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In 2004, Starbucks announced that it will increase prices at its stores before the end of year. Analysts expected prices to rise by 4% to 5%.
According to Starbucks prices went up to adjust for increases in dairy products and rents.
(1) From the case in 2004, explain the logic for a price increase from Starbucks' perspective.
(2) Can you discuss the effect of operating leverage on why Starbucks had to close about 600 stores in 2008.
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This paper will analyze the decision of Starbucks on increasing the prices of the products as well as closing down nearly 600 stores in the market. The company is facing economic and financial issues and thereby to overcome these challenges the top-level management has taken such a decision. The company is also looking forward to increase their revenues by changing their present strategies. This paper is written in a Microsoft Word Document File.
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