The paper "The People versus Starbucks" is a great example of a Management Case Study. Starbucks is a multinational American coffee corporation. The company was first established in 1971 in Seattle, Washington. The company has grown over the years to be the largest coffeehouse globally (Starbucks 2014). The store made instant success, with sales surpassing anticipations. Starbucks website (2014) claims that the company now operates in 64 nations with 23,188 stores consisting of 12,974 in the US, 1,551 in Canada, 1927 in the United Kingdom 1,897 in China, and 1,088 in Japan.
The competition has since grown in the industry making Starbucks rethink and evaluate its strategies. Based on comprehensive research, this case study will identify strategic issues and problems. It will also analyze and evaluate the problems and provide extensive recommendations addressing the identified problems. 2.0 Starbucks current situation Starbucks is basically a strong brand that is recognized for its quality coffee (Starbucks 2014). The company is now operating in 64 countries with several stores and also has a global presence. Starbucks (2014) posits that the company has a large customer and has even gone ahead to introduce a customer loyalty program that targets both teens and adults.
The loyalty program was integrated for the registered Starbucks Card users providing packages like the free Wi-Fi access (Starbucks 2014). Starbucks started testing the mobile app for Starbucks cards, a stored value mechanism where customers could access pre-paid money to buy products at the company. Starbucks launched its inclusive mobile app platform in 2011 (Starbucks 2014). Starbucks is normally recognized for selling quality coffee but also offers other cold and hot beverages, sandwiches, pastries, and snacks. Recently, the company overhauled its menu to offer products such as baked goods and salads with no high-fructose and artificial or corn syrup or ingredients (Davis 2008, p. 21).
Despite performing well for several years in many countries, the company has faced low sales recently in some countries. After struggling with the stiff domestic competition, the company closed its six stores in Israel in 2003, claiming that there were "on-going operational problem" and a "complex business settings (Wiggins 2008). In 2009, Starbucks also confirmed the shutting down of a further 300, not well-performing stores and doing away with 7,000 positions (Starbucks 2014).
This is a sign that customer visits had declined reducing sales tremendously. Starbucks ’ stock prices also reduced in the process. 3.0 Strategic Issues and Problems Over the years, Starbucks ’ growth has been stirred by its mission statement which is “ to enthuse and foster the human spirit through the principle of one person, one neighborhood and one cup at a time” (Starbucks 2014). Also that it has often been, and will often be about quality. Since its establishment in 1971, Starbuck has become the biggest coffeehouse in the world (Starbucks 2014).
However, getting into global markets has proved to be very challenging. The complexity of foreign expansion reflects on challenges unexpected in a local business. 3.1 Global Market Demand and Risks As stated earlier, Starbucks ' business became a success within a short time. As the competition grew in the coffee industry increased, Starbucks thought it’ s time to enter into new markets and increase its global presence. Starbucks (2014) contends that in 2013, Starbucks had expanded and operated in 64 countries and had 23,188 stores.
For Starbucks, locating the perfect global market to expand its business proved to be challenging. Coffee is one of the products that depend on disposable income. The economy is one factor that keeps on dwindling, and for that matter, Starbucks found it hard to establish that high disposable income and if it would still remain stable (Murphy 2007, p. 1).
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