Answer those questions
MKTO 470 (Winser 2010 Section CASE 1-1 Starbucks-Going Global Fast The Sturbucks coffee shop on Siath Avense and Pine Street in there could be room for even more stores. Given such concen -wn Seamle sherene and onderty. umemalable tration, it is likely to uke annal Mmetore sales increases of ay other in the chain bought years ago by entrepeneur Howard 10 percent or more if the company is going se malch its historic averall sales growth. That, as they might say at Starbucks, is a tal Indeed, the crowding of so many stores so close together has Schultz. A lew years ago however, the quiet storefihont made pages anound the world. During the World Trade Oeganization talks ender to fil inNovember 1999, protesters flooded Seattle's andan ng theie targets was Starbucks, a symbol, to them, of free-market cap talim run amok, another multinational out to blanket the carth Onion, Amid the crowds of protesters and riot police were black-masked narchists who trashed the sto, leaving its windows smashed and while its ts tasteful groen and-white decor smelling opressn Says an angry front streets, and among t become a national joke, eliciting quips such as this headline in The satirical pablicatioe "A New Starbucks Opens in Resat- room of Exising Surbucks" And even the company admits that practice of blankcting an anea with stos belgs achieve outlets "We prob of tear gas instead of market dominance, ican cut sales at existing It's bartfal 1 think people ane al y self-cannibalize our dotes at a rate of 30 parcens ayea Ir's very diffikula to protest againdt a can of CokeSchultz says. Adds Lehman Beohers Inc analyst Mitchell Spejver Starbucks is at a defining point in its growth It's reaching a level ou that makes it harder and hander to grow, just duc to the law of lange bottle of Pepsi or a can of Folgers Starbacks is both this wsiqu s beand and a place whowe you can po and break a windoe napaired, and the protesters calticred to Starbucks realy is caleinating the To duplicate the has no chice but to returns of its finst decade, Starbock ts concept aggressively. Indend, some its green and-white ebim beckoning so COnuers on analysts gave Surbucks only two years at most befiore it saturates thRe cuatnett' ln , Suhwks Corp had 281 shiees aboued Today, ahoul 5.500 m stages of pln to colosias the giobe. If the protesters acticx they weren wnong were jusd carty the US market The chain new eporates 5 utill in the early stages of a lets, from Beijing to Bristol That leaves plenty of noom to grow were wrong in their Mos of its planned new stores will be buil aveneas, sqpeesent abour Stabucks ambitions They ing a 35 pencent incecase in its foreign hase. Most recently, the hain has opened stones in Vicnna Zurich, Madrid Berlin, and far-of Jakarta. Athens comes nest. And within the nest modity into an upscale consar accessory has a fairy-tale qual year, Starbucks plans to move into Mexico and Puerto Rico But Starbucks gnew from 17 cofflee hos in Scnle 15 years ago to global espansion poses hage risks for Starbaxks. For one thing. it outlets in 50 coutrics Sales have climbold an average makes less moncy on each overseas siore because most of then are $10 4 hillion in 2008 before talling to 59.8 billios in 2009 Profits on Soeeign tur, t educes the company's share of the prolits to only Morcver, Starbuscks most cope with some prodictable chal bounded ahead an average of 30 perceat per yea teough 2007 20 parcent to 50 parcest peaking at 5o671, then dropping to 5582 bllion and 5494 billie sus atd 2009, respectively T finm cland 475 shires an thi US ksge" of becoming a mater voeqany inthe Unied States nding the wave of saccesfal baby boomers throegh the 1990 sill, tde Starbucks same and image connest wh mallicns of the cospaty faces at oninously hostde sroception tiom its future anound the glube Up wwl nocenty, i was one of the COrs, the twonty-or thirty-somethings of Giencration X. Not e-oing hrands in aalilfeel sarveys of the top are the activists among them turned olf by the posse History Bookmarks Window Help MKTG 470 (Winter 2019 Section hounded ahead an average of 30 percent per year theough 2007 20 percent to 50 pencent peaking an 5673, then dropping to 5582 illion and 5494 billicn in Monover, Starbucks must cope with some predictable chal- 2008 and 200s, nespectively. The firm closed 475 stores in the USlenges of becoming a matare company