Case Study : Starbucks Aggressive Expansion

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-Market Saturation: Starbucks aggressive expansion has worked favorably thus far but may limit future growth. The US may be over crowding causing stores to cannibalize sales from one another. Starbucks had 7,559 company operated and 4,962 licensed stores for a total of 12,521 in 2015]. Additionally, Starbucks relies heavily on US markets with almost 75% of their transactions taking place domestically. This heavy reliance could send shudders through the company if the US economy experiences turbulence. -Product mix: While Starbucks is best known for their coffee, many international countries largely prefer tea or other products. As such, Starbucks must apply a different business model abroad. Experiments with new food and beverage can be…show more content…
Starbucks began testing with mobile ordering systems that allow customers to place their orders from their phones prior to arriving at the store. This reduces customer wait time and boosts satisfaction. An expansion of this concept could increase customers and sales. Threats: -Competition: The coffee market has many competitors, from other large retailers to smaller mom & pop stores. Starbucks must continually improve their business model in order to halt these competitors from eroding their market share and profits. -Commodity based: Coffee prices are dictated by the market price of coffee beans and other ingredients. If a surge in prices were to send coffee prices higher across the board, customers will begin to seek out cheaper alternatives. Starbucks can only mitigate this risk to an extent, and creating large stockpiles of beans could be detrimental if prices were to fall. -US Economy: Starbucks earns more than 75% of their revenues from US based stores. In the event that the US economy stumbles sales could be impacted significantly. This would force Starbucks to aggressively pursue foreign expansion which could be very costly and ineffective in less developed countries. Values of Key Personnel The way a company treats their management and employees says a lot about the type of company it wants to be, and the image it wants to portray. Starbucks values every individual, all the way from the CEO and employees to
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