Christine Day, Starbucks’ senior vice president of administration in North America has recently discovered that Starbucks has not always been meeting the customer’s expectations in the area of customer service. As a result of the new findings, “Ms. Day has proposed a plan to invest an additional $40 million annually in the company’s 4,500 stores, which would allow each store to add the equivalent of 20 hours of labor a week” (Moon & Quelch, 2006, p.1). It is believed that the increase in labor should increase customer satisfaction, thus increasing sales. Additional hours of labor could be the answer needed to increase customer satisfaction. However, it is possible that the invested $40 million dollars to increase labor, may have no actual increase in customer satisfaction or increased sales. If previous customers have already been turned off from a Starbucks experience, the additional labor may not be enough to draw those customers back in. Competitors may have already won over previous customers and began capitalizing on their own collected market research data. Other alternatives to investing $40 million in increased labor could be to allocate some of these funds to marketing, which Starbucks has lacked from its beginning. Labor was already the company’s largest expense item in North America. The data suggests the average hourly rate with shift supervisors and hourly partners is $9.00 an hour, with 360 labor hours a week, for a sum of $3,240 a week per store (Moon & Quelch, 2006, p.14). Allocating an additional $40 million dollars adds to the labor expenses with no certain outcome. As stated,
Interestingly, although Starbucks was considered one of the world’s most effective ...