Macroeconomic influence
1.0 Macroeconomic Variables
Three changes in macroeconomic variable that can influence multinational
corporations- Starbucks and Costa Coffee’s business strategies locally
and internationally are gross domestic product (GDP), the unemployment rate and
inflation rate.
2.0 Gross Domestic Product
The GDP is a representation of a countries economic growth. Therefore, for a
business to make strategic decisions and business plans, it must take into account the
rise and fall of the GDP. Over the period of 3 years America’s GDP is $17.393 trillion
in 2014, $18.036 trillion in 2015 and $18.569 2016 (Amadeo, 2017). That is an
increase of 2.4% to 2.6% and a drop to 1.6% from 2014 to 2016 (Amadeo, 2017). The
increase signifies that businesses are more profitable, they are able to pay better
wages, employ more people, also consumers buyer power is higher which increases
GDP consumption.
In the second quarter financial year of 2013, Starbucks reported an increase in
customer traffic. The increase in sales is said to have contributed to the 2.6% increase
in GDP for the year and on the whole aggregating a 70% contribution in consumer
consumption of the GDP (Schwarts, 2013).
In china, there are over 2,000 operating Starbuck stores, making it the second largest
market for Starbucks (Huang, 2017). China’s economic growth expanded 6.7% in
2016. it was the slowest growth in 26 years (Huang, 2017). However, the minimal
expansion still remained in China’s governable estimated range. The growth of
China’s GDP is attributed to the strong fiscal support, prospering property market and
non rigid monetary policies says Huang (2017).
On the flip side, Costa Coffee in UK states consumer spending is a driving factor
despite an economic downturn resulting prior to the EU referendum. The year 2016
had a GDP growth of only 0.6% and from that 80% of the growth is made up of retail
sales and from the travel agency sector (Kollewe, 2017). Costa Coffee was more
cautious because customer volumes began depleting due to the drop in Pound Sterling
at the moment which resulted in static wages and tight household budgets (Kollewe,
2017). Thus, until the uncertainty of Brexit is resolved, Costa Coffee is working on its
