is an sample tarde paper :

Here's a sample of a good trade paper.  Please note that Starbucks is not the largest coffee company in the U.S.; it is the largest specialty coffee company.  There's a difference. 

Starbucks Corporation

             Starbucks Corporation is the largest American global coffee company founded in Seattle, WA in 1971.[1] The company's main product is coffee, however they also make coffee machines and sell food such as sandwiches, breakfast food, drinks and bakery products. Starbucks doesn't export coffee or its other products directly from Washington, but it exports the Starbucks experience that once originated in Seattle. All its shops are famous for high quality coffee and the distinct interior design of its stores.

            Starbucks competes in the monopolistic competition because there are many coffee shops and each of them tries to distinguish its products from the rest, which is one of the main features of this type of market.[2] Monopolistic competition has low barriers to entry,[3] thus it is not difficult to start a coffee business, all one needs is to rent a space and buy a coffee machine. Although there are many firms in this market they do have some market power, which is the ability to set prices.[4] Usually, different coffee shops price its products differently because of the varying operating costs.

            Since the day Starbucks opened its first store in Seattle, it has grown enormously. Global annual Starbucks report shows that on September 2013 it had a total of 19,767 stores all over the world and 9,204 of them were outside of the U.S.[5] Starbucks exports its product to 64 countries divided into four operating segments: the Americas; Europe, Middle East and Africa (EMEA); China/Asia Pacific (CAP); and Channel Development. These segments include countries such the US, Canada, Brazil, Germany, France, Russia, China, and Australia.[6] Starbucks has company-opened stores that belong to the corporation and licensed stores that have the right to sell Starbucks' product, these licensed stores are especially popular abroad.[7]

             Starbucks annual report for 2013 shows that the annual sales of their products reached $14.9 billion, which is a 12% increase from 2012 sales ($13.3 billion).[8] 74% of total sales come from its Americas segment and 26% come from the other operating segments.[9] It means that over $3.9 billion comes from world trade not including countries of North and South America. Since largest percent of sales outside the US comes from licensed stores, Starbucks loses 20-50% of that revenue, which goes to the company that partners with Starbucks.[10]

             Since Starbucks is in monopolistic competition, it has many competitors, however, it is still the largest coffee company in the world. Starbucks has 36.7% of US coffee and snacks retail market share.[11] Main US competitors are Dunkin' Brands, McDonald's, Tully’s and Peet's Coffee mostly because their coffee is less expensive.[12] The main global competitors also include Dunkin' Brands and McDonald's, as well as a British company called Costa Coffee, which exports its product to 35 countries with annual sales of $1.6 billion worldwide in 2013.[13]

               Starbucks is a big company, however it had no comparative advantage especially for opening its first shop in Seattle. It has no environmental comparative advantage since Washington’s climate is not conducive to growing coffee beans; though Seattle is a port town, giving it a slight cost advantage in import of coffee. Starbucks did not have investment based comparative advantage since it wasn't meant to go global, it did so only because of the demand for the product.[14] Even though it has no comparative advantage it does have the economies of scale, which is long run decreases in a cost of production.[15] Starbucks buys coffee at a fixed price ($1.26 per pound)[16], which means that they have contracts with a coffee supplier that state how much they will pay for coffee in a given year no matter what the spot price is.[17] Therefore, it saves Starbucks money when coffee supply is low and the spot price is higher than the fixed price. Starbucks is a highly automative corporation that develops improved coffee machines in order to make better tasting coffee and increase speed of production. Also, Starbucks trains its workers and they repeatedly perform very specific tasks, granting the company gains from specialization.



[1] UW Business School, Starbucks Corporation: Competing in a Global Market, 04/07/2003, www.foster.washington.edu/centers/gbc/globalbusinesscasecompetition/Documents/Cases/2003Case.pdf

[2] T.M. Sell, Econ&110, lecture notes, Types of Market 04/07/14

[3] T.M. Sell, Econ&110, lecture notes, Types of Market 04/07/14

[4] T.M. Sell, Econ&110, lecture notes, Types of Market 04/07/14

 

[5] Starbucks Corporation, Fiscal 2013 Annual Report, Company-operated and Licensed Store Summery, pg3, news.starbucks.com/uploads/documents/Starbucks_Fiscal_2013_Annual_Report_-_FINAL.PDF

[6] [Starbucks… Australia] Nithin Geereddy, Strategic Analysis of Starbucks Corporation, scholar.harvard.edu/files/nithingeereddy/files/starbucks_case_analysis.pdf

[7] Starbucks Corporation, Fiscal 2013 Annual Report, Company-operated and Licensed Store Summery, pg3, news.starbucks.com/uploads/documents/Starbucks_Fiscal_2013_Annual_Report_-_FINAL.PDF

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