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Starbucks case study strategic management
Starbucks case study strategic management
Starbucks corporate strategy
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Question 1:When Howard Schultz launched Starbucks, who was the target market and how was Starbucks positioned to appeal to this target market? When Starbucks started their target market were people who enjoyed coffee not just for the energy boost that they got from the caffeine, but people who enjoyed sitting down and drinking a well-prepared cup of coffee. Upon visiting Italy and falling in love with the coffee bars and the experience that they offered, Schultz envisioned a place between home and work where you could just sit and enjoy your coffee. Starbucks wanted to control their coffee from “raw green bean to the steaming cup” this meant that they had to talk with their farmers to make sure the quality was up to their standards. They …show more content…
With that store being there to help support new stores that would be entering the region. The goal was to have around 20 stores after two years of entering a market and have those stores expand even further into smaller cities and suburban locations. They also started to add drive-through because it made it more convenient for parents with small children. Some of the drawbacks of drive-through were that it took away from impulse buys and sometimes created bottlenecks in the line. Licensing the brand was also a great way that they expanded their business; by putting Starbucks in airports in malls they create a lot of foot traffic lead to successful stores. Starbucks carefully considered their image and the image they wanted to uphold when choosing licensees. The international market is now where Starbucks has the most potential to grow. As of right now Starbucks has plans to open 1,400 new stores in China. That’s more than half of the store it already has in China. The growth technique that I was most impressed with was that having two locations so close to each other would not saturate the market. The first store would see a drop in sales at first but would bounce back and the new store would grow. I notice we have that here, at Target in uptown you can actually see the Starbucks across the street while you are in line. Both seem pretty busy most of the time too. Question 3: It’s clear that, in general, the company’s growth initiatives were sound in terms of generating the growth expected by Wall Street. But which of Starbucks’ initiatives, in retrospect, were sound decisions for the brand and which were inconsistent with brand
Starbucks is one of the largest coffee franchises in the world. With over 26,000 stores in 64 countries, the company has the right to brag about this. One of the problems which Starbucks is currently being faced with is the brand being watered down by over expansion and a too diverse product mix. With McDonalds and Dunkin Donuts entering into the specialty coffee market, Starbucks needs to alter the path which it is going in order to remain competitive in this industry.
Great quality products, customized, served in clean, convenient placed stores for everyday coffee, friendly and fast serving, everything in a pleasant atmosphere - these were just few factors that lead to the great success of Starbucks during the nineties. Their USP was a place where every American could escape from home or work, for a coffee drinking ritual; high quality coffee, according to each customer's taste, served in a special, intimate ambience. Their image was supposed to appeal to anyone, being based on the idea of community, "exploiting" the need of people to interact with each other, in a "third place", away from home or work.
Emphasis on quality, Starbucks Experience, brand image, and important suppliers to dispute lower price contributions to competitors hence increasing profits
The company’s founder and CEO, Howard Schultz, has been successful in creating Starbucks into something that we didn’t really know we needed until we had it. He has meticulously crafted a brand for the company that adds a psychological value to its offerings. Thereby, when you buy a cup of coffee at Starbucks, you buy an experience. The somewhat quiet, not-so-rushed atmosphere along with dimmed ambience and friendly staff found at Starbucks’ stores add a feel-good factor to your purchase. As a result, people are willing to pay a premium for coffee at Starbucks even if McDonald’s were running a promotion offering free coffee. The premium prices translate to superior margins for its investors.
Today, they have expanded lunch programs to a total of 4,150 stores and introduced the ability to warm pastries and provide hot breakfast sandwiches to stores across the nation. Starbucks retail stores are operated through a number of joint venture and licensing arrangements in South East Asia countries as well as Thailand, Singapore and China. When they do the business in foreign countries, the most important issues will have to be aware of the exchange rates. They are planning to open 2,400 stores internationally in 2007, and they have approximately set financial growth targets for total revenue 20 percent and annual earnings-per-share 20 to 25 percent for the next three to five years. In addition, they have proposed new stores count target to 40,000 worldwide (20,000 U.S. and 20,000 International) in the long-term (Starbucks Financial Release, 2007).
