Starbucks’ Investment Proposal & Case AnalysisStarbucks’ Investment Proposal & Case Analysis        It has been 47 years since Starbucks has emerged its first store location at Seattle’s Pike Place Market.  Christine Day, Starbucks’ Senior vice president of administration in North America one day reflected on the company’s recent performance in 2002 and saw that Starbucks was having 5% or higher comparable store sales growth for eleven years in a row. As much success as Starbucks was having, there were also some areas of opportunity as expected. “We’ve always taken great pride in our retail service, but according to the data, we’re not always meeting our customer’s expectations in the area of customer satisfaction” (Moon, Quelch 2006). It is possible that many companies worldwide experience store and sales growth success while running into customer satisfaction area issue and Starbucks has found itself in the same situation. After Christine Day discussed this concern with her staff members, they decided to come up with the idea to decrease the waiting time hoping to increase customer satisfaction to continue improving as a company. To reach this goal, Starbucks must decide if investing 40 million dollars annually into all stores to add 20 hours of labor per week to each store would be a good idea.        Howard Schultz, the founder and chairman of Starbucks decided to travel to Italy in 1982 and absolutely fell in love with the country’s coffee experience and quality. Because of his obsession of coffee business inspired from his travel experience to Italy, Schultz decided to take a risk and bought Starbucks a few years down the road. In the early 90’s, Starbucks was having extremely successful business due to offering not only whole beans but also premium coffee beverages. Because of this success, Schultz was able to open up to 140 stores in the Northwest and Chicago while challenging other small coffee chain businesses.
Besides offering what Starbucks believed to best the highest quality coffee beans in the world, Starbucks also offered the experience never before seen in the coffee business. “At the time, most Americans had two places in their lives – home and work. But I believed that people needed another place, a place where they could go to relax and enjoy others, or just be by themselves” (Moon, Quelch, 2006). Starbucks believe that this is one of the many factors that differentiate themselves from other coffee chains at the time. Schultz was able to get people to pay more than they normally do on a cup of coffee because customers feel it isn’t just coffee that they purchase, it is also the experience of being there to have business meetings, take a break from work or class, a time to do school projects or a place to go spend quality time with friends. Therefore, at the time, people feel as if Starbucks was their third home besides their actual home and workplace.
This quote is not meant to be taken to mean that Starbucks is the only brand they have available. Starbucks are just one of many companies that is available to those who want to experience their own brand and culture.
5 The Importance of Coffee and Work
“The Importance of Coffee and Work” does not even begin to account for the fact that the coffee industry is currently in an epic slump. Just last year, there were 18.6 million coffee-related deaths worldwide (1 US Bureau of Labor Statistics, 2012). Even though the majority of those deaths occurred in Latin America and Asia (where the number of coffee related deaths dropped slightly year to year), the coffee industry continued to grow and remain so (1 International Coffee Federation, 2015). This in large part explains why Starbucks, like other companies, has been experiencing a downward spiral. As the cost to produce and ship coffees and other beverage products has soared, the U.S. has seen significant declines in sales. Over the last three decades, a significant number of coffee outlets have closed down, and a large portion of which are due to supply constraints. In general, one of the factors that keeps the cost to produce and ship products up in the U.S., is that the cost to produce beverages requires higher costs than it could otherwise. Although the costs will grow somewhat over time, the amount of production produced and the amount of volume of the product won’t necessarily have the same effect on production and volume prices.
Furthermore, despite the fact that consumers now want to get rid of their excess capacity, the cost of production, volume, and manufacturing are often too high. The cost of production is what fuels the demand for drinks and other products, like beer and wine. Additionally, at the same time, there is huge demand for caffeine and other stimulative substances, which are often only obtained through consumption and consumption of foods and drinks (2). In addition to increasing the cost to produce beverages and other products, there is significant additional costs associated with the use of energy. Consumption of energy can be extremely harmful to health and is therefore a leading cause of cardiovascular disease (Wade et al., 2012). This is especially true in the case of excess consumption of energy, which increases the risk of cardiovascular disease, stroke, and death. Excess energy can also cause shorting in the blood level of blood vessels, which lowers the potential for clotting and also cause inflammation and other problems. One of the benefits of consuming less is that a portion of the body (for example, the gut) becomes warmer by consumption. Additionally, the increased amount of energy used through a particular beverage (such as espresso, white chocolate, coffee, or coffee grounds) can stimulate the production of hormones and other beneficial enzymes, which reduce the amount of sugars in the food during processing (2–4). Furthermore, these effects are only seen in people consuming very high amounts of calories such as food such as chips and fruit juices. Even if you consume a large portion of energy in one day, the amount of energy consumed actually decreases over time so that the same amount of calories can only be consumed for a long period of time. For instance…you will experience a slight decrease in your heart rate, your blood pressure, and your overall cardiovascular and metabolic rates that could occur before that (5). However, if you consume more calories that the calorie content would go down (say, consuming a lot of chocolate, coffee grounds, and coffee powder), this could slow down the rate of increase of cholesterol in the system and increase the risk for heart disease. If you have high amounts of caffeine, you will also experience a tendency towards a decrease in blood pressure and possibly death at a later date. Lastly, coffee beverages, whether they be in high demand or low supply conditions, are generally