Case Analysis of Case 14: Starbuck's Strategy and Internal Initiatives to Return to Profitable Growth

Case Analysis of Case 14: Starbuck's Strategy and Internal Initiatives to Return to Profitable Growth

Introduction

Howard Schultz was man behind the idea of Starbucks who set up first coffee shop in the year 1971 in Seattle area. He has been able to grow and expand this coffe shop into an established company beyond United States with its business operations of additional 100 stores in other countries. Labor-efficiency initiatives and cost-reduction policies of company sustained its strategic advantage among other competitors. Brand awareness and brand-name strength are strategic objectives of this case study to capitalize the business operations of Starbucks. Other key strategic issues include consumer products group of Starbucks, spending on advertising, vertical integration, and health care coverage for all employees.

This case study also discusses key issues that require management of the company to be proactive rather than reacting to external responses. The aggressive market of specialty coffee allows customers to pay higher price due to ambiance, brand value, and taste of Starbucks.

This assignment presents a compliance viewpoint of strategic issues and internal initiatives of Starbucks to return to profitable growth. A brief introduction follows background of the study that includes clear and concise summary of pertinent information and external resources for external and internal analysis of the company. The next section is about the analysis that uses core concepts for the identification and discussion on strategic issues of industry in which Starbucks is operating. These issues include strategic fit, external environment, and internal situation. The last section of the assignment concludes the findings with summary on alternatives and recommendation for the improvement of strategies.

Background

Starbucks planned to expand into mainstream markets in the mid of 1990s (York, 2010). Schultz chose to expand products and offerings of the company ahead of its retail stores to earn sales through market segments and distribution channels. The purpose of this attempt was to make its offerings accessible to current and new base of customers. It attempts to cater customers whether they are working, travelling, shopping, or dining. The creation of in-house specialty sales group and marketing of products into hotels, business offices, select retailers, universities, restaurants, airlines, country clubs, and airlines creates internal arguments (Murphy, 2011). The case of weather serving coffer to United flights with difference in coffee making equipment in different planes is another debatable issue.

The potential damages to the integrity of brand are another issue if the quality of coffee does not measure industry practices. The mutual agreement of Starbucks and United took several months to maintain quality control on different planes of United. Sheraton, Hyatt, Westin hotels, Radisson, ad Hilton are specialty sales group that results in offering different packets of its coffe in each room with the availability of coffee making equipment. The similar agreement was with Wells Fargo, US Foods and Sysco Corporation for the expansion of its product offering and entry into new market segments (York, ...