Coffee and Starbucks
.:Executive Summary:.
Starbucks has been the most successful coffee chain using their aggressive expansion strategies to surpass its competitors. Through its expansion, Starbucks has focused on creating a dense network of stores all around US, while also opening up new locations all around the world.
However, Starbucks’ aggressive expansion strategies have posed major threats to its financial health such as tight cashflows, increase debts, poor liquidity ratios and etc. In addition, this approach can exacerbate competition among close Starbucks stores. Due to the aggressive expansion, Starbucks has lost its internal focus in its core business coffee and its unique “Starbucks Experience – third place”.
The issues are how Starbucks can stay profitable in the future and at the same time sustain its dominant position in the gourmet coffee industry. We have examined the industry analysis that focuses on the industry trends, the firm competitive environment and followed by a SWOT analysis on Starbucks. Finally, we look at the company strategy analysis that focuses on the Starbucks’ strategic intent and its strategic position. From these analyses, we recommend a few options where Starbucks should pursue moving forward in order to avoid further decline and sustain its dominant position.
.:Company Background & History:.
Starbucks Coffee, Tea and Spice was established in 1971 by Jerry Baldwin, Zey Siegel and Gordon Bowker in Seattle to sell roasted coffee beans and coffee machines. (See Exhibit 1 for timeline) At that time, the founders’ philosophy was to provide high quality coffee and educate the public the art of appreciating fine coffee. It was the founders’ passion and strong commitment on educating the public that attracted Howard Schultz to join Starbucks in 1982 as the head of the marketing department, overseeing the company’s retail stores.
On one of his business trips to Milan, Italy, Schultz stumbled upon an opportunity to revamp Starbucks
Starbucks has been the most successful coffee chain using their aggressive expansion strategies to surpass its competitors. Through its expansion, Starbucks has focused on creating a dense network of stores all around US, while also opening up new locations all around the world.
However, Starbucks’ aggressive expansion strategies have posed major threats to its financial health such as tight cashflows, increase debts, poor liquidity ratios and etc. In addition, this approach can exacerbate competition among close Starbucks stores. Due to the aggressive expansion, Starbucks has lost its internal focus in its core business coffee and its unique “Starbucks Experience – third place”.
The issues are how Starbucks can stay profitable in the future and at the same time sustain its dominant position in the gourmet coffee industry. We have examined the industry analysis that focuses on the industry trends, the firm competitive environment and followed by a SWOT analysis on Starbucks. Finally, we look at the company strategy analysis that focuses on the Starbucks’ strategic intent and its strategic position. From these analyses, we recommend a few options where Starbucks should pursue moving forward in order to avoid further decline and sustain its dominant position.
.:Company Background & History:.
Starbucks Coffee, Tea and Spice was established in 1971 by Jerry Baldwin, Zey Siegel and Gordon Bowker in Seattle to sell roasted coffee beans and coffee machines. (See Exhibit 1 for timeline) At that time, the founders’ philosophy was to provide high quality coffee and educate the public the art of appreciating fine coffee. It was the founders’ passion and strong commitment on educating the public that attracted Howard Schultz to join Starbucks in 1982 as the head of the marketing department, overseeing the company’s retail stores.
On one of his business trips to Milan, Italy, Schultz stumbled upon an opportunity to revamp Starbucks