...Mr. Howard Schultz, the chairman and CEO of Starbucks Corporation is faced with some immediate and long term challenges in the year 1996. He needs to keep up the brand image of Starbucks, beat the competition, foray into new horizons for expansion, improve on the real estate strategy while maintaining the ‘coffee ‘ experience Starbucks is known for. Immediate issues 1. MacDonald is petitioning for a contract to serve Starbucks coffee. Mr. Howard is sceptical that granting this contract will dilute the brand image of Starbucks. While this can boost revenue in the shorter term, this can also lead to loss in clientele and reputation. Should Mr. Howard agree to the proposal? 2. Starbucks has a goal of having 2000 stores by the year 2000. The number of ‘A’ sites in market has decreased and the task of “street sniffers” is becoming increasingly difficult. The immediate challenge is to expand in different regions of the city. Should he put laser focus on Doppio strategy ? Basic Issues 1. Given Mr Howard’s bad experience at the University store , Starbucks needs to take an active look at the speciality agreements with retailers , restaurants and service providers. They are a big source of revenue generation but any compromise either on the coffee quality or coffee ‘experience’ could lead to loss in clientele, loss of brand and a hard earned niche market segment. 2. The regional competitors such as Second Cup in Canada and Best coffee in Seattle are eating the Starbuck’s...
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...Technology School of Business A350A0050 Business Research Methods Case Starbucks stock value 2006-2010 ”Fall and rise” Contents Introduction 3 Theoretical framework 5 SWOT 5 Strategic Formulation 6 Porters 5 forces model 8 Problem analysis – Case Starbucks 9 Factors leading to the decline in stock price between 2006-2009 9 Starbucks analysis using the 5 forces model 10 Rivalry among existing competitors 10 Threat of substitution products and services 11 Bargaining power of suppliers 11 Bargaining power of buyers 13 Threat of new entrants 14 Summary of the five forces analysis 14 SWOT analysis 15 Strengths 15 Weaknesses 16 Opportunities 16 Threats 17 Customer Value, Satisfaction and Loyalty 18 Generic strategies from Starbucks’s point of view 18 Conclusions 20 References 21 Introduction In the year 2000, Howard Schultz, a long term director of Starbucks left his position as the CEO. Starbucks was on a steady course and had its stock price on the rise until the year 2006. (lähde haastattelu) The global financial crisis hit the coffee giant relatively harder than other companies in the business sector (lähde annual report 2010). In early 2008, due to the poor performance of Starbucks, Howard Schultz felt compelled to return in to the CEO’s position, as Schultz mentioned in his interview for Harvard Business Report in 2010 “The leadership had failed the 180,000 Starbucks people and their families.” (lähde haastattelu). The global...
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...CASE 1 – 1 Starbucks - Going Global Fast ------------------------------------------------- ------------------------------------------------- Didem Akdemir ------------------------------------------------- Mignon Pemberton ------------------------------------------------- Yunella Webb ------------------------------------------------- ------------------------------------------------- 2 IBMS Feb11 Table of Contents 1. Summary 2 2. Questions 4 3. Sources 6 1. Summary Starbucks’ success Starbucks is one of the largest chains of coffee shops in the world. They started their business in the early 80s as a tiny chain of Seattle coffee shops, grew rapidly in the 90s and now own 5,689 coffee shops in 28 countries. This chain of coffee shops is very well managed by a well-seasoned management team popularly known as H2O, because of Howard Schultz (Chairman and Chief Global Strategist), Howard Behar ( Head of North American Operations), and Orion Smith (CEO). This year (2002) it had about 1200 and it was still in the early stages of its plan to colonize the world. Problem Although, the company has expanded enormously, since it went public in 1991, this growth can not last much longer. New profits in the saturated home market are difficult to make. Although, there are still 8 states with no Starbucks stores in the U.S. One outlet for every 9400 people is the norm according to Starbucks and this has not been reached yet. The company admits that while...
