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Starbucks: Delivering Customer Service
Starbucks is a major specialty-coffee brand in North. Recent market research has indicated that the service level of Starbucks is currently not meeting the expectations of customers. Thus, the company is discussing a plan to increase customer satisfaction by increase the amount of labor in each coffee store and, as a consequence, increase the speed-of-service. However, the plan would result in additional costs of $40 million per annum while the impact on the profitability of Starbucks is unclear. Citation:
Youngme Moon and John A. Quelch. “Starbucks: Delivering Customer Service”. HBS Premier Case Collection 504016, Jul 31, 2003. Addressed questions:
Please summarize the case study “Starbucks – Delivering Customer Service”. •
Please identify the key challenges of Starbucks.
Case study analysis
Starbucks is a leading specialty-coffee brand and coffee store chain based in the US. It was founded in 1971 by Gerald Baldwin, Gordon Bowker, and Ziev Siegl. Howard Schultz, who joined Starbuck’s marketing team in 1982, later bought the enterprise from its founders and took it public in 1992. In 2002, Starbucks had achieved a CAGR of 40% since its IPO and owned approx. 1/3 of the coffee bars in the US. Its competitors range from small-scale specialty coffee chains, which were regionally concentrated, to independent specialty coffee shops, and donut and bagel chains. For the years ahead, Starbucks sought to further expand its retail operations based on expected growth in coffee consumption, untapped national and international markets and unreached saturation levels. To sell its products, Starbucks used company-operated stores in areas with high traffic and high visibility. Additionally, Starbucks sold coffee products through retail channels, including food service accounts (e.g. hotels, airlines,...
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