Howard Shultz on Starbucks Future Plans to Grow

Major companies and corporations that comprise a big part of the United States economy take advantage of certain opportunities such as going public through IPO’s, acquisitions, and mergers. These three approaches provide an additional resource and many times an advantage to expand, become more profitable, or simply save a company’s existence.

And plus as these new businesses take place, new opportunities may

The marketing sector of the company will also be saving money once and if the acquisition takes place.

The goals of mergers range from reducing the number of competitors, to access of new products (Belcourt et al., p 330). Statistics show that 80% of new product developments fail (Howells, 2011), partly due to challenges and conflicts with human resources functions. Mergers and acquisitions are the fastest way to enter new markets. “It is estimated that 1/3 of all mergers fail due to faulty integration of diverse operations and cultures,” (Chhinzer, 2013). Therefore, the success of a merger or acquisition lies in the ability to guide, motivate, retain, and effectively use

* It also helps the company in ensuring that it stays competitive in the market.

Since, Starbucks has rebounded and in the 3rd quarter of 2011 has reported record sales and net revenues (www.Starbucks.com). The downward turn of the economy was definitely an uncontrollable event that caused a threat to the company. However, it also provided an opportunity for the stakeholders to re-examine their corporate structure and mission which forced them to make changes for the betterment of the company by increasing the customer experience. I believe Mr. Schultz did an outstanding job of turning the company around during this time. Had he not made the changes that he did, Starbucks may have failed.

When Howard Schultz launched Starbucks, its main targets were the competitors and the customers. Schultz’s brand aimed at gaining dominance in the coffee industry in addition creating a Italian coffee shop feel in the United States (Buchanan & Simmons, 2009). The strategy of Starbucks was based on new products, listening to customers wants and ensure future expansion (Buchanan & Simmons, 2009). In creating convenience for customers, Starbucks created stores almost on top of eachother. They hinged on the idea that, they did not want to lose out on a sale if a line was too long. This action, of placing stores in heavy populated areas, basing need on projected growth of an area caused some decline in sales during economic trouble with the economy. The 2007 recession, failure of subprime mortgages, increased competition from McDonald 's McCafe brand, and Dunkin Doughnuts all led to a decline in sales for Starbucks in the fourth quarter of 2007 (Buchanan & Simmons, 2009). To attempt to regain market share and recover after the

For more than three decades since Starbucks started its operations, the company was considered as a leading coffee chain operator. However, in 2008, the company faced a significant financial downturn that almost cost it its position in the marketplace. Through strategic planning and adopting a differentiation strategy, Starbucks, under the CEO Howard Shultz, recovered from the financial decline to regain a competitive advantage over other big companies like McDonald's and Panera Bread. This paper will discuss the business strategy and management for Starbucks Company and emphasize the importance of business strategy. It will cover the strategic basics of Starbucks, its financial downfall, an analysis of its profitability and a comparison with its key competitors as well as its technological threats and opportunities.

Starbucks utilizes a differentiation business model by offering an overall unique and high quality experience for the consumer. From the high-quality food and drink options, to the uniquely roasted coffee and supreme customer service, Starbucks aims to provide an experience unobtainable anywhere else. Starbucks also focuses heavily on rapid expansion by seeking out profitable geographical areas and overcrowding those areas with stores in order to exploit profits and slow down competitors. Starbucks’ compliments this with its horizontal acquisition strategy, extending their product line through acquisition of competitors. This provides Starbucks with a differentiation strategy focused on providing a diversified product mix

Even so, just two weeks earlier Howard Schultz announced that the company will be expanding internationally. The plan is to open more than 1500 stores in Germany, France, and Britain over a 3-year span (Forbes, 2008). It is estimated that this expansion will boost revenue by more than 20 percent (MSN Money, 2008). In spite of Starbucks’ struggle among its love-hate relationship between customers and protesters, one thing that Starbucks

This key acquisition is one of Starbucks’s main strategic goals for diversifing its brand by

First, Starbucks has effectively applied the product differentiation strategy. To achieve it, the company has specialized in different product mixes, aligned its business locations to a specific ambiance that suits the context, and varied the customer experience, thus resulting in a higher customer service satisfaction. Further, Coskun, Basligil, and Baracli (2008) note that Starbucks prides in having their customers enjoy a premium service. Therefore, the company’s signature strategy has worked well thus far, as competitors find it difficult to imitate. Second, the enterprise has coordinated its acquisition and portfolio strategy, thus consolidating the market. As discussed in the background chapter, Starbucks has a portfolio network of eight brands under its stable. Third, Starbucks’ international expansion strategy has worked well, with a presence in 70 countries (Starbucks, 2017). These factors, coupled with its financial capability, offer Starbucks an edge over its

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.

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.

Starbucks has a reputation for new product development and creativity. But new ideas can not come so often and even if they do they may not be on target. Moreover, almost the ¾ of their shops are located in the U.S. which means they are depended too much on one country. They need to spread into another group of countries in order to spread the business risk. Also organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.