PGDM TRI-2

BEHAVIORAL ECONOMICS

ASSIGNMENT: 02
CEC COMPONENT
CASE STUDY ANALYSIS

“CASE STUDY ON STARBUCKS”

SUBMISSION DATE: 28th December 2023 (Evening 17:00)

Note:

 The assignment should be documented in word document as per class room

instructions.
 The assignment need to be converted into pdf format and upload at designated
location. The assignment need to be uploaded on ERP.
 Student need to upload their assignment by their name on first page as attached
at last page.
 Assignment has to be submitted on timely basis, 28th December 2023
(evening 17:00) and no excuses in whatsoever case will be entertained.
 If any report found full similarity or copied with another report, both full group
will not be eligible for marks and all of them will get zero.
 CASE STUDY ON STARBUCKS
An Introduction
The Starbucks Company was founded in Seattle in 1971 by Jerry Baldwin, Gordon Bowker and
Zev Seigel with a vision to educate American consumers about the fine coffee drinking
experience. In 1987 Howard Schultz took over the Starbucks Group, he wanted to create the
Italian espresso bar experience in America by creating a personal relationship between the
customers and their coffee.
Just within a couple of years they grew from a small coffee business house to a multi-million
dollar player in the industry by buying only the best coffee available and providing the people
with an unmatched store experience. As standing, Starbucks is number one in the speciality
coffee industry, with more than 12,000 shops in more than 35 countries.
The Starbucks mission statement is “To inspire and nurture the human spirit – one person,
one cup and one neighbourhood at a time.”
Freshly brewed coffee is the main product offered by Starbucks along with other drinks which
include cold and hot teas, cakes and pastries. The Starbucks coffee comes in a many varieties
each possessing a different taste, aroma and flavour.
In addition to its extensive product offerings, Starbucks has many brands including; Starbucks
Hear Music, Tazo Tea, Starbucks Entertainment, , Ethos Water, Torrefazione Italia coffee and
Seattle’s Best Coffee. The successful management of all of these brands pulled together
constitutes the Starbucks portfolio.
Starbucks is also one of the most globally conscious corporations in the world. In 2006
Starbucks donated $36.1 million in cash and products, volunteered 383,000 hours in local
communities, required growers to use strict environmental guidelines, used 20% renewable
energy in stores, and actively recycled in almost 80% of stores in US and Canada. Starbucks
has established itself as the coffee leader in the world and has done so on a socially and
environmentally conscious platform.
Strategic Issues Facing Starbucks
The major challenge that Starbucks is dealing with is the current financial crisis in the world
economy forcing them to call closures of many stores around the world.
Another challenge that Starbucks is dealing with is competitors. There are numerous coffee
shops all over the world and being able to stand out to generate customers is important. Their
main competitors are Dunkin Donuts, McDonald’s, and Nestle in the US and brands like Costa
Coffee and Caffè Nero in the UK, the two major markets for Starbucks. It is important that for
Starbucks to know their competitors and what they are currently doing.
Also Starbuck coffees are priced higher than other market competitors because of Starbucks
only purchasing the highest quality coffee beans for their product, thus increasing the price of
the drink giving the competitors a cost advantage over Starbucks.
Also Starbucks inadequate marketing strategy on advertising is a hindrance in the business
growth opportunities. They prefer to build the brand by promoting the drinks cup-by-cup with
customers. The advertisement ends until they drink the coffee, reducing the chances to attract
valuable customers.
Starbucks also does not emphasize on distributing their products to supermarket because of
being concerned with the quality of the coffee; if the coffees were packaged into plastic bags.
Also the rigorous expansion strategy followed by Starbucks can take a toll on the firms brand
image. As corporations grow there can be a tendency to focus too heavily on increasing output
and locations, and less focus on quality and brand image. Starbucks needs to stay with its
values and ideals that have made it successful.
Also Starbucks policy of not franchising can be a cause of concern for the firm. Franchising
would allow the company to open many new stores with less risk, and make considerable
profits in doing so. Because of this the firm’s research and development costs would fall
making use of the franchisee knowledge of the local market in terms of geographic,
psychographics, demographics, and the local country regulations.

Questions:
1. How prospect theory works in case of star bucks?
2. Explain: Functions of Priorities and preferences with context of marketing strategy?
3. Explain: Do you think Decision making of Starbucks regarding franchising model is the
case of prospect theory.
4. From 1971 to 1987 to 2006 how Manifestation worked for the starbucks.
5. Explain Present starbucks-India scenario (within 300 words)

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 PGDM TRI-2
BEHAVIORAL ECONOMICS
ASSIGNMENT: 02 CEC COMPONENT
CASE STUDY ANALYSIS

“CASE STUDY ON STARBUCKS”

Submitted by:
Name: First and Last name only (Sachin Tendulkar)
Roll No. 000
Batch: Alpha/Beta/Gamma/Delta

Under the Guidance of

Dr.Hardik Brahmbhatt
December 2023