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...Background: First established in 1971, but the real and actual Starbucks was created in 1987 when an ex employee bought the company after creating one by his own and persuading some investors to buy it. Howard Schultz was the entrepreneur that took the company since its start in Seattle to the actual global enterprise that is today. The innovation has been always in the way of Starbucks, even is seen on its logo that have changed trough the years to give the company an actual image; the first one had a twin-tailed mermaid, and have change to the actual logo know in the modern world. When the company started as Starbucks Corporation, had 17 stores and soon the company started to open more and more stores in the United States, but when the company opened the first store out the United States had already 1014 stores in America; the company also started to purchase companies in different countries in order to enter in new markets, a very well directed strategy of expansion. The rise of this company has been as successful that in the 90’s invested on the stock and had actions, which also gave them to the employees; this behavior was established by Howard Schultz, the owner and director, and he gave an explanation of his actions, he said: "He (my father) was beaten down, he wasn't respected," Schultz said. "He had no health insurance, and he had no workers' compensation when he got hurt on the job." So with Starbucks, Schultz "wanted to build the kind of company that my father...
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...MG Case 1.1 Starbucks – Going Global Fast Starbuck Corporation is an American coffee company and coffeehouse-chain founded in 1971 in Seattle, Washington. In 1987, the three owners sold the Starbucks chain to Howard Schultz, a former employee, and quickly began to expand, going from 17 coffee shops in Seattle to over 20,891 shops in 62 countries: United States, Canada, Japan, China, United Kingdom, South Korea, Mexico… Since 1987, Starbucks has opened on average two now stores every day. However Starbucks is now facing some challenges. The sales have dropped from $10.4 billion in 2008 to $9.8 billion in 2009. The corporation had to close 475 stores in the United States in 2009 to reduce costs. The market is saturated across the United States and Canada, and Starbucks is now facing employee’s dissatisfaction. 1. The controllable elements are about the firm characteristics and research and development. The firm’s characteristics are: the products (Hot and cold beverages, snacks, pastries…), the price (premium prices for their products), promotion (the firm has saved a lot of marketing cost by relying on word of mouth), channel of distribution (20,891 outlets in 62 countries which shows that Starbucks has good controlled over its channel of distribution). Research and development has an important part of the firm. It has controlled over its R&D process, it has installed automatic espresso machines to increase the speed of service and also offered the prepaid card so...
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...Company Background The first Starbucks opened in Seattle,on March 30, 1971, by three partners Jerry Baldwin, Zev Siegl, and Gordon Bowker. The three were inspired to sell quality coffee beans and equipment. The first Starbucks cafe was located at 2000 Western Avenue from 1971–1976. This cafe was later moved to 1912 Pike Place Market. In 1987, the original owners sold the Starbucks chain to former employee Howard Schultz, who rebranded his Il Giornale coffee outlets as Starbucks and quickly began to expand. In the same year, Starbucks opened its first locations outside Seattle in Canada. The first Starbucks location outside North America opened in Tokyo, Japan, in 1996. Currently Starbucks has over 20,000 stores in 65 countries. Starbuck’s growth Starbucks started off as a shop selling coffee beans and equipment in this section we will analyze Starbuck’s concept for growth and how it has become one of the biggest coffee shop in the world. After, Schultz acquisition of Starbucks in 1987, he made his dream became a reality by expanding Starbucks worldwide. Initially Schultz planned to open 125 stores in 5years. 1. Company owned store (No franchising) 2. Store design and ambience (Created its own in-house team of architects and designers to ensure that the store will have the right image) 3. “Starbucks everywhere” - Cannibalization (centralized buying) Management believes although blanketing cities with Starbucks store, new store might draw 30 percent of...
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...Mahammad Rahimov Michael Poliquin Starbucks - Going Global Fast Question 1: Identify the controllable and uncontrollable elements that Starbucks has encountered in entering the global market. The case discusses multiple international markets that Starbucks had entered. Japan, France, Italy, Austria, and the Middle East were mentioned. Starting with the Japanese market, the elements that faced Starbucks there were uncontrollable. The first element was the fierce competition in the Japanese market that already existed, and the fact that Japan’s economy had suffered a blow which resulted in an economic depression. Moving on to the next market, which is France. The elements were also uncontrollable because the policies and regulations in the French republic were extremely sophisticated and biased towards the Labour Unions. Going south towards Italy, which is one of those countries that coffee-drinking is embedded in its culture. Starbucks’ Italian mission was faced by a controllable element, which is Starbucks’ own pricing strategy. In a country where the average Italian is used to paying 65cents (North), and 55cents (South) for a cup of espresso, Starbucks offered their espresso for a $1.5. Also, the fact that Italian coffee houses offer food along with their coffee made it even harder for Starbucks. When Starbucks decided to enter the ‘Imperial City’, which is known around the planet as a centre of Western sophistication, Vienna proved to be culturally adaptable to the...
