1

Starbucks in France: Teething Problems

Case Study Reference No. TRT0039B

This case was written by Arpita Siddhanta under the direction of Bharathi S Gopal

IBSCDC. It is intended to be used as the basis for class discussion rather than to

illustrate either effective or ineffective handling of a management situation. This case

was compiled from published sources.

© 2004, IBSCDC

No part of this publication may be copied, reproduced or distributed, stored in a retrieval

system, used in a spreadsheet, or transmitted in any form or medium – electronic,

mechanical, photocopying, recording, or otherwise – without the permission of IBSCDC.

Related Products Availability

Teaching Note

Structured Assignment

Distributed and Printed by Phone : 91(40) 23435310 - 11IBSCDC, India Fax : 91(40) 23430288www.ibscdc.org E-mail : info@ibscdc.org

All rights reserved

2

Starbucks In France: Teething Problems

“We’re looking forward to sharing the Starbucks Experience with French customers at our firststore in Paris. As France has a very strong coffee tradition, we are confident that our qualitycoffees 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 itsoperation, Starbucks emerged as the world’s leading retailer, roaster3, and brand of specialtycoffee with coffeehouses in North America, Middle East, Europe, Latin America and the PacificRim.4 In fiscal 2005, Starbucks had a record revenue of $6.4 billion, growing at a rate of 20% perannum (Annexure I).5

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

Starbucks-The Company

Started in 1971 with a single store in Seattle6’s Pike Place Market7, USA, Starbucks (AnnexureII) welcomed nearly 35 million customers to its stores on a weekly basis by 2005.8 The companyhad 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 inthe 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.html2 Source: ‘Starbucks in 2005’, ICFAI Business School, www.ecch.com3 One who processed coffee beans, etc. with intense heat. www.oup.com4 Source: http://www.starbucks.com/aboutus/Company_Profile_Feb06.pdf5 Source: ibid6 Seattle was the largest city in the Pacific Northwest region of the United States. It was located in the U.S. state of Washingtonbetween Puget Sound (an arm of the Pacific Ocean in the Pacific Northwest of the United States) and Lake Washington. First settledin the 1850s, it prospered after the coming of the railroad in 1884 and became a boom town during the Alaskan gold rush of 1897. Itwas 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/Seattle7 Pike Place Market was a public market in Seattle, Washington, United States. The Market, which opened in 1907, was a place ofbusiness for many small merchants, and a popular tourist destination. http://en.wikipedia.org/wiki/Pike_Place_Market8 Source: http://www.starbucks.com/aboutus/Annual_Report_2005_part1.pdf9 Source: http://www.starbucks.com/aboutus/Company_Profile_Feb06.pdf10 Source: ibid

