Starbucks in France: Teething Problems

Case Study Reference No. TRT0039B

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1 Starbucks In France: Teething Problems

“We’re looking forward to sharing the Starbucks Experience with French customers at our first store in Paris. As France has a very strong coffee tradition, we are confident that our quality coffees and the Starbucks Coffeehouse Experience will be appreciated by French customers.”1

--Franck Esquerre, Managing Director, Starbucks Coffee France SAS

In 2005, Starbucks was the largest specialty coffee shop chain in the world.2 In 35 years of its operation, Starbucks emerged as the world’s leading retailer, roaster3, and brand of specialty coffee with coffeehouses in North America, Middle East, Europe, Latin America and the Pacific Rim.4 In fiscal 2005, Starbucks had a record revenue of $6.4 billion, growing at a rate of 20% per annum (Annexure I).5

The coffee multinational initially operated in various locations of North America, starting its business in the US in 1971. In the mid 1990s, however, the US market reached saturation. For further growth, in 1996, Starbucks started its international ventures. It entered the Asian market with an outlet in Tokyo, in 1996. This was followed by the company’s foray into Singapore and Philippines. After receiving encouraging responses in the Asian markets, Starbucks entered Europe in 1998. In 2004, the coffee chain reached Paris in France. France, being the birthplace of café society, already had several well-established and reputed coffee chains. Moreover, the café culture of France was much different from the culture Starbucks was known for. Hence analysts questioned whether Starbucks was aware of the risk it was taking by entering into France and challenging the origin of café ethnicity.

Starbucks-The Company

Started in 1971 with a single store in Seattle6’s Pike Place Market7, USA, Starbucks (Annexure II) welcomed nearly 35 million customers to its stores on a weekly basis by 2005.8 The company had outlets in more than 10,000 locations around the world by the end of 2005 (Annexure III).9 Starbucks’ objective was to establish the company as the most recognized and respected brand in the world, maintaining its uncompromising principles, (known to be its ‘Mission Statement’) (Exhibit I), as it grew.10

1 Source: http://h71028.www7.hp.com/enterprise/cache/11737-0-0-225-121.html 2 Source: ‘Starbucks in 2005’, ICFAI Business School, www.ecch.com 3 One who processed coffee beans, etc. with intense heat. www.oup.com 4 Source: http://www.starbucks.com/aboutus/Company_Profile_Feb06.pdf 5 Source: ibid 6 Seattle was the largest city in the Pacific Northwest region of the United States. It was located in the U.S. state of Washington between Puget Sound (an arm of the Pacific Ocean in the Pacific Northwest of the United States) and Lake Washington. First settled in the 1850s, it prospered after the coming of the railroad in 1884 and became a boom town during the Alaskan gold rush of 1897. It was an important commercial, transportation, and industrial hub and a major port of entry in 2005. http://www.answers.com/seattle&r=67, http://en.wikipedia.org/wiki/Seattle 7 Pike Place Market was a public market in Seattle, Washington, United States. The Market, which opened in 1907, was a place of business for many small merchants, and a popular tourist destination. http://en.wikipedia.org/wiki/Pike_Place_Market 8 Source: http://www.starbucks.com/aboutus/Annual_Report_2005_part1.pdf 9 Source: http://www.starbucks.com/aboutus/Company_Profile_Feb06.pdf 10 Source: ibid

2 The Birth

The first Starbucks coffee store was opened in Seattle by three coffee lovers, Jerry Baldwin11, Zev Siegel12, and Gordon Bowker13, with an investment of $6,350.14 The three friends named the store after ‘Starbuck’, a character in ‘Moby Dick’15. A mermaid with bare breasts and a fully visible, double fish tail was made the company’s logo. The logo was however changed over the years (Annexure IV). The first store offered high-quality coffee beans, bulk tea and spices. During their first year of operation, the three partners purchased green coffee beans from Peet's16, and then began buying directly from the growers. During 1981, the company had 85 employees working in 5 retail stores in Seattle, selling freshly roasted coffee beans.17 The company also had a small roasting facility and a wholesale business that supplied coffee to the local restaurants.18

During the same year, a young entrepreneur, Howard Schultz (Schultz)19, visited a Starbucks store. He was impressed with the great smell, and the care the Starbucks’ owners put into choosing and roasting the beans. Later, Schultz said, “I walked into the market and into the store. There was something incredibly special. The aroma. The authenticity. But it also felt like a rough diamond. It was something I felt I could polish into a jewel.”20

It took one year for Schultz to convince the Starbucks’ owners to hire him. In 1982, he joined Starbucks as Director of Retail Operations and Marketing. A year later, Schultz traveled to Milan21. There, in the city’s espresso bars22, he met trained baristas23 preparing espresso24, cappuccino25, and other drinks made from high-quality arabica beans26. Schultz was impressed.