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...S w 9B08A016 PY A CRACK IN THE MUG: CAN STARBUCKS MEND IT?1 Michael Herriman, Motohiro Wanikawa, Ryoko Ichinose, Shobhana Darak and Yumana Chaivan wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. O Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Version: (A) 2008-10-23 C Copyright © 2008, Ivey Management Services N O T After 20 years of phenomenal expansion, the last six months of 2007 saw Starbucks jolted by a decline in share price of 50 per cent and a decrease in customer visits to its outlets in North America. Its share price was hovering around $19 to $20.2 By mid-2008, it had declined to $18. Its fiscal first-quarter profit in 2007 rose by less than two per cent and in January 2008 it announced the closing of 100 U.S. stores. On July 1, 2008, this...
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...Case study: Starbucks Question 1: Starbucks is a service that sells a product. In fact they sell different product like coffee, but their main success come from selling services. Starbucks sell many services as Wi-Fi connection but the most important service provided is the Starbucks coffeehouse experience: making connections with the people and things that are important to them over a cup of coffee. The Starbucks experience is a service because it’s intangible, heterogenic, there is a simultaneous production and consumption and also, it’s perishable. Intangible because we cannot touch it, heterogenic because it’s not provided in the same way for all customers, here it’s a matter of people, sellers and buyers. It’s a simultaneous production and consumption because it’s produced in the stores by sellers and consummated at the same time. In the end it is perishable because we cannot stock this experience. Question 2: Levels of products and service value is very important on selling services nowadays; customer expectations and perceptions of a service impact directly their satisfaction, if we take as example a customer that has a high level of quality expectations of the service and that receives a lower quality level from his expectations, will be totally unsatisfied even if the service is pretty good. To achieve greater success nowadays companies have to deliver a service quality that meets customers’ expectations. Companies have also to gain a good quality positioning...
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...1. Analyze the challenges Starbucks faced in entering the Indian Market Political factors The political factors have strong influence on regulation and the control of business, also the spending power of consumers and other businesses. We must consider those factors as important depending on the political system of the country we are operating in and the political condition of the country as a whole. The Indian economy has been subject to some positive economic reforms since 1992 which had improve a better working environment for foreign companies and has made it possible for foreign investors to operate in the country in a easy way. Economic factors The Indian Government is still trying to improve unfavorable factors like widespread poverty, inadequate physical and social infrastructure, bureaucracy, limited non-agricultural employment opportunities, regulatory and foreign direct investment controls, insufficient access to quality basic and higher education, and the imbalance of rural-to-urban migration.. Socio-Cultural factors The culture of India poses a great challenge. The mix of traditional tea-drinking population together with the various differences between Muslim and Hindu and the difference between various regions of the country, makes it hard to divide and place is concrete consumer groups. There’s obvious separation in coffee consumption between rural and urban areas having distinctly higher preferences for coffee. “Still the numbers of coffee consumers remain...
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...Strategist of Starbucks, followed various key steps in order to build today’s successful and continuously growing coffee business. After a witness visit of café business to Italy, Schultz decided to implement the European elegant café spirit into Starbucks coffee house all keeping the American warmth in one coffee shop, where customers can stop by to get a coffee on their way to work, socialize, have a break, or relax after work. In addition, Starbucks has been successfully able to engrave the brand name in the customers’ mind by creating a strategic mission and sui generis brand values. Starbucks core values has consisted of providing a great work environment and treating each other with respect and dignity, embracing diversity as an essential component in the way they business, applying the highest standards of excellence to the purchasing, roasting, and fresh delivery of their coffee, developing enthusiastically satisfied customers all of the time, contributing positively to their communities and their environment, recognizing that profitability is essential to their future success. Starbucks created simple yet powerful tactics to put these core values into motion. First and foremost, the company has put lots of focus on training its employees to provide the best service to customers, in a way to build a long lasting relationship with this latter; bearing in mind the idea that employees are the key component in keeping the company successful; the reason for which Starbucks has been...
