Starbucks Case Study
Autor: kek4zb • November 1, 2015 • Coursework • 839 Words (4 Pages) • 953 Views
Name: | Kristofer Kuhn |
Assignment: | Week 1 Business Case Analysis |
Date Submitted: | 10/25/15 |
Course (include the section number: | MBA526 |
Statement of Academic Integrity: I certify that:
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Student’s Signature (type your full name): | Kristofer Eugene Kuhn |
Starbucks Corporation, Case Analysis
Kristofer E. Kuhn
Park University
Starbucks Corporation, Case Analysis
In 1987, Howard Schultz opened his first coffee bar, Il Giornale, in Seattle’s Pike Place Market. In 2012 Starbucks was number 229 on the Fortune’s top 500 listing. How was Mr. Schultz able to build a multinational coffee empire? The answer lies not in aggressive growth but rather in the core values set forth by Schultz, a strategy that’s existed since day one and has lead as the primary vison for Starbucks ever since. The sharp downturn that Starbucks faced in 2008 and its return to dominance a few years later shows how this strategy has worked.
Synopsis
In 2008, after 20 years of strong expansion, rising profits, and increasing stock price, Starbucks hit a brick wall (Grant, 450). Starbucks hit its peak stock price of $40 in October 2006, after which they experienced a sharp and rapid decline by more than 75% over the next two years (Grant, 450). Multiple factors lead to this decline, such as the global recession in 2008 which saw same store customer visits drop for the first time since the company went public in 1992 (Marketline, 5).
In an effort to right the ship, Howard Schultz returned as the CEO at the start of 2008. Schultz realized upon his return that there was no single solution to fix Starbucks problems, but acknowledged that Starbucks aggressive growth had been too rapid, and they had compromised their core values as a result (Grant, 450). The first step Schultz took was to shift the companies’ focus from expanding the brand to enhancing it (Marketline, 5).
The Fix
In order to refocus Starbucks from brand expansion, Schultz closed approx. 900 stores between 2008-2009, “When we reviewed some of the underperforming stores, I was horrified to learn that the stores that we ultimately had to close had been open less than 18 months” (Grant, 451). Among other cost reductions, Schultz looked to increase employee efficiency. On major change was the installation of new coffee machines that automatically grinded coffee, previously employees had to grind coffee for each cup. Finally, to refocus each employee on the “Starbucks Experience,” Schultz had every store closed for one day to retrain staff (Marketline, 7).
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