11 Jerry Baldwin was an English teacher. He co-founded Starbucks in 1971. He learnt the coffee trade from Alfred Peet, whose store Peet's Coffee & Tea was the inspiration for Starbucks. In 1984, Peet's was put up for sale. Baldwin led a group of investors who purchased the company. In 1987, he sold his interests in Starbucks. Baldwin was Chairman of Peet's until 2001 when Peet's became a publicly traded company. During 2006, he was the Director of Peet’s. Baldwin also served as President of the Specialty Coffee Association of America. http://en.wikipedia.org/wiki/Jerry_Baldwin 12 He was a History teacher. Later, he became a co-founder of Starbucks. http://en.wikipedia.org/wiki/Starbucks 13 He was an American entrepreneur. He started out as a writer. Later, he co-founded Starbucks. He was also a co-owner of Peet's Coffee & Tea. http://en.wikipedia.org/wiki/Gordon_Bowker 14 Source: ‘Starbucks’ Drive-through Windows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com 15 ‘Moby Dick’ was a novel by Herman Melville. http://en.wikipedia.org/wiki/Moby_Dick 16 Peet's Coffee & Tea was a specialty coffee roaster and retailer. It was founded in 1966 by Alfred Peet in California. Peet's was especially noted for its strong, darkly roasted coffee; it advertised that the beans were hand-roasted and delivered to stores as fresh as possible. http://en.wikipedia.org/wiki/Peet%27s_Coffee_%26_Tea 17 Source: ‘Starbucks’ Drive-through Windows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com 18 Source: ‘Starbucks in 2005-Sustaining Growth’, ICFAI Business School, www.ecch.com 19 Howard Schultz was an American businessman and entrepreneur most widely known as Chief Global Strategist and Chairman of Starbucks Corporation. Schultz was born on July 19th, 1953, in Brooklyn, N.Y. In 1975, he got his bachelor's degree from Northern Michigan University majoring in communication. He worked as Vice President of U.S. operations for Hammarplast, a Swedish house wares company in New York, marketing coffee makers to a number of retailers, including Starbucks. In 1982, he joined Seattle's Starbucks. http://en.wikipedia.org/wiki/Howard_Schultz 20 Source: ‘Starbucks in 2005-Sustaining Growth’, ICFAI Business School, www.ecch.com 21 Milan was a city of northern Italy. It was taken by the Romans in 222 B.C. and was an important commercial, financial, cultural, and industrial center since the medieval times because of its strategic location. http://www.thefreedictionary.com/Milan 22 Espresso bars were a type of coffeehouses that specialized in coffee beverages made from espresso. ‘Starbucks’ Drive-through Windows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com 23 The term barista (the Italian word for "bartender" - masculine or feminine) was used in English to denote a maker of espresso based beverages. A barista had an understanding of the various aspects of producing espresso drinks. http://encyclopedia.thefreedictionary.com/Barista 24 A strong coffee brewed by forcing steam under pressure through darkly roasted, powdered coffee beans. http://www.answers.com/topic/espresso 25 Cappuccino was an Italian beverage, prepared with espresso and milk. In Italy, it was consumed almost exclusively early in the day for breakfast; in some other countries, it was consumed throughout the day or after dinner. http://encyclopedia.thefreedictionary.com/cappuccino 26 Coffee was divided into two categories, Arabica & Robusta. Arabica coffee was the superior species from the coffee lovers’ point of view. Arabica beans were the beans of choice in "gourmet" or "specialty coffees". Arabica coffee beans produced rich flavor and body. Robusta lacked this flavor and body. Arabica coffee was difficult to grow, and was prone to disease, requiring more hand cultivation, and yielded smaller harvests per acre. http://www.surfcitycoffee.com/html/bean_basics.html

3 He thought of incorporating the Italian coffee bar culture in the US by hiring trained baristas and offering high-quality cappuccinos and arabica coffee beans in Starbucks.

Exhibit I Starbucks’ Mission Statement

1. Provide a great work environment and treat each other with respect and dignity. 2. Embrace diversity as an essential component in the way we do business. 3. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. 4. Develop enthusiastically satisfied customers all of the time. 5. Contribute positively to our communities and our environment. 6. Recognize that profitability is essential to our future success.

Source: http://www.starbucks.com/aboutus/environment.asp

But back in Seattle, the Starbucks’ owners rejected Schultz’ plans to serve coffee in cups in the store.27 Schultz quit and started his own coffee bar chain in Seattle in 1985, called II Giornale. He sold brewed coffee and espresso beverages made from Starbucks’ coffee beans. He also sold gourmet, flavored coffee made of expensive arabica beans. Consumers gave high value to this novel format. As a result, though the gourmet coffee was priced 80-100% more than the traditional coffee, people bought it.28 In 1987, Schultz bought Starbucks’ assets along with its name for $3.8 million.29 He decided to label the new coffee chain as, ‘Starbucks Corporation’.

Overseas Expansion

Starbucks Corporation began its foreign venture through Vancouver30, Canada, in 1987. However, till 1995, the company concentrated mainly on the US market. In 1996, the US market became saturated with more than 3 stores per 10,000 residents (considered to be the saturation point).31 For further growth, Starbucks focused on overseas expansion (Annexure V) yet again. The company first established a subsidiary called, ‘Starbucks Coffee International Inc’32. In its foreign markets, instead of building its brand on its own, Starbucks followed the joint venture route. The joint venture required the local partner to bear most of the capital cost, besides paying an upfront licensing fee and a royalty on sales after operations started.

Starbucks first approached the Asian countries since, by that time, Europe had a well-established café culture. Schultz mentioned, “The decision was made to go to Asia first because we felt that the maturity of the coffee market in Europe was very strong and was not going to change much over the years. The Asian market was in its developmental stage and we had an opportunity to position Starbucks as a leader in a new industry.”33 In 1996, Starbucks entered Japan and Singapore. In Japan, the coffee chain served its coffee in paper cups against the perception that the Japanese consumers would not like drinking coffee in them. It also banned cigarette smoking

27 Source: http://www.myprimetime.com/work/ge/schultzbio 28 Source: http://www.icfaipress.org/304/AN-Starbuckway_72.asp 29 Source: http://www.myprimetime.com/work/ge/schultzbio 30 Vancouver was an island of southwest British Columbia, Canada, in the Pacific Ocean, separated from the mainland by the Strait of Georgia and Queen Charlotte Strait. The Strait of Juan de Fuca flowed between the southern end of the island and the coastline of northwest Washington. First sighted by Spanish explorers in 1774 and visited by Capt. James Cook in 1778, it was named to honor Capt. George Vancouver, who circumnavigated the island in 1792. http://www.answers.com/vancouver+island&r=67 31 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com 32 It was wholly owned by Starbucks Corporation. http://h71028.www7.hp.com/enterprise/cache/11737-0-0-225-121.html 33 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com

4 inside the stores to preserve the natural aroma of coffee. But, to attract the localites, Starbucks served Green Tea Frappuccino34 as Japanese had a preference for green tea. Further, the company priced its coffee below that of its competitors to attract more customers. However, the critics warned the coffee company about the possible reluctance from the traditional tea-drinkers35, and criticized its no-smoking policy. They also said that no Japanese would ever lose face by drinking from a cup in the street. And finally, the critics informed Starbucks’ management that given the high rent, stores couldn’t be larger than 500 square feet. But by 2002, Starbucks captured the Japanese market by opening 368 outlets.36 In fiscal 2002, the company generated a net income of $6.29 million in Japan.37 Schultz mentioned, “Our no-smoking policy made us an oasis in Japan. As for our to-go business, you can’t walk down a street in Tokyo today and not see someone holding a cup of Starbucks coffee. And our store size in Japan is identical to our store size in the U.S., about 1,200 to 1,500 square feet.”38 By the end of 2004, with Tokyo-based restaurant chain Sazaby39, Starbucks accounted for around 500 cafes in Japan.40 Schultz later quoted, “Our local partner Sazaby’s understanding of the Japanese consumer and the insight they have about the merchandizing and unique products has been a big help.”41

Starbucks Coffee International opened in the Philippines in 1997. In 1998, Starbucks started its European market venture by entering into the UK. The company acquired 60 outlets of the Seattle Coffee Company42, a UK-based chain of low-priced coffee shops, positioned at the best locations in London. It re-branded all its stores as Starbucks. The UK venture was a successful one and immediately, the company started to think of other European projects. However, one analyst43 remarked, “Starbucks is an American imitation of a European concept. To try to sell that back to the Europeans, that’s a real challenge.”44 Starbucks Coffee International also reached Taiwan, Thailand, New Zealand, and Malaysia in 1998.

