Overview and Problem Identification
This case presents an overview of the specialty coffee industry, which is the second most traded commodity next to oil, and Starbucks’ position as a market leader in this industry. Two main concerns that must be addressed, as Mr. Howard Schultz, the Chairman and CEO of Starbucks Corporation questioned, is whether Starbucks is utilizing its resources and capabilities to grow in the most efficient and effective way; as well as if it was overextending in its quest for growth.
Analysis in Brief
As previously mentioned, the specialty coffee industry is the second most traded commodity in the world; being divided into two categories: specialty coffee and basic coffee. Starbucks has a growing and stable position in the industry, they have a first-mover advantage, owning their own stores and managing the quality of their products, while having prime locations with a welcoming atmosphere. The total US and Canadian markets included 1,074 Starbucks stores, with a population of 257,128 people per store, and a maximum number of 4,931 coffee stores supported by the market (Starbucks Corp., June 20, 1997). Starbucks’ great success and growth was led by many factors such as bringing education to their customers, offering quality coffee and good customer service and providing a unique Starbucks experience. The Starbucks also has a very loyal and close relationship with its suppliers, providing a competitive advantage against their competitors, for example if the supplier provides for many and has a limited amount, Starbucks will have the first priority to take it.
Outline of Recommendations
Starbucks is doing a very good job in maintaining a strong position in the speciality coffee industry. I believe they have been utilizing their resources well and their close relationship with their suppliers will keep them at an advantage. However, they should always evaluate their position in the market relative to their...