1. What explains the Starbucks success story? The success Starbucks saw in the early 1990’s is a result of Howard Schultz’s vision for the company. Schultz’s goal was not primarily about the coffee itself; it was about creating an experience around drinking coffee in a Starbucks store. He wanted to create a “third-place” for those whose lives were centered on home and work. In creating this experience, Schultz focused much of his attention and resources on customer satisfaction, which lead to Starbucks’ quick success. There were a few key elements of the Starbuck’s value proposition that led to its success; coffee Profitability of a customer is also determined by the number of times they return. With that being said, according to Figure 8, the customers who are more satisfied with the current state of Starbucks are thee established customers (those who first visited 5+ years ago). If Starbucks wants increase profitability they should focus more attention on these customers. Based on my calculations a satisfied customer visits Starbucks 4.3 times a month and spend approx. $4.06 per visit with an average customer life of 4.4 years, resulting in about $921 in revenue for Starbucks. A highly satisfied customer, however, visits 7.2 times a month, spending $4.42, for 8.3 years resulting in over $3,100 in revenues. As you can see a highly satisfied customer is much more valuable to Starbucks than a satisfied one. One of Starbucks major problems came as a result of its expansion strategy. In 1992 Starbucks had 140 stores. In 2002, it established itself as the number one coffee store in the world with over 4500 stores worldwide. During these years of expansion Starbucks image began to change. In the process of opening so many new stores, the values once placed in the company began to dissolve quickly. They began to care more about how much money could be made by opening new stores than the money being lost in the stores already open. The retail
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INTRODUCTION OF STARBUCKS 3 II. MAIN ISSUES OF THE CASE 3 1. Situations: 3 2. Strategy: 4 III. ANSWERS TO QUESTIONS 5 Question 1 5 Question 2. 6 Question 3 7 Question 4 9 Question 5 11 Question 6 12 Question 7 14 Question 8 15 Question 9 16 IV. CONCLUSION & RECOMMENDATIONS 18 EXECUTIVE SUMMARY Our report is about analyzing Case 24: Starbucks in 2012: Evolving into a Dynamic Global Organization in the lecture Crafting & Executing Strategy. Starbucks case analysis…
Christine Day, Starbucks’ senior vice president of administration in North America is facing a dilemma. In two days she’s scheduled to meet with Howard Shultz, Starbucks’ Chairman, and Orin Smith, Starbucks’ CEO, to offer her recommendation on whether the company should move forward with a plan to invest $40 million annually, adding 20 hours per week of labor to each of the company’s 4,500 stores. The aim of the investment is to improve speed of service and customer satisfaction. As the case reveals…
brand coffee makers have some market power to set prices above the generic value brands, Starbucks operates under monopolistic completion where there are many small firms that sell similar products, therefore they do not exert complete market power in the industry. Starbucks has, up until now, been able to take advantage of premium pricing but according to an article in Business week, “Starbucks is looking to rebound from dismal US sales as more consumers cut back on spending. In its first-quarter…
Starbucks Coffee Company: Transformation and Renewal - Case Study Analysis 1. Starbucks’ decline was highly attributed to its rapid growth in the early 2000s. The accelerated number of stores being built created a number of problems including the saturation the Starbucks Experience it so highly valued as well as a drop in sales due to competition with existing Starbucks stores in any given area. This same-store sales being taken from one another gave Starbucks the feeling of “cannibalism” from…
Table of Contents Introduction 3 Company Background 3 The Case 4 Literature Review 5 Change Theories 5 Leadership 5 Psychological Contract & Motivation 5 Critical Analysis 6 Recommendations 6 References 7 Introduction Changes have never been as fast-paced as in the modern world, driven by technological advancements, consumerism, easy information sharing, and knowledge intensity. Businesses have to be constantly aware of their external environment and of the potential changes…
3)For this analysis, consider using an alternative form of the BCG growth matrix. Format your matrix with present products and new products in the matrix columns, and present markets and new markets in the matrix rows. (25 marks) Quadrant 1: These are possible growth…
economy growth slowdown, it did not cause a serious influence for chain coffee shop. As Howard Schultz said, CEO of Starbucks, “I don't think we had a business plan for the severity of what has taken place. History demonstrated to us that a downturn in the economy would not affect us, and in fact, we would be recession-proof.” (Katie Couric, 2008) Based on Financial Times, Starbucks revealed that strong earnings of $242m of 2008, a jump from the $64m it recorded during the comparable period last year…
Final Case Study and Strategic Plan: Starbucks’ Global Quest BUS 402 Strategic Management & Business Policy Executive Summary Here at Starbucks, we have had a very rewarding year thus far, and have been very successful since the beginning of our journey. As a matter of fact when you mention the name, Starbucks, people quickly think about that wonderful aroma and taste that is associated with the Starbucks’ name. This is truly what we are trying to create, a partnership…
Executive Report on Starbucks Introduction Since its inception in 1971, the people who work for Starbucks have been providing us with great coffee, and a relaxing atmosphere to enjoy it in. But how did this company develop from a single store in 1971, to a multi-national giant with more than 17,000 stores in 55 countries? Of course there are many aspects of the company, which were responsible for this massive success, one of the most important being the creativity and determination of Howard Schultz…
understanding. (11-25 points) Course concepts are not highlighted nor connected to the application. Adequate analysis; shows real depth of understanding of main Quality of issue(s) and its Analysis implication, arguments Critical Thinking well supported with details. (26-40 points) Some analysis, main issue(s) understood but not analyzed adequately, some details. Inadequate analysis, main issue(s) not understood, not much details Responded towards the end. Showed some interaction with others…