Starbucks entered the Chinese market, along with Kuwait, South Korea, and Lebanon45, in 1999. Like Japan, China was also known to be a tea drinking country. Thus, Starbucks first introduced its coffee in the big hotels and restaurants of Beijing through a licensing agreement with Beijing

34 Frappuccino was a very sweet coffee beverage that had a nice rich and creamy consistency. It was a very milky beverage with a taste of coffee flavor. http://www.bevnet.com/reviews/frappuccino/ 35 Japan was considered as a traditionally tea drinking country. 36 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com 37 Source: http://www.icfaipress.org/304/AN-Starbuckway_72.asp 38 Source: http://www.businessweek.com/magazine/content/02_36/b3798007.htm 39 Sazaby was a domestically focused Japanese corporation known for creating original brands in dining, clothing, and household goods. Sazaby promoted its expansion through domestic and foreign alliances that shared its philosophy and provided a brand image. Through these partnerships, Sazaby continually offered a new mixture of fashions and lifestyles to its customers. Sazaby's four core sectors were product sales, food and restaurants, foreign alliances, and content. http://www.valueframeworkinstitute.org/Feb2003/feature.article.htm 40 Source: http://www.icfaipress.org/304/AN-Starbuckway_72.asp 41 Source: http://www.businessweek.com/magazine/content/02_36/b3798007.htm 42 In January 1992, The Original Seattle Coffee Company, Inc., (OSCC), was founded by Bruce A. Kosmala to provide a simple and convenient way of distributing specialty coffees, fruit smoothies and pastries to the work place and movie industry. Being the original designer and pioneer of the espresso truck/trailer concept, Bruce worked tirelessly perfecting this concept. OSCC later expanded its line of services to include the ability to custom design and build solutions for nearly any industry. It built any type of business into one of its trucks or trailers (mobile hair salons, mobile florists, mobile manicurist, mobile dog groomers, etc.). http://www.seattlecoffeetrucks.com/mobile-coffee.asp 43 Barry Sine, an analyst at H.D.Brous and Co. ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com 44 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com 45 Lebanon was a country of southwest Asia on the Mediterranean Sea. The region was gradually absorbed by the Persian Empire and later conquered by Alexander the Great. Eventually it came under the Roman control and was Christianized before the Arab conquest of the 7th century. Lebanon became a French League of Nations mandate after the World War I and proclaimed its independence in 1941, although full self-government was not achieved until 1945. In 1975, tensions between Christians and Muslims led to civil war in Lebanon, which finally came to an end in 1991. Beirut was the capital and the largest city of Lebanon. http://www.answers.com/lebanon&r=67

5 Mei-Da46. The China-based coffee wholesaler distributed Starbucks’ coffee in major restaurants and hotels. After being successful, in 2000, Starbucks opened its first store in Beijing. By 2003, it expanded to more than 70 stores including outlets in Shanghai and Guangzhou47.

In 2000, Starbucks Coffee International opened in Dubai, Hong Kong, Qatar, Bahrain, Saudi Arabia, and Australia. A year later, Starbucks opened its first company-owned store in Europe at Zurich, Switzerland. It was followed by the company’s rapid expansion in the European market by opening stores in Austria, Germany, Spain and Greece. In 2002, it further strengthened its UK operation by acquiring 13 stores of its rival Coffee Republic48. And finally in 2003, Starbucks acquired the entire chain of Seattle Coffee. The coffee multinational however faced some problems when it entered the French market in 2004. Observing Starbucks’s teething problems in France, analysts49 said, “The Asian could support more sites than North America in long-term. Europe may have similar potential, although individual countries such as Italy and France may prove tough to crack.”50

In 2005, Starbucks continued its international ventures. It opened its stores in Bahamas, Ireland, and Starbucks first company-operated stores in Dalian51 in Northeast China. Starbucks was successful in most of its international endeavors. Howard Schultz mentioned that through its unique coffee culture, termed as ‘Starbucks Experience’, the company was able to transcend barriers and language.

Starbucks’ Experience

The time when Schultz entered the café business in the early 1980s, the coffee industry was declining in the US.52 However, since the early years of 1990s, Starbucks managed to blossom. With its unique product line and store experience, the company rapidly increased the number of gourmet drinkers in the US, and also overseas (Annexure VI). Over the years, the coffee chain also emerged as a global leader. Schultz mentioned that Starbucks’ main goal was ‘to serve a great cup of coffee’53. Starbucks was known as a specialty coffee shop chain which offered a variety of fresh, rich-brewed coffee beverages, focusing on the Italian flavor. It also offered pastries, sandwiches, desserts, hot breakfasts, and coffee-related accessories and equipment primarily through its company-operated retail stores. Like Nestle54, it started selling packaged coffee in the supermarkets. In addition, Starbucks sold whole bean coffees through a specialty

46 Beijing Mei Da Coffee Co., Ltd., a portfolio company of H&Q Asia Pacific, (H&Q Asia Pacific (H&QAP) was a premier private equity firm that invested throughout the Asia Pacific region), was founded in 1995. It was a coffee wholesaler in China. On January 11th, 1999, Mei Da opened the first Starbucks Coffee store in China. http://198.66.205.43/press_news/ap_press/pressStaerbucks.htm 47 Guangzhou was among the largest cities in China. Guangzhou was the transportation, industrial, financial, and trade center of southern China. It was a special economic development zone and an important trading point with Hong Kong. It had an integrated steel complex, paper mills, a long-established textile industry (silk, cotton, jute, and later synthetic fibers), and factories producing tractors, machinery, machine tools, newsprint, refined sugar, small appliances, tires, bicycles, sports equipment, porcelain, cement, and chemicals. Traditional arts and crafts, principally ivory and jade carvings, were still produced in Guangzhou. It was the hub of water transportation along the Pearl River. http://www.answers.com/guangzhou&r=67 48 Coffee Republic was formed in 1995 by Bobby and Sahar Hashemi, a brother and sister team. Coffee Republic became one of the best known and largest independent espresso bar brand in the UK, with bars all across the UK. http://www.coffeerepublic.co.uk/about.php 49 Analysts at Salomon Smith Barney. ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com 50 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com 51 Dalian was a city of northeast China on the Liaodong Peninsula and the Bo Hai. It was a major seaport, and was opened to foreign commerce in 1901. http://www.answere.com/dalian&r=67 52 In the early 1980s, Americans drank less coffee. The average consumption of coffee declined from a high of 3.1 cups a day in 1962 to 1.67 cups a day. The sales of the major 3 brands, namely Maxwell House, Folgers and Nescafe were down. By 1988, Maxwell House lost $40 million on its domestic coffee business. http://www.icfaipress.org/304/AN-Starbuckway_72.asp 53 Source: http://www.myprimetime.com/work/ge/schultzbio 54 Nestle S.A. or Société des Produits Nestlé S.A., headquartered in Vevey, Switzerland was the world's biggest food and beverage company. In 2006, Nestle's products extended from mineral waters to baby food to coffee and dairy products. Its main rival was Cadbury Schweppes. http://en.wikipedia.org/wiki/Nestle

