STARBUCKS AND KRAFT

NEGOTIATION
BY:
MUSTAFA AL KARKHI
INTRODUCTION , LEVEL OF CONFLICT
 Dispute between Starbucks and Kraft.
 3 year dispute.
 Agreement dates back to 1998 when Kraft began
selling to Starbucks packages coffee.
 Final led to arbitration.
 Level of conflict : inter group : between two
different groups.
DISFUNCTION OF CONFLICT, MOTIVATIONS
 Decreased communication.
 Competitive goals.
 Blurred issues.
 Escalation.
 Motivation of the conflict:
 Situation
 Parties
 Relationships between parties
 distrust
STARBUCKS ISSUE , KRAFT ESCALATION
 Wanted greater flexibility to sell the single served coffee pods that
were taking off in the market at that time.
 The company's agreement with Kraft limited Starbucks to selling
pods that worked in Kraft machines.
 Starbucks was in danger of being left behind in a race for market
share.

 Escalation: Kraft objected to the deal

Termination but Starbucks broke off the
Business relationship and started selling
K-cup packs .
SOURCE OF THE CONFLICT,
POSSIBLE ALTERNATIVE SOLUTION
 Interest :money benefits and allocation of resource.
 The distribution of coffee packaged .

Public obligation.
possible alternative solution : the situation could have
been handled differently understanding better the interest
of the other side. An alternative ,Kraft machines change for
better and where the pods work as well in their machines.
This would have been a win win situation and maybe even
have cut cost and greater the benefits of both parties.
TARGET POINT ,RESERVATION POINT AND BATNA

Starbucks Kraft
Starbucks point was Kraft target point
its initial offer to was the of contract
$500 million to Kraft 1,9 billion

Kraft reservation
Starbucks point was not clear
reservation point was but assumed to be
$500million the same as target
point

Starbucks BATNA Kraft BATNA would

would be Kraft be continue
defaulting on its executing the
contract contract
GOALS AND RELATIONSHIPS ,PROCESS TOWARD GOALS

Relationship goals
Kraft Maintain relationship with Starbucks
Starbucks no further relationship

Goals and interests

Starbucks : buy rights of the contract back from Kraft
Kraft: receive fair market price or continue with contract

Process toward goals

Starbucks : original attempt to take over the business
claiming a breach of contract
Kraft :arbitration
OUTCOMES
 Starbucks :loss of reputation after loosing law
suit and being portrayed as villain .
 Kraft: jeopardized reputation as category
captain.
CONCLUSION
 Wide negative bargaining zones .
 Conflict needed resolution through arbitration

 Starbucks must pay $2,23 billion in damages plus $527

million.
 The rift began in march 2011.

 Starbucks said coffee business back from Kraft was the

right decision.
Reference :
www.pon.harvard.edu, www.economist.com
www.wikipedia.org, www.reuters.com
STARBUCKS AND KRAFT NEGOTIATION