Case: 13 Starbucks Corporation — 2009

Presented by: Deepika Mayank Saurabh Sumit

History

• First Starbucks opened in Seattle Washington

• March 30, 1971

• Jerry Baldwin-English Teacher

• Gordon Bowker-Writer

• Zev Siegh – History Teacher

Then…

• Entrepreneur Howard Schultz joined the company

in 1982

• Director of Retail Operations and Marketing

• Idea of selling beverages

Then…• April, 1984 first store to sell beverages was opened

• Served 400 customers – over the 250 customer

average at their best store

• II Giornale Acquires Starbucks

• Howard Schultz – Starbuck’s President and CEO

worldwide economic recession hit in 2007 and simultaneously McDonald’s entered the coffee business big time. Starbucks closed 600 underperforming stores in the United States in 2008 and plans to open only about 200 new stores in 2009.

Starbucks 10/31/2011

You can now wake up to smell the $4.00 per cup coffee at Starbucks. But McDonald’s is now running an ad saying, “$4.00 coffee is dumb” as the firm attacks Starbucks around the world with its $1.00 (and less) coffee. Starbucks needs a clear strategic to offset the new attacks of McDonald’s that are trying to attract all Starbucks’ customers.

Starbucks 10/31/2011

Schultz, Starbucks’s CEO, says the media exposure concerning McDonald’s versus Starbucks coffee products actually helped his firm by creating “unprecedented awareness for the coffee category overall.”

Product Diversification

SBUX (NASDAQ)

Now…• World's premier roaster and retailer of specialty

coffee

• 8,812 company-owned stores

• 7,852 licensed stores in more than 50 countries

Now…• Annual sales of about $10 billion as of April 2010

• Sell : beverages, pastries, whole bean coffee,

ground coffee, and coffee-related products

Starbucks 10/31/2011

50:50 joint venture, named Tata Starbucks, will own and operate Starbucks cafés which will be branded Starbucks Coffee “A Tata Alliance”.

beginning with stores in Delhi and Mumbai in calendar 2012.

Starbucks 10/31/2011

Structure, Mission, Vision

vision is “To inspire and nurture the human spirit— one person, one cup, and one neighborhood at a time.”

› Flatter organizational structure will:

– Lead to more efficient and more effective business strategy

– Streamline information flow from customer and low-tier employee to corporate level

– Keep customer and bottom line a priority to Starbucks business strategy

– Utilize new employee manual to streamline production and increase employee efficiency

Starbucks 10/31/2011

The company further elaborates by stating the following guiding principles:

Our Coffee It has always been, and will always be, about quality. We’re passionate about ethi- cally sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done.

Our Partners We’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold each other to that standard.

Our Customers When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers—even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.

Our Stores When our customers feel this sense of belonging, our stores become a haven, a break from the worries outside, a place where you can meet with friends. It’s about enjoyment at the speed of life—sometimes slow and savored, sometimes faster. Always full of humanity.

Starbucks 10/31/2011

Our Neighborhood Every store is part of a community, and we take our responsibility to be good neigh- bors seriously. We want to be invited in wherever we do business. We can be a force for positive action—bringing together our partners, customers, and the community to contribute every day. Now we see that our responsibility—and our potential for good—is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.

Our Shareholders We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our shareholders. We are fully accountable to get each of these elements right so that Starbucks—and everyone it touches—can endure and thrive.

Mission Statement1990 – October 2008

• Establish Starbucks as the premier purveyor of the

finest coffee in the world while maintaining our

uncompromising principles as we grow.

Mission StatementOctober 2008 - Present

Competition

McDonalds Dunkin Donuts

Second Cup New World Coffee

Caribou Coffee

Starbucks 10/31/2011

Marketing

Starbucks retail outlets seen as a place for socialization, relaxation, and reflection.

electrical outlets and, in some stores, wireless access, for customers who might need to use their MP3 players or laptop computers.

Additionally, they have introduced the Starbucks’ card with the hope of strengthening customer loyalty by improving service.

Starbucks’ products can be found in convenience stores, grocery stores, department stores, movie theaters, businesses, schools, and even airports.

Conclusion

Starbucks continues to be the “coffeehouse of choice” for many domestic and international consumers. Their strategy remains one of progressive expansion, but perhaps with more measured caution given the economic times. Recent closures of less than profitable loca- tions combined with worldwide economic conditions presents challenges for the company.

Firms such as McDonald’s and Dunkin’ Brands desire to lure all Starbucks’ customers away to cheaper cups of coffee. Develop a clear strategic plan for Starbucks.