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...1. A) Factors accounted for the success of Starbucks in the early 1990s: It has broad distribution strategy. Starbucks owns nearly one-third of America’s coffee bars, which is more than its next five biggest competitors combined. Almost all of Starbucks’ locations in North America are company-owned stores located in high-traffic, high-visibility settings such as retail centers, office buildings, and university campuses. This made Starbucks a very convenient coffee bar because of the many different locations. They also work with third parties to raise brand awareness and reach new customers. They sold coffee products through non company operated retail channel for example hotels, restaurants, airlines. They partnered with pepsi0cola to distribute bottled Frappuccino beverages. And Dreyer’s Grand ice cream to distribute a line of premium ice cream. Starbucks really pays attention to its employee satisfaction, they believe that partner satisfaction leads to customer satisfaction. They had one of the lowest employee turnover rate in the industry. Starbucks “Just Say Yes” policy empowered partners to provide best service possible, even if it required going beyond company rule. The last thing they want to do is win the argument and lose the customer. They also track service performance using a program called the Customer Snapshop B) Starbucks’ brand image during 1990s * Coffee quality: it offered the highest quality coffee in the world and controlled much of the supply...
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...Although Starbucks has supported responsible business practices virtually since its incep-tion, as the company has grown, so has the importance of defending its image. At the end of 1999 Starbucks created a Corporate Social Responsibility department, now known as the Global Responsibility Department. Global Responsibility releases an annual report in order to allow shareholders to keep track of its performance, which can be accessed through the Shared Planet website. Starbucks is concerned about the environment, its employees, suppliers, customers, and its communities. In 1992, long before it became trendy to be "green," Starbucks developed an environmen-tal mission statement to more clearly articulate the company's environmental priorities and goals. This initiative created the Environmental Starbucks Coffee Company Affairs team, the purpose of which was to develop environmentally responsible policies and minimize the company's "footprint." As part of this effort, Starbucks began using environmental purchas-ing guidelines and set out to reduce waste through recycling and energy conservation and ed-ucate partners through the company's "Green Team" initiatives. Concerned stakeholders can now track the company's progress through its Shared Planet website, which clearly outlines Starbucks' environmental goals and how the company is faring in living up to those goals. Growing up poor with a father whose life was nearly ruined by an unsympathetic employer that did not offer...
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...The Birth From the very beginning Starbucks was modeled on European coffee bars and conceptualized to be the ‘Third Place’ between home and office. To achieve this goal Schultz had focused on developing a coffee culture. Everything revolved around the high quality coffee which was controlled from the time it was harvested till it was consumed. Quality is everything for Starbucks, because coffee is such a perishable commodity the company knew that it was very vulnerable if its quality was compromised. This tight end-to-end control was the hallmark of Starbucks in its early days. They operated over 100 stores which were company owned and spent a great deal of time training employees. Schultz believed that employee happiness was paramount to the success of the company. To that end Starbucks offered medical insurance to all its employees even with the majority being part-time. These initiatives created a sense of ownership amongst the employees and this positivity trickled down to the customers. In the process of developing a coffee culture Schultz realized that the customer experience was as important as the end product. Roasting and grinding the beans in the store, creating coffee made to order, all of this created a kind of spectacle and consumers responded very favourably. To better reflect the European coffee bars on which it was modeled, each Starbucks location was designed to make customers stay and consume their beverage on site. Comfy seating arranged in a living room type...
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...(a) Describe Starbucks’ value-creating strategy in 1980s. [8 marks] Starbuck attracted the attention of Schultz (vice president of Hammarplast AB’s) as a value-creating strategy in 1980’s. Schultz curious about Starbucks when he noticed that the company buying a huge number of drip coffeemakers from Hammerplast and later he joined as a head marketing of Starbucks. Shortly, he visit Milan, Italy for a business trip and he noticed every stret had coffee bars served espresso and other coffee based drink, but were meeting places where people could socialize. Schultz try to convince the owners to enter the restaurant business. Baldwin just let him to sell espresso in a corner of Starbucks store which opened in April 1984 in downtown Seattle. From this, it proved a very successful result, with the store services 400 customers bt the end of the first two months and grew up to 800 customer per day. After much persuasion, the owner allowed Schultz to put espresso machines in 2 other stores. After that, Schultz eventually decided to start out on his own and established a coffee house named “ II Giornale” (The daily) in Italy. In 1987, Baldwin and Bowker decide to sell all 6 of their Starbucks stores and roasting plants along with the brand name to Schultz. Then, Schultz converted six roasting shop that Starbucks owns into classy and comfortable coffee houses, modeled on Italian espresso bars. (b) What was Starbucks’ competitive advantage before 2008 and how was it achieved...
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