3

The Birth

The first Starbucks coffee store was opened in Seattle by three coffee lovers, Jerry Baldwin11, ZevSiegel12, and Gordon Bowker13, with an investment of $6,350.14 The three friends named the storeafter ‘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 theirfirst year of operation, the three partners purchased green coffee beans from Peet's16, and thenbegan buying directly from the growers. During 1981, the company had 85 employees working in5 retail stores in Seattle, selling freshly roasted coffee beans.17 The company also had a smallroasting 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 Starbucksstore. He was impressed with the great smell, and the care the Starbucks’ owners put intochoosing 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 roughdiamond. 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 joinedStarbucks as Director of Retail Operations and Marketing. A year later, Schultz traveled toMilan21. 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 storePeet's Coffee & Tea was the inspiration for Starbucks. In 1984, Peet's was put up for sale. Baldwin led a group of investors whopurchased the company. In 1987, he sold his interests in Starbucks. Baldwin was Chairman of Peet's until 2001 when Peet's became apublicly traded company. During 2006, he was the Director of Peet’s. Baldwin also served as President of the Specialty CoffeeAssociation of America. http://en.wikipedia.org/wiki/Jerry_Baldwin12 He was a History teacher. Later, he became a co-founder of Starbucks. http://en.wikipedia.org/wiki/Starbucks13 He was an American entrepreneur. He started out as a writer. Later, he co-founded Starbucks. He was also a co-owner of Peet'sCoffee & Tea. http://en.wikipedia.org/wiki/Gordon_Bowker14 Source: ‘Starbucks’ Drive-through Windows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com15 ‘Moby Dick’ was a novel by Herman Melville. http://en.wikipedia.org/wiki/Moby_Dick16 Peet's Coffee & Tea was a specialty coffee roaster and retailer. It was founded in 1966 by Alfred Peet in California. Peet's wasespecially noted for its strong, darkly roasted coffee; it advertised that the beans were hand-roasted and delivered to stores as fresh aspossible. http://en.wikipedia.org/wiki/Peet%27s_Coffee_%26_Tea17 Source: ‘Starbucks’ Drive-through Windows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com18 Source: ‘Starbucks in 2005-Sustaining Growth’, ICFAI Business School, www.ecch.com19 Howard Schultz was an American businessman and entrepreneur most widely known as Chief Global Strategist and Chairman ofStarbucks Corporation. Schultz was born on July 19th, 1953, in Brooklyn, N.Y. In 1975, he got his bachelor's degree from NorthernMichigan University majoring in communication. He worked as Vice President of U.S. operations for Hammarplast, a Swedish housewares company in New York, marketing coffee makers to a number of retailers, including Starbucks. In 1982, he joined Seattle'sStarbucks. http://en.wikipedia.org/wiki/Howard_Schultz20 Source: ‘Starbucks in 2005-Sustaining Growth’, ICFAI Business School, www.ecch.com21 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/Milan22 Espresso bars were a type of coffeehouses that specialized in coffee beverages made from espresso. ‘Starbucks’ Drive-throughWindows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com23 The term barista (the Italian word for "bartender" - masculine or feminine) was used in English to denote a maker of espresso basedbeverages. A barista had an understanding of the various aspects of producing espresso drinks.http://encyclopedia.thefreedictionary.com/Barista24 A strong coffee brewed by forcing steam under pressure through darkly roasted, powdered coffee beans.http://www.answers.com/topic/espresso25 Cappuccino was an Italian beverage, prepared with espresso and milk. In Italy, it was consumed almost exclusively early in the dayfor breakfast; in some other countries, it was consumed throughout the day or after dinner.http://encyclopedia.thefreedictionary.com/cappuccino26 Coffee was divided into two categories, Arabica & Robusta. Arabica coffee was the superior species from the coffee lovers’ point ofview. Arabica beans were the beans of choice in "gourmet" or "specialty coffees". Arabica coffee beans produced rich flavor andbody. Robusta lacked this flavor and body. Arabica coffee was difficult to grow, and was prone to disease, requiring more handcultivation, and yielded smaller harvests per acre. http://www.surfcitycoffee.com/html/bean_basics.html

4

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

Exhibit IStarbucks’ 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 thestore.27 Schultz quit and started his own coffee bar chain in Seattle in 1985, called II Giornale. Hesold brewed coffee and espresso beverages made from Starbucks’ coffee beans. He also soldgourmet, flavored coffee made of expensive arabica beans. Consumers gave high value to thisnovel format. As a result, though the gourmet coffee was priced 80-100% more than thetraditional coffee, people bought it.28 In 1987, Schultz bought Starbucks’ assets along with itsname 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 marketbecame saturated with more than 3 stores per 10,000 residents (considered to be the saturationpoint).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 itsforeign markets, instead of building its brand on its own, Starbucks followed the joint ventureroute. The joint venture required the local partner to bear most of the capital cost, besides payingan 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-establishedcafé culture. Schultz mentioned, “The decision was made to go to Asia first because we felt thatthe maturity of the coffee market in Europe was very strong and was not going to change muchover the years. The Asian market was in its developmental stage and we had an opportunity toposition Starbucks as a leader in a new industry.”33 In 1996, Starbucks entered Japan andSingapore. In Japan, the coffee chain served its coffee in paper cups against the perception thatthe Japanese consumers would not like drinking coffee in them. It also banned cigarette smoking

