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Starbucks Case Study

1508 words - 6 pages

CASE STUDY:Starbucks in US: Too much coffee spilling all over?29 August 2014IntroductionStarbucks 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. 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 DilemmasMintzberg(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 all stores, but conflicted with unique personal customer experience approach the business was based on where the barrister's innovative touch is no longer there.Wide product offering versus brand weakening - Introducing merchandise into stores conflicted with customer experience. Barristers focused more on upselling rather than having conversations with the customers. Hot breakfast smells overpowered fresh coffee smell.PESTEL Analysis (Macro-environmental)Political: Increasing public dissatisfaction over the government's budget and regulatory misconduct, involving: prolonged lax regulations and oversight on financial marketplace that resulted in the financial crisis (Sherman 2009); Growing deficits caused by Bush's overspending in Afghanistan and Iraq wars driven by $700 billion consumed on bailout plans (Raston 2008); Presidential elections results impact on Government policies and regulations.Economical: US GDP growth slowed down to...

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