Case Study for Starbucks

2) Garthwiate, Craig; Busse, Meghan; Brown, Jennifer; Merkley, Greg “Starbucks: A Story of Growth” Harvard Business Publishing, July 2012.

Starbucks management announced its intention to double the number of retail stores and increase the number of customers to all stores. Starbucks had added 1672 stores during 2005. It continued to open new stores with 2199 openings in 2006 and 2571 openings in 2007. Earnings per share grew from 61 cents per share 87 cents per share over the period of 2005-2007. At the close of the 2007 fiscal year, the management was forecasting the opening of an additional 2500 stores in 2008.

Starbucks strategies have successfully made them one of the biggest names in the coffee market globally. Starbucks has been able to survive the high competitive market and to differentiate themselves from other coffee shops by producing high quality coffee. Also, Starbucks successfully create a huge numbers of loyal customers worldwide by providing great services and high quality products. Starbucks was able to survive 2008 financial crisis successfully. In 2008, Starbucks net income was -53% that means Starbucks was losing so much many yet, 2009 Starbucks was able to not only stop their losses but also to gain a profit of 24%. However, Starbucks should be worry from the possibility of another financial

The company many sales drink, Food and Nutrition. Drink comprises of the finest coffee from best beans procured all around the world and various other products. They also serve food which is good from the customer’s nutrition point of view. They also serve various beverages cold drink, brewed coffee etc. They not only serve food with nutritional value but also salads, sandwiches etc.

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’ shares have grown more than 1500% over the past decade. Financially, it has been an oak tree in an ever changing economy with customers that have ever changing demands. However, there has been increased concern for the financial viability of the coffee shop a recently announced plan to close down over 600 stores that were said to be underperforming domestically. That means that more than 1,000 jobs will be eliminated. As scary as that is on the local front to top management, the executive staff feels that it is the only way to recover from it’s shocking $108.7M loss for the 2nd quarter this fiscal year.

Starbucks strategy at the beginning was based upon creating a symbolic-expressive value trough a social meaning concept of offering the American community meeting places; this positioned its original products and made associations to identify consumers with self-expression providing personal, social and sociocultural meaning.

In responding to its financial crisis in 2008, Starbucks brought back Schultz as CEO and stabilized financial downturn by closing nearly 1,000 stores that were underperformed, reducing $580 million operating cost.

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.

Firstly, Starbucks’ net sales growth from 2006 to 2015 shows us that the company has been working well on its attractiveness through time. Indeed, except in 2009, sales have been constantly increasing from one year to another at a rate of 11% in average. Over the period, two specific year are to be highlighted. 2007 and 2015 experienced respectively an increase of 21% and 17% much higher than the 11% in average. While 21% was the normal sales growth rate in 2007, Starbucks has experiencing an amazing year sales wise since the beginning of 2015. According to the last estimations, this sales increase seem to be due to outstanding performances on the tea market as well as a great progression in terms of traffic in Asia and in the US.

For this assignment we were required to review the case study titled “Starbucks’ Structure” found in Chapter 3 of our The five functions of effective management text. We are required to write a paper that answers the four case questions of 1. Complete a job description and job specification for a Starbucks employee. 2. What form of departmentalization should Starbucks use? Should the form be changed in stores offering food products and lunch? Why or why not? 3. When the company began to experience financial problems, should the leadership try to centralize power and decision-making

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

Even with the “No. 1 Best Coffee” Award from Zagat’s Survey of National Chain Restaurants as well as numerous other awards and recognition under their belt, Starbucks remains vulnerable to the ever-changing, ever-demanding needs of their customers (Starbucks Company Recognition). In order to succeed in the service industry, companies must provide impeccable customer service in addition to rewarding their customers through programs and promotional strategies. Currently, Starbucks has reward programs and promotional strategies in place, but they have failed to construct them in a way that fairly and appropriately benefits their customers. In addition, Starbucks’ reward programs are generally unknown by most people

The cause of this case study is to evaluate and recognize Starbucks growth in the past decades. Starbucks was established in 1971. The industry for coffee at the time was in decline for almost a decade. The consumption of coffee back then was mostly at home or “Away from home” either with a meal at dinner or restaurant. In larger cities like New York or San Francisco they have specialty coffee roasters for example Peet’s. The main goal of Schultz was aiming with that mentality to roast and vend great coffee (CRAIG, BUSSE, BROWN, “Aplia” Kellogg 1). By 1982 they had five retail outlets that served coffee beans and supplies for home but at the time they weren’t served prepared. As the growth of Starbucks is