6 sales group and supermarkets. Further, the company produced and sold Frappuccino coffee drink and a line of premium ice creams through its joint venture partnerships. It offered a line of innovative premium teas produced by its wholly owned subsidiary, Tazo Tea Company55.

However, it was believed that Starbucks flourished more for its store ambience than for its coffee (Annexure VII). With a combination of music, comfortable chairs, and aroma of coffee beans, it was deemed as a wonderful experience by the customers. The company provided facilities like patio seating, along with fireplaces, leather chairs, and newspapers; and playing area for children in its stores. The company banned smoking in its stores to preserve the aroma of coffee beans within the stores.

The management of Starbucks stated that the store was an ‘authentic coffee experience’ with a place to think and imagine. It termed its stores as a ‘third place’, after home and work, a place to escape from the chaos at home and office. Nevertheless, at times, the stores were used for office purposes also. The company connected its cafés with high-speed wireless Internet connections, which enabled the customers to sit in a store and check e-mail, surf the Web or download multimedia presentations using their laptops. The new service allowed Starbucks to attract a new set of customers—the business class and emerging entrepreneurs, who held meetings, job interviews and conducted businesses.

Starbucks invested in a world-class roasting facility, and made investment in a computer- information system sophisticated enough to keep track of sales in hundreds of its stores. Starbucks had an efficient customer service that added to its retail service. Schultz mentioned, “Starbucks is not in the coffee business serving people but in the people business serving coffee.”56 Its coffee brewers were called baristas. Every new barista was given 25 hours of training on coffee history and the intricacies of preparing quality-brewed coffee. They were trained to anticipate the customers' needs and explain to customers the various flavors and blends. The company installed automatic espresso machines in 800 locations to reach out to more customers. It launched an e-commerce site called SeattlesBest.com, from which customers could purchase coffee, coffee flavorings and gift items online. In 2001, Starbucks started offering prepaid Starbucks Cards, priced between $5 and $500. The cards cut transition time to half, as it required the store managers to only swipe them to deduct the sale prices. To speed up its service, it launched Starbucks Express. This enabled the customers to preorder and prepay for beverages and pastries via phone or Starbucks Express' website.

To create a unique coffee culture, Starbucks used music. The company compiled music of different artists, played them in its stores, and also sold them to customers. For that, it acquired Hear Music57 of Cambridge, Massachusetts in 1999. Hear Music created music programming and CDs for Starbucks coffeehouses worldwide. Since then, Starbucks sold about 5 million CDs till 2005. It went a step further by entering into a contract with Seal58, an artist, to create proprietary music for Starbucks.

55 Tazo Tea Company was a tea manufacturer and distributor based in Portland, Oregon (Portland was the largest city in the U.S. in the state of Oregon.). Tazo Tea was founded in 1994 by Steve Smith along with his business partners Stephen Lee and Tom Mesher. The company was purchased by Starbucks in 1999 for $8.1 million. http://en.wikipedia.org/wiki/Tazo 56 Source: ‘Starbucks’ Drive-through Windows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com 57 Hear Music was the brand name of Starbucks’ retail music concept. Hear Music began as a catalog company in Cambridge, Massachusetts in 1990 before being purchased by Starbucks in 1999. http://en.wikipedia.org/wiki/Hear_Music 58 Seal was born in England on February 19th, 1963. Before beginning a singing career, Seal studied architecture and worked in an electrical engineering firm. He had won Grammy Awards and had success in the US, and internationally. In the late 1980's, Seal began singing with various bands and on his own. http://www.rockonthenet.com/artists-s/seal_main.htm

7 Starbucks’ yet another unique feature was its ‘drive-through window service’. Starbucks once shunned the drive-through concept, fearing it might alienate customers who liked to come inside and sip coffee while listening to music in cozy chairs. Later, in 1994, on coffee lovers’ demand, the company opened its first drive-throughs in car-crazed southern California to offer the busy customers a speedy service. Commenting on the move, Jim Donald, Starbucks’ President and Chief Executive Officer (CEO) at the time said, “We have a habit of giving customers what they want, and when a customer has six kids in their car or their favorite pets and it’s raining or snowing, that’s creating an experience for them that will want to make them use a drive-thru.”59 Starbucks had dozens of drive-throughs doing brisk business within a few years.

Starbucks was successful in creating a culture and a loyal customer base. By 1993, the number of gourmet drinkers in the US grew to 4.5 million, which increased to 21 million in 1999.60 In 2004, Starbucks became an informal gathering place for people of all types – mothers, young children, students, teenagers, shoppers, couples, and businessmen.61 The Chairman of Starbucks, Howard Schultz, mentioned, “You get more than the finest coffee when you visit a Starbucks – you get great people, first-rate music, and a comfortable and upbeat meeting place.”62

Starbucks Entry Into France

Starbucks Coffee International, and Grupo Vips63, Starbucks’ partner in the Spanish market, announced a joint venture in September 2003 to open Starbucks’ retail locations in France. The joint venture company was named ‘Starbucks Coffee France SAS’. On Friday, January 16th,, 2004, Starbucks Coffee France SAS opened its first store in Paris. The coffee chain announced that its French locations would be operated by the joint venture, under Managing Director, Franck Esquerre. Franck Esquerre was credited with more than 20 years of experience in the food and beverage industry at that time.