27 Source: http://www.myprimetime.com/work/ge/schultzbio28 Source: http://www.icfaipress.org/304/AN-Starbuckway_72.asp29 Source: http://www.myprimetime.com/work/ge/schultzbio30 Vancouver was an island of southwest British Columbia, Canada, in the Pacific Ocean, separated from the mainland by the Strait ofGeorgia and Queen Charlotte Strait. The Strait of Juan de Fuca flowed between the southern end of the island and the coastline ofnorthwest Washington. First sighted by Spanish explorers in 1774 and visited by Capt. James Cook in 1778, it was named to honorCapt. George Vancouver, who circumnavigated the island in 1792. http://www.answers.com/vancouver+island&r=6731 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com32 It was wholly owned by Starbucks Corporation. http://h71028.www7.hp.com/enterprise/cache/11737-0-0-225-121.html33 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com

5

inside the stores to preserve the natural aroma of coffee. But, to attract the localites, Starbucksserved Green Tea Frappuccino34 as Japanese had a preference for green tea. Further, the companypriced its coffee below that of its competitors to attract more customers. However, the criticswarned the coffee company about the possible reluctance from the traditional tea-drinkers35, andcriticized its no-smoking policy. They also said that no Japanese would ever lose face by drinkingfrom a cup in the street. And finally, the critics informed Starbucks’ management that given thehigh rent, stores couldn’t be larger than 500 square feet. But by 2002, Starbucks captured theJapanese 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 someoneholding a cup of Starbucks coffee. And our store size in Japan is identical to our store size in theU.S., about 1,200 to 1,500 square feet.”38 By the end of 2004, with Tokyo-based restaurant chainSazaby39, Starbucks accounted for around 500 cafes in Japan.40 Schultz later quoted, “Our localpartner Sazaby’s understanding of the Japanese consumer and the insight they have about themerchandizing and unique products has been a big help.”41

Starbucks Coffee International opened in the Philippines in 1997. In 1998, Starbucks started itsEuropean market venture by entering into the UK. The company acquired 60 outlets of the SeattleCoffee Company42, a UK-based chain of low-priced coffee shops, positioned at the best locationsin London. It re-branded all its stores as Starbucks. The UK venture was a successful one andimmediately, 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 tothe 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 introducedits 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 ataste 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.com37 Source: http://www.icfaipress.org/304/AN-Starbuckway_72.asp38 Source: http://www.businessweek.com/magazine/content/02_36/b3798007.htm39 Sazaby was a domestically focused Japanese corporation known for creating original brands in dining, clothing, and householdgoods. 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 coresectors were product sales, food and restaurants, foreign alliances, and content.http://www.valueframeworkinstitute.org/Feb2003/feature.article.htm40 Source: http://www.icfaipress.org/304/AN-Starbuckway_72.asp41 Source: http://www.businessweek.com/magazine/content/02_36/b3798007.htm42 In January 1992, The Original Seattle Coffee Company, Inc., (OSCC), was founded by Bruce A. Kosmala to provide a simple andconvenient way of distributing specialty coffees, fruit smoothies and pastries to the work place and movie industry. Being the originaldesigner and pioneer of the espresso truck/trailer concept, Bruce worked tirelessly perfecting this concept. OSCC later expanded itsline of services to include the ability to custom design and build solutions for nearly any industry. It built any type of business into oneof 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.com44 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com45 Lebanon was a country of southwest Asia on the Mediterranean Sea. The region was gradually absorbed by the Persian Empire andlater conquered by Alexander the Great. Eventually it came under the Roman control and was Christianized before the Arab conquestof the 7th century. Lebanon became a French League of Nations mandate after the World War I and proclaimed its independence in1941, although full self-government was not achieved until 1945. In 1975, tensions between Christians and Muslims led to civil war inLebanon, 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

6

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

In 2000, Starbucks Coffee International opened in Dubai, Hong Kong, Qatar, Bahrain, SaudiArabia, and Australia. A year later, Starbucks opened its first company-owned store in Europe atZurich, Switzerland. It was followed by the company’s rapid expansion in the European marketby opening stores in Austria, Germany, Spain and Greece. In 2002, it further strengthened its UKoperation by acquiring 13 stores of its rival Coffee Republic48. And finally in 2003, Starbucksacquired the entire chain of Seattle Coffee. The coffee multinational however faced someproblems when it entered the French market in 2004. Observing Starbucks’s teething problems inFrance, 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 mayprove 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 wassuccessful in most of its international endeavors. Howard Schultz mentioned that through itsunique coffee culture, termed as ‘Starbucks Experience’, the company was able to transcendbarriers and language.