in the Usited States. Aller n 2009 to edace cests niding the wave of successful baby boomers through the 1990, con unm around globe. Up unl fecently, it was ene ofthe consumers, the twenty-er thirty-somethags ofGeneration X Not hacepowmg bean..umualBusinessw14 surveys ofthe p only are the activ among them named off by the pwer and 100 global beands On Wall Street, Suarbucks was one of the last image of the well-Aknown brand, but many athers say that Star- great growth stories Its stock, inclading four splits, soared more buck" latie-sipping sophisticales and piped-in Kenny G music are than 2,000 penest o er a deal, sur Walmart, Genoral areal turnof They don't feed wanted in a placethut seilsdcspr Electric, PepaiCo, Coca Cola, Microsoft, and IAM in total eturns cofSoe at 53 a cup 2006 thr "ock pece peaked at over S40, but now has decland Eve the thaofigalati highpie afle aa betas for granted Starbucka" growth over the early part of the past de- Schultzh team is hardpressed to pnnd out new prodein a cade coincided with aremarkablesurgeanthe econway Cosun home market that is quickly becoming saturated. Amazingy. spending tanked in the downturn, and those 53 lates were an easy with over 10,000 sores scanered acress the Uniteod Stales and place for people on a budet to out hack Canada, there ane stall eight states in the United States with no Starbacks also faces slumping morale and employee burnout Starbucks stores Frappaccino-free cities include Batte, Monamong its store managers and its once-cheery army of bariatas Fargo, North Dakota Bal big cities, a lacat suburbs, Siak oplista fr Panamen in de mata buses an and shopping malls are fall to the brim In cofflee-craned Scattle, Starbucks innovation that once commanded awe and respect there is a starbucks o det fer every .400 people, and the com. fum e. employee. But now, though (miyes still paid pany considers that the upper limit of coffee-shop saturation la beher dhan comparable workers elsewhene ahout 57 per hour Manhattan's 24 square miles, Saarbuis has i24 cales, wth-maay "egard the job as just-the fas-foed . Iisatisfw. on the wary Thar's one for every 12,000 pople-mcaning that tion over odd hours and low pay is afflecting the quality of the . Cases 1 An Overvi normally sterling service and eves the coffee itelf, say some Starbucks was baping to make sp much of that gowth with company's oughly 470 Caliornia ores suod Starbucks in 2001 hut In the late 1990 Schule thought hat offering 58 sand for alegelly sefusing to pay legally mandated versine. Sta-wices, deerts and CDs in his stoees and selling packaged cof foe in supomurkets would significantly hood salies Thhe specialty beness nou accounts for abed 16 penet or sales, but grow off anotherwise strung sec quarter 3loseen, the heart eiht To be sure. Slabuks has a kn going 10"asilcodunts the panann with.tm-cab And Suhaks uan mantan ^ ait , hachinacs to get .wy about rumng iking. By nelyng bucks hapaaen to he highly imnatne mthe way at sea eleiks nkipe through a rain to delni a sale Thai, u.. @ mail.google.com MKTG 470 (Winter 2019 Sect er elliegedly refusing to pry leplly mandated overtime Star- bucks settled the suit for $18 million, shaving S0 03 per share off an otherwise strong second quarter. However, the heart of the wiches, desserts, and CDs in his stoees and selling packaged cof fee in supermarkets would splantly boout sales The specialty business now accounts for about 16 pencent of sales, but growth g overworked and underappreciated doesnt has been less than expected What's more important for the botom line, though, is that Star- To be sare, Starbucks has a lot going for it as it confroets the bucks has peoven to be highly innovative in the way it sells its seem to be geing away challenge of regaining ts growth. Nearly free of debt. fuels cs. mam course: cotte. In loc-it has installed annie pansion with internal cash fow And Sturbucks can maintain a espresso machines to spend up service. And several years aga, tight grip on its image because stores are company-owned: There began offering prepaid Starbucks cards, priced from $$ to $500, are no franchisces to get sloppy about runnang thngs By relying which clerks saipe thragh a reale deda a sale nk says on mystique and word of mouth, whether hore or overseas, the the compa cuts tasu lion unes half Sabucks has sold company saves a bundie on marketing costs. Starbucks spands