Starbucks Corporation: An External Analysis

Starbucks Corporation: An External Analysis
Case Study

        Stephanie S Williams        

20172884

Strategic Management

MGT 620

Lecturer: Mr Collin Turner

University of the Commonwealth Caribbean

Commonwealth Executive Masters of Business (CEMBA)

Cohort 21

Table of Contents

Case Summary        1

External Analysis        3

References        7

Case Summary

Starbucks was founded in 1971 in Seattle, Washington. By 1993, the company had licensed 12 stores and was operating 260 company-owned facilities including the partnership with Barnes & Noble to sell its coffee at the bookseller’s stores, the company’s net earnings at that time was $8.3 million.

In 2000, Starbucks opened 200 new stores outside of the United States; of which, 150 were in the Asia-Pacific region, it also opened its first stores in Dubai and Hong Kong, and its 100th stores in both Japan and the United Kingdom. In 2001, Starbucks opened a store in Zurich, Switzerland, marking its first venture into continental Europe. The Japanese operation in 2002, posted a $3.9 million loss, despite a 15 percent increase in revenues and 108 new store openings, and the first low performance locations were closed.

Notwithstanding the foregoing, Starbucks continued its international expansion with its first store in Turkey and acquired 129 Seattle’s Best Coffee coffeehouses, as well as certain wholesale distribution rights. By 2004, its long-term U.S. expansion goal was set at 50 percent and Starbucks announced it will eventually open 15,000 domestic outlets, and 30,000 worldwide.

In its marketing efforts/strategies, Starbucks strives to provide the best and most environment for its customers; retail stores were update with special amenities such as wireless access, electrical outlets and laptop among others. Starbucks introduced the Starbucks’ card with the hope of strengthening customer loyalty by improving service. Research and development is constantly in pursuit of the new products and service to suit the demand and needs of the customer. The company’s were available for purchase in convenience stores, grocery stores, department stores, movie theatres, businesses, schools, and even airports.

Starbucks has three reportable operating segments: United States, International, and Global Consumer Products (CPG). The company has experienced declining net income for two consecutive years; 2008 and 2009.

Along with the worldwide economic recession that occurred in 2007 and its major competitor; McDonald’s unprecedented entry into the coffee business that changed the external operating environment in which Starbucks operated; the company was presented with many opportunities with which to exploit and several threats to avert. Some of the opportunities includes closing underperforming stores in some market and open new stores in markets with perceived more potential for earnings.