Coffeehouse and Starbucks

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1. Original Strategic Vision for Starbucks

Howard Schultz’s original strategic vision was to transform Starbucks into a national company with an emphasis on placing great value on its employees. He believed that the key to success was for Starbucks to capitalize on its people; he wanted a somewhat decentralized organizational structure which emphasized the importance of including employees in the decision-making process. Schultz wanted to place an image of Starbucks as an employer that cared for the general well-being of its employees and one that employees could be take pride in being a part of. A key strategic objective espoused by Schultz in his original strategic vision was to transform Starbucks into “the most respected brand name in coffee and for the company to be admired for its corporate responsibility.”

Also worth noting is the fact that after visiting Milan, Italy Schultz also made it part of his strategic vision to transform Starbucks as a remake of the Italian coffee bar culture. He wanted customers to perceive a visit to a Starbucks coffee shop as a social gathering where customers could grab a fresh-brewed beverage, meet their friends and visit. He believed that creating this emphasis on customer “experience” could distinguish Starbucks from its competitors.

Schultz’s 2010 strategic vision for Starbucks is an extension of his original vision from the 1980s which has been expanded to include more innovative and cost cutting practices. It can also be argued that some of his new strategic objectives are more prudent instead of being fully aggressive. For example, while Schultz still believed that the company should continue to pursue international expansion, he makes it evident that this should be pursued at a slower, more methodical pace. In addition, with regards to the volume of stores in the US, he acknowledges the fact that expansion efforts were not properly coordinated with regards to the close proximities of many Starbucks shops. Therefore he closed 900 underperforming shops, three quarters of which were located three miles away from a nearby shop.

The 2010 strategic vision also continued to emphasize the customer experience. He believed that employees have lost their “soul of the past” in their passion to educate customers about their products and provide customers with a quality experience . As a result in 2008, Schultz ordered 7,100 US stores to be temporarily shut down for three business hours to provide special training for store employees. The purpose of this was to give their baristas hands-on training to aid in improving the quality of the beverages they served. It was also an effort to renew and reignite Starbucks’ culture of a customer-centric focus to help employees understand the importance of a satisfying customer experience.

Lastly, much innovation and cost-cutting practices were incorporated into the 2010 strategic vision. For example as part of a serious cost-cutting strategy, the company undertook a 1000-person cut in staffing to cut down on administrative costs from the company’s organizational support infrastructure. With regards to innovation, the company also implemented ideas such as internet-based software for scheduling work hours for store employees and new resources such as laptops for store employees. Innovation was also implemented in the products the company offers. An example of this is the launch of VIA instant coffees and menu items designed to offer healthy breakfast choices for people with busy lifestyles such as fruit cups and healthier bakery selections.

2. Has Starbuck’s strategy evolved as the strategic vision has evolved?

3 . The Broad Differentiation strategy most closely approximates the competitive approach used by Starbucks. This is supported by the fact that the company’s target segment is not limited to a specific niche market. As reinforced by the company’s resurging commitment to expand to global markets, it is committed to...
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