Starbucks
Starbucks
MBA6008
Capella University
Mablean Leverett
03/10/2014
Reasons for Starbuck's recent crisis
These are the some of the reasons which I think are responsible for coffee shop's recent crisis: Overwhelmed by success: Starbuck reached its peak of success. Like many business I think Starbuck is also carried away by its success. It felt that it had captured the market and making any change in the way of doing the business will not affect its share in the market. At one point in 2006 profits climbed 18% at this time they expanded rapidly assuming they can succeed always but unfortunately in May2008 it fell by 18%. Expansion: The company concentrated on expansion more than maintaining its current stores. Rapid expansion of stores put the management to forget about other important aspects of the business. In many locations we could see 2 shops very close by which creates unnecessary pressure on both the stores. They start to compete with each other which do not help the business. At one point of time they opened more than 8 new stores a day. Forgetting their customer need: Star bucks customers are unique. They go the stores not only to have a great tasting coffee but also to enjoy the unique atmosphere the store would provide. But this is slowly changing. It has changed the hand pulled espresso shots to automatic one to save money. Starting to utilize the shelf space for books does not satisfy a typical Starbuck customer.
Losing the brand name: Star buck is slowly losing its brand name in the market. The stores are losing its core competency. The stores no longer smell coffee. It started selling products totally not related to coffee and also selling unbranded cheap products which
MBA6008
Capella University
Mablean Leverett
03/10/2014
Reasons for Starbuck's recent crisis
These are the some of the reasons which I think are responsible for coffee shop's recent crisis: Overwhelmed by success: Starbuck reached its peak of success. Like many business I think Starbuck is also carried away by its success. It felt that it had captured the market and making any change in the way of doing the business will not affect its share in the market. At one point in 2006 profits climbed 18% at this time they expanded rapidly assuming they can succeed always but unfortunately in May2008 it fell by 18%. Expansion: The company concentrated on expansion more than maintaining its current stores. Rapid expansion of stores put the management to forget about other important aspects of the business. In many locations we could see 2 shops very close by which creates unnecessary pressure on both the stores. They start to compete with each other which do not help the business. At one point of time they opened more than 8 new stores a day. Forgetting their customer need: Star bucks customers are unique. They go the stores not only to have a great tasting coffee but also to enjoy the unique atmosphere the store would provide. But this is slowly changing. It has changed the hand pulled espresso shots to automatic one to save money. Starting to utilize the shelf space for books does not satisfy a typical Starbuck customer.
Losing the brand name: Star buck is slowly losing its brand name in the market. The stores are losing its core competency. The stores no longer smell coffee. It started selling products totally not related to coffee and also selling unbranded cheap products which