Starbucks Case 1
Case Study #1:
STARBUCKS
Seattle, Washington
QUESTION #1
So, what does Starbucks need to do to return to growth and profitability? Should it lower prices? Should it expand its menu? What should be its strategy?
In order for Starbucks to return to growth and profitability they should focus on the cost structure and tackle the net margin issue which would increase its Return of Equity and make a better use of its existing assets to increase its Return of Assets. A strategy of this would be cost management. A day-to-day business analysis is needed to integrate the decision-making of what are controllable, preventing costs from getting into the structure of unnecessarily. Investing only where investment makes sense and addressing the total cost of the business. The focus of this would facilitate the profitability, will support formulation of pricing strategy, enables financial analysis and achieve long-term growth and sustainability objectives. I personally would advise against lowering of prices and expanding its menu. Lowering of prices is a risky attempt and everything should be considered how it would affect the bottom line. It is a short-term solution to higher number of sales but not long-term in terms of profitability and covering the operational cost and cost of goods. Expanding the menu is a big no-no, Starbucks is famous for its coffee and should only focus on that until such time that the company can recuperate from the losses.
QUESTION #2
As founder, Schultz brought enormous success to Starbucks. But is he the right leader for Starbucks now? Should he continue as CEO? Is he meeting his basic responsibilities as Starbucks’ top manager? What key mistakes is he making?
Shultz is the right leader for Starbucks but not as a CEO. He is a very detail-oriented person and hands on boss but he is feared by the management and employees if they voice out for suggestions and he would comment on it. The key mistake he is making, he is
STARBUCKS
Seattle, Washington
QUESTION #1
So, what does Starbucks need to do to return to growth and profitability? Should it lower prices? Should it expand its menu? What should be its strategy?
In order for Starbucks to return to growth and profitability they should focus on the cost structure and tackle the net margin issue which would increase its Return of Equity and make a better use of its existing assets to increase its Return of Assets. A strategy of this would be cost management. A day-to-day business analysis is needed to integrate the decision-making of what are controllable, preventing costs from getting into the structure of unnecessarily. Investing only where investment makes sense and addressing the total cost of the business. The focus of this would facilitate the profitability, will support formulation of pricing strategy, enables financial analysis and achieve long-term growth and sustainability objectives. I personally would advise against lowering of prices and expanding its menu. Lowering of prices is a risky attempt and everything should be considered how it would affect the bottom line. It is a short-term solution to higher number of sales but not long-term in terms of profitability and covering the operational cost and cost of goods. Expanding the menu is a big no-no, Starbucks is famous for its coffee and should only focus on that until such time that the company can recuperate from the losses.
QUESTION #2
As founder, Schultz brought enormous success to Starbucks. But is he the right leader for Starbucks now? Should he continue as CEO? Is he meeting his basic responsibilities as Starbucks’ top manager? What key mistakes is he making?
Shultz is the right leader for Starbucks but not as a CEO. He is a very detail-oriented person and hands on boss but he is feared by the management and employees if they voice out for suggestions and he would comment on it. The key mistake he is making, he is