Starbucks has more than 10,000 employees in 6,700 stores, which serve some 50 million customers in 51 countries each week. Geoffrey Mwa Ngulumbi runs a family-owned fair-trade farm in Tanzania and supplies Starbucks with coffee beans and other raw materials.

a. How does Starbucks coordinate its activities?

Is it likely to mainly use a command system or an incentive system? Explain.

b. How do you think Geoffrey Mwa Ngulumbi coordinates the activities of his farm? Is he likely to mainly use a command system or an incentive system? Explain.

c. Describe and compare the principal–agent problems faced by Starbucks and Geoffrey Mwa Ngulumbi’s farm. How might each firm deal with them?