Case Study on the Success and Decline of Starbucks in the Last 10 Years

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Case study on the Success and Decline of Starbucks in the last 10 years

QUALITATIVE ASSIGNMENT

Case study on the Success and Decline of Starbucks in the last 10 years

1st October 2011

TABLE OF CONTENT

1.INTRODUCTION3
1.1CONCEPTS AND DEFINITIONS4
1.2JUSTIFICATION OF THE STUDY5
2.THEORETICAL BACKGROUND6
2.1SUCCESSFUL SERVICE INDUSTY COMPANIES6
2.2Strategy Formulation in service industry7
2.3Customer Value, Satisfaction, and Loyalty8
2.4Service Quality10
3.CASE DESCRIPTION12
4.DATA AND METHODS14
4.1.1RESEARCH STRATEGY14
4.1.2Visual Design of Methodology15
4.1.3Limitations15
4.2Data Collection16
5.SWOT Analysis on Starbucks16
5.2The Company’s timeline19
6.RESULTS23
7.CONCLUSIONS24
8.CONTRIBUTION OF EACH STUDENT24
9.REFERENCES26

APPENDICES

Appendix I Outstanding Events of Starbucks

Appendix II Financial Data of Starbucks

INTRODUCTION

Hardly any company is as associated with coffee as is Starbucks. Starbucks has come a long way from its roots as a single coffee shop in Seattle, Washington. Now it is a multi-billion dollar business that operates 17018 coffee shops in 57 countries, through which it sells fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a variety of complementary food items, a selection of premium teas, and beverage-related accessories and equipment. Besides this, Starbucks also licenses its brand to retail stores which sell coffee and tea products, as well as ready-to-drink beverages.

Starbucks’ core-competence is selling high-quality coffee beverages at premium prices in their strongly branded company-operated stores. It is vital to the company to own the components and employ the people who are able to support and maintain this core competence. The nature of the industry Starbucks operates in is end consumer based. Starbucks coffee houses especially are famous for being the “Third Place” between work and home, suitable for more informal meetings as well as for social gatherings and breaks from the hectic everyday life (Wikinvest, 2011). Despite its apparent successes, or perhaps because of them, Starbucks faces a number of challenges it must grapple with.

Due to its rapid growth it has had difficulties maintaining a lean and efficient bureaucracy, and also remaining focused on the customer.

To name some of the challenges in their Annual report of 2007 the CEO Howard Schultz talked about ‘slow costumer traffic’ in the USA and assured that “We understand the challenges we face, and we know that we have the ability and experience to overcome them” (Starbucks 2007 p.3).

The company's core objectives, according to its latest annual report, are maintaining respect for its brand by both expanding its physical reach and product portfolio, and focusing on remaining an employer of choice. (Starbucks 2009)

The following case study aims to take a closer look at the factors involved in the success and decline of Starbucks during the last decade including the period of the economic downturn as well especially as a company which operates in the service sector. We combine a qualitative approach with multiple sources of evidence using secondary data. First we look at the company in general and its background. We then take a closer look at the success factors of service industries in general. In the main section we deal with the case description, as well as the data and methodology involved. We use a SWOT analysis to present our results and reach conclusions.

1 CONCEPTS AND DEFINITIONS

The key words in this research are...
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