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Starbucks announced that it will increase prices at its stores before the end of 2004. Analysts expect prices to rise by 4% to 5%. Prices are going up to adjust for increases in dairy products and rents. The firm is seen as the clear leader in the retail coffee market but opinion is split on whether consumers will continue to pay more for their caffeine. Some surveys indicate that people already think they already pay too much for their coffee while others suggest that Starbucks is actually less expensive than many of its competitors. ,,(1) Explain the logic for a price increase from Starbuck’s perspective. ,,(2) If you were forecasting revenues and profits for Starbucks in the upcoming year, what information would you focus on? ,,

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