Starbucks has rapidly expanded from 17 coffee shops in Seattle 15 years ago to over 16,000 outlets in 50 countries. While global expansion provides opportunities for growth, it also poses challenges as Starbucks must adapt to new markets. As the US market becomes saturated with Starbucks locations, maintaining historic growth rates will be difficult. Starbucks is focusing on innovation like mobile ordering and expanding its food offerings to attract new customers and drive additional sales. However, concerns over employee satisfaction and treatment could impact Starbucks' customer service and brand image as it continues to grow globally.
Starbucks: A Story of Growth - case study presentation for EBS/DBSBrandon J. Murray, PMP
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.
Foudation of business strategy of starbucks is a word file which talks about how the starbucks positioned themselves and their strategies to fight against competitors.
The ppt descibes the the Branding and marketing strategies of Starbucks Under 8 functional Bracket like Logo, Standardisation, expansion, Globalisation, Co-branding, Augmented Services, Facing Competition and Pricing Strategies.
Starbucks: A Story of Growth - case study presentation for EBS/DBSBrandon J. Murray, PMP
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.
Foudation of business strategy of starbucks is a word file which talks about how the starbucks positioned themselves and their strategies to fight against competitors.
The ppt descibes the the Branding and marketing strategies of Starbucks Under 8 functional Bracket like Logo, Standardisation, expansion, Globalisation, Co-branding, Augmented Services, Facing Competition and Pricing Strategies.
Starbucks is one of the largest chains of coffee shops in the world. There are many topics that arise throughout the case with Starbucks Corporation. Starbucks Coffee is located worldwide and there are many different ways to look at this situation. The company offers a unique range of coffee, lattes, espressos, and café style drinks. The company intended to reach a specific target audience, but has ended up in many different markets and has been growing rapidly. Starbucks has greatly used the “youth appeal” strategy to gain entrance into new markets. However, such enthusiasm cannot be counted on indefinitely; other strategies are always in the works. Over time Starbucks has been able to acquire a solid brand reputation and has a world renowned company logo. There have been some distinguished controllable and uncontrollable elements Starbucks has encountered when entering global markets. The strategies of any company’s goals are vital to its success. This is one area Starbucks has excelled in, just as McDonald’s has in recent years. Starbucks has paralleled its branding with the actions found at any Starbucks across the world. They have an excellent company vision, which they stick to, which in turn assists their brand image. Starbucks’ image has been achieved not only through this and their massive global entrance, but through their ability to provide honest quality service. In recent years there was a time that Starbucks saw the opportunity to go global and jumped on it.
An interesting analysis of Starbucks's SWOT, 4Ps, Strategy, Marketing, Finance etc. Hope you will enjoy this presentation. Go through the slides and don't forget to hit like and share buttons. All the best.
A Fortune 500 company, Starbucks share prices reached its peak in 2006 and declined unexpectedly in 2008. Although its business has picked up in 2011 with an increase in operating profits, Starbucks has lost its market leader position to Costa, a chain coffee shop business owned by Whitbread plc. Starbucks’ strategic issues are its decrease in market share, negative brand perception that was invoked by its competitors and its devalued Starbucks’ Experience that was its competitive advantage. A situational analysis of Starbucks was conducted to indicate possible opportunities and threats. Internal analysis and competitor analysis was conducted simultaneously to identify Starbucks distinctive capabilities and weaknesses against competitors. Strategic options such as Market Penetration, Product Development and Market development were assessed for their suitability, acceptability and feasibility. Strategic choices that unravel three issues that Starbucks is challenged with are presented in the report.
overall sales growth. That, as they might say at Starbucks, is.docxkarlhennesey
overall sales growth. That, as they might say at Starbucks, is a tall
order to fill.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Restroom
of Existing Starbucks.” And even the company admits that while
its practice of blanketing an area with stores helps achieve market
dominance, it can cut sales at existing outlets. “We probably self-
cannibalize our stores at a rate of 30 percent a year,” Schultz says.
Adds Lehman Brothers Inc. analyst Mitchell Speiser: “Starbucks is
at a defining point in its growth. It’s reaching a level that makes it
harder and harder to grow, just due to the law of large numbers.”
To duplicate the staggering returns of its first decades, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates more than 7,000 interna-
tional outlets, from Beijing to Bristol. That leaves plenty of room
to grow. Most of its planned new stores will be built overseas, rep-
resenting a 35 percent increase in its foreign base. Most recently,
the chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profits to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s, the
company faces an ominously hostile reception from its future con-
sumers, the twenty- or thirty-somethings. Not only are the activists
among them turned off by the power and image of the well-known
brand, but many others say that Starbucks’ latte-sipping sophisti-
cates and piped-in Kenny G music are a real turnoff. They don’t
feel wanted in a place that sells designer coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be
taken for granted. Starbucks’ growth over the early part of the past
decade coincided with a remarkable surge in the economy. Con-
sumer spending tanked in the downturn, and those $3 lattes were
an easy place for people on a budget to cut back.
To be sure, Starbucks has a lot going for it as it confronts the chal-
lenge of regaining its fast and steady growth. Nearly free of debt, it
fuels expansion with internal cash flow. And Starbucks can maintain
a tight grip on its image because most stores are company-owned:
There are no franchisees to get sloppy about running things. By re-
...
there could be room for even more stores. Given such concen-.docxrelaine1
there could be room for even more stores. Given such concen-
tration, it is likely to take annual same-store sales increases of
10 percent or more if the company is going to match its historic
overall sales growth. That, as they might say at Starbucks, is a tall
order to fi ll.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Rest-
room of Existing Starbucks.” And even the company admits that
while its practice of blanketing an area with stores helps achieve
market dominance, it can cut sales at existing outlets. “We prob-
ably self-cannibalize our stores at a rate of 30 percent a year,”
Schultz says. Adds Lehman Brothers Inc. analyst Mitchell Speiser:
“Starbucks is at a defi ning point in its growth. It’s reaching a level
that makes it harder and harder to grow, just due to the law of large
numbers.”
To duplicate the staggering returns of its fi rst decade, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates 5,507 international out-
lets, from Beijing to Bristol. That leaves plenty of room to grow.
Most of its planned new stores will be built overseas, represent-
ing a 35 percent increase in its foreign base. Most recently, the
chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profi ts to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s,
the company faces an ominously hostile reception from its future
consumers, the twenty- or thirty-somethings of Generation X. Not
only are the activists among them turned off by the power and
image of the well-known brand, but many others say that Star-
bucks’ latte-sipping sophisticates and piped-in Kenny G music are
a real turnoff. They don’t feel wanted in a place that sells designer
coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be taken
for granted. Starbucks’ growth over the early part of the past de-
cade coincided with a remarkable surge in the economy. Consumer
spending tanked in the downturn, and those $3 lattes were an easy
place for people on a budget to cut back.
Starbucks also faces slumping morale and employee burnout
among its store managers and its once-cheery army of baristas.
Stock options for .
Starbucks is one of the largest chains of coffee shops in the world. There are many topics that arise throughout the case with Starbucks Corporation. Starbucks Coffee is located worldwide and there are many different ways to look at this situation. The company offers a unique range of coffee, lattes, espressos, and café style drinks. The company intended to reach a specific target audience, but has ended up in many different markets and has been growing rapidly. Starbucks has greatly used the “youth appeal” strategy to gain entrance into new markets. However, such enthusiasm cannot be counted on indefinitely; other strategies are always in the works. Over time Starbucks has been able to acquire a solid brand reputation and has a world renowned company logo. There have been some distinguished controllable and uncontrollable elements Starbucks has encountered when entering global markets. The strategies of any company’s goals are vital to its success. This is one area Starbucks has excelled in, just as McDonald’s has in recent years. Starbucks has paralleled its branding with the actions found at any Starbucks across the world. They have an excellent company vision, which they stick to, which in turn assists their brand image. Starbucks’ image has been achieved not only through this and their massive global entrance, but through their ability to provide honest quality service. In recent years there was a time that Starbucks saw the opportunity to go global and jumped on it.
An interesting analysis of Starbucks's SWOT, 4Ps, Strategy, Marketing, Finance etc. Hope you will enjoy this presentation. Go through the slides and don't forget to hit like and share buttons. All the best.
