Starbucks Study Case

Only available on StudyMode
  • Download(s) : 35
  • Published : March 6, 2013
Open Document
Text Preview
Founded in 1971, Starbucks is currently one of the largest retailers in the coffee industry. Despite the excellent growth since it first opened, in 2008 Starbucks found itself in a financial crisis and was in need of new strategies and implementations. Their financial results from the previous quarter proved that Starbucks was the worst in its history as a public company. Due to the financial crisis, the board of directors requested that Schultz return to the Starbucks as the CEO. Many consumers thought that of Starbucks as a "heartless corporate predator" and that they were expanding themselves too thinly. Understanding the perception of the company from the consumers point of view and the company's financial crisis Starbucks was going through, Schultz decided to implement a "transformational agenda" of new strategies to improve the company.

One thing that Schultz did immediately once he returned to be CEO again was to close nearly 1,000 stores that did not generate returns that were planned by the company. The reason for choosing to close down underperforming stores was part of a strategy where he wanted to reduce the costs such as operation costs which included labor costs, operations waste, while improving logistics in other profitable locations. Although many popular press came out with headlines such as "Starbucks Goes from Venti to Grande," Schultz focused on his cost saving strategy and as a result, Starbucks cut $580 million in operating costs by the year of 2009. Along with cutting cost, Schultz sought to improve the supply chain operations in the stores that were still opening, resulting in store orders being on time without errors experienced in the past.

The actions that Schultz took proved to be effective as we can see today. By closing underachieving stores, Schultz was able to focus on the remaining open stores to provide the best experience at Starbucks locations. He focused on delivering orders and improving operating equipment to help...
tracking img