Starbucks in 2009
STARBUCKS IN 2009
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TABLE OF CONTENT
Starbucks issues and causes…………………………………………...….……………….2 Starbucks current strategies and evaluation…………………………..…….……………..4 Analysis and recommendations………………………………………………………….10 SOAR analysis……………………………………………………..………………..10 Competitive analysis…………………………………………………………….......11 Value chain analysis…………………………………………………………………14 Recommendations……………………………………….………………..…………17 Appendix………………………………………………………........................................18 References……………………………..…………………….……………………….......19
STARBUCKS IN 2009
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STARBUCKS IN 2009 Starbucks issues and causes Starbucks share price went down from the peak of $40(October 2006) more than 75% over the next two years. The sale and operating profits decreased 73.1 million dollars compared to the last year in 2008 (Table 1 in the Appendix). The growth rate of Starbucks store sales decreased 8% in 2008 (Starbucks Corporation, 2008).
60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2005 2006 2007 2008 ROA ROE
The chart above shows the ROA (return on assets) and ROE (return on equity) ratio of Starbucks has generally gone down between 2005 and 2008.
STARBUCKS IN 2009
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Following are five main factors that caused Starbucks downturn in 2008: 1. Economic environment—Great Recession The global economic decline began in 2007 and took a sharp downward turn in September 2008. Due to this recession, each U.S. household lost an average of approximately $5,800 in income, and gross domestic product declined 6.2 percent annualized (PEW, 2008).
2. Competitors Some independent coffee shops, such as Caribou Coffee (U.S.), have imitated the operating model of Starbucks and have expanded and become national chains. In addition, fast food chains, including McDonald’s, Burger King, and Dunkin’ Donuts, started to provide coffee and get favorable comments.
3. Consumer performance Customers, especially coffee-lovers, became connoisseurs through the education process of
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TABLE OF CONTENT
Starbucks issues and causes…………………………………………...….……………….2 Starbucks current strategies and evaluation…………………………..…….……………..4 Analysis and recommendations………………………………………………………….10 SOAR analysis……………………………………………………..………………..10 Competitive analysis…………………………………………………………….......11 Value chain analysis…………………………………………………………………14 Recommendations……………………………………….………………..…………17 Appendix………………………………………………………........................................18 References……………………………..…………………….……………………….......19
STARBUCKS IN 2009
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STARBUCKS IN 2009 Starbucks issues and causes Starbucks share price went down from the peak of $40(October 2006) more than 75% over the next two years. The sale and operating profits decreased 73.1 million dollars compared to the last year in 2008 (Table 1 in the Appendix). The growth rate of Starbucks store sales decreased 8% in 2008 (Starbucks Corporation, 2008).
60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2005 2006 2007 2008 ROA ROE
The chart above shows the ROA (return on assets) and ROE (return on equity) ratio of Starbucks has generally gone down between 2005 and 2008.
STARBUCKS IN 2009
3
Following are five main factors that caused Starbucks downturn in 2008: 1. Economic environment—Great Recession The global economic decline began in 2007 and took a sharp downward turn in September 2008. Due to this recession, each U.S. household lost an average of approximately $5,800 in income, and gross domestic product declined 6.2 percent annualized (PEW, 2008).
2. Competitors Some independent coffee shops, such as Caribou Coffee (U.S.), have imitated the operating model of Starbucks and have expanded and become national chains. In addition, fast food chains, including McDonald’s, Burger King, and Dunkin’ Donuts, started to provide coffee and get favorable comments.
3. Consumer performance Customers, especially coffee-lovers, became connoisseurs through the education process of
References: 2 STARBUCKS IN 2009 Starbucks issues and causes Starbucks share price went down from the peak of $40(October 2006) more than 75% over the next two years