jst $70 mallion of the cands $30 million anqually on advertising, or roughly 1I pencent of ev When Starbucks launched Starbucks Express, its boldest ex- enws. usually stor new avon ef coffee drinks in the Rimmer imest yet, it blended Java, Web technol and faster service. and pr des launches, such as its new in-store Web service Most Atabout 60 steresthe Denver area, custmers can pre-order consumer companies its size shell out upwards of $300 million and peepay for beverages and pastries via phone or on the Star- per year. Moreover, Statbucks for the fint time faces competision bucks Express Web site. They jat make the call or click the from large US competitors such as McDonald's and their nw use before arriving at the sicee, and their beverage will be waiting-with their name printed on the cup. The company de- Schulkz remains the heart and soul of the operation Raised in cided in 2003 that the innovation had not succeeded and elimi- Brooklya public-housing project, he found his way to Starbucks nated the service a tiny chain of Seatle coffee shops, as a marcketing exccutive in And Starbucks continues to try other fundamental store change 2t announced espumin cfa high-speed wureless Inter- early 1980a The name came about when the orignal owners looked to Scatle bistory for inspiration and chose the moniker ef net service to about 1200 Starbcks locations in North Amenica an old mining camp Subu Furthenefinment ledto Starbucks, and Europc Partners the proped-which Subucks calls the aher the find mag in Maly Dick, which they fe enked he ea- world's largest w-Fi network-mclude Mobile Intematonal, a faring romance of the early coffiee traders (hence the mermaid wircless subsidiary of Deutsche Telekom, and Hewlett-Packard loge). Schulur got the idea for the modern Starbucks formut while Customers sit in a stone and check e-mail, surf the Wieh, or down viining a Milan coffiee bar He bought out his bosses in 1987 and load or tripping ver coeds. They start with 24 hours of free wircless broudband before choosing from a varicty of monbly subecrip The company is stil capable ef designing and opening tore in 16 wocks or less and recouping the initial investment tion plans critics call its edalry real estate-strangy-paying mere than marketeate rmas keep competitors out of a locali e David C- penetaim ofculinen buspr con" anker, abeady feel- conleuble in br drex rhe (1 pay kin hat bec le ince Viwace in Scattle's hip Capitolhad a group of twemtysomethings hypootinod for a market study Hl neighbothood says Starbecks approachod his lanfloed and W their delenscs were dow n, oud cane the bad news They c- oleted to pay naty double the rate to Put a coffee shop the ther can't afford to edoe at Stataks or the only porn they same building. The ladleed ck with Schumer, who says, aggarethose uorking bdndthe-a-says Mak Banks who pay twice the going rate Another time, Starbucks and Tuly's now part of Publicis Wildw ide) in San Franciscs. Ose of the - Coffoe Corp Scatle-based cofee chain, wow coupeting ng thones toe hypaosis brought out was a sose that "people for space-the city Starbucks got lcac but vacated the lik.c mc anon't wekmnc bese escept to serve the y.ppia ay. pronises bedoee the torm was op Sull, rather than let TullysThen the ane thone who just find the whole Starbucks svene a ba apologics or the hardball tactics The real estale bsiness in She goes to Daskin Deests saying "Smal medium and large is America is a very, very tough game." he sys-n's na lie the As a espands Suabacks faces asother big rsk that of be rll mail.google.com MKTG 470 (Winter 2010 Section America is a very, very tough game, he says "it's not fox the fne fer me faint of heart As it expands, Starbucks faces another big risk: that of be- ceming a far less special place for its employees For a com- Sal, the company's straegy could backfiee. Not only will ncighborhood activists and localbusinesses increasingly resent the pany modeled anound enthusiastic service, actics, but customsers coweld also grow annoyed over having fewer consequences choioes, Moreover, analyits contend for both image and sales. During its grouth spurt that Stwbucks can maintain of the mid- to late-1990s, Starbucks had the lowest employee growth in the United Staiesturnover rate of any restaurant or fast-food compamy, largely equivalent to 550 sew sores for only ahout two mone yearns thanks to its then