The first store was located in the heart of the city at 26, Avenue de l’Opera, one of Paris’ popular tourist and shopping districts. The store was modern yet comfortable, two-level coffeehouse with pale yellow walls, red velvet curtains, and twisting lanterns. Customers could sit in plush armchairs and read newspapers. In spring and summer, they could sit outside – while sipping an espresso which cost €641.60 ($2) or a cappuccino, which was €2.60 ($3.25). Expressing his views, Howard Schultz said, “We chose the Opera district as the location for our first store in Paris as it is a true crossroads of French and international cultures. Since there is already a strong, vibrant and lively local coffee culture, we believe that there is excellent growth potential for Starbucks. Our commitment to the market is long-term and we are very optimistic about our opportunities for success in France.”65

However, Starbucks, whose green-and-white logo was instantly familiar in the US and in many other countries, was barely known in France. Further, in France, the café culture was much different from the culture Starbucks was famous for. There were also several well-established and reputed coffee chains in France. People thus wondered why Starbucks, which had more than 10,000 stores worldwide, ventured into France, despite high operating costs and cultural

59 Source: http://usatoday.printthis.clickability.com/pt/cpt?action=cpt&title=USATODAY.com+-+Star... 60 Source: http://www.icfaipress.org/304/AN-Starbuckway_72.asp 61 Source: ‘Starbucks in 2005-Sustaining Growth’, ICFAI Business School, www.ecch.com 62 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com 63 Grupo Vips was a leader in the restaurant and retail industries in Spain. By the end of 2005, it had 274 outlets in 18 cities in Spain and France. http://www.clubvips.com/en/flash.php 64 Euro (€) was the official currency of the European Union (EU). 1 Euro = 1.2644 U.S. dollars. 65 Source: http://h71028.www7.hp.com/enterprise/cache/11737-0-0-225-121.html

8 resistance. Jeffery Young, Managing Director of a London-based retail analyst firm, Allegra Strategies, answered, “It’s partly about brand building in areas of high tourist traffic.”66

Challenges

France had a strong tradition of independent, family-owned coffeehouses like ‘Flore’, and ‘Les Deux Magots’. During 2004, when Starbucks approached its market, France had 60,000 coffeehouses.67 The French cafés had a unique coffee culture. During winter season or springtime, inside a café bar, the French would sit over a coffee, with their pet dogs under the table, for hours. A rich, dark espresso was a French favorite, which they preferred to sip under a haze of cigarette smoke at a zinc bar68 or at a tiny cramped sidewalk table. Hence, Starbucks’ bright, upbeat image, with its large white paper cups of takeout brews, along with big, sticky snacks, seemed to be a million miles away. Though Schultz mentioned, “Starbucks would fit well into the French café tradition,”69, this was not the feeling at ‘Le Firmament’, a café near the Starbucks first store at de l’Opera. “It’s an absurd idea,”, said Jean – Paul Bedel, a regular at the very café. “The whole point about cafes in France is that you can sit over a coffee as long as you like, read the papers,…, taking away a coffee in a Styrofoam cup is anathema, unthinkable. It’s the kind of thing you’d only think of doing at a railway station.”70

Another Starbucks’ café rule, considered as unbelievable by the French community, was its no- smoking policy. People in France could not think of having a cup of coffee without a cigarette. Yet, Franck Esquerre mentioned, “It’s something we debated for a long time. In the stores, we’re going to be nonsmoking to preserve the quality of the coffee. But in some cases, if we have outside seating, people can smoke.”71

Starbucks had yet another big challenge in France: changing French opinion about American coffee. Thick, dark espresso was coffee to French. “American coffee, it’s only water. We call it ‘jus des chaussette’ (juice wrung from soggy socks),”72 said Bertrand Abadie, a local documentary filmmaker. Along with him, many other locals opined that Starbucks coffee would never replace the corner café or the typical Parisian ‘petit noir coffee’ – a shot of espresso that was perfect with a Gauloise73 cigarette early in the morning. “Usually we like the petit noir or noisette, and not long coffees like they serve in Starbucks,”74, said Pierre, a regular customer of noisette at Paris. Even an American living in France was not happy enough to have his homeland brand in France. June Rives, President of Rives Travel Excursions75, who was living in France since 2000, said, “Bringing Starbucks to Paris is like bringing coals to Newcastle.” Rives,

66 Source: http://www.businessweek.com/print/globalbiz/content/apr2006/gb20060420-895395.htm 67 Source: http://news.bbc.co.uk/2/hi/europe/3661636.stm 68 Zinc bar was a traditional French wet bar style with pewter on top, where people gathered around in bistro, café, and brasserie. There were not many left, but they came back throughout the world, by lovers of French tradition bistro way of life. These marvelous bars had the top and inside made of pewter that took, with time, a beautiful silvery color. Pewter required very little maintenance. http://www.bistrots-dautrefois.com/zincbars.html 69 Source: http://www.smh.com.au/cgi-bin/common/popupPrintArticle.pl?path=/articles/2003/09/26/... 70 Source: ibid 71 Source: Jamey Keaten, ‘Is France Ready for Starbucks?, September 26, 2003, Associated Press 72 Source: http://usatoday.printthis.clickability.com/pt/cpt?action=cpt&title=USATODAY.com+-+Star... 73 Gauloise was a brand of cigarette of French manufacture. It was produced by the company Altadis. Traditional Gauloises were short, wide, unfiltered and made with dark tobaccos from Syria and Turkey which gave off a strong and distinctive aroma. http://www.answers.com/topic/gauloise 74 Source: http://news.bbc.co.uk/1/hi/world/europe/3401637.stm 75 Rives Travel Excursions, a travel agency, located in Houston, Texas and Paris, France, provided small group tours of 18 to 20 people to France. http://www.francetourism.com/practicalinfo/reservations-USTO-wine.htm

9 originally from Houston76, added, “Starbucks is great, but I wouldn’t put it up against French coffee.”77

Starbucks, along with coffee, offered fastfood in its outlets. These snacks had an American flavor, which was much unusual to the French taste. However, the French were very conservative with deeply held traditions. It was felt that the French would not accept the fastfood lifestyle of US. Hence, in France, Starbucks had to add the local flavor to its food to appease the localites.

The US coffee giant also faced high operating costs in France. Ralph Hababou, co-founder of Columbus Café78, a French coffee store chain and Starbucks’ chief rival in France, said, “I think it’s (starbucks) losing a phenomenal amount of money here. The cost of hiring employees and buying leases is simply too high.”79 Columbus Café, established in 1994, expanded slowly to just over 30 outlets in 10 years and struggled financially. During 2005, it made $6.8 million in sales, but was still losing money. When Starbucks entered the French market, it considered buying Columbus, but finally decided against it. As an alternative, it moved into Columbus’s territory.

In France, another threat to Starbucks came due to the Iraq war80 that took place the previous year Starbucks entered France. The French opposed the then President of USA, George Bush’s attack on Iraq. And even though Starbucks was not the ambassador of American policies, it remained symbolic to what USA did.

