Reference no: EM132578448

STARBUCKS SPENDS $100 MILLION TO IMPROVE PASTRIES BY  BUYING FRENCH BAKERY CHAIN

Starbucks Corp. is looking to offer a more tempting menu, with a $100 million cash deal to buy a small bakery chain. The Seattle-based coffee shop chain says baked goods from La Boulange will start replacing its current lineup early next year, starting with French pastries such as the croissant. Products will start appearing in Bay Area stores first then roll out nationally. Starbucks also says it plans to make the San Francisco-area bakery into a national presence in the years ahead. "We'll take it one store at a time, starting in metropolitan areas around the U.S. where there's demand," said Cliff Burrows, President of Starbucks Americas.

Food has become an important part of Starbucks' revenue stream in recent years, with the segment now generating $1.5 billion a year. About a third of the purchases in its.

U.S. locations include a food item. As Starbucks faces increasing competition from fast-food chains serving specialty coffees, the company has increased its profits through an expanding mix of consumer products, such as its ice cream and Tazo-branded K-Cup portion packs.

With the acquisition of La Boulange, Starbucks says it hopes to popularize the French bakery experience in the U.S. the same way it brought the experience of the Italian espresso bar to the masses. After more than 40 years, we will be able to say that we are bakers too,' CEO Howard Schultz said in a statement.

a) Discuss the importance of corporate level strategy for Starbucks.

b) Assess the competitive advantages that can be acquired by Starbucks with the La Boulage purchases.

c) Analyse the effect of Starbucks's current market forces as the management team decides to expand its product offerings.