unheand-of policy of giving health insurance After bat, i will hue to depend on oveneas growth maintain and modest stock eptions to part-timers making barely more than minimum wage Part 6 Supplementary Material Such perks are so longor enough to keep all the wokers to lsrael several yeurs ago to met with then Forecigs Secretary happy. Starbucks pay docn T come close to matching the work. Shimon Peres and other Israchi officials to discuss the Middie oad it requires, complain some walf Says Carrie Shay, a ormer East crisis le won't divulge the nature of his discussions But Schaltz let the Paleatin- ians have it. With Starbucks outlets already in Kuwailt, Lehanon, tore manager in West Hollywood, Califoraia: If 1 wene making sty at a Scatile synagogue a decent living. Id ill be there. Shay one of the plaintiffs in run a store w 10 to 15 part-time emplayees. She hired enploy Palestinian prot-and-los statemest. But she was also expected to put in peace" for both sides the suit against the compamy, says she carned $32,000 a year to Oan, Qatar, and Saud Arabia, be created a mild sproar among Schultue quickly hackpedaled saying hat ees, managod their schodules, and menitered the stove's weekly his wonds were takedt out of conlest and asserting that he is "pro There ane plenty mone mineficlds ahead So lax, the Seamle cof vi plolging to work up to 20 hours of overtime a weck withost e company has compiled an em ious recond of growdh. But the exira pay -a equirement the compuny has droppod since the gidy bazz of that initial espansce is wearing off Nw, Starbcks In a 2005 bid to boost sales in its largest intermational market cinos But pehaps & is mevitable. The busines modet calls for Surbocks Corp espanded ts business in Japan, beyond cales and kes of -wage werken. And thc-people who 8e hired into convenient wires, with a lac of chilled coffee in plastic Stahcs expanda, the less they are agt to feel connectod to he ups The move gnes the Seale-haseldl company a chance so grab original mission of high service buntering wth cuiones nd a chun of agan's 510 bullion market for coffice sold in cams, boe wants to peoject of nelaxsed workers cheerfully making cappu- out to be one of the gret 21st centary Amcan saccess oshas eco a houshold name since opening its Snst Japanese sdore, is beting on the poner of its band to peopel sales of the Oversess, hengh, the whole Starbaks pkage ew dis nd to many young people, sll very onel In Vinna, we ra MKTO 470 Cwnter 2019 lations and gencrous labor benefits. And in Italy, the epicenter ofThe company has ne imnediate plans to introduce the bever European coffee culhure, the notion that the locals will abandon age in the United States, thongh it has in the past broughs home their own 200,000 coffee bars en masse for Starbucks strikies many prodacts launched in Asia A green tea frappuccino, first launched as ladicroas For one, talian coffie bars peosper by serving food i Asia, ww lster introdaced in the United States and Canada as well as coffe, an area where Surtucks eill strugsles. Ale where company officials say ws well received. talian ceffee is cheaper than US. java and, say Italan purists, much beter. Americans pay about $1.50 for an espresso. Ia sorth ways been smooth After cutting the ribbon on its fiest Japan stone Starbacks has done well in lapan, although the road hasn t al will evetually come to Italy. It' have a lat hops attracted large crowds, but the effect wowe off as the market to prove when it does Carlo Petrini, founder of the antiglobalbecame saturated The company neturned to proitabiliey and et erved in stynofom"wom'cut it. The cups are paper, of cours. declined again to 2,7 hillion yern a 2009 But the skepticism is real Most recestly in Japan, the firm has successfally developed As Starbucks spreads out, Schulitz will have to be inreas a beeader menu for its stoees, including Cases 1 An Overview ume stone salies and everall peodits. The fim also added 175ew 3 Crtqe Sarbucks' overal corporate strategy aicres since 2000 including some drive-throug McDonald's also is ataciking the Japanese market with the intro duction of its McCafe coflee shop or more information QUESTIONS As a guide, use Exhabit 13 and its description in Chapter I, and 3 do the Sollow ing o 10013 Sk Pu L Idcstity the conteollable and wncontro@lable clements th 2 Wht are the major sources of risa facing the company? Disouss poteetial