CASE STUDY:
Starbucks in US: Too much coffee spilling all over?
29 August 2014
Introduction
Starbucks Case Study (De Wit and Meyer 2010) provides the background for Starbucks as an American coffee retailer, roster, and brand with over 15,000 stores in 43 countries in 2008. It also discusses factors impacting Starbucks position, details about their history and challenges.
Starbucks was created as a friendly and personalised coffee experience and designed to be the "third space" between home and work (Starbucks 2007). The main strategy was to push for aggressive growth, invest ahead of the growth curve and aim for market dominance as a premium brand and achieve competitive advantage through differentiation (Porter 1985).
Starbucks remained very successful until 2004 when the key strategies faced growing competition, economic elements and the damage of their unique in-store customer experience.
This report focuses on the events up to 2008 and uses the framework suggested by Hubbard (1996) to identify and analyse the key challenges; evaluate options and offer recommendations on how to accomplish stronger position and withstand economic difficulties impact on shareholders and stakeholders and Starbucks overall commercial viability.
Starbucks Chairman Howard Shultz talks to the medi...
A display of Starbucks Ethos water.
English: Starbucks' headquarters building in Seatt...Information presented will be analysed using PESTEL analysis for the key political and economic factors, Porter's Five Forces analysis for the external market forces, and SWOT analysis for the internal issues.
Strategy paradoxes Dilemmas
Mintzberg(1994) asserts that strategy making process comes from vision, learning, and planning. Starbucks business strategies created major issues. Due to lack of market planning and research triggered by aggressive growth policy, some strategies were at odds with the brand core purpose.
Covering versus Saturation - Starbucks strategy was to cover whole area with stores and achieve a strong hold. This increased brand awareness, but cannibalisation was unavoidable.
Consistency versus Customer experience - Automatic coffee machines helped drive taste consistency across...