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Tiêu đề New Trends In F&B Industry Make Contracts Fail The Case Of Starbucks And Kraft
Tác giả Le Hoang, Minh Chau, Nguyen Thuc, Tran Tien Minh, Pham Hoang Dang Khoa
Người hướng dẫn Mr. Tran Khanh
Trường học Ton Duc Thang University
Chuyên ngành International Business
Thể loại Report
Năm xuất bản 2023
Thành phố Ho Chi Minh City
Định dạng
Số trang 32
Dung lượng 3,15 MB

Cấu trúc

  • CHAPTER 1: INTRODUCTION (10)
    • 1.1 F&B industry overview (10)
    • 1.2 Brief information about Starbuck and Kraft Company (11)
      • 1.2.1 Overview of Starbucks coffee brand (11)
      • 1.2.3 Overview of Kraft Company (13)
      • 1.2.4 Kraft Company Strategy (15)
    • 1.3 Issue (17)
    • 1.4 Timeline (19)
    • 1.5 Objective (19)
  • CHAPTER 2: LITERATURE REVIEW (20)
    • 2.1 The best choices in negotiation (BATNAs) (20)
    • 2.2 The worst choices in negotiation (WATNAs) (21)
    • 2.3 Distributive negotiation (21)
  • CHAPTER 3: ANALYSIS (22)
    • 3.1 The case (22)
    • 3.2 Theory application (23)
      • 3.2.1 BATNAs (23)
      • 3.2.2 WATNAs (25)
      • 3.2.3 Distributive negotiation (25)
    • 3.3 Evaluation (26)
      • 3.3.1 The failure of make adaptable agreements for changing conditions (26)
      • 3.3.2 The failure to work towards an integrative negotiation (27)
  • CHAPTER 4: SOLUTION (28)
  • CHAPTER 5: CONCLUSION (30)

Nội dung

delicious food and create a community for consumers.1.3 IssueThe disagreement stems from a contract signed when Kraft started distributing Starbucks packaged coffee through retailers in

INTRODUCTION

F&B industry overview

The food and beverage (F&B) industry plays a crucial role in the market by selling various food and drink products, significantly contributing to the agricultural economy This sector can be divided into two main segments: production and distribution Production involves the manufacturing and processing of finished meals and beverages, including most packaged or prepared goods However, items produced through farming or horticulture that undergo no further processing fall outside the scope of the F&B sector, remaining part of the broader agricultural industry (Tam, 2020).

In the food and beverage sector, distribution involves delivering products to customers, encompassing companies that ship to retailers, restaurants, and direct consumers This industry includes fresh food, packaged food, and both alcoholic and non-alcoholic beverages It caters to a diverse array of retail outlets, ranging from grocery stores to prepared meals served at restaurants, institutions, and events Notably, food and beverage services are prevalent beyond hotels and independent businesses such as restaurants, cafes, pubs, and lounges (Tam, 2020).

The Covid-19 pandemic significantly disrupted various industries, with the food and beverage sector being among the most immediately impacted However, this industry has demonstrated a rapid recovery and is now exploring numerous international expansion opportunities (Tam, 2020).

The global food and beverage (F&B) industry, valued at over $5.9 trillion in 2019, is anticipated to recover from pandemic-related setbacks with a projected 7% growth, reaching approximately $7.5 trillion by 2023 Asia dominated the market in 2019, holding 42%, while North America accounted for 22% Despite challenges, the F&B sector in Europe is expected to see growth by 2022 The pandemic spurred a 100% increase in food deliveries, enhancing the demand for delivery services and online orders Additionally, a growing focus on healthy living has driven consumer spending on natural products, prompting many companies to eliminate artificial ingredients The rise in health consciousness has also led to an increased demand for plant-based proteins, with U.S sales expected to grow from $10.3 billion to $14.5 billion over the next five years, indicating a robust recovery and expansion in the F&B industry (Tam, 2020).

Starbucks and Kraft Company are prominent players in the food and beverage industry, representing two of the major firms that shape today's market alongside well-known brands like McDonald's, KFC, Subway, and Domino's Pizza (Tam, 2020).

