Case Discussion Questions

$1.$What kind$($s$)$ of power does Starbucks hold over their suppliers in this case?

$2.$ Use the double marginalization problem and solution guides to structure two alternatives: one in which prices to consumers are maintained and profits are split $3$:$1$ in favor of Starbucks, and one in which prices are raised $25\%$ and profits are split $2$:$1$ in favor of Starbucks. Assume the following: current price is $$8\mathrm{.}00$ for a bag of this coffee, manufacturer costs have been $$2\mathrm{.}00,$ their mark$-$up has been $$2\mathrm{.}00($and they're seeking more$),$ retailing costs have been $$1\mathrm{.}00$ and mark$-$up has been $$3\mathrm{.}00.$ What are the resulting mark$-$ups for the manufacturer and retailer $($Starbucks$)$ under each scenario? How will suppliers and consumers respond to either scenario?