Starbucks’ Optimism

Starbucks was successful in most of the places it ventured. But, France was not just another country. Howard Schultz once said, “If Starbucks can succeed here (France), it could be a turning point or a coming of age.”81 In France, Starbucks thus seemed to adapt the local café culture to attract customers. The company diluted its no smoking policy. It was strictly applied inside the stores, but not in pavement seating areas. The coffee giant also hired local chefs to make sure that the croissant82 and ‘pain au chocolate’ pastries could meet the high standards of the French palate. “We spent a lot of time on the food side getting it right.”83, informed Schultz. Franck Esquerre further said, “Over the past few months, we have been working closely with several small specialty French food companies to adapt some of Starbucks key pastries to local tastes. We are also using local ingredients to develop traditional French pastries and other fresh food items to appeal to our French customers.”84

76 Houston was a city of southeast Texas. Founded in 1836 and named after Sam Houston, it was a major industrial, commercial, and financial hub, the center of the U.S. aerospace industry, and a deep-water port connected with Galveston Bay and the Gulf of Mexico by the Houston Ship Channel. Houston was also the largest city in Texas. http://www.answers.com/houston&r=67 77 Source: http://usatoday.printthis.clickability.com/pt/cpt?action=cpt&title=USATODAY.com+-+Star... 78 Created in 1994, Columbus Café® was France's leading chain of Espresso Bars and a pioneer in the rapidly changing face of traditional café life. American in origin, the concept of the espresso bar had its roots in Italy but had been updated for a new generation. At Columbus Café®, the customers were treated to a wide selection of gourmet drinks both hot and cold and succulent pastries that could all be eaten on the premises or "to-go", an entirely new concept in France. http://www.columbuscafe.com/us/INDEX.HTM 79 http://www.businessweek.com/print/globalbiz/content/apr2006/gb20060420_895395.htm 80 The Iraq War (2003) was a military engagement encompassing the invasion and occupation of Iraq by a U.S.-led coalition. The then U.S. President George W. Bush stated that the war was a part of an ongoing conflict called the War on Terrorism. http://en.wikipedia.org/wiki/Iraq_war 81 Source: http://usatoday.printthis.clickability.com/pt/cpt?action=cpt&title=USATODAY.com+-+Star... 82 A croissant was a butter-laden flaky French pastry, named for its distinctive crescent shape. Croissants were made of a leavened variant of puff pastry by layering yeast dough with butter. http://www.answers.com/topic/croissant 83 Source: http://usatoday.printthis.clickability.com/pt/cpt?action=cpt&title=USATODAY.com+-+Star... 84 Source: http://h71028.www7.hp.com/enterprise/cache/11737-0-0-225-121.html

10 Starbucks’ takeout concept was however retained in its French outlets. The fact was taking away a coffee was no more a new concept in France by 2004-2005. Columbus Cafe, which had 20 stores in Paris at that time, had introduced the concept when it initiated in France. Ratiba, a sandwich bar worker in Paris, added, “The fact is French society is changing; I think there could very well be people who will love a takeaway coffee store.”85 But commuters toting paper cups of coffee was still a rare sight in Paris. Starbucks revealed, “When many people think of Starbucks, they think of the iconic white paper cup with our logo on it. But a cup is just a vessel; it’s meant to contain something precious. In our case, we lovingly fill our cup with the world’s finest handcrafted beverages.”86

The younger generation in France however expressed its excitement that it would finally be able to sip the kind of coffee it loved to watch, on the US TV series ‘Friends’. In fact, for some, it was an exotic rarity, far more exciting than the average French cafe. Melissa, aged 18, said she could hardly wait, "I love Starbucks caramel coffee - it's very good and I like the concept that they're opening in Paris. I think Starbucks will be ok for French people.”87 The French girl’s excitement indicated that the coffee culture in France was changing, and Starbucks became a part of the evolving change. Schultz remarked, “I wonder if it (French café culture) is as relevant to young people today as it was 30 years ago.”88 At Starbucks France, young rich kids from the city’s best universities, mixed with American and Asian tourists, were happily ready to pay $5 for a frappuccino.

Furthermore, the time when Starbucks entered the French market, the coffee industry in France was declining. The poor service and a lack of basic courtesy in the French cafes drove away the customers. “The number of cafes and customers has been dwindling as the number of complaints has been growing.”89, an industry spokesman said. Analysts felt it would help Starbucks to establish it as a specialty coffee chain in France.

Gazing Into The Coffee Cup

Starbucks was successful in places where consultants said it would never fly. The fact was the coffee multinational had the characteristic to acclimatize itself to the culture where it traded. The company believed as long as the core product stayed true to its quality and principles, the other elements of the offer could adapt to the local market needs. For example, in its stores in China, Japan, Germany or Kuwait, the drink was the same espresso, but the food had a local flavor. In Britain, Starbucks won an award for its mince pie. In Asia, the coffee chain offered curry puffs and meat buns. Further, Starbucks offered green tea frappuccino in Japan, and made men-only and family divisions in its stores in the Middle East. Starbucks’ another international strategy was forming joint ventures with local players. “The idea is that an experienced local partner can help identify locations, sift through tax issues and give Starbucks stores more community appeal”90, said Peter Maslen, President of Starbucks Coffee International. It also tested each country with a handful of stores in trendy districts, using experienced Starbucks managers. It sent local baristas to Seattle for 13 weeks of training. Then it started opening stores by the dozen. And with same international strategies, Starbucks was all set to capture the French market. “With slow and steady expansion over the next few years, Starbucks France could build a nice business”91, said Jeffery

85 Source: http://www.smh.com.au/cgi-bin/common/popupPrintArticle.pl?path=/articles/2003/09/26/... 86 Source: http://www.starbucks.com/aboutus/Annual_Report_2005_part1.pdf 87 Source: http://news.bbc.co.uk/1/hi/world/europe/3401637.stm 88 Source: http://usatoday.printthis.clickability.com/pt/cpt?action=cpt&title=USATODAY.com+-+Star... 89 Source: http://news.bbc.co.uk/2/hi/europe/3661636.stm 90 Source: http://www.globalexchange.org/campaigns/fairtrade/coffee/662.html.pf 91 Source: http://www.brandchannel.com/print_page.asp?ar_id=259§ion=profile

11 Young of Allegra Strategies. However, he mentioned that it was unlikely that the French market would be as promising as Britain, where the company opened its 500th outlet in 2004. Allegra projected Starbucks to open 250 outlets by 2008 in France.