A Fortune 500 company, Starbucks share prices reached its peak in 2006 and declined unexpectedly in 2008. Although its business has picked up in 2011 with an increase in operating profits, Starbucks has lost its market leader position to Costa, a chain coffee shop business owned by Whitbread plc. Starbucks’ strategic issues are its decrease in market share, negative brand perception that was invoked by its competitors and its devalued Starbucks’ Experience that was its competitive advantage. A situational analysis of Starbucks was conducted to indicate possible opportunities and threats. Internal analysis and competitor analysis was conducted simultaneously to identify Starbucks distinctive capabilities and weaknesses against competitors. Strategic options such as Market Penetration, Product Development and Market development were assessed for their suitability, acceptability and feasibility. Strategic choices that unravel three issues that Starbucks is challenged with are presented in the report.
overall sales growth. That, as they might say at Starbucks, is.docxkarlhennesey
overall sales growth. That, as they might say at Starbucks, is a tall
order to fill.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Restroom
of Existing Starbucks.” And even the company admits that while
its practice of blanketing an area with stores helps achieve market
dominance, it can cut sales at existing outlets. “We probably self-
cannibalize our stores at a rate of 30 percent a year,” Schultz says.
Adds Lehman Brothers Inc. analyst Mitchell Speiser: “Starbucks is
at a defining point in its growth. It’s reaching a level that makes it
harder and harder to grow, just due to the law of large numbers.”
To duplicate the staggering returns of its first decades, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates more than 7,000 interna-
tional outlets, from Beijing to Bristol. That leaves plenty of room
to grow. Most of its planned new stores will be built overseas, rep-
resenting a 35 percent increase in its foreign base. Most recently,
the chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profits to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s, the
company faces an ominously hostile reception from its future con-
sumers, the twenty- or thirty-somethings. Not only are the activists
among them turned off by the power and image of the well-known
brand, but many others say that Starbucks’ latte-sipping sophisti-
cates and piped-in Kenny G music are a real turnoff. They don’t
feel wanted in a place that sells designer coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be
taken for granted. Starbucks’ growth over the early part of the past
decade coincided with a remarkable surge in the economy. Con-
sumer spending tanked in the downturn, and those $3 lattes were
an easy place for people on a budget to cut back.
To be sure, Starbucks has a lot going for it as it confronts the chal-
lenge of regaining its fast and steady growth. Nearly free of debt, it
fuels expansion with internal cash flow. And Starbucks can maintain
a tight grip on its image because most stores are company-owned:
There are no franchisees to get sloppy about running things. By re-
...
there could be room for even more stores. Given such concen-.docxrelaine1
there could be room for even more stores. Given such concen-
tration, it is likely to take annual same-store sales increases of
10 percent or more if the company is going to match its historic
overall sales growth. That, as they might say at Starbucks, is a tall
order to fi ll.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Rest-
room of Existing Starbucks.” And even the company admits that
while its practice of blanketing an area with stores helps achieve
market dominance, it can cut sales at existing outlets. “We prob-
ably self-cannibalize our stores at a rate of 30 percent a year,”
Schultz says. Adds Lehman Brothers Inc. analyst Mitchell Speiser:
“Starbucks is at a defi ning point in its growth. It’s reaching a level
that makes it harder and harder to grow, just due to the law of large
numbers.”
To duplicate the staggering returns of its fi rst decade, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates 5,507 international out-
lets, from Beijing to Bristol. That leaves plenty of room to grow.
Most of its planned new stores will be built overseas, represent-
ing a 35 percent increase in its foreign base. Most recently, the
chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profi ts to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s,
the company faces an ominously hostile reception from its future
consumers, the twenty- or thirty-somethings of Generation X. Not
only are the activists among them turned off by the power and
image of the well-known brand, but many others say that Star-
bucks’ latte-sipping sophisticates and piped-in Kenny G music are
a real turnoff. They don’t feel wanted in a place that sells designer
coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be taken
for granted. Starbucks’ growth over the early part of the past de-
cade coincided with a remarkable surge in the economy. Consumer
spending tanked in the downturn, and those $3 lattes were an easy
place for people on a budget to cut back.
Starbucks also faces slumping morale and employee burnout
among its store managers and its once-cheery army of baristas.
Stock options for .
CS1−2Starbucks—Going Global FastCASE 1-1The Starbucks coMargenePurnell14
CS1−2
Starbucks—Going Global FastCASE 1-1
The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago, however, the quiet storefront made front
pages around the world. During the World Trade Organization talks
in November 1999, protesters flooded Seattle’s streets, and among
their targets was Starbucks, a symbol, to them, of free-market capi-
talism run amok, another multinational out to blanket the earth.
Amid the crowds of protesters and riot police were black-masked
anarchists who trashed the store, leaving its windows smashed and
its tasteful green-and-white decor smelling of tear gas instead of
espresso. Says an angry Schultz: “It’s hurtful. I think people are
ill-informed. It’s very difficult to protest against a can of Coke, a
bottle of Pepsi, or a can of Folgers. Starbucks is both this ubiqui-
tous brand and a place where you can go and break a window. You
can’t break a can of Coke.”
The store was quickly repaired, and the protesters scattered to
other cities. Yet, cup by cup, Starbucks really is caffeinating the
world, its green-and-white emblem beckoning to consumers on
three continents. In 1999, Starbucks Corp. had 281 stores abroad.
Today, it has about 7,000—and it’s still in the early stages of a plan to
colonize the globe. If the protesters were wrong in their tactics, they
weren’t wrong about Starbucks’ ambitions. They were just early.
The story of how Schultz & Co. transformed a pedestrian com-
modity into an upscale consumer accessory has a fairy-tale quality.
Starbucks grew from 17 coffee shops in Seattle to over 19,000 outlets
in 58 countries. Sales have climbed an average of 20 percent annu-
ally since the company went public, peaking at $10.4 billion in 2008
before falling to $9.8 billion in 2009. Profits bounded ahead an aver-
age of 30 percent per year through 2007, peaking at $673 million,
then dropping to $582 million and $494 million in 2008 and 2009,
respectively. The firm closed 475 stores in the U.S. in 2009 to reduce
costs. But more recently, 2017 revenues rebounded to $22.4 billion
profits with an operating profit of $4.1 billion.
Still, the Starbucks name and image connect with millions of
consumers around the globe. Up until recently, it was one of the
fastest-growing brands in annual BusinessWeek surveys of the top
100 global brands. On Wall Street, Starbucks was one of the last
great growth stories. Its stock, including four splits, soared more
than 2,200 percent over a decade, surpassing Walmart, General
Electric, PepsiCo, Coca-Cola, Microsoft, and IBM in total returns.
In 2006 the stock price peaked at over $40, after which it fell to just
$4, and then again rebounded to more than $50 per share.
Schultz’s team is hard-pressed to grind out new profits in a
home market that is quickly becoming saturated. The firm’s 12,000 ...
http://www.pbs.org/wgbh/pages/frontline/teach/divided/postviewing.html
A Class Divided - Questionnaire
General Reactions
• What did you learn?
• What scene or scenes do you think you will still remember a month from now
and why those scenes?
• Did any part of the film surprise you? Do you think someone of a different
race, ethnicity, or religion would also find it surprising?
Impact of Discrimination
• What did the children’s’ body language indicate about the impact of
discrimination?
• How did the negative and positive labels placed on a group become self-
fulfilling prophecies?
• In the prison seminar, one of the white women asserts that all people face some
kind of discrimination. Another woman challenges her, claiming that whites
can't really know what it's like to face discrimination every minute of every
day. What do you think?
• Both Elliott and her former students talk about whether or not this exercise
should be done with all children. What do you think? If the exercise could be
harmful to children, as Elliott suggests, what do you think actual discrimination
might do?
Looking at the Structures that Nurture Bias
• What features did Elliott ascribe to the superior and inferior groups and how
did those characteristics reflect stereotypes about blacks and whites?
• How did Elliott's discrimination create no-win situations for those placed in the
inferior group? How did she selectively interpret behavior to confirm the
stereotypes she had assigned?
• It's easy to understand why third-graders might not refuse to obey their teacher,
but when the exercise is done with the prison guards, why don't any of the
adults object?
