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Case Study: Starbucks

Kenneth M. Remolano
STEM – 123
1. Introduction
Starbucks is a company which coffee and food business state of the art. By this time
Starbucks has become a living legend and a pioneer in the specialist coffee industry. The good or
service being sold to the target audience is usually for the aged and people want to feel calm.
Since, elders’ favorite drink is coffee it is the best shop for them and for the students that stress
in their school activities. But behind of its success the company has some key problems and
issues. One of them is their store. In every Shoe Market (SM) they had only one shop of a
Starbucks and many times their shop get crowded. The second one is their product is mostly
expensive because their materials in producing coffee are imported. The third issue is the
company has no service for the children. Therefore, the company is very popular nowadays.
People love to drink coffee to relieve their stress and have a piece of mind. Not all company has
a perfect service but they ensure the satisfaction of the customers.
2. Background
Initially founded by childhood friends and Howard Shultz, Gerald Baldwin and Gordon
Bowker bought Starbucks Coffee in 1982 in order to improve the productivity of store operations
and promotions. Starbucks has since grown into a household name and a leader in coffee and
snackshop industry. Starbucks was the first private firm to issue ownership options for its
employees and conducted its initial Public Offering in 1992, when the company began leasing
the store to other businesses. When the corporation grown from over 300 branches by the end of
1993 to 10, in 2011 789 branches in the US (Grant, 454), growth began. Even a company known
as Starbucks wasn't free from the 2008 recession. Having witnessed steady growth over 100% in
gross net profit from 2005 to 2008, the crisis took its toll, resulting in a 5.86% fall in the same
figures. Starbucks now come with a wide variety of options. The company has grown from a few
corporate-owned outlets to approve stories in record stores and schools, and has a decent position
in the retail market. Starbucks often expanded internationally, opening new branches around the
globe in Canada, the UK, China, Germany, the Philippines and many other countries. In 50
countries they have 16, 706 branches for now (as of 27 Dec. 2009), refer to Starbucks' website.
They created a social strivings in 2009 when they launched the Farmer Support Center in Kigali,
Rwanda and it became the largest holder of Fair Trade CertifiedTM coffee in the world.
3. Evaluation of the case
Their key competencies can be reflected at convenient places as well as reasonable rates
as high-quality coffee and goods, offering a culture to share in the specialty coffee experience
and a range of options. Help honesty as well as fair corporate practices and a leader getting
named as one of the most trustworthy businesses in 2010 for the 4th year running, by Ethisphere
Magazine. Starbucks faces on its problems, though, because it found sales continue to slip in the
recent crisis, before other businesses did. Starbucks has a new expansion plan in its report,
according to Melissa Allison – more sales and lower prices, Starbucks has reduced 900 branches
and cut 34,000 employment. The nouveau strategy for Starbucks is to concentrate on the certain
aspects of risk management and front-end spending. This includes the widening of foreign
markets, the use of costs and sharing relationships risks and immediate sales. By caffeine and
some other items in grocery stores and retail locations, and revitalizing the Top Quality Coffee in
Seattle. Seen is therefore Starbucks in distinguishing strategy because they provide high-quality
services and exclusive service in the comfort of a wide range of locations which split them from
their rivals. In, the new collection of instant coffee is cheap leadership and scramble
differentiation. Although this will be an affordable and simple option to regular Coffee, it's also
different from certain brands on the market. Currently they're focused on previous projects and
regional development.

Value Chain
Product Bean and ingredient Product
Storefront Take home products
Development selection Distribution

To Starbucks the value chain is mentioned above. The internal component of the value chain
shows the development of the company to test the instant coffee line of VIA by adding green tea
and international influences. Developers are still exploring the world for top quality beans for
Fair Trade suppliers. Such products are also sold to company malls, supermarket stores, aviation
malls, grocery shops and more, and ultimately given to bring imported espresso and gift cards to
the home. Those items are also sold to company storefronts, restaurant outlets, airport malls,
convenience shops and more, and eventually provided to carry home processed espresso and gift
cards.

New Value Chain

Product International Bean and ingredient Product
Development Development selection Distribution

Online Storefront
Storefront Mobile Apps Take home products
Customization

Above is a modern supply chain for upstream international growth that helps global
markets to manufacture innovative goods that are best tailored to lifestyles and could
theoretically bring value to both the US sector and the Green Tea Latte generated in the
Starbucks in Japan. Online platform functionality was introduced downstream, allowing you to
create an online profile, buy online, make new cocktails, etc. A smartphone app that could find
Starbucks places, place orders for drinks, etc. is also included. To identify the two key problems
above are the competencies and the gross domestic product. It is the main problem of this
company because they usually think that their product is popular to the customers. They respond
well to their strengths, vulnerabilities, chances and challenges. It is evident after a pair of
originative-purposes that the company depends on its core strengths but has scope for growth.
4. Proposed solution/changes
The primary challenges facing this company were its efforts to rapidly grow and generate
demand for new technologies. The desire to grow could over-expose the company and endanger
its capacity to adapt. New competitors in the industry like McDonalds face a new possible rivalry
challenge although it is uncertain if they occupy the same business. Starbucks should take
alternate steps to protect the strategic edge that it has maintained for so long. Despite
McDonalds, the coffee market has little like Starbucks. The rest is close, showing a Starbucks
hazard being a part of a blind taste test.
5. Recommendations
My ideas only for Four Action Frame study will be to have more flexibility by
empowering clients to introduce additional recipes and beverages within their current offerings.
That would incorporate online user experience with the other creation. Customers can move on
to Starbucks' mobile app and have total freedom to make their own drink, order the site, find
Starbucks nearest to them and get directions. Customers should be able to share their preferred
combination of drinks so everybody will vote on that. To order to improve the Starbucks
branding to the new modern era and create a blue sea for the espresso experience, the user
interface can also include Iphone apps, uploading drink requests, finder etc.
Generally Starbucks held a competitive edge because the initial blue ocean was built to
offer standard, bistro-style coffee options to the masses. To stay up-to-date, it would need to
focus on its skills, and avoid growing to tiny. To deter competitors like McDonalds and other
coffee chains we will need to create fresh brand imagination by enhancing customer experience
and investing in online ads and interactivity. Rather than making more new goods, I think their
power lies in their name and by improving the connections with their current customers, they
will identify themself from McDonalds and other people. Moreover, conflicts in a company
cannot affect the company responsibility because everything has a way to overcome on it. It may
affect but not the whole gross of the company. Furthermore, it can strengthen the company and
innovate more products.
REFERENCES:
https://www.slideshare.net/WilliamDuncan13/starbucks-case-study-58030438

https://www.uhu.es/45122/temas/P&SC/Theme1_StarbucksCoffe_CaseStudy.pdf