STARBUCKS Case analysis

Case: Starbucks

Five Highly Relevant Facts

After showing swift initial growth, Starbucks' share price declined 75% within two years.

The strategy adopted by the CEO to address this problem was to radically cut back the company's U.S. expansion and focus on the quality of Starbucks' coffee and customer service rather than increasing the quantity of new stores.

Although the global recession had an impact on Starbucks' revenue, there were deeper and more long-standing concerns about over-expansion and brand dilution due to excessive store density in urban areas.

This has been created by the 'cluster' strategy of expansion favored earlier in the store's growth history. Starbucks is now expanding more slowly and also focusing on its international strategies country-by-country.

Starbucks is diversifying its in-house coffee offerings and its supermarket coffees (including instant coffee),...

It is not necessary to drink coffee at Starbucks' price point, even though the coffee is not really high-priced enough to be a traditional luxury good. Still, Starbucks must convey additional value to justify the purchase of a beverage.
How can Starbucks compete with the higher-end coffee offered by lower-priced chains such as McDonald's and Starbucks?

How can Starbucks use its mission of corporate responsibility to build and sustain its brand image?

The Firm's Core Competence

Providing coffee perceived to be of high quality, but not so expensive middle-class customers cannot afford it

Providing an in-store 'experience' that is pleasurable, including the smell of the coffee

Consistency and reliability of product

Employees that are knowledgeable about…