Starbuck's Analysis

1. Has Starbuck’s strategy evolved as the strategic vision has evolved?

Starbuck’s strategy adapted as the vision evolved, especially during the transition of being bought by Howard Schultz. The strategy had to shift from a small scale operation of selling beans and espresso roasters to a large scale operation with hundreds of locations that sold coffee beans & equipment while also serving café food to patrons. Additionally, Schultz wanted the stores to be reminiscent of Italian espresso bars, highly focused on employee satisfaction & respect, and retain full company control.

Schultz realized that Starbucks had to lose money and be heavily invested in three things in order to succeed: 1.) Attract a sophisticated management team 2.) Build a state of the art coffee bean roasting facility and 3.) Invest in an integrated IT system to keep track of all the stores. In recognizing this Starbucks strategy focused on building a coffee company exceeding that of every other brand available.

2. What is your assessment of Starbuck’s financial performance during fiscal years 2005-2009?

Up until the financial crisis in 2009 Starbucks had been growing annually with international sales increasing every year up until that point. However, revenue from stores in the US peaked in 2006 and have been declining since. The only country where Starbucks continued to make revenues during the start of the recession was in China, with all other international markets declining.

Perhaps as a response to the decline in sales and revenues store openings in the US dropped off dramatically between 2007 and 2008, a number that had previously been steadily growing. In 2009, 474 US Starbucks stores were closed and only 89 were opened internationally.

In the years leading up to the recession Starbucks had been on a steady path of growth and expansion, peaking in the 2007 fiscal year.