Brief information about Starbuck and Kraft Company

1.2.1 Overview of Starbucks coffee brand

On March 30, 1971, the first Starbucks coffee shop was opened by English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker in Seattle, Washington, offering exquisite coffee and grinding equipment The company's trajectory changed when Howard Schultz, inspired by Italian coffee culture during a trip to Milan, suggested selling coffee beans and brewed beverages However, the original owners rejected this idea, fearing it would distract from their core business Instead, Schultz launched the Il Giornale coffee shop franchise in April 1986, marking the beginning of Starbucks' significant growth in the food and beverage industry.

Over the past 40 years, Starbucks has successfully expanded its presence globally, bringing the Italian coffee culture to countries like Japan, Hong Kong, and South Africa When Starbucks went public, it achieved revenues of approximately 73 million USD, with its stock value soaring by 70% in just a few years The company primarily focuses on growth through acquisitions, having swiftly acquired brands such as Seattle's Best Coffee, Coffee People, and Torrefazione Italy, as well as Tazo, Teavana, and Ethos, to enhance its product offerings.

Starbucks has maintained its position as the leading coffee brand for the second consecutive year, boasting a brand value of $38.4 billion, a 21% increase from the previous year, according to Brand Finance The company is expanding its presence by doubling the number of stores in China, a market of 1.6 billion people, and forming a joint venture with a popular Indian non-alcoholic beverage brand to enter the packaged coffee sector in collaboration with Swiss brand Nestlé Additionally, Starbucks has partnered with UberEats to deliver hot beverages directly to customers, demonstrating its commitment to meeting the evolving demands of consumers during the ongoing COVID-19 pandemic.

Figure 1: Top 10 Most valuable restaurant brands (Samantha Loveday, 2021)

By 2019, Starbucks had expanded to 28,000 stores across 77 countries and territories, serving over 40 million customers weekly and selling 4 billion cups of coffee annually.

Figure 2: Number of Starbucks stores 1987-2017 (Brandsvietnam, 2019)

Kraft Foods, a top confectionery manufacturer in America, reported sales exceeding $55 billion in 2013 and operates in over 150 countries worldwide Remarkably, over 98% of American households have at least one Kraft product, which includes popular items like Ritz crackers, Oreos, and Cadbury chocolates.

Kraft Foods was founded by James L Kraft in 1903 The company specializes in the production of cheese products Over the years, Kraft Foods continues to own

10 many food-related brands such as Milka, Toblerone, Jacobs, Oscar Mayer, or Oreo (Brandsvietnam, 2014).

In 2012, Kraft Foods underwent a significant transformation by splitting into two distinct entities: Kraft Foods Group and Mondelez Mondelez emerged as the lucrative "money printing machine" of the company, recognized for its substantial dividend payouts, and focused primarily on the domestic market with popular snack and confection brands like Cadbury, Nabisco, Oreo, and Trident In contrast, Kraft Foods Group reported impressive figures in 2013, with revenues of $18.2 billion and profits of $2.7 billion, concentrating on core businesses that include beverages, cheese, dairy products, and snacks.

In July 2007, Kraft Foods acquired Danone Group's cookie division in France, which included popular brands like Lefèvre Utile (LU), Tuc, and Prince This strategic merger positioned Kraft Foods as the world's largest cookie manufacturer while the company continued to enhance and grow its business.

In 2010, Kraft Foods acquired Cadbury for $19.6 billion, enhancing its presence in the UK confectionery market Despite dominating the US and European markets, Kraft remains the second-largest confectionery company globally, trailing behind Nestlé, which maintains a strong position in both developed and developing nations The acquisition aimed to facilitate market expansion and access to emerging markets, leading to the merging of popular brands like Oreo, Velveeta, and Cadbury chocolate With the confectionery industry projected to grow significantly, the combined revenue of these giants is estimated at $55 billion annually.

Figure 3: Market share in emerging markets of Kraft (Brandsvietnam, 2014)

The acquisition of Cadbury transformed Kraft Foods into a dominant force in the confectionery sector, securing a remarkable 70% market share in chocolate and access to 1.2 million retail outlets in India (Brandsvietnam, 2014) With over a century of experience in the industry, Kraft Foods currently ranks as the second-largest confectionery company globally, trailing only Nestlé, while maintaining a commanding presence in both the US and European markets The company continues to expand its influence in this category (Brandsvietnam, 2014).