solution MKTO 470 (Winser 2010 Section CASE 1-1 Starbucks-Going Global Fast The Sturbucks coffee shop on Siath Avense and Pine Street in there could be room for even more stores. Given such concen -wn Seamle sherene and onderty. umemalable tration, it is likely to uke annal Mmetore sales increases of ay other in the chain bought years ago by entrepeneur Howard 10 percent or more if the company is going se malch its historic averall sales growth. That, as they might say at Starbucks, is a tal Indeed, the crowding of so many stores so close together has Schultz. A lew years ago however, the quiet storefihont made pages anound the world. During the World Trade Oeganization talks ender to fil inNovember 1999, protesters flooded Seattle's andan ng theie targets was Starbucks, a symbol, to them, of free-market cap talim run amok, another multinational out to blanket the carth Onion, Amid the crowds of protesters and riot police were black-masked narchists who trashed the sto, leaving its windows smashed and while its ts tasteful groen and-white decor smelling opressn Says an angry front streets, and among t become a national joke, eliciting quips such as this headline in The satirical pablicatioe "A New Starbucks Opens in Resat- room of Exising Surbucks" And even the company admits that practice of blankcting an anea with stos belgs achieve outlets "We prob of tear gas instead of market dominance, ican cut sales at existing It's bartfal 1 think people ane al y self-cannibalize our dotes at a rate of 30 parcens ayea Ir's very diffikula to protest againdt a can of CokeSchultz says. Adds Lehman Beohers Inc analyst Mitchell Spejver Starbucks is at a defining point in its growth It's reaching a level ou that makes it harder and hander to grow, just duc to the law of lange bottle of Pepsi or a can of Folgers Starbacks is both this wsiqu s beand and a place whowe you can po and break a windoe napaired, and the protesters calticred to Starbucks realy is caleinating the To duplicate the has no chice but to returns of its finst decade, Starbock ts concept aggressively. Indend, some its green and-white ebim beckoning so COnuers on analysts gave Surbucks only two years at most befiore it saturates thRe cuatnett' ln , Suhwks Corp had 281 shiees aboued Today, ahoul 5.500 m stages of pln to colosias the giobe. If the protesters acticx they weren wnong were jusd carty the US market The chain new eporates 5 utill in the early stages of a lets, from Beijing to Bristol That leaves plenty of noom to grow were wrong in their Mos of its planned new stores will be buil aveneas, sqpeesent abour Stabucks ambitions They ing a 35 pencent incecase in its foreign hase. Most recently, the hain has opened stones in Vicnna Zurich, Madrid Berlin, and far-of Jakarta. Athens comes nest. And within the nest modity into an upscale consar accessory has a fairy-tale qual year, Starbucks plans to move into Mexico and Puerto Rico But Starbucks gnew from 17 cofflee hos in Scnle 15 years ago to global espansion poses hage risks for Starbaxks. For one thing. it outlets in 50 coutrics Sales have climbold an average makes less moncy on each overseas siore because most of then are $10 4 hillion in 2008 before talling to 59.8 billios in 2009 Profits on Soeeign tur, t educes the company's share of the prolits to only Morcver, Starbuscks most cope with some prodictable chal bounded ahead an average of 30 perceat per yea teough 2007 20 parcent to 50 parcest peaking at 5o671, then dropping to 5582 bllion and 5494 billie sus atd 2009, respectively T finm cland 475 shires an thi US ksge" of becoming a mater voeqany inthe Unied States nding the wave of saccesfal baby boomers throegh the 1990 sill, tde Starbucks same and image connest wh mallicns of the cospaty faces at oninously hostde sroception tiom its future anound the glube Up wwl nocenty, i was one of the COrs, the twonty-or thirty-somethings of Giencration X. Not e-oing hrands in aalilfeel sarveys of the top are the activists among them turned olf by the posse History Bookmarks Window Help MKTG 470 (Winter 2019 Section hounded ahead an average of 30 percent per year theough 2007 20 percent to 50 pencent peaking an 5673, then dropping to 5582 illion and 5494 billicn in Monover, Starbucks must cope with some predictable chal- 2008 and 200s, nespectively. The firm closed 475 stores in the USlenges of becoming a matare company in the