Starbucks Case

Background

Starbucks was found in Seattle, Washington in 1971 by three young men. The young men decided to sell hand made fresh brewed coffee at a price of $1.50 for a cup of coffee that would normally costs only $0.40 elsewhere. The company started expanding and there was high demand on coffee; they also created a comfortable relaxing place where customers can sit down and relax while enjoying their coffee.

Sales have picked up, and Starbucks became the world's largest coffee retailer. Starbucks Corporation focused on implementing coffee-buying guidelines that are environmentally, socially, and economically responsible. This step helped the company's public image; which in return was reflected by increased sales revenue.

The success of Starbucks goes back to their strategy of creating a unique comfortable environment where customers can sit and relax, without having to worry about getting pressured to buy. Also, Starbucks emphasized employee training programs that educated the employees about coffee and the art of brewing the best coffee. Such courses include "Brewing the Perfect Cup at Home" and "Coffee Knowledge".

The company also focused on employee's satisfaction to guarantee loyal employees. As a matter of fact, Starbucks has the lowest turnover rate in employees compared to others in the fast food industry.

On the other hand, Starbucks got a big hit in 2008 when its stock price went down dramatically. This was not something unexpected, because there were factors that played a role in bringing down Starbucks stock price.

First, after Starbucks became so successful; copy-cats came in and started to open new coffee shops serving similar products. Also, big corporations like McDonald's; focused heavily on improving its coffee and the way it is made.

Second, as surprising as it may seem, the over growth of Starbucks did hurt it in one way or another. Nowadays, almost on every corner of the street there is a Starbucks coffee shop and sometimes you find two shops on opposite sides of the street. This made it seem to customers that Starbucks is no longer a special place; rather it became a convenient place just like any other joint.

Finally, Starbucks started searching for efficiency; which is perfectly fine if it does not affect current production. The company started using flavor-locked packaging for its coffee.

Situation Assessment - External Analysis

 Customer analysis

Starbucks is focusing on what it calls its "core customers," mostly defined as people belong to or above the middle class. These customers demand higher quality product and enjoy the atmosphere. They don't really care about the price as long as Starbucks can provide good services for them.

 Competitor analysis

The