Looking for Answers
• At recess, two of the boys from different groups get in a fight. Elliott asks the
one who was teased if responding with violence made him feel better or made
the teasing stop. What does the answer suggest about the use of violence as a
http://www.pbs.org/wgbh/pages/frontline/teach/divided/postviewing.html
political strategy? At the time, who was using violence for political purposes
and why?
• How is the blue eyes/brown eyes exercise related to the Sioux prayer, "Help me
not judge a person until I have walked in his shoes"?
PA RT S I X
cases 1 AN OVERVIEW
O U T L I N E O F CA S E S
1-1 Starbucks—Going Global Fast
1-2 Nestlé: The Infant Formula Controversy
1-3 Coke and Pepsi Learn to Compete in India
1-4 Marketing Microwave Ovens to a New Market Segment
cat42162_case1_01-016.indd 1 21/10/15 2:49 pm
The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago however, the quiet storefront made front
pages around the world. During the World Trade Organization
talks in November 1999, protesters flooded Seattle’s streets, and
among their targets was Starbucks, a symbol ...
Conflict Handling Styles The five conflict handling modes are .docxmaxinesmith73660
Conflict Handling Styles
The five conflict handling modes are
1. Competition- People who approach conflict in a competitive way assert themselves and do not cooperate as they pursue their own concerns at other people’s expense. To compete, people take a power orientation and use whatever power seems appropriate to win. This may include arguing, pulling rank or instigating economic sanctions. Competing may mean standing up and defending a position believed to be correct, or simply trying to win. Forcing is another way of viewing competition. For people using a forcing style, usually the conflict is obvious, and some people are right and others are wrong.
2. Avoidance- When you avoid a conflict, you allow others to handle it without your involvement. If the disagreement does not intensely concern or affect you, it may be best to simply avoid participating in the conflict at all. Another reason to avoid a conflict is if anger is involved--if you or another person are very angry, avoiding the disagreement temporarily can allow you both time to cool down. As with accommodating, it is important not to rely on avoiding conflict involving matters that do mean a lot to you.
3. Compromise- If you need to resolve a conflict more quickly, compromising might be a good solution. With compromise, each person gives a little bit up in order for the ultimate solution to be acceptable to everyone. You will not get your way entirely with compromise, so this is a style that is best to use when the answer to the problem is not of utmost importance to you
4. Accommodation- People who accommodate are unassertive and very cooperative. They neglect their own concerns to satisfy the concerns of others. They often give in during a conflict and acknowledge they made a mistake or decide it is no big deal. Accommodating is the opposite style of competing. People who accommodate may be selflessly generous or charitable, and they may also obey another person when they would prefer not to, or yield to another’s point of view. Usually people who accommodate put relationships first, ignore the issues and try to keep peace at any price.
5. Collaboration -Unlike avoiders, collaborators are both assertive and cooperative. They assert their own views while also listening to other views and welcome differences. They attempt to work with others to find solutions that fully satisfy the concerns of both parties. This approach involves identifying the concerns that underlie the conflict by exploring the disagreement from both sides of the conflict, learning from each other’s insights and creatively coming up with solutions that address the concerns of both. People using this style often recognise there are tensions in relationships and contrasting viewpoints, but want to work through conflicts.
overall sales growth. That, as they might say at Starbucks, is a tall
order to fill.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting.
Starbucks Competitive Analysis - SWOT and PESTLE analysis of Starbucks, a popular coffee house chain based in the United States. The analysis covers Starbucks's business strategy and its internal and external environmental factors.
Starbucks v McDonalds Coffee wars Economist.com httpww.docxsusanschei
Starbucks v McDonald's | Coffee wars | Economist.com http://www.economist.com/business/displaystory.cfm?story_id=10498...
2 of 3 1/18/2008 1:30 PM
Full contents Subscribe
Country BriefingsCountry Briefings
Cities GuideCities Guide
PRINT EDITION
Enlarge current cover
Past issues/regional covers
NEWS ANALYSIS
POLITICS THIS WEEK
BUSINESS THIS WEEK
OPINION
Leaders
Letters to the editor
Blogs
Columns
Kallery
WORLD
United States
The Americas
Asia
Middle East & Africa
Europe
Britain
International
SPECIAL REPORTS
BUSINESS
Management
Business Education
FINANCE & ECONOMICS
Economics Focus
Economics A-Z
SCIENCE & TECHNOLOGY
Technology Quarterly
BOOKS & ARTS
Style Guide
PEOPLE
Obituary
MARKETS & DATA
Weekly Indicators
Currencies
Rankings
Big Mac Index
Chart Gallery
DIVERSIONS
Correspondent’s Diary
RESEARCH TOOLS
AUDIO AND VIDEO
DELIVERY OPTIONS
E-mail Newsletters
Audio edition
Mobile Edition
RSS Feeds
Screensaver
CLASSIFIED ADS
AP
Going head to head
Business
Starbucks v McDonald's
Coffee wars
Jan 10th 2008
From The Economist print edition
Starbucks ousts its boss and brings back its founder as a new threat
emerges
HOWARD SCHULTZ once said that he finds it painful when people compare his firm,
Starbucks, to McDonald's. The founder of the world's biggest chain of coffee shops
thinks a visit to Starbucks should involve “romance and theatre”, a far cry from the
pit-stop-like experience of eating a meal at the world's biggest fast-food chain. Yet in
its efforts to expand and attract less affluent customers over the past couple of
years, Starbucks has started to become more like McDonald's—even as McDonald's,
for its part, has been moving upmarket to become more like Starbucks.
Starbucks is now struggling with
the most serious crisis in its
history—much as McDonald's did
at the beginning of the decade.
Last year Starbucks' share-price
fell by 42%, making it one of the
worst performers on the NASDAQ
exchange. In the last quarter of
2007 Starbucks recorded its first
ever year-on-year decline in
customer visits in America, easily
its biggest market. When
analysts at Bear Stearns, an
investment bank, downgraded
the firm's shares on January 2nd,
they plunged by another 12%.
This sealed the fate of Jim
Donald, the chief executive since
2005. On January 7th the company said it would replace him with Mr Schultz, who
stepped aside in 2000 to become chairman.
Mr Schultz is not trying to pass the buck. His company is in trouble, and much of it is
self-inflicted. “I'm here to tell you that just as we created this problem, we will fix it,”
he promised. He wants to slow down the pace of expansion and improve the
“customer experience” in America, while accelerating expansion overseas. But he
says there is no “silver bullet”.
Analysts agree that Starbucks'
main problem is
overexpansion—as it was at
McDonald's in 2001, when the
chain crossed the 30,000-store
mark and struggled with a
dearth of innovation, market
saturati.
The document should be double-spaced, using Arial font #12. • Ad.docxarnoldmeredith47041
The document should be double-spaced, using Arial font #12. •
Add any Appendices at the end of the Word document. •
• Your reference sources, in addition to the base case and question sets, should be online sites and articles, •
Turnitin, a software tool that improves writing and prevents plagiarism, will be used to assess your sourcing of information. Do your own work. Please read the instructions carefully before beginning to answer the questions.
FINANCE
Please answer the questions below. Use either the Bloomberg terminals located at the Feliciano School of Business or other reputable sources such as the SEC website, finance.yahoo.com, Compustat, morningstar.com or Wall Street Journal etc. for the financial data you use in your answers. You need to provide the references regarding the financial data you use to support your answers at the end of the finance portion of the term paper.
Questions: 1. Expanding the number of stores in a foreign market, such as the expansion plan launched by Starbucks in China (announced in 2018), is a major capital budgeting project. A project of this scale requires coordinated planning across all functions of a business that you are studying in your Integrated Core classes. Choose and discuss three items on the income statement and balance sheet (a total of six items) that you think this new undertaking will effect. Explain why you chose those particular items, and how the marketing, management and operations decisions of the company will affect them.
2. Choose and calculate three ratios for Starbucks for the last two years. Make sure to select ratios that you think that expanding into a new market will effect, and explain your reasoning. Identify a competitor of Starbucks and contrast these three ratios for the two companies. Explain why you selected this competitor. Describe how the decisions made by management, marketing and operations functions of the company can impact, and hopefully improve, the components of firm operations that these financial ratios measure.