Usited States. Aller n 2009 to edace cests niding the wave of successful baby boomers through the 1990, con unm around globe. Up unl fecently, it was ene ofthe consumers, the twenty-er thirty-somethags ofGeneration X Not hacepowmg bean..umualBusinessw14 surveys ofthe p only are the activ among them named off by the pwer and 100 global beands On Wall Street, Suarbucks was one of the last image of the well-Aknown brand, but many athers say that Star- great growth stories Its stock, inclading four splits, soared more buck" latie-sipping sophisticales and piped-in Kenny G music are than 2,000 penest o er a deal, sur Walmart, Genoral areal turnof They don't feed wanted in a placethut seilsdcspr Electric, PepaiCo, Coca Cola, Microsoft, and IAM in total eturns cofSoe at 53 a cup 2006 thr "ock pece peaked at over S40, but now has decland Eve the thaofigalati highpie afle aa betas for granted Starbucka" growth over the early part of the past de- Schultzh team is hardpressed to pnnd out new prodein a cade coincided with aremarkablesurgeanthe econway Cosun home market that is quickly becoming saturated. Amazingy. spending tanked in the downturn, and those 53 lates were an easy with over 10,000 sores scanered acress the Uniteod Stales and place for people on a budet to out hack Canada, there ane stall eight states in the United States with no Starbacks also faces slumping morale and employee burnout Starbucks stores Frappaccino-free cities include Batte, Monamong its store managers and its once-cheery army of bariatas Fargo, North Dakota Bal big cities, a lacat suburbs, Siak oplista fr Panamen in de mata buses an and shopping malls are fall to the brim In cofflee-craned Scattle, Starbucks innovation that once commanded awe and respect there is a starbucks o det fer every .400 people, and the com. fum e. employee. But now, though (miyes still paid pany considers that the upper limit of coffee-shop saturation la beher dhan comparable workers elsewhene ahout 57 per hour Manhattan's 24 square miles, Saarbuis has i24 cales, wth-maay "egard the job as just-the fas-foed . Iisatisfw. on the wary Thar's one for every 12,000 pople-mcaning that tion over odd hours and low pay is afflecting the quality of the . Cases 1 An Overvi normally sterling service and eves the coffee itelf, say some Starbucks was baping to make sp much of that gowth with company's oughly 470 Caliornia ores suod Starbucks in 2001 hut In the late 1990 Schule thought hat offering 58 sand for alegelly sefusing to pay legally mandated versine. Sta-wices, deerts and CDs in his stoees and selling packaged cof foe in supomurkets would significantly hood salies Thhe specialty beness nou accounts for abed 16 penet or sales, but grow off anotherwise strung sec quarter 3loseen, the heart eiht To be sure. Slabuks has a kn going 10"asilcodunts the panann with.tm-cab And Suhaks uan mantan ^ ait , hachinacs to get .wy about rumng iking. By nelyng bucks hapaaen to he highly imnatne mthe way at sea eleiks nkipe through a rain to delni a sale Thai, u.. @ mail.google.com MKTG 470 (Winter 2019 Sect er elliegedly refusing to pry leplly mandated overtime Star- bucks settled the suit for $18 million, shaving S0 03 per share off an otherwise strong second quarter. However, the heart of the wiches, desserts, and CDs in his stoees and selling packaged cof fee in supermarkets would splantly boout sales The specialty business now accounts for about 16 pencent of sales, but growth g overworked and underappreciated doesnt has been less than expected What's more important for the botom line, though, is that Star- To be sare, Starbucks has a lot going for it as it confroets the bucks has peoven to be highly innovative in the way it sells its seem to be geing away challenge of regaining ts growth. Nearly free of debt. fuels cs. mam course: cotte. In loc-it has installed annie pansion with internal cash fow And Sturbucks can maintain a espresso machines to spend up service. And several years aga, tight grip on its image because stores are company-owned: There began offering prepaid Starbucks cards, priced from $$ to $500, are no franchisces to get sloppy about runnang thngs By relying which clerks saipe thragh a reale deda a sale nk says on mystique and word of mouth, whether hore or overseas, the the compa cuts tasu lion unes half Sabucks has sold company saves a bundie on marketing costs. Starbucks spands jst $70 