We appreciate your visit to In 2011 Starbucks terminated a contract with Kraft Foods that allowed Kraft to sell bagged Starbucks coffee in grocery stores The early termination resulted in. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Answer:
Starbucks and Kraft Foods
The reasons companies terminate contracts before their expiration include impossibility of performance, material breaches of contract terms, misrepresentation, fraud, lack of capacity, mutual mistake, and frustration.
The reason for Starbucks' termination of the contract was "multiple material breaches." These were not established by the arbitrator, who delivered judgment in Kraft's favor.
It is not always realistic to terminate a long-standing contract without abiding by the contract termination terms because the damages and accruing interests that can be awarded against the terminating company may be too huge.
Explanation:
The "multiple material breaches" that Starbucks alleged against Kraft included the allegation that "Kraft did not always meet minimum advertising budgets or keep Starbucks involved in major initiatives." According to Starbucks, these violations eroded its "brand equity."
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Final answer:
Companies terminate contracts for various reasons, such as market changes or dissatisfaction with performance. It is realistic as long as it aligns with business goals and legal/ethical standards.
Explanation:
Companies terminate contracts for various reasons, such as changes in market conditions, strategic shifts in business focus, or dissatisfaction with the performance of the other party. In the case of Starbucks and Kraft, it is likely that there was a disagreement or dissatisfaction with the way Kraft was distributing the bagged coffee in grocery stores. Starbucks may have wanted to have more control over the distribution process or maximize its profits.
While terminating contracts can have financial implications like liabilities or litigation costs, it is a realistic behavior for companies if they believe it serves their long-term interests. Companies have the right to protect their brand, maximize profits, and make strategic decisions that align with their business goals. However, it is important for companies to consider the legal and financial consequences of terminating contracts to minimize potential risks and ensure fair and ethical business practices.
Overall, the reasons companies terminate contracts can vary, and it is a realistic behavior as long as it is based on valid reasons and done in accordance with legal and ethical standards.
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