This document summarizes Starbucks' strategy and initiatives to return to profitable growth after facing declining revenues during the economic downturn of 2008-2009. Howard Schultz returned as CEO in 2008 to lead a transformation of Starbucks' strategy. Initiatives included expanding internationally through licensing, increasing marketing efforts, focusing on regional products, innovating new products, and implementing process improvements to reduce costs. By 2010, Starbucks had become the world's largest coffeehouse company with over 17,000 stores globally.

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
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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