Starbucks’ Experience

The time when Schultz entered the café business in the early 1980s, the coffee industry wasdeclining 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 ofgourmet drinkers in the US, and also overseas (Annexure VI). Over the years, the coffee chainalso emerged as a global leader. Schultz mentioned that Starbucks’ main goal was ‘to serve agreat cup of coffee’53. Starbucks was known as a specialty coffee shop chain which offered avariety of fresh, rich-brewed coffee beverages, focusing on the Italian flavor. It also offeredpastries, sandwiches, desserts, hot breakfasts, and coffee-related accessories and equipmentprimarily through its company-operated retail stores. Like Nestle54, it started selling packagedcoffee 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 privateequity firm that invested throughout the Asia Pacific region), was founded in 1995. It was a coffee wholesaler in China. On January11th, 1999, Mei Da opened the first Starbucks Coffee store in China. http://198.66.205.43/press_news/ap_press/pressStaerbucks.htm47 Guangzhou was among the largest cities in China. Guangzhou was the transportation, industrial, financial, and trade center ofsouthern China. It was a special economic development zone and an important trading point with Hong Kong. It had an integratedsteel complex, paper mills, a long-established textile industry (silk, cotton, jute, and later synthetic fibers), and factories producingtractors, 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 ofwater transportation along the Pearl River. http://www.answers.com/guangzhou&r=6748 Coffee Republic was formed in 1995 by Bobby and Sahar Hashemi, a brother and sister team. Coffee Republic became one of thebest known and largest independent espresso bar brand in the UK, with bars all across the UK.http://www.coffeerepublic.co.uk/about.php49 Analysts at Salomon Smith Barney. ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com50 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com51 Dalian was a city of northeast China on the Liaodong Peninsula and the Bo Hai. It was a major seaport, and was opened to foreigncommerce in 1901. http://www.answere.com/dalian&r=6752 In the early 1980s, Americans drank less coffee. The average consumption of coffee declined from a high of 3.1 cups a day in 1962to 1.67 cups a day. The sales of the major 3 brands, namely Maxwell House, Folgers and Nescafe were down. By 1988, MaxwellHouse lost $40 million on its domestic coffee business. http://www.icfaipress.org/304/AN-Starbuckway_72.asp53 Source: http://www.myprimetime.com/work/ge/schultzbio54 Nestle S.A. or Société des Produits Nestlé S.A., headquartered in Vevey, Switzerland was the world's biggest food and beveragecompany. In 2006, Nestle's products extended from mineral waters to baby food to coffee and dairy products. Its main rival wasCadbury Schweppes. http://en.wikipedia.org/wiki/Nestle

7

sales group and supermarkets. Further, the company produced and sold Frappuccino coffee drinkand a line of premium ice creams through its joint venture partnerships. It offered a line ofinnovative 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, itwas deemed as a wonderful experience by the customers. The company provided facilities likepatio seating, along with fireplaces, leather chairs, and newspapers; and playing area for childrenin its stores. The company banned smoking in its stores to preserve the aroma of coffee beanswithin the stores.

The management of Starbucks stated that the store was an ‘authentic coffee experience’ with aplace to think and imagine. It termed its stores as a ‘third place’, after home and work, a place toescape from the chaos at home and office. Nevertheless, at times, the stores were used for officepurposes 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 downloadmultimedia presentations using their laptops. The new service allowed Starbucks to attract a newset of customers—the business class and emerging entrepreneurs, who held meetings, jobinterviews 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 servingcoffee.”56 Its coffee brewers were called baristas. Every new barista was given 25 hours oftraining on coffee history and the intricacies of preparing quality-brewed coffee. They weretrained 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 morecustomers. It launched an e-commerce site called SeattlesBest.com, from which customers couldpurchase coffee, coffee flavorings and gift items online. In 2001, Starbucks started offeringprepaid Starbucks Cards, priced between $5 and $500. The cards cut transition time to half, as itrequired 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 beveragesand pastries via phone or Starbucks Express' website.

