Case Study - Starbucks

starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One

It’s hard to drive the street these days and not see a Starbuck’s coffee house sitting on a corner with cars lined up in the drive-thru or consumers gathering in their café to socialize. This has been the scene since the first Starbucks was opened in 1971. Since then, Howard Schultz, chairman and CEO, has embarked on a quest to bring Italian bistro traditions to the United States. Starbucks mission statement is simple, “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time” (Starbucks, 2017, para. 7). Starbucks has built a global empire with a reported 22,519 stores spanning over 66 countries. The company’s diversity and purchase power of high quality whole coffee

All around the globe people have either purchased a coffee or have heard of the coffee chain Starbucks. As the #1 coffee house chain in the world, with just over 19,700 stores, Starbucks has managed to stay at the top of their game with reinventing themselves and how they do business. Whether that is due to the change in leadership, structure or cultural change, this chain has surpassed the market place by overpowering the second place Dunkin Donuts by almost 8,000 stores worldwide. Nothing seems to slow down this powerhouse and they have the numbers to prove just that. The company has spent decades growing only the best for their franchise. Starbucks has included “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Jurevivius, “Mission Statement of Starbucks”). How is it that one chain can take the world by storm?

However, there was a significant differentiation between Starbucks and the independent specialty coffeehouses. The brand image of Starbucks also had some rough edges. More customers were beginning to agree with the fact the Starbucks cared primarily about making money and building more stores. Also, despite the high customer snapshot scores customer satisfaction scores were declining. It was believed that there was a service gap between Starbucks scores on key attributes and customer satisfaction. In polls by customers “improvements to service,” particularly speed of service, was most mentioned for improvement.

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

The objective of this case study is to analyze why Starbucks was not meeting expectations in terms of customer satisfaction thereby losing customer loyalty. Whether or not to invest millions of dollars ($ 40 million) in each store to enhance the labor. How will it impact the sales and profitability if invested? Product mix and marketing approach will also be recommended in this paper.

a) The nature of Starbucks’ business is to generate income based on operating activities. When referencing the Statement of Cash Flows and looking at their operating activities, you can see that Starbucks generates $2,908.3M in net cash provided by operating activities. Investment is a significant item in this statement as well. The company spent $785.9M in investments in the year ending September 29th, 2013. Strong investment activities show that Starbucks is investing through buying and selling (Sales, maturities, and calls of investments $1,040.2M) and using their spare cash to invigorate future growth and fund future obligations.

Starbucks dates back from 1971 and is based in Seattle, Washington. The company was founded by Gordon Bowker, Jerry Baldwin and Zev Siegl and it

a. Starbucks Corporation makes money in a few different ways, it’s highest revenue source are through the company-operated stores, here they sell things like different coffee brews, teas and pastries. Starbucks’ other revenue sources include product sales to licensed stores, this includes royalties and other fees paid to Starbucks for using it’s brand. Another source of revenue is consumer packed goods (CPG), food service and other, threw CPG, food service and other, Starbucks sells already packaged goods like coffee and tea to other retail stores like grocery stores, gas stations, warehouses, etc. Starbucks also holds short and long-term investments, which primarily consist of

Starbucks is diversifying into other related industries including bottled water, and even the music retailing industry. When a customer enters a Starbucks, they get a wide choice of many different types of products. They provide bagels, souvenirs, pastries, yogurt, wraps, fruit, Frappuccino, Espressos, Tazo teas, and many other items. Starbucks uses contemporary design of all promotional, web-related, and other material to keep it appealing to young generations. This contemporary look and feel is unified throughout all their material, so even the older target segments will feel younger when they drink your coffee.

Starbucks first opened its doors in Seattle’s Pike Place Market with the name being coined from that of Moby Dick’s first mate (Schultz & Yang 1999). It has spread its shops across North America, all over Europe, the Middle East, Latin America as well as the Pacific Rim with an estimated 35 million customer weekly (Michelli, 2008). With tremendous growth from a small time coffee shop, the company has matured to an international icon that today it is one of the world’s leading retailer, roaster and brand specialty coffee (Story, 1971). The company offers whole bean coffees, espresso beverages, and confectionery and bakery items.

In assessing Starbucks Social responsibility strategy, one would have to look at certain key elements of the strategy and what makes it a good strategy, a great strategy or even a poor strategy. One would have to ask question such as;

This paper will examine Starbucks, Inc. CSR and sustainability practices from the viewpoint of a potential socially responsible investor performing due diligence. Two indices will be used to compare and contrast the company 's CSR report which measure the CSR practices of corporations; also, the usefulness of these two indices for research purposes will be evaluated, critiquing the credibility and limitations of each index. A report will be formed addressing Starbuck’s CSR performance and strategies based on the analysis.

Starbucks when established in 1971by three founding members; it was known as Starbucks Coffee, Tea and Spices. They were not selling beverages instead they sold coffee beans. By the next year itself they opened a second one in same Seattle, Washington.

Starbucks put up some very interesting numbers for the years 2014 and 2013. Specifically, their profit margin both years seems to be extremely low (most businesses want to operate around 20%). 2013 showed a mere 8.8 million in earnings. I believe Starbucks was undergoing massive expansion during this time period, however, as the year following put up numbers more in line with the norm. Their profit margin seemed relatively low due to such expansion, as their outflow of cash was very close to their inflow.