mallion of the cands $30 million anqually on advertising, or roughly 1I pencent of ev When Starbucks launched Starbucks Express, its boldest ex- enws. usually stor new avon ef coffee drinks in the Rimmer imest yet, it blended Java, Web technol and faster service. and pr des launches, such as its new in-store Web service Most Atabout 60 steresthe Denver area, custmers can pre-order consumer companies its size shell out upwards of $300 million and peepay for beverages and pastries via phone or on the Star- per year. Moreover, Statbucks for the fint time faces competision bucks Express Web site. They jat make the call or click the from large US competitors such as McDonald's and their nw use before arriving at the sicee, and their beverage will be waiting-with their name printed on the cup. The company de- Schulkz remains the heart and soul of the operation Raised in cided in 2003 that the innovation had not succeeded and elimi- Brooklya public-housing project, he found his way to Starbucks nated the service a tiny chain of Seatle coffee shops, as a marcketing exccutive in And Starbucks continues to try other fundamental store change 2t announced espumin cfa high-speed wureless Inter- early 1980a The name came about when the orignal owners looked to Scatle bistory for inspiration and chose the moniker ef net service to about 1200 Starbcks locations in North Amenica an old mining camp Subu Furthenefinment ledto Starbucks, and Europc Partners the proped-which Subucks calls the aher the find mag in Maly Dick, which they fe enked he ea- world's largest w-Fi network-mclude Mobile Intematonal, a faring romance of the early coffiee traders (hence the mermaid wircless subsidiary of Deutsche Telekom, and Hewlett-Packard loge). Schulur got the idea for the modern Starbucks formut while Customers sit in a stone and check e-mail, surf the Wieh, or down viining a Milan coffiee bar He bought out his bosses in 1987 and load or tripping ver coeds. They start with 24 hours of free wircless broudband before choosing from a varicty of monbly subecrip The company is stil capable ef designing and opening tore in 16 wocks or less and recouping the initial investment tion plans critics call its edalry real estate-strangy-paying mere than marketeate rmas keep competitors out of a locali e David C- penetaim ofculinen buspr con" anker, abeady feel- conleuble in br drex rhe (1 pay kin hat bec le ince Viwace in Scattle's hip Capitolhad a group of twemtysomethings hypootinod for a market study Hl neighbothood says Starbecks approachod his lanfloed and W their delenscs were dow n, oud cane the bad news They c- oleted to pay naty double the rate to Put a coffee shop the ther can't afford to edoe at Stataks or the only porn they same building. The ladleed ck with Schumer, who says, aggarethose uorking bdndthe-a-says Mak Banks who pay twice the going rate Another time, Starbucks and Tuly's now part of Publicis Wildw ide) in San Franciscs. Ose of the - Coffoe Corp Scatle-based cofee chain, wow coupeting ng thones toe hypaosis brought out was a sose that "people for space-the city Starbucks got lcac but vacated the lik.c mc anon't wekmnc bese escept to serve the y.ppia ay. pronises bedoee the torm was op Sull, rather than let TullysThen the ane thone who just find the whole Starbucks svene a ba apologics or the hardball tactics The real estale bsiness in She goes to Daskin Deests saying "Smal medium and large is America is a very, very tough game." he sys-n's na lie the As a espands Suabacks faces asother big rsk that of be rll mail.google.com MKTG 470 (Winter 2010 Section America is a very, very tough game, he says "it's not fox the fne fer me faint of heart As it expands, Starbucks faces another big risk: that of be- ceming a far less special place for its employees For a com- Sal, the company's straegy could backfiee. Not only will ncighborhood activists and localbusinesses increasingly resent the pany modeled anound enthusiastic service, actics, but customsers coweld also grow annoyed over having fewer consequences choioes, Moreover, analyits contend for both image and sales. During its grouth spurt that Stwbucks can maintain of the mid- to late-1990s, Starbucks had the lowest employee growth in the United Staiesturnover rate of any restaurant or fast-food compamy, largely equivalent to 550 sew sores for only ahout two mone yearns thanks to its then unheand-of policy