Starbucks: A Story of Growth - case study presentation for EBS/DBS
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Starbucks: A Story of Growth - case study presentation for EBS/DBS

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For entry into the EBS European Business School / DBS Durham University Business School - dual Executive MBA programme, I was asked to analyze a case study from Kellogg School of Management at......

For entry into the EBS European Business School / DBS Durham University Business School - dual Executive MBA programme, I was asked to analyze a case study from Kellogg School of Management at Northwestern University. I then had to write a handful of essays and give a 1-hour presentation consisting of 30 min of briefing and 30 min of Q/A from the EBS faculty audience.

Starbucks Corporation is known world-wide for their specialty coffee innovation and creative business design. Over time Starbucks has built a business around a relaxing, somewhat romantic atmosphere that brings to the customer a European feel and thus provides a strong user experience for its customers. In Starbucks’ earliest days, coffee consumption in the United States (US) was considered nothing special. Most US coffee offered a similar taste and wasn’t offered in a special “European” environment. With this absence of uniqueness, convenience was the dominant criteria used by US consumers to choose their coffee.

Enter Starbucks.

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  • 1. A Story of Growth Case Study Presentation by: Brandon J. Murray 1  
  • 2. Starbucks Mission THEN NOW “establish Starbucks as “to inspire and nurture the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow the human spirit – one person, one cup and one neighborhood at a ” ” Case Study Presentation by: Brandon J. Murray time. 2  
  • 3. Case Study Presentation by: Brandon J. Murray 3  
  • 4. U.S. Coffee Consumption in a major slump! Starbucks Founded Howard Schultz acquires Starbucks Case Study Presentation by: Brandon J. Murray 4  
  • 5. The Rise of the Coffeehouses !   In San Francisco & New York, small specialty coffeehouses and roasters were being established !   Starbucks was created in this mold, aiming to roast and sell excellent coffee Case Study Presentation by: Brandon J. Murray 5  
  • 6. We should sell prepared coffee drinks like the Italians are doing!! Case Study Presentation by: Brandon J. Murray 6  
  • 7. We love roasting and selling beans ...not interested in selling prepared drinks. Mr. Schultz leaves Starbucks! Case Study Presentation by: Brandon J. Murray 7  
  • 8. Mr. Schultz buys Starbucks! Now I think I WILL make & sell those prepared coffee drinks!! Case Study Presentation by: Brandon J. Murray 8  
  • 9. Starbucks Expansion !   In 1996, Starbucks began executing two initiatives: !   Selling Starbucks products through mass distribution channels !   Dramatically expanding its footprint Case Study Presentation by: Brandon J. Murray 9  
  • 10. Mass Distribution Channels “ to accelerate growth of the Starbucks brand into the grocery channel across the United States.” –Howard Schultz, in response to Kraft agreement Case Study Presentation by: Brandon J. Murray 10  
  • 11. Licensing Agreements! By 2008, 16% of of Starbucks revenues came from sources other than its company-owned retail stores. Case Study Presentation by: Brandon J. Murray 11  
  • 12. Starbucks Retail Expansion 1996     1,015  Stores     2001 4,709  Stores   2007   15,011  Stores   Case Study Presentation by: Brandon J. Murray 12  
  • 13. Competitor Latte Prices v . Starbucks Case Study Presentation by: Brandon J. Murray 13  
  • 14. I’m back…. Schultz Returns as CEO Case Study Presentation by: Brandon J. Murray now check out my transformational agenda to cut $580 million in 2009 and deliver 90% of store orders on time and without errors. 14  
  • 15. Store Closed for… •  Mr. Schultz closes nearly 1,000 underperforming stores •  Mr. Schultz closes Starbucks stores nationwide for an afternoon to retrain all baristas Case Study Presentation by: Brandon J. Murray 15  
  • 16. Business Process Improvement !   Starbucks makes operational changes to their brewing stations and coffee bean “default roast” selections. Case Study Presentation by: Brandon J. Murray 16  
  • 17. Starbucks gets back to its roots… !  “ round, smooth, and balanced…a mild, sweet finish. ” - Howard Schultz, describing his ‘Consistent Brew 19’ (renamed to Pike Place Roast) Case Study Presentation by: Brandon J. Murray 17  
  • 18. Case Study Presentation by: Brandon J. Murray 18  
  • 19. Moving business “away from the store” !   Starbucks produces an instant coffee !   Starbucks produces a single-serve pod coffee !   Starbucks applies VIA technology to sell shelfstable Frappuccino, ice-cream, and even beer “Never be without great coffee” “faster, easier, and doesn’t force the entire household to drink the same thing in the morning.” – Howard Schultz, slogan on VIA – Howard Schultz, on single-serve Pods Case Study Presentation by: Brandon J. Murray 19  
  • 20. Starbucks pursues coffee initiatives outside of their own brand !  Seattle's Best Coffee !  15th Avenue Coffee and Tea !  Roy Street Coffee and Tea Case Study Presentation by: Brandon J. Murray 20  
  • 21. Manufacturing Brewing Equipment •  What is a Clover coffee machine? !   An $11,000 USD coffee machine which makes a superior brew by controlling dose, brewing temperature, and brew time. •  What benefits did Mr. Schultz see with the Clover? 1) Produces superior cup of coffee 2) Offered customers “theater & romance” 3) Makes a single cup at a time, allowing to brew from smaller batches of specialty beans “Frankly, we just don’t want anyone else to have it.” -­‐  Michelle  Gass,  SBUX  execu3ve  in  response  to  Clover  acquisi3on   Case Study Presentation by: Brandon J. Murray 21  
  • 22. My “Starbucks Experience” •  Starbucks, with CEO Howard Schultz at the helm, has been an inspiration for regular coffee consumers like me - - all the way to national and global business leaders alike. •  I have enjoyed this Starbucks Case Study project immensely! Case Study Presentation by: Brandon J. Murray 22  
  • 23. QUESTIONS? THANK YOU… 1) For your time, 2) For this opportunity to analyze a fascinating business case, and of course 3) For considering me for your graduate programme. Case Study Presentation by: Brandon J. Murray 23  
  • 24. [ Backup Slide ] Case Study Presentation by: Brandon J. Murray 24  
  • 25. Company  Timeline:     Howard  Schultz  &  Starbucks   !   1981: Howard Schultz visits the company that's buying so many drip coffeemakers from the Swedish company he represents and falls in love with it. !   1982: He becomes Starbucks' director of retail operations and marketing. !   1983: He travels to Milan !   1985: He founds Il Giornale !   1987: Leads a group of investors to buy Starbucks when it had fewer than 20 stores and plans to open 125 new stores in five years. !   1992: Takes the company public (IPO). Starbucks ends fiscal year with 165 stores. !   1996: Begins selling bottled Frappuccino drinks !   2000: Steps down as CEO, a title that goes to Orin Smith. Schultz remains chairman. Ends fiscal year with 3,501 stores. !   2003: Acquires Seattle’s Best Coffee Company !   2005: Smith retires and is replaced by Jim Donald. Starbucks ends fiscal year with 10,241 stores. !   2008: Schultz reclaims CEO position and Donald leaves the company. More than 15,000 stores worldwide. Starbucks acquires Clover Brewing System. Launches Pike Place Roast. !   2009: Launches Starbucks VIA Ready Brew Coffee !   2011: Launches Starbucks K-Cups portion packs – Green Mountain Coffee Roasters !   2012: Total Stores = 17,651 (as of July 01, 2012) Case Study Presentation by: Brandon J. Murray 25