Nonetheless, some analysts felt that France was not an another country for Starbucks, and hence they questioned whether the coffee multinational was aware of the risk of entering the coffee birthplace. Some further felt that the time of entry of Starbucks in France was not right. The Iraq war was a deterrent for Starbucks’ efforts to grow in France. Howard Schultz quoted, “We are all mindful of the political tension that existed this past year between France and the US and the feelings the French people have about President Bush. Perhaps we can be a great example of something that is American, that is very respectful of French culture, and we want to bridge the gap.”92

92 Source: http://usatoday.printthis.clickability.com/pt/cpt?action=cpt&title=USATODAY.com+-+Star...

12 Annexure I Starbucks’ Selected Financial Data

(In thousands, except earnings per share and store operating data)

Source: http://www.starbucks.com/aboutus/Annual_Report_2005_part2.pdf

13 Annexure II Major Events At The Starbucks

1971: Starbucks opened its first location in Seattle’s Pike Place Market. 1982: Howard Schultz joined Starbucks as Director of Retail Operations and Marketing. 1983: Schultz traveled to Italy, where he’s impressed with the popularity of the espresso bars in Milan. He saw the potential to develop a similar coffeehouse culture in Seattle. 1985: Schultz founded Il Giornale, offering brewed coffee and espresso beverages made from Starbucks’ coffee beans. 1987: With the backing of local investors, Il Giornale acquired Starbucks’ assets and changed its name to Starbucks Corporation. Starbucks opened in Chicago and Vancouver, B.C. Starbucks location total at fiscal year end = 17. 1988: Thecompanyoffered full health benefits to full and part-time employees. Starbucks location total at fiscal year end = 33. 1989: Newstoreswereopening in Portland, Ore. Starbucks location total at fiscal year end = 55. 1990: Starbucks expanded its headquarters in Seattle and built a new roasting plant. The company was awarded Horizon Air account. Starbucks location total at fiscal year end = 84. 1991: Thecompanyestablished a relationship with CARE, the international relief and development organization, and introduced the CARE coffee sampler. Starbucks became the first privately owned U.S. company to offer a stock option program that included part-time employees. It opened first licensed airport location with HMSHost at Sea-Tac International Airport. Starbucks opened in Los Angeles. Starbucks location total at fiscal year end = 116. 1992: Starbucks completed initial public offering, with common stock being traded on the Nasdaq National Market under the trading symbol “SBUX.”. Starbucks opened in San Francisco; San Diego; Orange County, Calif.; and Denver. Starbucks location total at fiscal year end = 165. 1994: Starbucks opened in Minneapolis; Boston; New York; Atlanta; Dallas; and Houston. Starbucks location total at fiscal year end = 425. 1995: Starbucks began selling compact discs as a result of an extremely popular in-house music program. Awarded United Airlines account. Began serving Frappuccino® blended beverages. Opened roasting facility in York, Pa. Formed alliance with Dreyer’s Grand Ice Cream and introduced Starbucks® Ice Cream. The company completed $165 million convertible debenture offering. Starbucks Coffee International formed joint venture with Sazaby Inc. to open Starbucks coffeehouses in Japan. Opened in Philadelphia; Pittsburgh; Las Vegas; Cincinnati; Baltimore; San Antonio; and Austin, Texas. Starbucks location total at fiscal year end = 677. 1996: Awarded Westin (now Starwood Hotels) account. The North American Coffee Partnership (Starbucks and Pepsi-Cola Company) began selling bottled Frappuccino® coffee drink. New stores were opened in Rhode Island; Idaho; North Carolina; Arizona; Hawaii; Utah; and Ontario, Canada. Starbucks Coffee International opened in Japan; and Singapore. Starbucks location total at fiscal year end = 1,015. 1997: Established The Starbucks Foundation, benefiting local literacy programs in communities where Starbucks had coffeehouses. Offered Frappuccino® Bars, a lowfat decadent treat. Opened in Florida; Michigan; and Wisconsin. Starbucks Coffee International opened in the Philippines. Starbucks location total at fiscal year end = 1,412. 1998: Starbucks acquired Seattle Coffee Company in the United Kingdom. Signed a licensing agreement with Kraft Foods, Inc., to extend the Starbucks brand into grocery channels across the U.S. Launched Starbucks.com. Opened in New Orleans; St. Louis; Kansas City, Mo.; and Portland, Maine. Starbucks Coffee International opened in Taiwan; Thailand; New Zealand; and Malaysia. Starbucks location total at fiscal year end = 1,886. 1999: Acquired Tazo LLC, a tea company based in Portland, Ore. Acquired Hear Music, a San Francisco–based music company. Introduced Starbucks Barista AromaTM thermal coffeemaker, an insulated automatic drip coffee brewer. Opened in Memphis and Nashville, Tenn.; and Saskatchewan,

14 Canada. Starbucks Coffee International opened in Beijing; Kuwait; South Korea; and Lebanon. Starbucks location total at fiscal year end = 2,498. 2000: Howard Schultz transitioned from Chairman and Chief Executive Officer to Chairman and Chief Global Strategist. Orin Smith promoted to President and Chief Executive Officer. Starbucks Coffee International opened in Dubai; Hong Kong; Shanghai; Qatar; Bahrain; Saudi Arabia; and Australia. Starbucks location total at fiscal year end = 3,501. 2001: Starbucks provided $1 million in financial support to coffee farmers through Calvert Community Investments. Introduced the Starbucks Card, a stored-value card for customers to use and reload. Entered into agreement with Hyatt Hotels Corp. Starbucks opened 300th location in Japan and celebrated fifth year of business in Japan. Starbucks Coffee International opened in Switzerland and Austria. Starbucks location total at fiscal year end = 4,709. 2002: Introduced Starbucks DoubleShot® coffee drink to the ready-to-drink category. Launched its high-speed wireless internet service branded T-Mobile® HotSpot. Starbucks Coffee International opened in Oman; Indonesia; Germany; Spain; Puerto Rico; Mexico; Greece; and Southern China (Macau and Shenzhen). Starbucks location total at fiscal year end = 5,886. 2003: Developed and launched Starbucks Card DuettoTM Visa®, the first-of-its-kind payment card blending Visa credit card functionality with the reloadable Starbucks Card. Acquired total of Seattle Coffee Company. Starbucks Coffee International opened its 1,000th Asia Pacific store in Beijing, China. Starbucks Coffee International opened in Turkey; Chile; Peru; and Cyprus. Starbucks location total at fiscal year end = 7,225. 2004: Starbucks Coffee International opened in Paris. Introduced in-store CD-burning service powered by HP. The new music delivery experience allowed Starbucks’ customers to create personalized CDs at the Starbucks Hear MusicTM Coffeehouse in Santa Monica, Calif. Launched Hear MusicTM media bar CD burning service in selected locations in Seattle and Austin, Texas. Introduced new Frappuccino® Light blended coffee beverages. Expanded high speed wireless service, T-Mobile® HotSpotTM to more than 3,300 Starbucks stores. Starbucks location total at fiscal year end = 8,569. 2005: Orin Smith retired as Starbucks President and Chief Executive Officer. Jim Donald promoted to President and Chief Executive Officer. Starbucks responded to the tremendous tsunami devastation in South Asia by donating more than $1.5 million for tsunami relief and recovery, channeled through a variety of relief organizations around the world. Starbucks Coffee International opened stores in the Bahamas; Ireland; and Starbucks first Company-operated stores in Dalian in Northeast China. Starbucks location total at fiscal year end = 10,241. 2006: Introduced bottled Frappuccino® Strawberries and Creme drink, the first non-coffee bottled Starbucks beverage. Introduced ready-to-drink Starbucks Iced Coffee; a refreshing, cold coffee drink with just a touch of milk and sweetness. Starbucks location total as of March = 11,225.