Kraft Foods has been a pioneer in digital media and online content publishing, delivering branded content online through its CRM (Customer Relationship

Since the early 1990s, Kraft Foods has effectively utilized various digital platforms to enhance its marketing strategy, launching kraftfoods.com in 1992 and the Food and Family magazine in 2001 The company established its YouTube channel in 2005 and has progressively expanded its presence across mobile apps and social media Kraft Foods' marketing approach is characterized by a systematic application of the 4Ps: Product, Price, Place, and Promotion.

Product: Kraft Foods' products are diverse for all types of customers Kraft Food provides packaged beverages and food items for consumer use.

Kraft Food, a leading global food company originating in the US, has expanded its presence to nearly 170 countries, including the UK, Germany, Australia, India, Bangladesh, and Canada With manufacturing plants in over 70 countries, Kraft Food boasts a robust distribution network that effectively serves distributors, retailers, manufacturers, and end consumers through various channels such as convenience stores, supermarkets, and food markets Each brand under Kraft Food benefits from a dedicated distribution network, ensuring easy and convenient access to products for customers worldwide.

At the close of fiscal 2011, Kraft Foods reported estimated sales of $54.365 billion and profits of $3.547 billion The company aimed to streamline its cost structure while maintaining product quality, implementing a reasonable pricing strategy across its diverse brands to cater to various consumer markets To achieve a competitive edge, Kraft Foods recognized the necessity of aligning its product prices with those of rival brands.

Kraft Food has implemented comprehensive advertising strategies to promote its brands and products, starting with circulars in its early development The company expanded its reach by utilizing various media, including radio, newspapers, and leaflets, and now leverages popular channels such as television, magazines, and billboards Additionally, Kraft Food places a strong emphasis on social media advertising and actively sponsors community campaigns to enhance its positive brand image.

Kraft's "Killer Content Strategy" positions content as its essential lifeline, showcasing the company's pioneering role in content marketing even before the term became popular The launch of kraftfoods.com marked a significant step in their innovative approach to engaging consumers through valuable content.

1992 – the year before many of their competitors launched websites This site has evolved over the years to include a wide range of recipes and food-related content By

2005, they also included the content on the Website into the content of print publications, food, and family magazines (SIC).

“Content used to be a side project, but now it is our lifeline,” said Julie Fleischer, director of Data, Content, Media at Kraft Foods This is a great asset for Kraft.”

Kraft Foods' content strategy has significantly boosted food spending, leading to an impressive increase in ROI, with figures soaring by approximately 300% to 600%, as reported by Fleischer.

Kraft Food Make themself a part of users' lives

Issue

The disagreement stems from a contract signed when Kraft started distributing Starbucks packaged coffee through retailers in

1998 Starbucks made Kraft an offer of $750 million in 2010 when sales of its ground whole bean coffee reached $500 million yearly (Katie, 2023).

Starbucks sought greater flexibility to promote its popular single-serve coffee pods but was restricted by its contract with Kraft, which limited sales to pods compatible with Kraft's Tassimo machines As competition intensified with Green Mountain Coffee's Keurig system and K-Cup packs, Starbucks faced the risk of falling behind in the market.

The arrangement was eventually terminated despite Kraft's objections, but Starbucks chose to do so anyway and started selling K-Cup packs (Katie, 2023).

Starbucks experienced an 18.4% increase in market share for single-serving pods, while profits from grocery store items, including bottled drinks, surged by approximately 47% over two years This growth was attributed to the company no longer sharing profits with Kraft, resulting in $1.4 billion in revenue for fiscal 2013 (Katie, 2023).

Due to the inability of both parties to reach a mutual agreement, the dispute regarding Starbucks' decision to terminate their partnership escalated to arbitration Ultimately, Mondelez, a snack and confectionery spinoff from Kraft established in 2012, received the payment (Katie, 2023).

Timeline

Figure 4: Timeline of Starbucks and Kraft

Starbucks has publicly rejected the arbitrator's decision regarding its agreement with Kraft, stating, "We believe Kraft did not deliver on its responsibilities to our brand under the agreement" (Katie, 2023).