3. Explain how the financial decisions regarding opening a new store are related to management, marketing or operations decisions that the company must make (or has made)?
Marketing:
Listed below you will find some WEAKNESSES and THREATS for Starbucks, read them carefully then proceed to answer the questions that follow:
Starbuck Weakness:
1) Customers not willing to wait in long lines at stores during morning rush hour and lunch hour.
2) Coffee dominant business with a poor reputation for creativity around new product and companion product development.
3) Too dependent on word of mouth to create brand awareness.
Starbucks Threats:
1) Better value offered by local coffee house shops and national companies like Dunkin Donuts and McDonalds McCafe.
2) Downturn in the economy can decrease customer traffic and spending.
• • • • • PART I : MARKETING ASSIGNMENT QUESTIONS
.
Starbucks Corp. is betting its future on its coffee shops.To do .docxsusanschei
Starbucks Corp. is betting its future on its coffee shops.
To do that, the Seattle-based company has removed a distraction by selling the rights to offer its coffee and tea in grocery and retail stores to Nestle SA for more than $7 billion.
Coffee sellers from Dunkin' Brands Group Inc. to McDonald's Corp. have crowded supermarket shelves with branded bags of ground and roasted beans. Starbucks products will give Switzerland-based Nestle a bigger stake in that fight without having to introduce a new brand to U.S. consumers.
For Starbucks, the consumer packaged-goods business generated $1.8 billion in revenue in fiscal 2017, just 8% of Starbucks's total.
"While consumer packaged goods is an important and highly profitable business, it's small," said Michael Schaefer, head of Euromonitor's global food and beverage practice.
Sales have been slowing at Starbucks coffee shops in the U.S. as mall traffic declines and competition increases. Starbucks has opened higher-end stores under brands called Roastery and Reserve to compete with independent coffee shops and small chains that have grabbed sales from customers willing to pay more for specialty drinks and pastries. There are nearly 33,000 coffee shops in the U.S., according to market-research firm Mintel, up 16% from five years ago.
Starbucks also wants to open more coffee shops in China, a market the Seattle-based company said will eventually overtake the U.S. as its largest. The company recently opened its first Roastery store in Shanghai.
Retail operations in the U.S. and China "are our two big growth engines," Starbucks Chief Executive Kevin Johnson told investors on a call about the deal Monday.
Starbucks has dropped other ancillary businesses recently to focus on its coffee shops. Last fall, Starbucks sold its Tazo tea brand to Unilever for $384 million. The company recently closed its mall-based Teavana tea stores because of weak traffic.
Starbucks shares fell 23 cents to $57.45 on Monday. Nestle stock rose 1.6%.
The deal gives Starbucks an upfront infusion of cash that it plans to return to shareholders through share buybacks. Starbucks said it planned to give $20 billion to shareholders over three years in buybacks and dividends. That might assuage some shareholder concerns as Starbucks works to boost sales growth.
Nestle said it would pay Starbucks $7.15 billion as well as continuing royalties on all sales. Mr. Johnson said the partnership will raise familiarity with the Starbucks brand by getting its ground and whole bean coffee into international markets where it isn't currently sold.
Nestle hopes more coffee sales can offset flagging sales of some of its other packaged-food businesses. As part of the Starbucks deal, Nestle will add Starbucks Reserve, Seattle's Best Coffee and Teavana to a portfolio that includes the Nescafe and Nespresso brands. Nestle will also manage the business of distributing Starbucks K-Cups, the single-serve coffee pods used in Keurig brewers in North America.
.
Case Study InformationArticles Below are listed the art.docxtidwellveronique
Case Study Information/Articles
Below are listed the articles and case studies you will use for your individual case studies.
1. Home Depot in China
Read this article in the Wall Street Journal Sept 15 – 16 2012:
Home Depot Learns Chinese Prefer 'Do-It-for-Me'
(pdf will be attached).
In this article you will read about Home Depot's failure to enter the Chinese market. In the case you
should pretend you are the CEO of Home Depot and that you are wrestling with how you are going to
crack the Chinese market as well as analyze past failures.
2. See's Candies
Fortune Sept 3 2012:
The Secret's of See's Candies
(pdf will be attached).
This case should have you think about how you would organize an international expansion of See's
Candies.
3. United Cereal
This is a Harvard Business case which I have added to the cases we are reviewing in class.
In this case, there are two important decisions that Brill has to make that has to do with a Eurobrand.
Please use your case analysis technique to analyze this case and come up with some possible actions, as
well of course your favored action plan.
4. Cinnabon
Wall Street Journal December 26 2012:
‘Cinnabon Finds Sweet Success in Russia, Mideast’
(pdf will be attached)
This is an interview with Ms. Kat Cole, President about international expansion. Here, you should
pretend you are Ms. Cole and that you are thinking of expanding in other areas of the world. Use the
standard case analysis to come up with some areas of expansion and what issues you may face, and
how you would overcome them.
++++ Sample Case – this is a case you can use to help you understand how to write up a case. Do not
write this one up but rather read the interview and then see the sample write up. This was done by a
student last year and received an ‘A’. It was very well done with only some minor comments.
Starbucks International Expansion
Wall Street Journal Dec 15 2003:
'It's a Grande-Latte World'
(pdf will be attached along with the sample write up also in pdf)
Here, you will pretend you are Mr. Smith; the case is how Starbucks should enter foreign markets and
the challenges it faces as well as the kinds of solutions you can propose and of course why and how.
* Name Withheld *
INTB 620 Case 2
Starbuck’s International Expansion
November 19, 2012
In this case we reviewed an interview with the Starbucks Chief Executive Office, Orin
Smith dealing with the coffee store chain’s experience with international expansion. Starbuck’s
has achieved major operating in the United States since its beginnings. When Orin Smith joined
the corporation in 1990 the chain only operated 45 stores in the Pacific North West which have
grown to 7200 stores worldwide (1650 international stores, and 5550 in the US). Some of its
key advantages it has had in the US that supported its growth included: 1) operat ...
Most small businesses struggle to see marketing results. In this session, we will eliminate any confusion about what to do next, solving your marketing problems so your business can thrive. You’ll learn how to create a foundational marketing OS (operating system) based on neuroscience and backed by real-world results. You’ll be taught how to develop deep customer connections, and how to have your CRM dynamically segment and sell at any stage in the customer’s journey. By the end of the session, you’ll remove confusion and chaos and replace it with clarity and confidence for long-term marketing success.
Key Takeaways:
• Uncover the power of a foundational marketing system that dynamically communicates with prospects and customers on autopilot.
• Harness neuroscience and Tribal Alignment to transform your communication strategies, turning potential clients into fans and those fans into loyal customers.
• Discover the art of automated segmentation, pinpointing your most lucrative customers and identifying the optimal moments for successful conversions.
• Streamline your business with a content production plan that eliminates guesswork, wasted time, and money.
5 big bets to drive growth in 2024 without one additional marketing dollar AND how to adapt to the biggest shifting eCommerce trend- AI.
1) Romance Your Customers - Retention
2) ‘Alternative’ Lead Gen - Advocacy
3) The Beautiful Basics - Conversion Rate Optimization
4) Land that Bottom Line - Profitability
5) Roll the Dice - New Business Models
In this presentation, Danny Leibrandt explains the impact of AI on SEO and what Google has been doing about it. Learn how to take your SEO game to the next level and win over Google with his new strategy anyone can use. Get actionable steps to rank your name, your business, and your clients on Google - the right way.
Key Takeaways:
1. Real content is king
2. Find ways to show EEAT
3. Repurpose across all platforms
SEO as the Backbone of Digital MarketingFelipe Bazon
In this talk Felipe Bazon will share how him and his team at Hedgehog Digital share our journey of making C-Levels alike, specially CMOS realize that SEO is the backbone of digital marketing by showing how SEO can contribute to brand awareness, reputation and authority and above all how to use SEO to create more robust global marketing strategies.
Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
Key Takeaways:
Embrace AI for Local SEO: Learn to harness the power of AI technologies to optimize your website and content for local search. Understand the pivotal role AI plays in analyzing search trends and consumer behavior, enabling you to tailor your SEO strategies to meet the specific demands of your target local audience. Leverage the Content Factory Model: Discover the step-by-step process of creating SEO-optimized content at scale. This approach ensures a steady stream of high-quality content that engages local customers and boosts your search rankings. Get an action guide on implementing this model, complete with templates and scheduling strategies to maintain a consistent online presence. Maximize ROI with Dollar-a-Day Advertising: Dive into the cost-effective Dollar-a-Day advertising strategy that amplifies your visibility in local searches without breaking the bank. Learn how to strategically allocate your budget across platforms to target potential local customers effectively. The session includes an action guide on setting up, monitoring, and optimizing your ad campaigns to ensure maximum impact with minimal investment.
Digital Commerce Lecture for Advanced Digital & Social Media Strategy at UCLA...Valters Lauzums
E-commerce in 2024 is characterized by a dynamic blend of opportunities and significant challenges. Supply chain disruptions and inventory shortages are critical issues, leading to increased shipping delays and rising costs, which impact timely delivery and squeeze profit margins. Efficient logistics management is essential, yet it is often hampered by these external factors. Payment processing, while needing to ensure security and user convenience, grapples with preventing fraud and integrating diverse payment methods, adding another layer of complexity. Furthermore, fulfillment operations require a streamlined approach to handle volume spikes and maintain accuracy in order picking, packing, and shipping, all while meeting customers' heightened expectations for faster delivery times.
Amid these operational challenges, customer data has emerged as an important strategy. By focusing on personalization and enhancing customer experience from historical behavior, businesses can deliver improved website and brand experienced, better product recommendations, optimal promotions, and content to meet individual preferences. Better data analytics can also help in effectively creating marketing campaigns, improving customer retention, and driving product development and inventory management.
Innovative formats such as social commerce and live shopping are beginning to impact the digital commerce landscape, offering new ways to engage with customers and drive sales, and may provide opportunity for brands that have been priced out or seen a downturn with post-pandemic shopping behavior. Social commerce integrates shopping experiences directly into social media platforms, tapping into the massive user bases of these networks to increase reach and engagement. Live shopping, on the other hand, combines entertainment and real-time interaction, providing a dynamic platform for showcasing products and encouraging immediate purchases. These innovations not only enhance customer engagement but also provide valuable data for businesses to refine their strategies and deliver superior shopping experiences.
The e-commerce sector is evolving rapidly, and businesses that effectively manage operational challenges and implement innovative strategies are best positioned for long-term success.
AI-Powered Personalization: Principles, Use Cases, and Its Impact on CROVWO
In today’s era of AI, personalization is more than just a trend—it’s a fundamental strategy that unlocks numerous opportunities.
When done effectively, personalization builds trust, loyalty, and satisfaction among your users—key factors for business success. However, relying solely on AI capabilities isn’t enough. You need to anchor your approach in solid principles, understand your users’ context, and master the art of persuasion.
Join us as Sarjak Patel and Naitry Saggu from 3rd Eye Consulting unveil a transformative framework. This approach seamlessly integrates your unique context, consumer insights, and conversion goals, paving the way for unparalleled success in personalization.
Most small businesses struggle to see marketing results. In this session, we will eliminate any confusion about what to do next, solving your marketing problems so your business can thrive. You’ll learn how to create a foundational marketing OS (operating system) based on neuroscience and backed by real-world results. You’ll be taught how to develop deep customer connections, and how to have your CRM dynamically segment and sell at any stage in the customer’s journey. By the end of the session, you’ll remove confusion and chaos and replace it with clarity and confidence for long-term marketing success.
Key Takeaways:
• Uncover the power of a foundational marketing system that dynamically communicates with prospects and customers on autopilot.
• Harness neuroscience and Tribal Alignment to transform your communication strategies, turning potential clients into fans and those fans into loyal customers.
• Discover the art of automated segmentation, pinpointing your most lucrative customers and identifying the optimal moments for successful conversions.
• Streamline your business with a content production plan that eliminates guesswork, wasted time, and money.
The Secret to Engaging Modern Consumers: Journey Mapping and Personalization
In today's digital landscape, understanding the customer's journey and delivering personalized experiences are paramount. This masterclass delves into the art of consumer journey mapping, a powerful technique that visualizes the entire customer experience across touchpoints. Attendees will learn how to create detailed journey maps, identify pain points, and uncover opportunities for optimization. The presentation also explores personalization strategies that leverage data and technology to tailor content, products, and experiences to individual customers. From real-time personalization to predictive analytics, attendees will gain insights into cutting-edge approaches that drive engagement and loyalty.
Key Takeaways:
Current consumer landscape; Steps to mapping an effective consumer journey; Understanding the value of personalization; Integrating mapping and personalization for success; Brands that are getting It right!; Best Practices; Future Trends
Monthly Social Media News Update May 2024Andy Lambert
TL;DR. These are the three themes that stood out to us over the course of last month.
1️⃣ Social media is becoming increasingly significant for brand discovery. Marketers are now understanding the impact of social and budgets are shifting accordingly.
2️⃣ Instagram’s new algorithm and latest guidance will help us maintain organic growth. Instagram continues to evolve, but Reels remains the most crucial tool for growth.
3️⃣ Collaboration will help us unlock growth. Who we work with will define how fast we grow. Meta continues to evolve their Creator Marketplace and now TikTok are beginning to push ‘collabs’ more too.
Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
Key Takeaways:
Embrace AI for Local SEO: Learn to harness the power of AI technologies to optimize your website and content for local search. Understand the pivotal role AI plays in analyzing search trends and consumer behavior, enabling you to tailor your SEO strategies to meet the specific demands of your target local audience. Leverage the Content Factory Model: Discover the step-by-step process of creating SEO-optimized content at scale. This approach ensures a steady stream of high-quality content that engages local customers and boosts your search rankings. Get an action guide on implementing this model, complete with templates and scheduling strategies to maintain a consistent online presence. Maximize ROI with Dollar-a-Day Advertising: Dive into the cost-effective Dollar-a-Day advertising strategy that amplifies your visibility in local searches without breaking the bank. Learn how to strategically allocate your budget across platforms to target potential local customers effectively. The session includes an action guide on setting up, monitoring, and optimizing your ad campaigns to ensure maximum impact with minimal investment.
Top 3 Ways to Align Sales and Marketing Teams for Rapid GrowthDemandbase
In this session, Demandbase’s Stephanie Quinn, Sr. Director of Integrated and Digital Marketing, Devin Rosenberg, Director of Sales, and Kevin Rooney, Senior Director of Sales Development will share how sales and marketing shapes their day-to-day and what key areas are needed for true alignment.
Short video marketing has sweeped the nation and is the fastest way to build an online brand on social media in 2024. In this session you will learn:- What is short video marketing- Which platforms work best for your business- Content strategies that are on brand for your business- How to sell organically without paying for ads.
Mastering Multi-Touchpoint Content Strategy: Navigate Fragmented User JourneysSearch Engine Journal
Digital platforms are constantly multiplying, and with that, user engagement is becoming more intricate and fragmented.
So how do you effectively navigate distributing and tailoring your content across these various touchpoints?
Watch this webinar as we dive into the evolving landscape of content strategy tailored for today's fragmented user journeys. Understanding how to deliver your content to your users is more crucial than ever, and we’ll provide actionable tips for navigating these intricate challenges.
You’ll learn:
- How today’s users engage with content across various channels and devices.
- The latest methodologies for identifying and addressing content gaps to keep your content strategy proactive and relevant.
- What digital shelf space is and how your content strategy needs to pivot.
With Wayne Cichanski, we’ll explore innovative strategies to map out and meet the diverse needs of your audience, ensuring every piece of content resonates and connects, regardless of where or how it is consumed.
10 Video Ideas Any Business Can Make RIGHT NOW!
You'll never draw a blank again on what kind of video to make for your business. Go beyond the basic categories and truly reimagine a brand new advanced way to brainstorm video content creation. During this masterclass you'll be challenged to think creatively and outside of the box and view your videos through lenses you may have never thought of previously. It's guaranteed that you'll leave with more than 10 video ideas, but I like to under-promise and over-deliver. Don't miss this session.
