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Starbucks as Solution to Globalization and the Coffee Crisis in Colombia

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  1. Globalization and the Coffee Crisis in Colombia
  2. Starbucks as a Solution to the Coffee Crisis
  3. Mercantilism and the Coffee Crisis in Colombia
  4. Mercantilist Policies as Accelerators of Coffee Crisis
  5. Conclusion

Globalization has affected every part of the society around the world. Multinational corporations are opening new shops, manufacturing plants, and marketing agencies in other countries around the world. These efforts are aimed at reducing costs of production, in search of cheap labor as well as marketing strategies to acquire new markets. In its expansion strategy, Starbucks has embarked on a project to establish coffee shops in Colombia with the aim of tapping the huge coffee market in the country. Despite the many opportunities in employment and publicity of the coffee market in Colombia, there are factions in the coffee sector worried about the fate of national coffee chains such as Juan Valdez and OMA.

In rare cases, governments have adopted mercantilism as means of shoving local business into profitability in the advent of globalization. The national coffee farmers' strikes in Colombia that started in February 2013 were instigated by the falling coffee prices in the country (Clarence-Smith & Topik 2003). To many, globalization led to increased production of coffee berries leading to low global prices. In the Colombian context, the introduction of Starbucks coffee shops may improve the coffee prices in the country. However, the local coffee chains argue that introducing mercantilism would protect them from the huge multinationals such as Starbucks.

[...] Conclusion Globalization can be harmful as well as helpful to an economy. In order to harness the benefits of globalization, it is important for countries to adopt globalization strategies that accrue benefits to the nation. As it has been discussed, the Colombian coffee crisis that started in February 2013 and still continues can be resolved through adoption of proper globalization strategies. Strategies that attract investment in the production and marketing of coffee will resolve the coffee crisis and stop strikes by the farmers. [...]


[...] The coffee crisis in Colombia erupted as a result of poor prices for farmers. The poor prices were as a result of increased supply of coffee in the global market. By adopting mercantilist policies, the government would hinder the entry of multinationals such as Starbucks (Hellin & Higman 2003). The coffee crisis which has led to several strikes by farmers would not be solved by such policies since locally-produced coffee market in the country would remain low as the few coffee stores would continue to import coffee for local consumptions. [...]


[...] Further, the situation was compounded by globalization challenges such as the decline in national currency value, and decreasing prices for coffee in the world market. While globalization is a reality that Colombia has to contend with, the nature of globalization, as discussed by Rosenberg, in the coffee industry is unique. At a first glance, globalization has brought upon Colombia farmers, great suffering as prices of their produce falls as cheaper coffee beans from other countries become easily accessible. Lack of proper strategies in producing and marketing the Colombian coffee has led to the current coffee crisis in the country. [...]


[...] This solves two major issues stirring the coffee crisis in the country prices and unemployment. According to market players, the low coffee prices were as a result of depreciating Colombian currency. Therefore, by avoiding overreliance in the international market, the government will reduce the losses incurred due to weak currency. Further, Starbucks is estimated to provide employment to over 50,000 people in the country after the project is complete (Clarence- Smith & Topik 2003). These solutions may be enhanced through proper globalization strategies that establish Colombia as a destination for multinational companies willing to invest in the coffee industry. [...]


[...] However, a new form of globalization seeks to change the trend. With the establishment of the Starbucks coffee shops in the capital Bogota, the country is set to establish a globalization strategy that creates local demand for coffee hence creating market for the farmers. Starbucks as a Solution to the Coffee Crisis The coffee crisis has seen the government put to task to come up with policies that cautions coffee farmers from risks associated with globalization. Since a huge part of the coffee market is comprised of the international market, government policies may not be sustainable. [...]

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