of giving health insurance After bat, i will hue to depend on oveneas growth maintain and modest stock eptions to part-timers making barely more than minimum wage Part 6 Supplementary Material Such perks are so longor enough to keep all the wokers to lsrael several yeurs ago to met with then Forecigs Secretary happy. Starbucks pay docn T come close to matching the work. Shimon Peres and other Israchi officials to discuss the Middie oad it requires, complain some walf Says Carrie Shay, a ormer East crisis le won't divulge the nature of his discussions But Schaltz let the Paleatin- ians have it. With Starbucks outlets already in Kuwailt, Lehanon, tore manager in West Hollywood, Califoraia: If 1 wene making sty at a Scatile synagogue a decent living. Id ill be there. Shay one of the plaintiffs in run a store w 10 to 15 part-time emplayees. She hired enploy Palestinian prot-and-los statemest. But she was also expected to put in peace" for both sides the suit against the compamy, says she carned $32,000 a year to Oan, Qatar, and Saud Arabia, be created a mild sproar among Schultue quickly hackpedaled saying hat ees, managod their schodules, and menitered the stove's weekly his wonds were takedt out of conlest and asserting that he is "pro There ane plenty mone mineficlds ahead So lax, the Seamle cof vi plolging to work up to 20 hours of overtime a weck withost e company has compiled an em ious recond of growdh. But the exira pay -a equirement the compuny has droppod since the gidy bazz of that initial espansce is wearing off Nw, Starbcks In a 2005 bid to boost sales in its largest intermational market cinos But pehaps & is mevitable. The busines modet calls for Surbocks Corp espanded ts business in Japan, beyond cales and kes of -wage werken. And thc-people who 8e hired into convenient wires, with a lac of chilled coffee in plastic Stahcs expanda, the less they are agt to feel connectod to he ups The move gnes the Seale-haseldl company a chance so grab original mission of high service buntering wth cuiones nd a chun of agan's 510 bullion market for coffice sold in cams, boe wants to peoject of nelaxsed workers cheerfully making cappu- out to be one of the gret 21st centary Amcan saccess oshas eco a houshold name since opening its Snst Japanese sdore, is beting on the poner of its band to peopel sales of the Oversess, hengh, the whole Starbaks pkage ew dis nd to many young people, sll very onel In Vinna, we ra MKTO 470 Cwnter 2019 lations and gencrous labor benefits. And in Italy, the epicenter ofThe company has ne imnediate plans to introduce the bever European coffee culhure, the notion that the locals will abandon age in the United States, thongh it has in the past broughs home their own 200,000 coffee bars en masse for Starbucks strikies many prodacts launched in Asia A green tea frappuccino, first launched as ladicroas For one, talian coffie bars peosper by serving food i Asia, ww lster introdaced in the United States and Canada as well as coffe, an area where Surtucks eill strugsles. Ale where company officials say ws well received. talian ceffee is cheaper than US. java and, say Italan purists, much beter. Americans pay about $1.50 for an espresso. Ia sorth ways been smooth After cutting the ribbon on its fiest Japan stone Starbacks has done well in lapan, although the road hasn t al will evetually come to Italy. It' have a lat hops attracted large crowds, but the effect wowe off as the market to prove when it does Carlo Petrini, founder of the antiglobalbecame saturated The company neturned to proitabiliey and et erved in stynofom"wom'cut it. The cups are paper, of cours. declined again to 2,7 hillion yern a 2009 But the skepticism is real Most recestly in Japan, the firm has successfally developed As Starbucks spreads out, Schulitz will have to be inreas a beeader menu for its stoees, including Cases 1 An Overview ume stone salies and everall peodits. The fim also added 175ew 3 Crtqe Sarbucks' overal corporate strategy aicres since 2000 including some drive-throug McDonald's also is ataciking the Japanese market with the intro duction of its McCafe coflee shop or more information QUESTIONS As a guide, use Exhabit 13 and its description in Chapter I, and 3 do the Sollow ing o 10013 Sk Pu L Idcstity the conteollable and wncontro@lable clements th 2 Wht are the major sources of risa facing the company? Disouss poteetial solution
