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Question 3
Evaluate the arguments, using both qualitative and quantitative evidence, for investing in increased labour at the retail stores. What would you personally recommend?

To respond to the market findings, a proposal was to add an additional 20 hours of labor, per week, per store, at a cost of $40 million per year.
On the one hand, investing in increased labour can have several advantages. Indeed, first, it would allow the store increase its speed-of-service if they would hire an additional person. Consequently, it would increase the customer satisfaction, retention and finally loyalty. Besides, it could reduce the employees’ stress. Indeed, this job is very speed and requires a lot of attention and concentration, which can be physically or morally difficult for the partners. So, hiring another person could reduce the pressure on the others, who finally would be relaxed and could provide a better service.
Moreover, it can increase the store’s productivity. Indeed, if they hire another person, each store could be able to serve more customers per hour. Thus it would increase the store’s productivity per hour.
Besides, if we consider that this increased labour would increase the customer satisfaction and consequently the customer retention rate, there would be a positive impact on profits too. Thus, a 5% point customer rate increase would engender a 28% profit increase. As 28% of Starbucks’ profit represents nearly $543 million in 2002 and as the cost of this additional labour would be $40 million per year, we can consider that the gains would exceed the costs.
Finally, a better customer satisfaction could build stronger long-term relationships with Starbucks’ customers. The customers would be likely to come more often to Starbucks and to spend more money in these stores that would engender a profit increase.

However, on the other hand, investing in increased labour can have several...