Objective

Starbucks sought to expand its market presence by offering single-serve coffee pods, which were gaining popularity However, their existing agreement with Kraft restricted them to selling pods compatible only with Kraft's Tassimo machines, ultimately leading to the failure of their partnership (Katie, 2023).

Business disputes often arise due to rapidly changing market trends that can render previously negotiated agreements less favorable (Katie, 2023) This report aims to explore the impact of shifting market conditions on contractual cooperation and seeks to identify effective strategies to address these challenges.

LITERATURE REVIEW

The best choices in negotiation (BATNAs)

Before bargaining, the negotiators should prepare "BATNA,” which means

The best alternative to a negotiated agreement (BATNA) is crucial for negotiators, as it enables them to reach their goals with minimal trade-offs According to Leigh L Thompson, Jiunwen Wang, and Brian C Gunia (2009), negotiators should accept outcomes that exceed their BATNA and reject those that fall below it This concept, introduced by Roger Fisher and William Ury in their influential book, emphasizes the importance of having a strong BATNA to enhance negotiation effectiveness.

"Getting to Yes: Negotiating Without Giving In," published in 1981 Thibaut & Kelley

(1959) showed that the concept is rooted in social exchange theory.

According to Bazerman (1992), the Best Alternative to a Negotiated Agreement (BATNA) significantly influences the strength of each negotiating party A stronger BATNA enhances negotiation outcomes, as it bolsters bargaining power during discussions.

Figure 5: The relationship between each party’s BATNA

The worst choices in negotiation (WATNAs)

WATNA is essentially the worst backup plan for a negotiated agreement, which stands for Worst Alternative to a Negotiated Agreement (Roger Fisher & William Ury,

In negotiations, understanding WATNA (Worst Alternative to a Negotiated Agreement) is crucial, as it allows parties to evaluate their options and make informed decisions By comparing WATNA with other alternatives, each negotiating party can identify viable solutions and enhance their negotiation strategy.

In negotiations, it is crucial for negotiators to identify the least favorable solutions that may arise during disputes These undesirable options frequently fall short of fulfilling the parties' overall objectives or may only partially address specific goals.

WATNA serves as a crucial benchmark in negotiations, helping negotiators determine when to cease discussions If one party's alternative is less favorable than the other's WATNA, the negotiation is concluded Conversely, even if the alternative is not the optimal outcome, it may still be deemed acceptable, leading to an agreement.

Distributive negotiation

Distributive negotiation involves the division of limited resources, such as money or property, with the primary aim of achieving favorable economic outcomes rather than addressing the needs of both parties This type of negotiation is characterized by an adversarial relationship, often referred to as a "zero-sum" or "win-lose" scenario, where one party's gain is directly linked to the other party's loss.

Distributive negotiation is typically employed by competitive communicators in situations marked by a lack of mutual trust and cooperation, often regarded as the most effective negotiation strategy According to Beverly DeMarr and Suzanne De Janasz (2014), this approach involves highly competitive tactics, with each party striving to maximize their settlement range The strategies utilized in distributive negotiations are generally more direct and assertive, as there is minimal focus on maintaining relationships between the negotiating parties.

ANALYSIS

The case

Below is the detailed timeline of the Negotiation between Starbucks and Kraft with the highlight events and the situation of the F&B Industry:

Year Event Highlights The F&B Industry

1998 Starbucks and Kraft have signed an agreement to cooperate in the distribution and sale of Starbucks packaged coffee.

Starbucks packaged coffee was sold by Kraft through grocery stores.

Starbucks was one of the largest in fair trade coffee

$750 million to end their contract with

Kraft but Kraft rejected it

-The deal with Kraft caused Starbucks to shrink to only selling pods that work in Kraft's Tassimo machines.

-Kraft asked Starbucks to compensate the fair price with the fair market value of the business and 35% as a premium.

The brewer and K- Cup single serving packs by Green Mountain Coffee’s Keurig system became popular and it was a threat to Starbucks.

2011 Starbucks decided to break off the agreement and began to sell K-Cup packs

Starbucks' share of the single- serving pod market grew by 18.4%, and as it no longer shares profits with Kraft, Starbucks's profits for grocery products increased about 47% in two years.

Starbucks had breached its agreement with Kraft and ordered

Starbucks was dissatisfied with the decision “We believe Kraft did not deliver on its responsibilities to our brand under the agreement” but still made the payment.

