Coffee and Starbucks

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Starbucks is one of the best known stores around the world that sells highly-priced coffee. At number 241 on the Fortune 500 list, Starbucks has continued to grow as it has expanded worldwide into countries such as Argentina, Australia, South Africa, China, Czech Republic, and Lebanon (CNN Money, 2010; Hoovers, 2010; Starbucks Coffee Company, 2010). As the global leader in coffee, Starbucks boasts a total of nearly twenty-one thousand stores in fifty-five countries (Starbucks Coffee Company, 2010). Its dominance in the coffee market is displayed by the sheer statistics and numbers associated with Starbucks. Although Starbucks has performed exceptionally well, there are areas for improvement that will inevitably help to augment its revenues.

The coffee industry has been a difficult market to survive and adequate penetrate due to the fierce competition of Starbucks and its many competitors: Dunkin’ Donuts, McDonalds, and local coffee shops. The concentration ratio within the coffee industry stands at sixty percent, which is characteristic of medium concentration (Deardoroff & Rajaraman, 2005). Starbucks has suffered tremendously since McDonalds ventured into the coffee market. Due to many places selling coffee, Starbucks has not been able to fully capitalize on its consumer base nor has it been able to sustain it. Therefore, Starbucks has had to reorganize the overall structure of the company. Starbucks has regional operations on six different continents where decisions are made accordingly. Within the United States, they are present in all four time zones in order to accommodate their customers (Shultz, 2008). Starbucks has a difficult task to make sure that all of its stores are operating and generating revenue. Many of the decisions in terms of management come from the regional manager. However, the headquarters has made difficult management decisions such as closing down stores (Adamy, 2009). In addition, Starbucks employs a total of 128,000...
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