Starbucks Case Analysis

1433 Words6 Pages

Case Analysis
August 24, 2008

Analysis of Current Situation

1. Economic Conditions: In a time of inflation when the purchase of nonessential items is down, Starbucks is feeling the effects.
a. 600 Starbucks locations will close by mid-year 2009
b. This represents 8.7% of the stores nationwide..affecting 44 states..88 locations in California alone.
c. 12,000 employees will lose their jobs…Starbucks will offer relocation packages to many employees, severances to others.
d. Fewer than 200 new US locations will be opened in 2009….this is in comparison to 900 new US locations projected to be opened in 2008.
e. Infrastructure realignments of non-store support staff resulted in the reduction of 1,000
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A diverse supplier is one that is 51% owned, operated and managed by minorities, women and socially, economically disadvantaged individuals. Firm
1. Objectives and Constraints
a. Mission Statement—“To establish Starbuck as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.”
b. Constraints: Economic conditions, lower cost competitors

2. Financial Conditions
a. Stock (SBUX) –Currently at $15.76 per share …Down from the initial public offering in 1992 at $17 per share
i. 52 week performance: $13.33-$28.19
b. Consolidated net revenues increased 9% for the third quarter 2008 ( $2.6 billion in 2008 compared to $2.4billion in 2007)
c. Q3 2008, Starbucks reports net loss of $6.7 million compared to Q3 2007 net income of $158.3million
d. EPS Q3, 2008 = $0.01 per share..EPS Q3, 2007= $0.21 per share

Result of current financial picture:
1. Closure of 600 US based stores( loss of 12,000 jobs)
2. Closure of 61 Australia based stores
3. Reduction of 1,000 positions within leadership and non-store organization

3. Management Philosophy Adopts an “Employee First Policy--employees first, customers second. The belief is employee satisfaction will translate into excellent service to customers leading to increased customer satisfaction. 4. Organizational Structure
Howard Schultz has returned as president, CEO and chairman of Starbucks after firing Jim Donald, CEO. Schultz’s goal is

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