Starbucks’ Strategy and Internal Initiatives to Return to Profitable Growth Arthur A. Thompson – The University of Alabama
Amit J. Shah – Frostburg State University
Case 23 – C-333
I think it’s safe to say that most of us have visited a Starbucks or two in the past, but I’m not sure many of us know the diverse history and thoughtful planning that has gone into the development of their brand. This case provides a thorough look at how Starbucks came to be a leader in the coffee market and a leader in the world of corporate and social responsibility. Starbucks first caught Howard Schultz’s eye when he was Vice President of US Operations for a Swedish company coffee makers and miscellaneous other kitchen products. With Starbucks continuously selling a large number of their products in their Seattle locations, Schultz was intrigued. After a visit to one of their stores, Howard was struck by the ambiance, customer experience, and the care that was taken in the products. From this one visit Schultz determined he wanted to be a part of the Starbucks story. Schultz’s original vision was to open Starbucks stores across the country, providing high quality coffee in both Canada and the US and in 1982 he presented this idea to the current owners. While resistant to the idea at first, Schultz’s strategic vision was hard to argue with. A strategic vision can be described as something that ‘delineates management’s aspirations for the business, providing a panoramic view of ‘where we are going’ and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts and strategic path for it to follow in preparing for the future, and building commitment to the future course of action. A clearly articulated strategic vision communicates management’s aspirations to stakeholders and helps steer the energies of company personnel in a common direction.’ (Thompson, Peteraf, Gamble, Strickland, 2012, p 22-23). While his first vision is a bit vague and doesn’t provide any thoughts on how to arrive at that vision, once Schultz started working for Starbucks in 1982 and spending time in the retail stores, his original vision began to evolve. In 1983, he travelled to Italy and explored their coffee bar culture. It was after this trip that Schultz’s vision changed to not only including opening stores across the county but to say that Starbucks should expand and serve fresh coffee, high quality coffee in their stores. Schultz wanted to turn Starbucks into a coffee experience similar to what he had in Italy. Over the years, the Starbucks has developed new in-store products, developed new partnerships with PepsiCo, Kraft, hotel chains and airports to better distributed their products. Schultz has evolved Starbucks with the market, and adjusted for the international markets they entered. As they fine tuned their process and expanded their in store product line they also designed a physical store which spoke to their love of coffee. ‘The company went to great lengths to make sure that store fixtures, merchandise, displays, colours, artwork, banners, music, and aromas all blended to create a consistent, inviting, stimulating environment that evoked the romance of coffee; that signaled the company’s passion for coffee; that enhanced the mood and ambience of the store; and that rewarded customers with ceremony, stories, surprise, and a satisfying experience.’ (Thompson, Peteraf, Gamble, Strickland, 2012, p C-344). Even with the incorporation of these new revenue streams that original strategic vision for the company has not changed. Starbucks still values providing high quality, signature roasted coffee. At the same time, Schultz valued creating engaged employees whose opinions and experience are influential in their success. Overall, Schultz’s ‘aspiration was for Starbucks to become the...
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