Key Takeaways:
How to use the Video Matrix
How to use additional "Lenses"
Where to source original video ideas
Financial curveballs sent many American families reeling in 2023. Household budgets were squeezed by rising interest rates, surging prices on everyday goods, and a stagnating housing market. Consumers were feeling strapped. That sentiment, however, appears to be waning. The question is, to what extent?
To take the pulse of consumers’ feelings about their financial well-being ahead of a highly anticipated election, ThinkNow conducted a nationally representative quantitative survey. The survey highlights consumers’ hopes and anxieties as we move into 2024. Let's unpack the key findings to gain insights about where we stand.
2. Global Marketing
Submitted To:
Mirza Mohammad Didarul Alam
School of Business
United International University
Course Code: MKT - 4309
Section: A
Submitted By:
Roll No. Name Id. No.
5 Md. Shakhawatul Islam 111 093 033
8 Md. Shafikul Islam 111 093 141
13 Md. Jamir Hossain 111 101
14 Kawsar Ahamed 111 101
18 Khan Mohammad Nahian 111 103
Date of Submission:
March 11, 2014
3. Letter of Transmittal
March 11, 2014
To
Mirza Mohammad Didarul Alam
Assistant Professor
School of Business
United International University.
Subject: Letter of transmittal for Case Study.
Sir,
With due honor, we are wishing to inform you that it was a matter of great pleasure as
well as learning to prepare the case study of “Starbucks—Going Global Fast”. To
prepare the term paper, we collected and studied materials in due time and analyzed
these and eventually finalize the case study.
Actually we have enjoyed more in preparing this case study. Our team has worked hard
to prepare this report. So we would be highly obliged if you kindly accept the content of
the report.
Though we have put our best efforts yet it is very likely that the report may have some
mistakes and omissions that are unintentional. So, we hope that the report will worthy
of your consideration.
On behalf of the group
………………………
Md. Shakhawatul Islam
ID – 111 093 033
4. Case Study on :
CASE 1-1 Starbucks—Going Global Fast
The Starbucks coffee shop on Sixth Avenue and Pine Street in downtown Seattle sits serene
and orderly, as unremarkable as any other in the chain bought years ago by entrepreneur
Howard Schultz. A few years ago however, the quiet storefront made front pages around the
world. During the World Trade Organization talks in November 1999, protesters flooded
Seattle’s streets, and among their targets was Starbucks, a symbol, to them, of free-market
capitalism run amok, another multinational out to blanket the earth. Amid the crowds of
protesters and riot police were black-masked anarchists who trashed the store, leaving its
windows smashed and its tasteful green-and-white decor smelling of tear gas instead of
espresso. Says an angry Schultz: “It’s hurtful. I think people are ill-informed. It’s very
difficult to protest against a can of Coke, a bottle of Pepsi, or a can of Folgers. Starbucks is
both this ubiquitous brand and a place where you can go and break a window. You can’t
break a can of Coke.”
The store was quickly repaired, and the protesters scattered to other cities. Yet cup by cup,
Starbucks really is caffeinating the world, its green-and-white emblem beckoning to
consumers on three continents. In 1999, Starbucks Corp. had 281 stores abroad. Today, it
has about 5,500—and it’s still in the early stages of a plan to colonize the globe. If the
protesters were wrong in their tactics, they weren’t wrong about Starbucks’ ambitions. They
were just early.
The story of how Schultz & Co. transformed a pedestrian com-modity into an upscale
consumer accessory has a fairy-tale quality. Starbucks grew from 17 coffee shops in Seattle 15
years ago to over 16,000 outlets in 50 countries. Sales have climbed an average of 20 percent
annually since the company went public, peaking at $10.4 billion in 2008 before falling to
$9.8 billion in 2009. Profits bounded ahead an average of 30 percent per year through 2007
peaking at $673, then dropping to $582 billion and $494 billion in 2008 and 2009,
respectively. The firm closed 475 stores in the U.S. in 2009 to reduce costs.
Still, the Starbucks name and image connect with millions of consumers around the globe.
Up until recently, it was one of the fastest-growing brands in annual BusinessWeek surveys
of the top 100 global brands. On Wall Street, Starbucks was one of the last great growth
stories. Its stock, including four splits, soared more than 2,200 percent over a decade,
surpassing Walmart, General Electric, PepsiCo, Coca-Cola, Microsoft, and IBM in total
returns. In 2006 the stock price peaked at over $40, but now has declined to $4.
Schultz’s team is hard-pressed to grind out new profits in a home market that is quickly
becoming saturated. Amazingly, with over 10,000 stores scattered across the United States
and Canada, there are still eight states in the United States with no Starbucks stores.
Frappuccino-free cities include Butte, Mon-tana, and Fargo, North Dakota. But big cities,
affluent suburbs, and shopping malls are full to the brim. In coffee-crazed Seattle, there is a
Starbucks outlet for every 9,400 people, and the com-pany considers that the upper limit of
coffee-shop saturation. In Manhattan’s 24 square miles, Starbucks has 124 cafés, with more
on the way. That’s one for every 12,000 people—meaning that there could be room for even
more stores. Given such concen-tration, it is likely to take annual same-store sales increases
of 10 percent or more if the company is going to match its historic overall sales growth. That,
as they might say at Starbucks, is a tall order to fill.
Indeed, the crowding of so many stores so close together has become a national joke,
eliciting quips such as this headline in The Onion, a satirical publication: “A New Starbucks
Opens in Rest-room of Existing Starbucks.” And even the company admits that while its
5. Case Study on :
practice of blanketing an area with stores helps achieve market dominance, it can cut sales at
existing outlets. “We prob-ably self-cannibalize our stores at a rate of 30 percent a year,”
Schultz says. Adds Lehman Brothers Inc. analyst Mitchell Speiser: “Starbucks is at a defining
point in its growth. It’s reaching a level that makes it harder and harder to grow, just due to
the law of large numbers.”
To duplicate the staggering returns of its first decade, Starbucks has no choice but to
export its concept aggressively. Indeed, some analysts gave Starbucks only two years at most
before it saturates the U.S. market. The chain now operates 5,507 international out-lets,
from Beijing to Bristol. That leaves plenty of room to grow. Most of its planned new stores
will be built overseas, representing a 35 percent increase in its foreign base. Most recently,
the chain has opened stores in Vienna, Zurich, Madrid, Berlin, and even in far-off Jakarta.
Athens comes next. And within the next year, Starbucks plans to move into Mexico and
Puerto Rico. But global expansion poses huge risks for Starbucks. For one thing, it makes
less money on each overseas store because most of them are operated with local partners.
While that makes it easier to start up on foreign turf, it reduces the company’s share of the
profits to only 20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable challenges of becoming a mature
company in the United States. After riding the wave of successful baby boomers through the
1990s, the company faces an ominously hostile reception from its future consumers, the
twenty- or thirty-something’s of Generation X. Not only are the activists among them turned
off by the power and image of the well-known brand, but many others say that Star-bucks’
latte-sipping sophisticates and piped-in Kenny G music are a real turnoff. They don’t feel
wanted in a place that sells designer coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be taken for granted. Starbucks’
growth over the early part of the past de-cade coincided with a remarkable surge in the
economy. Consumer spending tanked in the downturn, and those $3 lattes were an easy
place for people on a budget to cut back.
Starbucks also faces slumping morale and employee burnout among its store managers and
its once-cheery army of baristas. Stock options for part-timers in the restaurant business
were a Starbucks innovation that once commanded awe and respect from its employees. But
now, though employees are still paid better than comparable workers elsewhere—about $7
per hour— many regard the job as just another fast-food gig. Dissatisfaction over odd hours
and low pay is affecting the quality of the normally sterling service and even the coffee itself,
say some customers and employees. Frustrated store managers among the company’s
roughly 470 California stores sued Starbucks in 2001 for allegedly refusing to pay legally
mandated overtime. Star-bucks settled the suit for $18 million, shaving $0.03 per share off
an otherwise strong second quarter. However, the heart of the complaint—feeling
overworked and underappreciated—doesn’t seem to be going away.