To create a unique coffee culture, Starbucks used music. The company compiled music ofdifferent artists, played them in its stores, and also sold them to customers. For that, it acquiredHear Music57 of Cambridge, Massachusetts in 1999. Hear Music created music programming andCDs for Starbucks coffeehouses worldwide. Since then, Starbucks sold about 5 million CDs till2005. It went a step further by entering into a contract with Seal58, an artist, to create proprietarymusic 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 thestate of Oregon.). Tazo Tea was founded in 1994 by Steve Smith along with his business partners Stephen Lee and Tom Mesher. Thecompany was purchased by Starbucks in 1999 for $8.1 million. http://en.wikipedia.org/wiki/Tazo56 Source: ‘Starbucks’ Drive-through Windows: Business Sense vs. Brand Dilemmas’, ICFAI Business School, www.ecch.com57 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_Music58 Seal was born in England on February 19th, 1963. Before beginning a singing career, Seal studied architecture and worked in anelectrical engineering firm. He had won Grammy Awards and had success in the US, and internationally. In the late 1980's, Seal begansinging with various bands and on his own. http://www.rockonthenet.com/artists-s/seal_main.htm

8

Starbucks’ yet another unique feature was its ‘drive-through window service’. Starbucks onceshunned the drive-through concept, fearing it might alienate customers who liked to come insideand 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 busycustomers a speedy service. Commenting on the move, Jim Donald, Starbucks’ President andChief Executive Officer (CEO) at the time said, “We have a habit of giving customers what theywant, and when a customer has six kids in their car or their favorite pets and it’s raining orsnowing, 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 ofgourmet 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, HowardSchultz, mentioned, “You get more than the finest coffee when you visit a Starbucks – you getgreat 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. Thejoint 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 announcedthat its French locations would be operated by the joint venture, under Managing Director, FranckEsquerre. Franck Esquerre was credited with more than 20 years of experience in the food andbeverage industry at that time.

The first store was located in the heart of the city at 26, Avenue de l’Opera, one of Paris’ populartourist and shopping districts. The store was modern yet comfortable, two-level coffeehouse withpale yellow walls, red velvet curtains, and twisting lanterns. Customers could sit in plusharmchairs and read newspapers. In spring and summer, they could sit outside – while sipping anespresso 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 inParis as it is a true crossroads of French and international cultures. Since there is already astrong, vibrant and lively local coffee culture, we believe that there is excellent growth potentialfor Starbucks. Our commitment to the market is long-term and we are very optimistic about ouropportunities for success in France.”65

However, Starbucks, whose green-and-white logo was instantly familiar in the US and in manyother countries, was barely known in France. Further, in France, the café culture was muchdifferent from the culture Starbucks was famous for. There were also several well-established andreputed coffee chains in France. People thus wondered why Starbucks, which had more than10,000 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.asp61 Source: ‘Starbucks in 2005-Sustaining Growth’, ICFAI Business School, www.ecch.com62 Source: ‘Starbucks in Ireland’, ICFAI Business School, www.ecch.com63 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 Spainand France. http://www.clubvips.com/en/flash.php64 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

9

resistance. Jeffery Young, Managing Director of a London-based retail analyst firm, AllegraStrategies, 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 ‘LesDeux Magots’. During 2004, when Starbucks approached its market, France had 60,000coffeehouses.67 The French cafés had a unique coffee culture. During winter season orspringtime, inside a café bar, the French would sit over a coffee, with their pet dogs under thetable, for hours. A rich, dark espresso was a French favorite, which they preferred to sip under ahaze 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, stickysnacks, seemed to be a million miles away. Though Schultz mentioned, “Starbucks would fit wellinto the French café tradition,”69, this was not the feeling at ‘Le Firmament’, a café near theStarbucks first store at de l’Opera. “It’s an absurd idea,”, said Jean – Paul Bedel, a regular at thevery café. “The whole point about cafes in France is that you can sit over a coffee as long as youlike, read the papers,…, taking away a coffee in a Styrofoam cup is anathema, unthinkable. It’sthe 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’regoing to be nonsmoking to preserve the quality of the coffee. But in some cases, if we have outsideseating, people can smoke.”71