Schultz, Howard, and Joanne Gordon. Onward: How Starbucks Fought for Its Life Without Losing Its Soul. New York: Rodale, 2011. N. pag. Print.
...nal locations in the heaviest coffee drinking countries. This has to be done quickly as to get the jump on other that may also be considering this type of a move. At the same time they should be selling franchise right for the coffee carts. This will provide an increased cash flow as well. During all of this Starbucks should be looking at coffee producers who are in financial trouble or are looking at selling their farms. This has to be done discretely as not to cause unnecessary bad press. After they run a couple of these coffee producing farms for a few years they should be able to see how the whole operation works and determine its viability. Once it’s proven viable they should send out simultaneous offers to the biggest producers as to catch them and other coffee companies off guard. Starbucks also should be getting into the bottled Frappuccino as soon as possible. They should leave the introduction of the product up to Pepsi because of their past experience. They should leave their entry into the grocery store market until some of these other strategies are implemented. This will prove to be the best strategy for Starbucks being able to reach their long-term gaol.
Starbucks did not escape the common practice of adapting and integrating the business to different geographic regions, but they did stick to their guns when it came to their standard product line-up and their no-smoking policy. Surprisingly, these conditions were met with wide acceptance. Analysts felt the real challenge would be in the European marketplace, what with coffeehouses on every corner to compete with. Again, the stores did very well, mainly because of the newer, cleaner environment they provided compared to the older locations of established houses.
... middle of paper ... ... Strategic planning kit for dummies, 2nd edition. Retrieved from http://www.dummies.com/how-to/content/strategic-planning-diversification.html “Starbucks”.
Starbucks is the world’s largest specialty coffee retailer, Starbucks has more than 16,000 retail outlets in more than 35 countries. Starbucks owns more than 8,500 of its outlets, while licensees and franchisees operate more than 6,500 units worldwide, primarily in shopping centers and airports. The outlets offer coffee drinks and food items such as pastries and confections, as well as roasted beans, coffee accessories, teas and a line of compact discs. The company also owns the Seattle's Best Coffee and Torrefazione Italia coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products. Starbucks Corporation was founded in 1985 and is based in Seattle, Washington. (Bramhall)
Starbucks is an international coffee house and it was created in 1971 when they opened the first store in Seattle, Newcastle. Currently, they own 21,000 stores in 65 different countries of the world, and their passion for the great coffee, excellent service and community interaction exceeds cultures and languages (Starbucks, 2014). This company is the number 1 brand coffeehouse chain in the world due to the best roaster, marketer and seller of speciality coffee. Its main slogan: “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time” (Jurevicius, 2013).
In 1971, three young entrepreneurs began the Starbucks Corporation in Seattle Washington. Their key goal was to sell whole coffee beans. Soon after, Starbucks began experiencing huge growth, opening five stores all of which had roasting facilities, sold coffee beans and room for local restaurants. In 1987, Howard Schultz bought Starbucks from its original owners for $4 million after expanding Starbucks by opening three coffee bars. These coffee bars were based on an idea that was originally proposed to the owner who recruited him into the corporation as manager of retail and marketing. Overall, Schultz strategy for Starbucks was to grow slow. Starbucks went on to suffer financial losses and overhead operating expenses rose as Starbucks continued its slow expansion process. Despite the initial financial troubles, Starbucks went on to expand to 870 stores by 1996. Sales increased 84%, which brought the corporation out of debt. With the growing success, Starbucks planned to open 2000 stores by year 2000.
I will briefly summarize and examine issues facing Starbucks. Starting from there I will pick the most important issue and study it from different positions. In the end of my I will try to suggest what steps should be made to keep the company in continuing its quest to become one of the most recognized and respected brands in the world.
The strategic vision that Howard Schultz had for Starbucks was "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow". This s...