ture suggests that even though global supply chain allows for cost reduction, it is much more complex than domestic one, and calls for tight controls. Since coffee prices are unstable due to weather, export regulations, economic, and political conditions in the growing countries of Colombia, Sumatra, Yemen, Antigua, Indonesia, Guatemala, New Guinea, Costa Rica, Sulawesi, Papua New Guinea, Kenya, Ethiopia, Java; it is not surprising that Starbucks is concerned with the supply and prices of this commodity. Starbucks enters into fixed-price purchase commitments and/or purchased futures contracts to secure the company from danger of price fluctuations and supply shortages. As of October 1, 2000, the Company had approximately $84 million in fixed-price purchase commitments which, together with existing inventory, is expected to provide an adequate supply of green coffee for the majority of fiscal 2001. Vice president for coffee, travels regularly to coffee-producing countries to built relationships with growers and exporters, and find products that would meet Starbucks' standards of quality and flavour. The Company believes that based on relationships established with its suppliers in the past, the risk of non-delivery on such purchase commitments is remote. Speciality items and coffee accessories however are purchased from local sources and manufacturers. Starbucks partnerships and joint ventures with suppliers described bellow are another way for the company to retain supplier sustainability and involvement. Therefore according de Wit and Meyer (1998) co-operative strategy benefits Starbucks in reducing risk of failure (Pepsi) and non-delivery, cutting costs, preserving quality, creating innovation (Frappuccino bottled), abandoning associated wastes (referenced in “Joint ventures, Partnerships” paragraphs bellow). To ensure that partners share in Starbucks success, eligible partners are provided with stock option grants under t...