Starbucks had yet another big challenge in France: changing French opinion about Americancoffee. 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 localdocumentary filmmaker. Along with him, many other locals opined that Starbucks coffee wouldnever replace the corner café or the typical Parisian ‘petit noir coffee’ – a shot of espresso thatwas perfect with a Gauloise73 cigarette early in the morning. “Usually we like the petit noir ornoisette, and not long coffees like they serve in Starbucks,”74, said Pierre, a regular customer ofnoisette at Paris. Even an American living in France was not happy enough to have his homelandbrand in France. June Rives, President of Rives Travel Excursions75, who was living in Francesince 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.htm67 Source: http://news.bbc.co.uk/2/hi/europe/3661636.stm68 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 marvelousbars 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.html69 Source: http://www.smh.com.au/cgi-bin/common/popupPrintArticle.pl?path=/articles/2003/09/26/...70 Source: ibid71 Source: Jamey Keaten, ‘Is France Ready for Starbucks?, September 26, 2003, Associated Press72 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 wereshort, wide, unfiltered and made with dark tobaccos from Syria and Turkey which gave off a strong and distinctive aroma.http://www.answers.com/topic/gauloise74 Source: http://news.bbc.co.uk/1/hi/world/europe/3401637.stm75 Rives Travel Excursions, a travel agency, located in Houston, Texas and Paris, France, provided small group tours of 18 to 20people to France. http://www.francetourism.com/practicalinfo/reservations-USTO-wine.htm

10

originally from Houston76, added, “Starbucks is great, but I wouldn’t put it up against Frenchcoffee.”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 withdeeply 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 ofColumbus Café78, a French coffee store chain and Starbucks’ chief rival in France, said, “I thinkit’s (starbucks) losing a phenomenal amount of money here. The cost of hiring employees andbuying leases is simply too high.”79 Columbus Café, established in 1994, expanded slowly to justover 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 buyingColumbus, 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 yearStarbucks entered France. The French opposed the then President of USA, George Bush’s attackon Iraq. And even though Starbucks was not the ambassador of American policies, it remainedsymbolic to what USA did.

Starbucks’ Optimism

Starbucks was successful in most of the places it ventured. But, France was not just anothercountry. Howard Schultz once said, “If Starbucks can succeed here (France), it could be aturning point or a coming of age.”81 In France, Starbucks thus seemed to adapt the local caféculture to attract customers. The company diluted its no smoking policy. It was strictly appliedinside the stores, but not in pavement seating areas. The coffee giant also hired local chefs tomake sure that the croissant82 and ‘pain au chocolate’ pastries could meet the high standards ofthe 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 withseveral small specialty French food companies to adapt some of Starbucks key pastries to localtastes. We are also using local ingredients to develop traditional French pastries and other freshfood 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, andfinancial hub, the center of the U.S. aerospace industry, and a deep-water port connected with Galveston Bay and the Gulf of Mexicoby the Houston Ship Channel. Houston was also the largest city in Texas. http://www.answers.com/houston&r=6777 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 oftraditional café life. American in origin, the concept of the espresso bar had its roots in Italy but had been updated for a newgeneration. At Columbus Café®, the customers were treated to a wide selection of gourmet drinks both hot and cold and succulentpastries that could all be eaten on the premises or "to-go", an entirely new concept in France.http://www.columbuscafe.com/us/INDEX.HTM79 http://www.businessweek.com/print/globalbiz/content/apr2006/gb20060420_895395.htm80 The Iraq War (2003) was a military engagement encompassing the invasion and occupation of Iraq by a U.S.-led coalition. The thenU.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_war81 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 leavenedvariant of puff pastry by layering yeast dough with butter. http://www.answers.com/topic/croissant83 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