Source: http://www.starbucks.com/aboutus/Company_Timeline_Feb06.pdf

15 Annexure III Starbucks International Expansion

Starbucks in Germany The original Starbucks store Starbucks in Doha, Qatar in Seattle

Starbucks in Australia Starbucks at de l’Opera in Paris, France Starbucks in Japan

Starbucks in Seoul, Korea Starbucks in China

Source: http://en.wikipedia.org/wiki/Starbucks

16 Annexure IV Starbucks Logo

StarbucksLogoin1971 StarbucksLogoin2005

Source: http://en.wikipedia.org/wiki/Starbucks#Name_and_logo

Annexure V Starbucks’ International Expansion (1996-2002)

Source: Starbucks International Group

17 Annexure VI Per Capita Coffee Consumption (Units: Kilograms Per Person Per Year) Country Year (2003)

USA 4.2 UK 2.2 Switzerland 7.4 Sweden 7.9 Spain 4.0 South Africa 0.4 Australia 2.7 Canada 4.0 Denmark 8.1 France 5.4 Germany 6.6 Greece 5.4 Ireland 2.3 Japan 3.2 Source: http://earthtrends.wri.org – Resource Consumption: Coffee consumption per capita – Microsoft In…

18 Annexure VII Starbucks’ Experience

Sip Coffee While Listening To Music In Cozy Chairs

Customer Friendly Baristas

Starbucks Frappuccino In Large Paper Cups Explore The World Of Tazo

Source: http://www.starbucks.com/ http://www.starbucks.com/aboutus/Annual_Report_2005_part1.pdf

19 References:

1. Rachel Tiplady, ‘Can Starbucks Blend into France?’, April 20, 2006, http://www.businessweek.com/print/globalbiz/content/apr2006/gb20060420_895395.htm 2. Caroline Wyatt, ‘Starbucks invades Parisian café culture’, January 15, 2004, http://news.bbc.co.uk/1/hi/world/europe/3401637.stm. 3. ‘Starbucks in 2005’, ICFAI Business School, www.ecch.com. 4. ‘Starbucks’, http://en.wikipedia.org. 5. ‘Starbucks’ Drive-through Windows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com. 6. ‘Great Entrepreneurs’, http://www.myprimetime.com. 7. ‘Starbucks Coffee’, http://www.starbucks.com. 8. ‘Starbucks’ success – More than just coffee’, http://www.icfaipress.org. 9. ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com. 10. ‘Starbucks entering France in ‘04’, September 25, 2003, http://www.bizjournals.com/portland/stories/2003/09/22/daily41.html?t=printable. 11. ‘Starbucks sees growing demand for drive-thru coffee’, http://www.usatoday.com/money/industries/food/2005-12-24-starbucksdrivethru_x.htm. 12. ‘Starbucks Coffee Company celebrates the opening of its first store in Paris’, http://h71028.www7.hp.com/enterprise/cache/11737-0-0-225-121.html. 13. ‘Clash of cultures looms as Starbucks marches on France’, September 27, 2003, http://www.smh.com.au/cgi- bin/common/popupPrintArticle.pl?path=/articles/2003/09/26/.... 14. Jamey Keaten, ‘Is France Ready for Starbucks?, September 26, 2003, Associated Press. 15. ‘France tackles ‘bad’ café culture’, September 16, 2004, http://news.bbc.co.uk/2/hi/europe/3661636.stm. 16. ‘Lattes for all: Starbucks plans global expansion’, April 20, 2003, http://www.globalexchange.org/campaigns/fairtrade/coffee/662.html.pf. 17. Noelle Knox, ‘Starbucks tries its special ambience on Paris’, http://usatoday.printthis.clickability.com/pt/cpt?action=cpt&title=USATODAY.com+- +Star... 18. John Simmons, ‘Starbucks – supreme bean’, November 21, 2005, http://www.brandchannel.com/print_page.asp?ar_id=259§ion=profile. 19. Q&A with Starbucks' Howard Schultz, September 9, 2002, http://www.businessweek.com/magazine/content/02_36/b3798007.htm. 20. Suresh Kotha and Debra Glassman, ‘Starbucks Corporation: Competing in a Global Market’, http://bschool.washington/edu/gbc/documents/starbucks_final.pdf.

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1. http://www.businessweek.com. 2. http://news.bbc.co.uk. 3. www.ecch.com. 4. www.oup.com. 5. http://www.starbucks.com. 6. http://www.answers.com. 7. http://en.wikipedia.org. 8. http://www.thefreedictionary.com. 9. http://encyclopedia.thefreedictionary.com. 10. http://www.surfcitycoffee.com. 11. http://www.icfaipress.org.

20 12. http://www.myprimetime.com. 13. http://www.clubvips.com. 14. http://www.bizjournals.com. 15. http://www.bevnet.com. 16. http://www.valueframeworkinstitute.org. 17. http://www.usatoday.com. 18. http://www.rockonthenet.com. 19. http://198.66.205.43/press_news. 20. http://www.seattlecoffeetrucks.com. 21. http://www.coffeerepublic.co.uk. 22. http://h71028.www7.hp.com. 23. http://www.smh.com. 24. http://www.francetourism.com. 25. http://www.globalexchange.org. 26. http://www.brandchannel.com. 27. http://bschool.washington/edu. 28. http://www.bistrots-dautrefois.com.

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