Starbucks Case Study

Topics: Starbucks, Howard Schultz, Espresso Pages: 8 (1711 words) Published: January 4, 2012
Starbucks in 2004: Driving for Global Dominance

Strategic Management STRA 703 Assignment

Prepared by:
Sherif Hendi (M1100758)

Presented to:
Dr. Gamal Shehata

Q. NO. 1
What are the key elements of Starbucks strategy as of 2004? (What is the store concept, the customer offerings and differentiators? The expansion strategy? The financial strategy? The personnel management and social responsibilities? Conduct a five forces analysis?) Q. No. 02

What was the original strategic vision and objectives and how did they evolve? What is your opinion of Starbucks’ mission statement? What grade would you give Howard Schultz for his job as the CEO Starbucks and why? Q. No. 3

What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio?) Q. No. 04
What were the key issues faced by Starbucks in 2004?

Q. No. 05
What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead?

Q. NO. 1
What are the key elements of Starbucks strategy as of 2004?

ANS: Key Elements of Starbucks’ Strategy
Starbucks adopted a lot of innovative strategies throughout its journey from 1971 to 2004. These strategies in brief are as follows:-
* The restaurant/store concept
* The offering of Innovative product line
* Differentiation from competition
* National and international expansion
* Distribution channels (Pepsi partnership/online store/Dreyer partnership) * Efficient Financial management (Centralized Information Systems) * Capitalizing on enhancing the people element

* Engaging in social responsibility programs (CARE).

Competitive Advantages or Differentiators
Their differentiating elements are as follows:-
* They were the pioneers to introduce espresso bar idea in USA * Mail order sales
* Word of mouth marketing
* Employee motivation strategies to attain improved employee commitment * Convenient distribution channels
* Introducing chemical free cultivation process.

Q. No. 02
What grade would you give Howard Schultz for the job he has done as CEO of Starbucks? Be prepared to support your answer based on how well (or not so well) he has performed the five tasks of strategic management discussed in Chapter 2. ANS: Howard Shultz gets a grade of 95% in his Strategic Management approach. In my opinion Howard Shultz just didn’t do perfect in the area of marketing as he did not spend adequate budgets on advertising and product innovation. Last but not the least is that he did not attempt to study the environment properly while entering into new geographical areas e.g. he opened a store down street in Chicago which was not a good idea due to cold weather conditions. Other than that, he made a great task of performing all the five tasks of Strategic Management

Q. No. 3
What was Howard Schultz’s original strategic vision for Starbucks? Is his present strategic vision for Starbucks different from the one he had in the 1980s? How many times has his strategic vision changed? Is his present strategic vision likely to undergo further evolution? ANS: Howard Shultz original Strategic Vision

“To establish Starbucks as the most recognized and respected brand in the world.” Strategic Objectives
* They wanted to have 15,000 stores by the year-end 2005. * They aimed to provide a great work environment and treat each other with respect and dignity. * They believed in taking on diversity as an essential component in the way they do business. * To apply the highest standards of excellence to the purchasing, roasting and fresh delivery of coffee. * To develop loyal and satisfied customers all of the time. * To contribute positively to their communities and environment, and recognize that profitability is essential to future success of business. How did they evolve?...
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