11

Starbucks’ takeout concept was however retained in its French outlets. The fact was taking awaya coffee was no more a new concept in France by 2004-2005. Columbus Cafe, which had 20stores in Paris at that time, had introduced the concept when it initiated in France. Ratiba, asandwich bar worker in Paris, added, “The fact is French society is changing; I think there couldvery well be people who will love a takeaway coffee store.”85 But commuters toting paper cups ofcoffee 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 meantto 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 ableto sip the kind of coffee it loved to watch, on the US TV series ‘Friends’. In fact, for some, it wasan exotic rarity, far more exciting than the average French cafe. Melissa, aged 18, said she couldhardly wait, "I love Starbucks caramel coffee - it's very good and I like the concept that they'reopening in Paris. I think Starbucks will be ok for French people.”87 The French girl’s excitementindicated that the coffee culture in France was changing, and Starbucks became a part of theevolving change. Schultz remarked, “I wonder if it (French café culture) is as relevant to youngpeople today as it was 30 years ago.”88 At Starbucks France, young rich kids from the city’s bestuniversities, mixed with American and Asian tourists, were happily ready to pay $5 for afrappuccino.

Furthermore, the time when Starbucks entered the French market, the coffee industry in Francewas declining. The poor service and a lack of basic courtesy in the French cafes drove away thecustomers. “The number of cafes and customers has been dwindling as the number of complaintshas been growing.”89, an industry spokesman said. Analysts felt it would help Starbucks toestablish 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 thecoffee multinational had the characteristic to acclimatize itself to the culture where it traded. Thecompany believed as long as the core product stayed true to its quality and principles, the otherelements 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. InBritain, Starbucks won an award for its mince pie. In Asia, the coffee chain offered curry puffsand meat buns. Further, Starbucks offered green tea frappuccino in Japan, and made men-onlyand family divisions in its stores in the Middle East. Starbucks’ another international strategy wasforming joint ventures with local players. “The idea is that an experienced local partner can helpidentify 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 ahandful of stores in trendy districts, using experienced Starbucks managers. It sent local baristasto Seattle for 13 weeks of training. Then it started opening stores by the dozen. And with sameinternational strategies, Starbucks was all set to capture the French market. “With slow and steadyexpansion 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.pdf87 Source: http://news.bbc.co.uk/1/hi/world/europe/3401637.stm88 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.stm90 Source: http://www.globalexchange.org/campaigns/fairtrade/coffee/662.html.pf91 Source: http://www.brandchannel.com/print_page.asp?ar_id=259&section=profile

12

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

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

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

13

Annexure IStarbucks’ Selected Financial Data

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

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

14

Annexure IIMajor 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 fromStarbucks’ coffee beans.1987: With the backing of local investors, Il Giornale acquired Starbucks’ assets and changed its nameto Starbucks Corporation. Starbucks opened in Chicago and Vancouver, B.C. Starbucks location total atfiscal year end = 17.1988: The company offered full health benefits to full and part-time employees. Starbucks locationtotal at fiscal year end = 33.1989: New stores were opening 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 wasawarded Horizon Air account. Starbucks location total at fiscal year end = 84.1991: The company established a relationship with CARE, the international relief and developmentorganization, and introduced the CARE coffee sampler. Starbucks became the first privatelyowned U.S. company to offer a stock option program that included part-time employees. It opened firstlicensed 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 NasdaqNational 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. Starbuckslocation total at fiscal year end = 425.1995: Starbucks began selling compact discs as a result of an extremely popular in-house musicprogram. Awarded United Airlines account. Began serving Frappuccino® blended beverages. Openedroasting 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 CoffeeInternational formed joint venture with Sazaby Inc. to open Starbucks coffeehouses in Japan. Opened inPhiladelphia; Pittsburgh; Las Vegas; Cincinnati; Baltimore; San Antonio; and Austin, Texas. Starbuckslocation 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 wereopened in Rhode Island; Idaho; North Carolina; Arizona; Hawaii; Utah; and Ontario, Canada. StarbucksCoffee 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 whereStarbucks had coffeehouses. Offered Frappuccino® Bars, a lowfat decadent treat. Opened in Florida;Michigan; and Wisconsin. Starbucks Coffee International opened in the Philippines. Starbucks locationtotal at fiscal year end = 1,412.1998: Starbucks acquired Seattle Coffee Company in the United Kingdom. Signed a licensingagreement 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. Starbuckslocation total at fiscal year end = 1,886.1999: Acquired Tazo LLC, a tea company based in Portland, Ore. Acquired Hear Music, a SanFrancisco–based music company. Introduced Starbucks Barista AromaTM thermal coffeemaker, aninsulated automatic drip coffee brewer. Opened in Memphis and Nashville, Tenn.; and Saskatchewan,

