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Example research essay topic: Starbucks Coffee Joint Venture - 1,374 words

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... 's Inc. None of the latter five companies is able to match the market capital achieved by Starbucks. Starbucks management identifies competitors in restaurants, shops, street carts and supermarkets. Where own machines are being set up to serve espresso, cappuccino, Last, and other coffee drinks to their customers.

They are also faced with other mail order suppliers and wholesalers. Product Supply: Coffee Prices, Availability, and General Risk Conditions Global supply literature suggests that even though global supply chain allows for cost reduction, it is much more complex than domestic one, and calls for tight controls. Since coffee prices are unstable due to weather, export regulations, economic, and political conditions in the growing countries of Colombia, Sumatra, Yemen, Antigua, Indonesia, Guatemala, New Guinea, Costa Rica, Sulawesi, Papua New Guinea, Kenya, Ethiopia, Java; it is not surprising that Starbucks is concerned with the supply and prices of this commodity. Starbucks enters into fixed-price purchase commitments andor purchased futures contracts to secure the company from danger of price fluctuations and supply shortages. As of October 1, 2000, the Company had approximately $ 84 million in fixed-price purchase commitments which, together with existing inventory, is expected to provide an adequate supply of green coffee for the majority of fiscal 2001. Vice president for coffee, travels regularly to coffee-producing countries to built relationships with growers and exporters, and find products that would meet Starbucks's tankards of quality and flavor.

The Company believes that based on relationships established with its suppliers in the past, the risk of non-delivery on such purchase commitments is remote. Specialty items and coffee accessories however are purchased from local sources and manufacturers. Starbucks partnerships and joint ventures with suppliers described bellow are another way for the company to retain supplier sustainability and involvement. Therefore according de Wit and Meyer (1998) co-operative strategy benefits Starbucks in reducing risk of failure (Pepsi) and non-delivery, cutting costs, preserving quality, creating innovation (Frappuccino bottled), abandoning associated wastes (referenced in Joint ventures, Partnerships paragraphs bellow). To ensure that partners share in Starbucks success, eligible partners are provided with stock option grants under the Bean Stock Plan for the 10 th consecutive year.

The ability to find optimal store locations with lower rents, costs of operations and qualifying personnel also contributes to their future. Starbucks management believes they have good relations with their employees and the risk of non-delivery of coffee is low. Visionary leadership, internal and external cooperation, learning, process management, continuous improvement, customer satisfaction, and employee fulfillment are attributes to almost smooth operations in Starbucks supply chain. Joint Ventures: There are five common objectives in a joint venture: market entry, risk reward sharing, technology sharing and joint product development, and conforming to government regulations. Other benefits include political connections and distribution channel access that may depend on relationships.

PepsiCo and Starbucks entered into a joint venture in 1994. Efforts were combined towards creation of new cold coffee drinks in bottles and / or cans and their mass distribution through Pepsi channels. Joint venture with multinational giant Pepsi was to open great international exposure for Starbucks, and shift business into more mainstream markets. While first product, Mazagran, resulted in failure. Bottled version of Frappuccino tested in 1996, succeeded.

Leading to the partnership investment into three bottling facilities to make Frappuccino in September 1996. In October 1995 Starbucks partnered with Dreyer's Grand Ice Cream to supply coffee extract for a new line of coffee ice cream made and distributed by Dreyer's under the Starbucks brand. The new line, featuring six flavors: Dark Roast Espresso Swirl, Java Chip, Vanilla and others, they appeared in supermarket in April 1996, and became top-seller by July. In 1997, two new low-fat flavors were added and were well accepted in the marketplace. Additional new ice cream products were planned for 1998.

In 1995, Starbucks worked with Seattle's Redhook Ale Brewery to create Double Black Stout, a stout beer with a shot of Starbucks coffee extract in it. In October 1995, SBI signed an agreement with SAZABY Inc. , a Japanese retailer and restaurateur, to form a joint venture, which will primarily develop Starbucks retails stores in Japan. In August 1996, SBI signed an agreement with Bonvests Holdings Limited to open retail stores in Singapore. United Airlines has joined the ranks of Delta and Horizon Airlines in serving coffee on board. Starbucks set up strict quality control on 500 -plus United planes with varying equipment, and Starbucks became the coffee supplier to the 20 million passengers flying United each year. According to Financial Times (may 1 st, 2001), Compaq Computer Corp.

and Starbucks Coffee Co. announced a five-year, $ 100 million deal in which Compaq will equip the coffee shop chain to give its customers wireless Internet access while they sip their Caf Latte. Starbucks has also collaborated with Capitol Records Inc. , on two Starbucks jazz CDs, available in Starbucks stores. Joint venture income was $ 20. 3 million for fiscal 2000, compared to $ 3. 2 million for fiscal 1999. The increase was primarily due to the crossover from losses to profitability of Starbucks Coffee Japan Limited as a result of an increase in scale, and due to the improved profitability of the North American business.

Licensed Stores and Speciality Sales: Growth of Distribution Channels The company does not offer franchising opportunities. Though in recent years Starbucks had begun entering into a limited number of licensing agreements for store locations in areas where the company was not able to locate their shops due to limits in capability. There is much value in transferring knowledge and best practices between parts of a global firm. To protect Starbucks quality brand information is carefully shared with licensees through training, at the same time the Company assures tight strategic control. Therefore, to maintain its mission of making Starbucks into a global brand, the company has taken an aggressive approach into various national international distribution channels, like: fashion retailers, airports, airlines, hotels, and book stores described below: Marriott Host International entered an agreement to operate Starbucks retail stores in local foreign airport locations. Hyatt agreement to distribute products internationally.

Agreement with ARAMARK Food and Services to put Starbucks stores on university campuses and other locations operated by ARAMARK As a result of licensing arrangements Starbucks received royalty fees, and supplied coffee for resale. Tight control over quality of operations was established to protect own brand image. Specialty sales groups provided Starbucks coffee products to restaurants, airlines, hotels, universities, hospitals, business offices, country clubs, and select retailers. Horizon Airlines, a regional carrier based in Seattle Nordstrom's received the contract for sale of Starbucks coffee only in Nordstrom stores Barnes & Noble Selected Wells Fargo Bank locations in California. Chapters, a Toronto book retailer with sites throughout Canada. Costco warehouse club stores.

A 1997 agreement with U. S. Office Products gave Starbucks the opportunity to provide its coffee to workers in 1. 5 million business offices. In 2000 Albertson s, Inc. , Safeway Inc. , Dayton Hudson Corporation (Super Target stores) and Marriott International, Inc, signed licensing agreements. Alliance with The New York Time.

The Times will use its advertising resources to promote the Starbucks brand, Starbucks will promote The Times. Mail order sales: Starbucks mail order catalogs offered coffee, candies and pastries, and select coffee-making equipment and accessories, distributed six times a year. Starbucks targeted direct-response marketing effort to expand retail into new markets and reinforce brand recognition in existing markets International expansion: Since Starbucks Coffee's opening in 1971 in Pike Place Market, the company has grown significantly both within the United States and abroad. The company's ultimate goal is to establish Starbucks, as the world's most respected and recognized coffee brand. Starbucks plans to achieve this objective through its continued rapid expansion of retail operations, growth of new products and other operations, as well as the development of new distribution channels. Interbrand Corporation, the world s leading brand consultancy, recently ranked Starbucks as one of the top 75 global brands.

Much of its growth abroad can be attributed to Starbucks Coffee International, a wholly owned subsidiary of Seattle-based Starbucks Coffee Co. This part of the company has entered new partnerships with prime international companies that have allowed it to expand and open retail stores in strategic locations. Foreign current...


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