1. Starbucks’ Strategy and Internal
Initiatives to Return to Profitable
Growth
GROUP 11:
SAURABH PATEL
SAURABH PAUL
SAURAV KUMAR
SHAILENDRA SHANKAR GAUTAM
SHARAD SRIVASTAVA
SHRIKANT
SIDDHARTH DIKSHIT
12810072
12810073
12810074
12810075
12810076
12810077
12810078

2. Executive Summary
 Starbucks started in 1971 by 3 academicians Jerry Baldwin, Zev
Siegel & Gordon Bowker
 Inspired by success of Peet’s Tea & Coffee in Berkeley
 Retail manager Schultz founded a new venture Giornale coffee
company as his vision for Starbucks global chain of coffee bars
conflicted with owner’s desire to focus on retail
 Giornale acquired Starbucks in 1987. The new organization named
as Starbucks Corporation . Schultz became the 1st CEO.
 Market expansion outside Pacific Northwest resulted into losses
which led Schultz to go for change in management team, opening of
roasting facility and an IT set-up.

3. Contd…
 Economic Downturn in 2008-2009, led to decline of company revenues
from $10.4 bn in FY 2008 to $9.8 bn in FY2009
 This led Starbuck to go for new strategic initiatives and rejuvenated
strategy execution efforts
 Schultz stepped down as CEO in 2000, but due to declining stock prices,
reducing customer traffic led Schultz to return as CEO
 2008-2010 , Schultz initiated a transformation of the Starbuck’s strategy in
order to restore profitability
 By 2010, Starbuck became world’s premier roaster and retailer of speciality
coffee
 8812 company owned stores & 7852 licensed stores in 50 countries

4. View Point
 Howard Schultz – CEO, Starbuck Corporation

5. Time Context
 1971 – establishment of Starbuck
 1982 – Schultz joins Starbuck
 1984 – Acquired Peet’ Coffee
 1986- Schultz founded II Giornale Coffee
 1987 – Giornale acquires Starbuck
 1992 – Starbuck union was decertified
 2000 – Schultz decide to step down as CEO
 2008-2009 – Economic Downturn, operating
margins declined from 14.3% to 6.0% in 2008
 2008 – Schultz returned as CEO

6. Objective
 To sustain Starbucks’ growth and attain market
leadership position

7. Problem Statement
External environmental
Economy
factors
–
Competition
and
Cause:
 Fierce competition with giants like McDonald
 Global recession
Symptoms:
 Declining customer traffic
 Decline in operating income from 14.3% in 2007 to 6.0%
in 2008

8. Mission Statement
1990-2008:
Establish Starbucks as the premier purveyor of the
finest coffee in the world while maintaining our
uncompromising principles as we grow.
2008 Onwards:
To inspire and nurture the human spirit – one person,
one cup and one neighbourhood at a time.

9. Financial Analysis
Particulars
Starbucks
McDonalds
2008
2009
2008
2009
Revenue
$10.39 bn
$9.78 bn
$23.52 bn
$22.74 bn
Gross Income
$1.12 bn
$1.24 bn
$8.64 bn
$8.79 bn
GI Growth
Net Income
9.93%
$315.5 mn
NI Growth
$390.8 mn
1.77%
$4.31 bn
23.87%
$4.55 bn
5.51%
Current Ratio
0.799
1.291
1.386
1.144
D/E Ratio
0.507
0.180
0.764
0.754
EPS (Diluted)
0.43
0.52
3.76
4.11
EPS (Diluted)
Growth
Inventory
Turnover
20.93%
12.50
Source: Marketwatch
12.00
8.88%
122.69
119.96

10. Area of Consideration
 Competitive Analysis
 Increase marketing efforts
 Supply Chain Network
 Financial Position
 Industry Analysis
 Human Resources

11. Alternate Course of Actions
 International Expansion
 Product Diversification
 Change in Marketing Strategy

12. Recommendations
International Expansion:
 Go for geographical expansion through Licensing
 Increase marketing efforts
 Product based on regional preferences
 Focus on innovative products
 Implement process re-engineering to reduce waste

13. Thank You