15

Canada. Starbucks Coffee International opened in Beijing; Kuwait; South Korea; and Lebanon. Starbuckslocation total at fiscal year end = 2,498.2000: Howard Schultz transitioned from Chairman and Chief Executive Officer to Chairman and ChiefGlobal Strategist. Orin Smith promoted to President and Chief Executive Officer. Starbucks CoffeeInternational 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 CommunityInvestments. Introduced the Starbucks Card, a stored-value card for customers to use and reload. Enteredinto agreement with Hyatt Hotels Corp. Starbucks opened 300th location in Japan and celebrated fifth yearof business in Japan. Starbucks Coffee International opened in Switzerland and Austria. Starbucks locationtotal at fiscal year end = 4,709.2002: Introduced Starbucks DoubleShot® coffee drink to the ready-to-drink category. Launched itshigh-speed wireless internet service branded T-Mobile® HotSpot. Starbucks Coffee International opened inOman; Indonesia; Germany; Spain; Puerto Rico; Mexico; Greece; and Southern China (Macau andShenzhen). Starbucks location total at fiscal year end = 5,886.2003: Developed and launched Starbucks Card DuettoTM Visa®, the first-of-its-kind payment cardblending Visa credit card functionality with the reloadable Starbucks Card. Acquired total of Seattle CoffeeCompany. Starbucks Coffee International opened its 1,000th Asia Pacific store in Beijing, China. StarbucksCoffee 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 poweredby HP. The new music delivery experience allowed Starbucks’ customers to create personalized CDs at theStarbucks Hear MusicTM Coffeehouse in Santa Monica, Calif. Launched Hear MusicTM media bar CDburning service in selected locations in Seattle and Austin, Texas. Introduced new Frappuccino® Lightblended coffee beverages. Expanded high speed wireless service, T-Mobile® HotSpotTM to more than3,300 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 toPresident and Chief Executive Officer. Starbucks responded to the tremendous tsunami devastation inSouth Asia by donating more than $1.5 million for tsunami relief and recovery, channeled through a varietyof 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 totalat fiscal year end = 10,241.2006: Introduced bottled Frappuccino® Strawberries and Creme drink, the first non-coffee bottledStarbucks beverage. Introduced ready-to-drink Starbucks Iced Coffee; a refreshing, cold coffee drink withjust a touch of milk and sweetness. Starbucks location total as of March = 11,225.

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

16

Annexure IIIStarbucks International Expansion

Starbucks in Germany The original Starbucks store Starbucks in Doha, Qatarin 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

17

Annexure IVStarbucks Logo

Starbucks Logo in 1971 Starbucks Logo in 2005

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

Annexure VStarbucks’ International Expansion (1996-2002)

Source: Starbucks International Group

18

Annexure VIPer Capita Coffee Consumption (Units: Kilograms Per

Person Per Year)Country Year (2003)

USAUKSwitzerlandSwedenSpainSouth AfricaAustraliaCanadaDenmarkFranceGermanyGreeceIrelandJapan

4.22.27.47.94.00.42.74.08.15.46.65.42.33.2

Source: http://earthtrends.wri.org – Resource Consumption: Coffeeconsumption per capita – Microsoft In…

19

Annexure VIIStarbucks’ 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

20

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&section=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 GlobalMarket’, http://bschool.washington/edu/gbc/documents/starbucks_final.pdf.

Websites:

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.

21

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.