To be sure, Starbucks has a lot going for it as it confronts the challenge of regaining its
growth. Nearly free of debt, it fuels expansion with internal cash flow. And Starbucks can
maintain a tight grip on its image because stores are company-owned: There are no
franchisees to get sloppy about running things. By relying on mystique and word of mouth,
whether here or overseas, the company saves a bundle on marketing costs. Starbucks spends
just $30 million annually on advertising, or roughly 1 percent of revenues, usually just for
new flavors of coffee drinks in the summer and product launches, such as its new in-store
Web service. Most consumer companies its size shells out upwards of $300 million per year.
Moreover, Starbucks for the first time faces competition from large U.S. competitors such as
McDonald’s and their new McCafés.
6. Case Study on :
Schultz remains the heart and soul of the operation. Raised in a Brooklyn public-housing
project, he found his way to Starbucks, a tiny chain of Seattle coffee shops, as a marketing
executive in the early 1980s. The name came about when the original owners looked to
Seattle history for inspiration and chose the moniker of an old mining camp: Starbo. Further
refinement led to Starbucks, after the first mate in Moby Dick, which they felt evoked the
sea-faring romance of the early coffee traders (hence the mermaid logo). Schultz got the idea
for the modern Starbucks format while visiting a Milan coffee bar. He bought out his bosses
in 1987 and began expanding.
The company is still capable of designing and opening a store in 16 weeks or less and
recouping the initial investment in three years. The stores may be oases of tranquility, but
management’s expansion tactics are something else. Take what critics call its “predatory real
estate” strategy—paying more than market-rate rents to keep competitors out of a location.
David C. Schomer, owner of Espresso Vivace in Seattle’s hip Capitol Hill neighborhood, says
Starbucks approached his landlord and offered to pay nearly double the rate to put a coffee
shop in the same building. The landlord stuck with Schomer, who says: “It’s a little
disconcerting to know that someone is willing to pay twice the going rate.” Another time,
Starbucks and Tully’s Coffee Corp., a Seattle-based coffee chain, were competing for a space
in the city. Starbucks got the lease but vacated the premises before the term was up. Still,
rather than let Tully’s get the space, Starbucks decided to pay the rent on the empty store so
its competitor could not move in. Schultz makes no apologies for the hardball tactics. “The
real estate business in America is a very, very tough game,” he says. “It’s not for the faint of
heart.”
Still, the company’s strategy could backfire. Not only will neighborhood activists and local
businesses increasingly resent the tactics, but customers could also grow annoyed over
having fewer choices. Moreover, analysts contend that Starbucks can maintain about 15
percent square-footage growth in the United States— equivalent to 550 new stores—for only
about two more years. After that, it will have to depend on overseas growth to maintain an
annual 20 percent revenue growth.
Starbucks was hoping to make up much of that growth with more sales of food and other
noncoffee items but has stumbled somewhat. In the late 1990s, Schultz thought that offering
$8 sand-wiches, desserts, and CDs in his stores and selling packaged coffee in supermarkets
would significantly boost sales. The specialty business now accounts for about 16 percent of
sales, but growth has been less than expected.
What’s more important for the bottom line, though, is that Star-bucks has proven to be
highly innovative in the way it sells its main course: coffee. In 800 locations it has installed
automatic espresso machines to speed up service. And several years ago, it began offering
prepaid Starbucks cards, priced from $5 to $500, which clerk’s swipe through a reader to
deduct a sale. That, says the company, cuts transaction times in half. Starbucks has sold $70
million of the cards.
When Starbucks launched Starbucks Express, its boldest experiment yet, it blended java,
Web technology, and faster service. At about 60 stores in the Denver area, customers can
pre-order and prepay for beverages and pastries via phone or on the Star-bucks Express Web
site. They just make the call or click the mouse before arriving at the store, and their
beverage will be waiting—with their name printed on the cup. The company decided in 2003
that the innovation had not succeeded and eliminated the service.
And Starbucks continues to try other fundamental store changes. It announced expansion
of a high-speed wireless Inter-net service to about 1,200 Starbucks locations in North
America and Europe. Partners in the project—which Starbucks calls the world’s largest Wi-Fi
7. Case Study on :
network—include Mobile International, a wireless subsidiary of Deutsche Telekom, and
Hewlett-Packard. Customers sit in a store and check e-mail, surf the Web, or down-load
multimedia presentations without looking for connections or tripping over cords. They start
with 24 hours of free wireless broadband before choosing from a variety of monthly
subscription plans.
Starbucks executives hope such innovations will help surmount their toughest challenge in
the home market: attracting the next generation of customers. Younger coffee drinkers
already feel un-comfortable in the stores. The company knows that because it once had a
group of twenty something hypnotized for a market study. When their defenses were down,
out came the bad news. “They either can’t afford to buy coffee at Starbucks, or the only peers
they see are those working behind the counter,” says Mark Barden, who conducted the
research for the Hal Riney & Partners ad agency (now part of Public’s Worldwide) in San
Francisco. One of the re-curring themes the hypnosis brought out was a sense that “people
like me aren’t welcome here except to serve the yuppies,” he says. Then there are those who
just find the whole Starbucks scene a bit pretentious. Katie Kelleher, 22, a Chicago paralegal,
is put off by Starbucks’ Italian terminology of grande and venti for coffee sizes. She goes to
Dunkin’ Donuts, saying: “Small, medium, and large is fine for me.”
As it expands, Starbucks faces another big risk: that of be-coming a far less special place
for its employees. For a com-pany modeled around enthusiastic service, that could have dire
consequences for both image and sales. During its growth spurt of the mid- to late-1990s,
Starbucks had the lowest employee turnover rate of any restaurant or fast-food company,
largely thanks to its then unheard-of policy of giving health insurance and modest stock
options to part-timers making barely more than minimum wage.
Such perks are no longer enough to keep all the workers happy. Starbucks’ pay doesn’t
come close to matching the work-load it requires, complain some staff. Says Carrie Shay, a
former store manager in West Hollywood, California: “If I were making a decent living, I’d
still be there.” Shay, one of the plaintiffs in the suit against the company, says she earned
$32,000 a year to run a store with 10 to 15 part-time employees. She hired employees,
managed their schedules, and monitored the store’s weekly profit-and-loss statement. But
she was also expected to put in significant time behind the counter and had to sign an
affidavit pledging to work up to 20 hours of overtime a week without extra pay—a
requirement the company has dropped since the settlement.
For sure, employee discontent is far from the image Starbucks wants to project of relaxed
workers cheerfully making cappuccinos. But perhaps it is inevitable. The business model
calls for lots of low-wage workers. And the more people who are hired as Starbucks expands,
the less they are apt to feel connected to the original mission of high service—bantering with
customers and treating them like family. Robert J. Thompson, a professor of popular culture
at Syracuse University, says of Starbucks: “It’s turning out to be one of the great 21st century
American success stories— complete with all the ambiguities.”
Overseas, though, the whole Starbucks package seems new and, to many young people,
still very cool. In Vienna, where Starbucks had a gala opening for its first Austrian store,
Helmut Spudich, a business editor for the paper Der Standard, predicted that Starbucks
would attract a younger crowd than the established cafés. “The coffeehouses in Vienna are
nice, but they are old. Star-bucks is considered hip,” he says.
But if Starbucks can count on its youth appeal to win a welcome in new markets, such
enthusiasm cannot be counted on indefinitely. In Japan, the company beat even its own
bullish expectations, growing to 875 stores after opening its first in Tokyo in 1996. Affluent
young Japanese women like Anna Kato, a 22-year-old Toyota Motor Corp. worker, loved the
8. Case Study on :
place. “I don’t care if it costs more, as long as it tastes sweet,” she says, sitting in the world’s
busiest Starbucks, in Tokyo’s Shibuya district. Yet same-store sales growth has fallen in
Japan, Starbucks’ top foreign market, as rivals offer similar fare. Meanwhile in England,
Starbucks’ second-biggest overseas market, with over 400 stores, imitators are popping up
left and right to steal market share.