In 1998, Kraft entered into a distribution agreement with Starbucks to sell its packaged coffee in grocery stores However, the early 2000s saw a shift in the retail coffee market with the rise of Green Mountain Coffee's Keurig system and K-Cup pods, prompting Starbucks to develop its own K-Cup to stay competitive A restrictive deal with Kraft limited Starbucks' ability to produce coffee capsules compatible with its own machines, risking its market position In 2010, Starbucks proposed a $750 million buyout to end the contract, but Kraft rejected the offer, demanding a premium based on fair market value As the agreement neared expiration in 2014, Starbucks chose to sever ties and launched its K-Cup packages independently This strategic move resulted in an 18.4% increase in Starbucks' share of the single-serve pod market and a significant 47% rise in grocery product profits, totaling $1.4 billion in cumulative revenue by fiscal 2013.

In 2012, an arbitrator ruled that Starbucks violated its agreement with Kraft, resulting in a $2.75 billion payment to the food company Starbucks contested the decision, asserting that Kraft had not met its obligations to the brand as outlined in the agreement.

Theory application

Keurig's launch of the coffee maker and K-Cup single-serving packs revolutionized the food and beverage industry, particularly in coffee In 2006, Green Mountain's acquisition of Keurig and its focus on specialty coffee flavors in K-Cup pods prompted Starbucks to recognize the threat of losing market share (Linda, 2022; Katie, 2023) Despite this, Starbucks aimed to create its own K-Cup coffee pods, but was restricted by an agreement with Kraft, which limited them to selling pods exclusively for Kraft's Tassimo machines.

20 and that they must be distributed by Kraft This was said to be the main reason why Starbucks wants to terminate the contract with Kraft (Katie, 2023).

Starbucks sought to terminate its contract with Kraft due to perceived failures in Kraft's responsibilities and a lack of cooperation in marketing and customer engagement decisions This desire for greater autonomy over its packaged coffee business motivated Starbucks to end the partnership early (Anne, 2013).

In negotiations with Kraft, Starbucks aimed to leverage its Best Alternative to a Negotiated Agreement (BATNA) by seeking to terminate their contract with minimal compensation, proposing a $750 million settlement which ultimately did not succeed Conversely, Kraft's BATNA involved maintaining the existing agreement, highlighting the complexities and challenges faced by both parties in the negotiation process.

According to Kraft in 2010, the annual sale of Starbucks' packaged coffee retail business grew to $500 million (Anne, 2013) With an estimated annual profit of about

$128 million in 50/50 split, the post-split loss did not seem to bother Kraft- the largest

Kraft, a leading US food company with an annual revenue of $48 billion, may receive compensation from Starbucks As Starbucks regains distribution rights to its packaged coffee products, it plans to expand its coffee and packaged food lines, positioning itself to compete with Kraft in the future.

Starbucks, previously a supplier for Kraft's Tassimo coffee system, posed a significant challenge for Kraft when it partnered with Green Mountain Coffee Roasters to produce K-Cups for Keurig, its main competitor JP Morgan's analysis indicated that 80% of Starbucks customers do not own single-cup coffee makers, highlighting a potential market gap for Kraft The termination of its contract with Starbucks threatened Kraft's position in the coffee sector, prompting the company to seek compensation based on fair market value plus a 35% premium to mitigate the impact of losing such a key partner (EconMatters, 2010; Lisa Baertlein, 2010).

As a result, Kraft’s BATNA in this negotiation was from keeping the autonomy of selling Starbucks packaged coffee to get a good compensation

Starbucks faced a significant risk by attempting to terminate its contract with Kraft prematurely, as failing to reach an agreement could lead to a breach of contract and substantial financial liabilities If Kraft pursued legal action, Starbucks might incur damages exceeding its expectations, potentially damaging its relationships with partners and suppliers Despite understanding these potential consequences, Starbucks ultimately decided to proceed with breaching the contract with Kraft.

