Small Business Critical Thinking Taks

Small Business Critical Thinking Task

Civics SOL Review

Background

Welcome to Ishmael’s Outpost, a quirky, Star Trek–themed coffee shop located in a busy city center. With decor inspired by starships, baristas dressed as Starfleet officers, and drinks like the “Captain’s Brew” and “Warp-Speed Cold Brew,” the café quickly became a local favorite.

The owner, Ishmael Reyes, started the shop with a love for sci-fi and a passion for quality coffee. But as the real-world economy has shifted over the last few years, Ishmael’s business has gone through some tough changes. Now, he needs your help to figure out how economic forces are affecting his shop—and what he can do about it.

Economic Concepts to consider:

• Supply and Demand

• Profit

• Competition and Market Structure

• Consumer Sovereignty

• Global Trade

• Entrepreneurship

• Government Agencies

Year 1

Trouble on the Farm

A coffee plant blight severely damaged crops in Central America, limiting supply and raising prices for green coffee beans.

• Ishmael paid more for beans but didn’t raise prices.

• Customers noticed the taste change from using a backup supplier.

• Profits dropped.

Open Ended

How did the blight affect the supply of coffee, and what impact did that have on prices and Ishmael’s profits? What could Ishmael have done differently to respond to this scarcity?

Year 2

Trade Opens Up

A new U.S. trade agreement with Colombia lowered tariffs and increased access to high-quality beans.

• Ishmael found a new supplier with better prices and quality.

• He launched a new drink and saw customers return.

• Profit margins improved.

Open Ended

How did the new trade agreement benefit Ishmael’s business? What are some advantages and potential risks of relying on international suppliers for key ingredients?

Year 3

A Competitor Lands Nearby

A national coffee chain opened down the block.

• They offered mobile orders, rewards programs, and drive-thru service.

• Ishmael lost customers who wanted convenience and cheaper prices.

• He launched a “Brew Local” campaign focused on quality and community, which helped a little.

Open Ended

How did the entrance of a large competitor change the market for coffee in Ishmael’s area? What strategies could a small business use to stay competitive without directly matching the chain’s prices and technology?

Year 4

Public Pushback

The Environmental Protection Agency releases a study on the toxic effects of pesticides. A local activist group began protesting the use of pesticides in coffee farming.

• They claimed Ishmael’s beans weren’t certified organic.

• Some customers stopped coming; others didn’t know what to believe.

• Switching to organic would cost 25% more.

Open Ended

Why might some consumers choose to stop supporting a business based on how its products are made? Should Ishmael switch to organic coffee even if it raises his costs? Why or why not?

Open Ended

Imagine Ishmael has asked you to create a plan for the future of his coffee shop. Using what you’ve learned about the U.S. economy, propose a plan with at least three action steps that help the shop:

Stay financially stable (control costs and maintain profits) and maintain or build customer loyalty (keep people coming back)

In your response, be sure to:

Explain how each action step addresses a specific challenge from the scenario

Use at least two economic concepts or terms:

Supply and Demand

Profit

Competition and Market Structure

Consumer Sovereignty

Global Trade

Entrepreneurship

Government Agencies