Entering other big markets may be tougher yet. The French seem to be ready for
Starbucks’ sweeter taste, says Philippe Bloch, cofounder of Columbus Cafe, a Starbucks-like
chain. But he wonders if the company can profitably cope with France’s arcane regulations
and generous labor benefits. And in Italy, the epicenter of European coffee culture, the
notion that the locals will abandon their own 200,000 coffee bars en masse for Starbucks
strikes many as ludicrous. For one, Italian coffee bars prosper by serving food as well as
coffee, an area where Starbucks still struggles. Also, Italian coffee is cheaper than U.S. java
and, says Italian purists, much better. Americans pay about $1.50 for an espresso. In
northern Italy, the price is 67 cents; in the south, just 55 cents. Schultz insists that Starbucks
will eventually come to Italy. It’ll have a lot to prove when it does. Carlo Petrini, founder of
the anti-globalization movement Slow Food, sniffs that Starbucks’ “substances served in
Styrofoam” won’t cut it. The cups are paper, of course. But the skepticism is real.
As Starbucks spreads out, Schultz will have to be increasingly sensitive to those cultural
challenges. For instance, he flew to Israel several years ago to meet with then Foreign
Secretary Shimon Peres and other Israeli officials to discuss the Middle East crisis. He won’t
divulge the nature of his discussions. But subsequently, at a Seattle synagogue, Schultz let
the Palestinians have it. With Starbucks outlets already in Kuwait, Lebanon, Oman, Qatar,
and Saudi Arabia, he created a mild uproar among Palestinian supporters. Schultz quickly
backpedaled, saying that his words were taken out of context and asserting that he is “pro-
peace” for both sides.
There are plenty more minefields ahead. So far, the Seattle coffee company has compiled
an envious record of growth. But the giddy buzz of that initial expansion is wearing off. Now,
Starbucks is waking up to the grande challenges faced by any corporation bent on becoming
a global powerhouse.
In a 2005 bid to boost sales in its largest international market, Starbucks Corp. expanded
its business in Japan, beyond cafés and into convenience stores, with a line of chilled coffee
in plastic cups. The move gives the Seattle-based company a chance to grab a chunk of
Japan’s $10 billion market for coffee sold in cans, bottles, or vending machines rather than
made-to-order at cafés. It is a lucrative but fiercely competitive sector, but Starbucks, which
has become a household name since opening its first Japanese store, is betting on the power
of its brand to propel sales of the new drinks.
Starbucks is working with Japanese beverage maker and distributor Suntory Ltd. The
“Discoveries” and “Doubleshot” lines are the company’s first forays into the ready-to-drink
market out-side North America, where it sells a line of bottled and canned coffee. It also
underscores Starbucks’ determination to expand its presence in Asia by catering to local
tastes. For instance, the new product comes in two variations—espresso and latte—that are
less sweet than their U.S. counterparts, as the coffee maker developed them to suit Asian
palates. Starbucks officials said they hope to establish their product as the premium chilled
cup brand, which, at 210 yen ($1.87), will be priced at the upper end of the category.
Starbucks faces steep competition. Japan’s “chilled cup” market is teeming with rival
products, including Starbucks lookalikes. One of the most popular brands, called Mt.
Rainier, is emblazoned with a green circle logo that closely resembles that of Starbucks.
Convenience stores also are packed with canned coffee drinks, including Coca-Cola Co.’s
9. Case Study on :
Georgia brand and brews with extra caffeine or made with gourmet coffee beans.
Schultz declined to speculate on exactly how much coffee Starbucks might sell through
Japan’s convenience stores. “We wouldn’t be doing this if it wasn’t important both
strategically and economically,” he said.
The company has no immediate plans to introduce the beverage in the United States,
though it has in the past brought home products launched in Asia. A green tea frappuccino,
first launched in Asia, was later introduced in the United States and Canada, where company
officials say it was well received.
Starbucks has done well in Japan, although the road hasn’t al-ways been smooth. After
cutting the ribbon on its first Japan store in 1996, the company began opening stores at a
furious pace. New shops attracted large crowds, but the effect wore off as the market became
saturated. The company returned to profitability, and net profits jumped more than sixfold
to 3.6 billion yen in 2007, but declined again to 2.7 billion yen in 2009.
Most recently in Japan, the firm has successfully developed a broader menu for its stores,
including customized products— smaller sandwiches and less-sweet desserts. The strategy
increased same store sales and overall profits. The firm also added 175 new stores since
2006, including some drive-through service. But McDonald’s also is attacking the Japanese
market with the introduction of its McCafé coffee shops.
Questions:
1. Identify the controllable and uncontrollable elements that Starbucks has encountered
in entering global markets.
2. What are the major sources of risk facing the company? Discuss potential solutions?
3. Critique Starbucks’ overall corporate strategy.
4. How might Starbucks improve profitability in Japan?
10. Case Study on :
SUMMARY
Starbucks is one of the largest chains of coffee shops in the world. There are
many topics that arise throughout the case with Starbucks Corporation. Starbucks
Coffee is located worldwide and there are many different ways to look at this
situation. The company offers a unique range of coffee, lattes, espressos, and café
style drinks. The company intended to reach a specific target audience, but has ended
up in many different markets and has been growing rapidly. Starbucks has greatly
used the “youth appeal” strategy to gain entrance into new markets. However, such
enthusiasm cannot be counted on indefinitely; other strategies are always in the
works. Over time Starbucks has been able to acquire a solid brand reputation and has
a world renowned company logo. There have been some distinguished controllable
and uncontrollable elements Starbucks has encountered when entering global
markets. The strategies of any company’s goals are vital to its success. This is one
area Starbucks has excelled in, just as McDonald’s has in recent years. Starbucks has
paralleled its branding with the actions found at any Starbucks across the world.
They have an excellent company vision, which they stick to, which in turn assists
their brand image. Starbucks’ image has been achieved not only through this and
their massive global entrance, but through their ability to provide honest quality
service. In recent years there was a time that Starbucks saw the opportunity to go
global and jumped on it.
11. Case Study on :
Answer No. 1
The Controllable Elements are:
1. Product: Starbucks provides a variety of products of very high quality. Their
product includes coffee, tea, pastries, Frappuccino beverages and smoothies.
2. Price: Starbucks Charges $1.5 for an espresso in USA, in northern Italy the
price is 67 cents and in south just 55 cents.
3. Channel of Distribution: Starbucks channel of distribution is very strong as it
is the largest coffeehouse company in the world, with 20,891 stores in 62
countries, including 13,279 in the United States, 1,324 in Canada, 989 in
Japan, 851 in China and 806 in the United Kingdom.
4. Promotion: Starbucks promote their coffee by relying on mystique and word
of mouth, the company saves a bundle on marketing costs. Starbucks spends
just $30 million annually on advertising, or roughly 1% of revenues.
5. Research: Starbucks tries to bring innovation or new things in its products or
services through research.
The Uncontrollable Elements are:
1. Culture: Starbucks faces difficulty because of cultural differences. For instance
once Schultz caused uproar among Palestine supports.
2. Competition: Starbucks faced competition in Italy, France, Japan and in many
other foreign countries.
3. Economic Conditions: The economic conditions are not the same in all
countries. So Starbucks makes its strategy accordingly to each country’s
economic conditions.
Answer No. 2
The major sources of risk that Starbucks faced:
1. The home market is becoming saturated.
2. The company is facing an ominously hostile reception from its future
consumers, the twenty or thirty something of generation X.
3. Starbucks is becoming a far less special place for its employees.
12. Case Study on :
The potential solutions could be:
1. As Starbucks is facing fierce competition, they need be better than the
competitors. They can lower their prices, better products and services, bring
innovation in their operation or they can incase their product line.
2. There needs to be a comprehensive research and bring a new strategy for its
generation X consumers.
3. They need to restructure their employees’ working schedule, increase their
salary and other benefits to ensure employee satisfaction.
Answer No. 3
Critique of Starbucks overall corporate strategy:
1. Starbucks is making less money on each overseas store because most of them
are operated with local partners.
2. The workers are not paid well for overtime or over duty.
3. Its pricing policy is not suitable for generation X.
4. Starbucks only spends $30 million annually on advertising, or roughly 1% of
its revenues.
5. There are eight states in U.S. with no Starbucks store.
Answer No. 4
Japan has a very competitive and lucrative market. To improve their profitability in
Japan, they need to position their products and services matching the culture of
Japan. They can lower their products prices, design its stores using Japanese
symbols or designs, free Wi-Fi and other technological facilities and they also should
increase their advertising budget to stay in the competition.