starbucks Business Turnaround Case
Business Turnaround
Case Study:
Starbuck’s Successful Implementation of Business
Turnaround
Identify a company that has overcome a crisis situation
Starbucks is an American global coffee company and coffeehouse chain. It is the largest coffeehouse company in the world, operating across 62 countries and having a chain of
20,891 stores across them. Starbucks serves hot and cold coffee based and refreshment drinks, pastries, snacks and sandwiches. Starbuck is one of the companies that have turned into a symbol of successful business turnaround.
Considering the economical conditions at the time in 2007, and the anticipated economic trends for the coming years, Starbuck took the decision to proportionally start closing stores across most major US markets. Starbucks customers have begun to visit the coffee shops less and less, which drove profits to a strong downturn. Starbucks share price declined by more than 75% in the following two years after 2006. Profits for the first 3 months of 2008 fell with 28% compared to the same period during the previous year. Final quarter revenues for 2008 showed that the company net income was down by 70%. This was the first decline of quarterly net income that the company was experiencing (decline to 64.3 million in comparison to 208.1 in December 2007). Sales and operating profit s of same-stores for
2007 slowed down with 1331.2 million in September 2007 to 1258.7 million is September
2008. In respond to those indicators of declining performance the company then decided to employ a business turnaround through preserving fundamental strengths and values of the
Starbucks brand, increase value and becoming more innovative with their business.
Furthermore they attempted to be more flexible and meet changing market trends, scale cost structure and improve operations efficiency. In 2012 the company had a record of,
13.29 billion dollars of revenues and 1.38 billion dollars of net income.
Figure 1. Starbucks
Case Study:
Starbuck’s Successful Implementation of Business
Turnaround
Identify a company that has overcome a crisis situation
Starbucks is an American global coffee company and coffeehouse chain. It is the largest coffeehouse company in the world, operating across 62 countries and having a chain of
20,891 stores across them. Starbucks serves hot and cold coffee based and refreshment drinks, pastries, snacks and sandwiches. Starbuck is one of the companies that have turned into a symbol of successful business turnaround.
Considering the economical conditions at the time in 2007, and the anticipated economic trends for the coming years, Starbuck took the decision to proportionally start closing stores across most major US markets. Starbucks customers have begun to visit the coffee shops less and less, which drove profits to a strong downturn. Starbucks share price declined by more than 75% in the following two years after 2006. Profits for the first 3 months of 2008 fell with 28% compared to the same period during the previous year. Final quarter revenues for 2008 showed that the company net income was down by 70%. This was the first decline of quarterly net income that the company was experiencing (decline to 64.3 million in comparison to 208.1 in December 2007). Sales and operating profit s of same-stores for
2007 slowed down with 1331.2 million in September 2007 to 1258.7 million is September
2008. In respond to those indicators of declining performance the company then decided to employ a business turnaround through preserving fundamental strengths and values of the
Starbucks brand, increase value and becoming more innovative with their business.
Furthermore they attempted to be more flexible and meet changing market trends, scale cost structure and improve operations efficiency. In 2012 the company had a record of,
13.29 billion dollars of revenues and 1.38 billion dollars of net income.
Figure 1. Starbucks
Bibliography: Allison, M., 2011. Review: Howard Schultz tells story of Starbucks turnaround in newest book "Onward" Groth, A., 2011. 19 Amazing Ways CEO Howard Schultz Saved Starbucks. Business Insider [online]