In conclusion, Starbucks’s WATNA was to cancel the agreement with Kraft regardless of the contract. b Kraft’s WATNA:

The contract between Starbucks and Kraft provided significant benefits to Kraft, and if Starbucks proceeded with cancellation, Kraft could face substantial losses Consequently, Kraft sought adequate compensation from Starbucks, aiming for an amount that matched its current valuation of the contract Kraft's worst alternative to a negotiated agreement (WATNA) was to terminate the contract and receive only the perceived present-day value Thus, when Starbucks proposed a $750 million settlement, Kraft deemed it insufficient and rejected the offer.

Distributive negotiation involves parties competing to maximize their own benefits rather than meeting the needs of others, as highlighted by Leigh L Thompson, Jiunwen Wang, and Brian C Gunia (2009) A prime example of this is the negotiation between Starbucks and Kraft, where both companies aimed to secure the highest possible profits for themselves, embodying the essence of distributive negotiation.

Specifically, here, for Starbucks, it tried to be able to terminate the contract by offering

After a failed negotiation with Kraft over a $750 million contract, Starbucks chose to unilaterally terminate the agreement, leading Kraft to pursue legal action Both companies were unwilling to collaborate on a mutually beneficial solution, focusing solely on their own interests This contentious negotiation spanned three years and concluded with a court ruling The fallout from this dispute not only damaged the reputations of both Starbucks and Kraft but also caused a decline in Starbucks' stock value.

10 cents to $31.04 in premarket trading, while Kraft shares fell 5 cents to $30.25 (Lisa Baertlein, 2010)

Following the conclusion of the negotiations, Starbucks faced significant financial setbacks, including a $2.75 billion payout to Kraft and a decline in its stock price This protracted legal battle also adversely impacted Kraft, which took three years to resolve the lawsuit against Starbucks, leading to a diminished corporate image and stock value Additionally, Kraft was compelled to seek new partnerships to replace Starbucks and prepare for competition with the collaboration between Starbucks and Green Mountain Coffee's Keurig system.

Evaluation

3.3.1 The failure of make adaptable agreements for changing conditions

F&B is a highly competitive and constantly changing industry, especially in the

The US market is highly integrated and adaptable to new trends, making it challenging for companies like Kraft and Starbucks to predict market fluctuations and competition, ultimately leading to unsatisfactory results in their partnership (Katie, 2023) Evidence indicates that the merger of Keurig and Green Mountain rendered the contract insufficient for Starbucks, prompting them to seek termination.

Before signing, Starbucks and Kraft should have taken more time to review and add terms that are more flexible and adaptable as the economy and industry changes.

It is crucial for both parties to discuss termination terms and compensation in advance to avoid unnecessary disputes and save time if the contract needs to be ended prematurely (Katie, 2023).

3.3.2 The failure to work towards an integrative negotiation

Starbucks and Kraft engaged in Distributive Negotiation, prioritizing their individual interests, which ultimately hindered their ability to reach a mutually beneficial agreement.

Successful integrative negotiation requires mutual support and active listening from both parties to understand each other's needs, including their Best Alternative to a Negotiated Agreement (BATNA) and Worst Alternative to a Negotiated Agreement (WATNA), which helps identify the Zone of Possible Agreement (ZOPA) However, in the case of Kraft and Starbucks, both companies prioritized their own interests over collaboration, leading to a prolonged negotiation without resolution, ultimately forcing them to rely on a judge's decision This approach not only harmed their reputations and led to a decline in their stock prices but also strained their business relationship.

SOLUTION

In light of the challenges faced by both Starbucks and Kraft due to their partnership, a viable solution would have been for them to collaborate more closely in adapting to emerging competitors and industry trends By leveraging Keurig's innovative technology, they could have developed a new product line that prioritized consumer convenience and enhancements The synergy between these two industry giants, with their extensive experience and market knowledge, would have made this endeavor feasible, ultimately leading to increased economic benefits and the establishment of a unique market position.

Instead of voluntarily terminating its contract with Kraft and facing potential lawsuits, Starbucks should have focused on negotiating with Kraft to address their demands Kraft sought compensation based on the fair market value of the business, plus a 35% premium, totaling approximately $1.5 billion in severance fees While this amount is significant, it is considerably lower than the $2.75 billion Starbucks would incur if they chose to terminate the contract outright Engaging in negotiations could have led to a more favorable outcome and helped preserve Starbucks' corporate image Thus, an integrative negotiation approach would have been beneficial for both parties.

