Starbucks, Case Study Example

The decline of the operations income and net income of Starbucks in 2008 was initially considered a result of the global recession. The figures showed that the market valuation of the company have gone down, and a strategy was needed. This called for a detailed strategy that would correct the marketing and positioning mistakes made by not reviewing the market demand continuously. The main concerns of the downturn were:

• Loss of trust due to the continuously declining share price
• Increasing operating expenses
• Competition from fast food chains selling gourmet coffee
• Density of stores in metropolitan areas
• Company image review and re-positioning

Starbucks has been a legend for over 20 years; a success story of a young entrepreneur and a fast and successful international expansion. The company has built many corporate values across the organization during the years of operation, which can help the management overcome the difficulties and re-position the company on the global markets. These values and core competences are:

• Organic and consistent quality coffee beans
• Involvement of employees in company visions
• Social responsibility made well-known to the public, creating a competitive advantage
• Clustering of stores to make Starbucks “local”.

Management Strategy

The management took social responsibility seriously, and by maintaining and managing sustainable campaigns the company managed to create a positive image and a competitive advantage at a low direct cost. The largest competitor, McDonalds in coffee sales could be overtaken by creating brand-awareness in companies and giving them a reason why they should choose Starbucks.

Recommendations

The figures show that the number of licensed stores and company-owned outlets is well balanced. By selling licenses, the company is able to cut the cost of expansion, increase the brand awareness in urban areas at a low operational cost. Therefore, apart from cutting back on the number of existing stores, the sale of company owned outlets would allow the company to preserve the market share and brand awareness of Starbucks, still produce a healthier looking balance sheet. The diversification and positioning of the brand through social media campaigns should be continued to guarantee continuous presence and growth.