Individual Case Study: Starbucks

Individual Case Study: Starbucks

Major Problem

On an overall level, one of the primary issues pertaining to strategy in which Starbucks faces involves its capacity to sustain its identity as a quality brand. As such, Starbucks has recently announced that they would be putting a brake on the chain's growth and closed 676 U.S. stores (Steverman, 2009). By doing this, Starbucks is essentially admitting that it is having difficulty in maintaining its current growth trends. The company’s ongoing trend of launching new stores has only been creating a growth that may be deemed as solely external. The company’s strategies have been focusing more on expansion versus actual growth. Starbucks has launched a gamut of new products in an attempt to become more appealing; nonetheless, the launch of these products has shown that they have only reduced the overall veracity of Starbucks’ image. Such strategies have been detrimental in the negative trend of the company. This trend may have been prevented if the company remained somewhat exclusive and grew at a more manageable rate. Starbucks has learned that it can be quite challenging to be a public company, and at the same time, maintain premium pricing.

Underlying Causes of the Problem

One of the most underlying causes of the problem in which Starbucks faces pertains to its competition within its industry. Within the industry, existing competition has successfully been able to establish and integrate new tactics and strategies. Additionally, these companies have been able to successfully implement initiatives in order to grab a larger share of the market. This, in conjunction with expectations from shareholders and stakeholders has added pressure to the company to perform well; even during the current slowdown within economy. This has caused the company to hastily focus more on expanding within its primary markets while exploring new markets and territories in which there may be potential opportunities.

One of Starbucks’ biggest competitors, Dunkin Donuts, has been able to explore and ultimately expand into new market so as to enhance its opportunities on a global scale. More specifically, the company has focused its initiatives in China and India in order to combat the economic slowdown within the United States and heightened level of competition (Company spotlight: Starbucks, 2009). Starbucks has additionally been assertive in its global expansions, but has failed to be as aggressive. If Starbucks were to seek expansion opportunities within emerging economies in the same manner as Dunkin Donuts, the company would have the capacity to take advantage of its existing brand reputation and make it more global.

Another underlying cause faced by Starbucks pertains to informed demands of its consumers. Such a demand has added elevated pressures on the company in order