Instead of pushing for a contract termination, Starbucks could have negotiated with Kraft for the rights to manufacture and sell K-Cup pods, which would have been more cost-effective and preserved their business relationship While terminating the contract would allow Starbucks to regain full rights to its packaged coffee, it would come at a significant financial cost, including a potential $2.75 billion compensation to Kraft Although Starbucks saw a 47% increase in grocery product profits after the contract termination, maintaining the contract would allow them to keep their reputation intact and avoid jeopardizing their relationship with Kraft With only four years remaining on the contract, negotiating K-Cup rights would benefit both parties, enabling Kraft to retain its suppliers for Tassimo coffee while allowing Starbucks to prepare for a smoother transition post-contract After four years, Kraft could renegotiate with Starbucks, preserving their business relationship rather than becoming competitors.

CONCLUSION

Starbucks aims to change its strategic direction without incurring the costs associated with such a shift To achieve this, the company has made unfounded allegations of material breach and introduced a new termination process that enables it to take control of the operations developed by Kraft This tactic forces Kraft into a position where it must either seek a preliminary injunction or breach its exclusivity obligations, raising significant concerns about fairness in the process.

Kraft seeks a court declaration to acknowledge that it is facing imminent and irreparable harm, thereby justifying the full consideration of its request for a preliminary injunction.

In the complex realm of partnerships, employing interest-based decision-making is essential for achieving favorable outcomes Often, parties resort to rights or power-based tactics, which can escalate conflicts and hinder collaboration.

The success of a business relationship hinges on mutual respect between parties Excessive focus on analyzing agreements and seeking loopholes can detract from the potential for success, particularly in large-scale licensing deals like the Kraft-Starbucks transaction While Kraft may appear to have won this negotiation, greater value could have been achieved for both parties, rather than resulting in Starbucks owing Kraft and a permanently fractured partnership.

Vào năm 2014, Kraft Foods, một trong những ông lớn trong ngành hàng bánh kẹo, đã thông báo kế hoạch gia nhập thị trường Việt Nam Sự xuất hiện của Kraft Foods hứa hẹn sẽ tạo ra những thay đổi lớn trong ngành công nghiệp bánh kẹo tại Việt Nam, mang đến nhiều sản phẩm mới và sự cạnh tranh mạnh mẽ hơn cho các thương hiệu địa phương.

2 Brandsvietnam (2019); Starbucks và bài toán tăng trưởng Doanh Thu Brands Vietnam (n.d.) Retrieved April 9, 2023, from https://www.brandsvietnam.com/17476-Starbucks-va-bai-toan-tang-truong- doanh-thu

3 EconMatters (2010); Why A Starbucks-Kraft Feud Will Be Costly For Both Companies; Business Insider; https://www.businessinsider.com/starbucks-kraft- 2010-12

In the article "Negotiation in Business: Starbucks and Kraft’s Coffee Conflict" by Katie Shonk (2023), published by the Program on Negotiation at Harvard Law School, the complex negotiation dynamics between Starbucks and Kraft are explored The piece highlights the challenges both companies faced during their partnership, particularly regarding product distribution and brand management It emphasizes the importance of preparation in negotiations and offers insights into conflict resolution strategies that can be applied in similar business scenarios For a deeper understanding of these negotiation tactics and their implications, visit the full article at the Harvard Law School's Program on Negotiation website.

5 Leigh L Thompson, Jiunwen Wang, and Brian C Gunia (2010); Negotiation; Annual Reviews; https://www.annualreviews.org/doi/full/10.1146/annurev.psych.093008.100458

6 Linda (2022); Keurig: The History Of A Leading Coffee Maker Brand; The Commons; https://www.thecommonscafe.com/keurig-the-history-of-a-leading- coffee-maker-brand/

7 Lisa Baertlein and Martinne Geller (2010); Starbucks: Kraft screwed up our partnership; NBCNEWS; https://www.nbcnews.com/id/wbna40408211

In 2021, Starbucks was recognized as the most valuable restaurant brand for the fifth consecutive year, according to a report by Samantha Loveday This achievement highlights Starbucks' strong brand presence and market influence in the restaurant industry The information was sourced from Licensing Source and was retrieved on April 9, 2023.

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