With Doritos on the outside and Taco Bell on the inside, the newly launched Locos Tacos might just rescue a brand wounded by bad publicity. Taco Bell recently partnered with Frito Lay to offer cheese-flavored shells stuffed with spicy beef filling. This big hit may be exactly what Taco Bell needs to get back on track after a devastating lawsuit falsely accused the fast food chain of adulterating its beef with binders and extenders. Yum Brands, owner of Taco Bell, Pizza Hut, and KFC, is the world’s largest restaurant company with 18,000 US restaurants and more than 37,000 worldwide. Although Taco Bell has the most restaurants, it continues to suffer from a serious image problem. Several years ago, it endured an e-coli outbreak, and, more recently, it was skewered by a viral video showing rats scampering about one of its Manhattan stores. Then the sky nearly fell in with the beef accusations. Yum CEO David Novak admitted that the lawsuit took the fun out of our business. However, he’s very upbeat about the brand’s growth overseas and a new line of products. “We’re positioning the brand around the notion that fresh is better. People don’t realize the product we have come to our stores is delivered fresh every day.” Stinging from criticism that fast food contributes to the worldwide obesity epidemic, Taco Bell is also looking for nutritious as well fresh menu choices. In the increasingly crowded fast food market, customers are shifting away from the traditional burger and chicken fast foods. One food industry executive said, “Burgers are your dad’s food, and Mexican is the choice of the new generation.” Poised to capitalize on this movement, Taco Bell remains keenly aware that A, it sells a quasi-Mexican food, and, B, it’s customers are changing. Although its products cannot veer too far from what appeals to the masses, Taco Bell must also compete with new flavors and fresh ingredients.
QUESTION 1: After watching the Workplace Video about Taco Bell, what was the purpose of its message? If you had been assigned the task of creating this video, is there any information you would edit out? Explain.
Chapter 09: Workplace Connection Video
Despite epic setbacks that prompted chairman and CEO Howard Schultz to return to the helm at Starbucks, the company continues to reign as the world’s largest coffee shop chain. After a recessionary slump, Starbucks has soared to more than 18,000 retail locations in 61 countries. The specialty coffee roaster and retailer has bolstered its presence in China, its fastest growing market. Recently, it has entered India, a traditionally tea-loving country. In its own words, Starbucks set out to be a different kind of company by providing a unique experience to customers and trying to create a connection one person, one cup, and one neighborhood at a time. Yet, the global behemoth serves a whopping 70 million customers a week and employs over 200,000 people. With annual sales of 11.7 billion dollars and a market value of 40 billion dollars, the company has returned to record performance. Adding to its accolades, Starbucks consistently ranks among the top ten in the “Fortune” magazine list of America’s most admired companies. It is known for its social responsibility initiatives, such as fair trade coffee sourcing, energy conservation, farmer loans, and ethical employment practices. Moreover, the retailer is regularly named among Fortune’s 100 best companies to work for, not least because Starbucks gives health insurance and stock options to all employees who it calls partners. Howard Schultz successfully bucked traditional retail wisdom. For example, by locating stores so densely together that they cannibalize each other’s sales. He famously relied on his entrepreneurial instinct and scorned conventional market research. Yet, although he is one of the most admired corporate executives of our time, Howard Schultz suffered a few flops, too. His head-long introduction of sorbeto failed miserably, and Starbucks had to abandon the sugary beverage. The company also has had mixed results with its music and film offerings. Moreover, Schultz himself admits that he misread the depth of the recession and its impact on his business. However, he scored a winner with Via, Starbucks’ instant coffee because this time he embraced focus groups and listened to his executives who advocated a slow methodical introduction. Now, the company wants to replicate in India what it considers its unique and exciting Starbucks experience. Connecting with customers and creating a sense of community. Such large scale ventures in vastly different cultures are fraught with peril, and Starbucks has conducted plenty of research. The company also decided not to go it alone. Instead, it aligned itself with Indian giant Tata Global Beverages. The joint venture is designed to help Starbucks establish a foothold in India’s potentially giant market.
QUESTION: 2 Please watch the Workplace Connection Video. What obstacles has Starbuck faced in expanding its global market, particularly in India? What did they enact as solutions?
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