Essay about Starbucks Case Study Analysis

1090 Words Mar 28th, 2015 5 Pages
Starbucks Coffee Company: Transformation and Renewal - Case Study Analysis

1. Starbucks’ decline was highly attributed to its rapid growth in the early 2000s. The accelerated number of stores being built created a number of problems including the saturation the Starbucks Experience it so highly valued as well as a drop in sales due to competition with existing Starbucks stores in any given area. This same-store sales being taken from one another gave Starbucks the feeling of “cannibalism” from within its own company. The desire to achieve high efficiency and reach financial goals led to the dilution of Starbucks’ ability to maintain its differentiation strategy through its most valuable resource, its reputation. The company lost
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However, the opening of too many stores began a trend of competing “comps” between stores in the same region. The case mentions an intersection in Washington where there is a Starbucks store on 3 of 4 corners with prospects of opening a fourth one on the last corner. Because the company was able to integrate new stores into its overall operations (such as getting materials to the store with ease through its channels), the company went from confident to arrogant. There was a visible loss in company morale, customer experience and investors’ confidence. This use of the company’s capabilities failed to contribute to Starbucks’ performance in regards to Schultz’ standards.

2. External factors and forces heightened the Starbucks’ decline, although they were not the main attribute to the decline, they did become a prominent threat to the company’s success. * Power of Suppliers (moderate): Starbucks has been able to acquire a dependable chain of suppliers that provide materials the highest of quality and while still maintaining social responsibility. Although Starbucks has considerable economies of scale, the global demand for coffee outweighs the market share Starbucks has thus giving the supplier an upper hand in bargaining power. * Power of Buyers (high): Although the company has been able to create a large loyalty

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