Written Case Analysis: Starbucks Corporation

Starbucks Corporation

The first Starbucks was opened on March 30, 1971 by 3 partners; Jerry Baldwin, Zev Siegl and Gordon Bowker in Seattle, Washington. The store focused exclusively on selling coffee beans. Later in 1987, the brand was sold to Howard Schultz who began selling coffee and espresso drinks in addition to roasted beans. Now, Starbucks Corporation is the largest international coffee company, its coffeehouse chain operating over seventeen thousand stores in 50 countries. It also operates an entertainment division through which it markets books, music and film.

In line with its vision, which is "To inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time", Starbucks Corporation has major expansions plans, aiming to open 15,000 outlets in the USA and 30,000 worldwide.

Problem (Taken from the case)

Starbucks continues to be the "coffeehouse of choice" for many domestic and international consumers. Their strategy remains on of progressive expansion, but perhaps with more measured caution given economic times. Recent closures of less than profitable locations combined with worldwide economic conditions presents challenges for the company. Firms such as McDonald's and Dunkin Brands desire to lure all Starbucks' customers away to cheaper cups of coffee. Develop a clear strategic plan for Starbucks.

Internal Audit

Many of Starbucks' strengths stem from the company's focus on consumer experience. The company reaches out to its customer in as personal a way as possible. Everything is designed to contribute to the customer experience at a Starbucks outlet, from the smell of each batch coffee, the people who work there, down to the lighting and music. Each aspect is designed to convey the image of high quality, class and comfort. In fact, this experience includes the partners (the company term for employees), as shown by the fact that the company is deemed one of the Top 10 places to work in by Fortune magazine. This has translated to financial performance above the industry average, however, the company as of late been suffering from reduced income and revenues. Their expansion efforts have created operations that are new and in need of a more extensive support system than the company currently possesses.

External Audit

Specialty coffee is becoming more popular, though the recent recession has had a negative effect on the industry. Still, people have begun to drink more coffee as they become more sophisticated while the world comes closer together. Consumers have also become more conscious about the effect of businesses on the environment, making Starbuck's ethical sourcing and efforts to be environmentally friendly a big plus. Consumers are also looking for, and willing to pay more, for healthier