Case Study: Coffee Shops

Read the information in the ‘Coffee shops’ text below together with the four comprehension questions.  Then choose an independent coffee shop in your area, which you will use as a case study for your written report.

Research the chosen coffee shop and write a report for an academic audience, presenting your findings and addressing the four comprehension questions.

In your report you must demonstrate the understanding and application of the theory you have learned in the module so far and you must follow the structure outlined below.

Case Study: Coffee Shops

81% of people visit a coffee shop weekly, spending £9.6bn a year in over 24,000 outlets. The UK coffee shop market grew by 7.3% in turnover during 2017, making it one of the UK’s strongest performing sectors, and it is anticipated to exceed £13bn from 31,400 outlets by 2022.

Costa, Starbucks and Caffè Nero share 52.9% of the UK coffee shop market, with 2,326, 956 and 675 outlets respectively. But the smaller chains and independents are gaining more grounds, and selling the experience, not just the coffee.

Choose an independent coffee shop, within a walking distance from a Costa, Starbucks or Caffè Nero and use both businesses as a case study for analysing the monopolistic competition market structure.

Write your findings in a report.  Within your report you must address the following points:

1.     Outline the characteristics of monopolistic competition structure in comparison to monopoly and perfect competition.

2.     Discuss product differentiation and its effects on deciding profit-maximising quantity and price of both the established outlet and your chosen independent coffee shop.

3.     Discuss the effect of advertising, brand and loyalty on deciding profit-maximising quantity and price of both the established outlet and your chosen independent coffee shop.

4.     Using secondary or primary data to produce diagrams, compare the equilibrium of both the established outlet and your chosen independent coffee shop in the short and long run.

Your case study report must be written with the following structure:

Section 1: Introduction – 150 words maximum, introducing the focus of your case study, identifying two companies and their industry, and outlining the main points covered in the report;

Section 2: Monopolistic competition market structures – max 400 words, outline the general characteristics of monopolistic competition market (e.g. the number and size of firms in the market; market power; barriers of entry; nature of the product; diagrammatic representation etc.), in comparison to the monopoly and perfect competition market structures.

Section 3: Analysis and calculation – max 800 words, describe how a monopolistic competition market structure impacts on firms and consumers. Provide a brief assessment, with diagrams of product differentiation for maximising the profit, the short and long run equilibrium;

3.1 The established outlet and your chosen independent coffee shop data: describe data type and

collection method

3.2 Product differentiation

3.3 Brand, advertising and loyalty

3.4 Short-run equilibrium

3.5 Long-run equilibrium

Section 4: Conclusion – max 150 words, summarise briefly the main points in this report;

References: Reference list (not included in the word count) – 6 or more relevant academic sources

All theory necessary for this assignment are covered in Theme 3 lectures:

·        Theory of the firm: perfect competition and monopoly

·        Theory of the firm: monopolistic competition and oligopoly

·        Product Differentiation

·        Short-run and long-run equilibrium in monopolistic competition

You must conduct a secondary research for this assessment finding relevant sources independently, in addition to the resources listed in your module handbook.

You should refer to a minimum of 6 relevant Academic sources for your report, your notes or materials provided in class will not be counted as academic references.

You must include a Harvard style reference list at the end of your report.  A full bibliography is NOT required.

You are expected to write a maximum of 1500 words (+/- 10%).

Macroeconomics

1.     Explain the key features of macroeconomic theories and models and apply them to analyse real-world issues

2.     Evaluate how macroeconomic theories, models and changes impact on the development of business policy

Microeconomics

3.     Explain market processes and evaluate the outcomes of financial and other markets

Content (30%)

All key information stipulated in the Task Instructions (Sections 1, 2 & 4;) is present and the main points of each area are well highlighted.

Section 3 is represented in detail and addresses each of the 4 points presented in the question adequately and pertinently.

Critical Evaluation & Analysis (40%)

Analysis of the issues is deep and balanced, drawing out and comparing both strengths and limitations across the companies.

Knowledge of marketing principles is applied well with real-world examples and references.

The impact of decisions on business policy is clearly highlighted.

Research & Support (20%)

Appropriate choice of numerous primary/secondary sources used

Pertinent reference to points within these sources

In-text citations and referencing is well managed

Presentation (10%)

Report is well-presented, coherently organised  and well-formatted

Expression is clear and register/tone is appropriate