Starbucks Strategic Proposal

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Abstract

This is a strategic proposal for the board of directors of Starbucks recommending the possible strategic direction for the organization over the course of the next three years. Starbucks has been able to grow despite several macro environmental fluctuations and business environment changes but in the light of recent changes in the competitive pressures on the industry, Starbucks will have to make major strategic decisions. Rather than insisting on growth from Europe, the company needs to look for Asian countries as their driver for growth. However, the company can only sustain itself if it can identify the un-served and un-captured segments and sub-segments of the market. Employee empowerment will assist in achieving this goal. Starbucks also needs to resist the temptation of cutting prices and expanding its menu to include new products. Starbucks's value chain is best suited to cater the needs of coffee drinkers and the company should only focus on the same. These actions are likely to increase the profit margins and revenues of the company in the long term.

Table of Contents

ABSTRACTII

INTRODUCTION1

DISCUSSION2

Economic Assessment and International Expansion2

Marketing Strategy5

Organizational Structure7

Financial Assessment8

CONCLUSION & RECOMMENDATIONS10

REFERENCES12

Starbucks Strategic Proposal

Introduction

Founded in the year 1971 and with revenues of more than 13 billion US dollars for the year 2012, Starbucks is the largest coffeehouse chain of the world with more than 20000 stores that are spread over six continents. Starbucks has been able both delight and baffle its investors and critics through the astounding success that it has enjoyed in the past three decades since the company's current Chairman, President and CEO Howard Schultz took control of the company and reinvented Starbucks. With almost 0.15 million spread all over the world, Starbucks aims to provide an experience to its customers who are willing to pay a premium for Starbucks's offerings. Over the years, Starbucks has become a symbol of American culture, modernization, globalization and corporate social responsibility (Larson, 2008).

However, the unprecedented growth enjoyed by the company finally came to a halt in the year 2008 as global economic meltdown and financial crisis decreased consumer spending and confidence. In fact, many experts had warned that Starbucks would not be able to sustain its escalating growth in the long term. Starbucks witnessed a 50 percent decline in its profits for the year 2008 as compared to the previous year. The company ended up closing more than 900 stores and also halted plans for further expansion. Since then, due to various strategic and tactical measures, the company has able to set itself on the path of improved financial performance with magnified revenues and improving profit margins (Hill & Jones, 2012). Nevertheless, the top management of the organization is well aware of the fact that the real challenge for Starbucks in the coming few years would be to meet the expectations of its customers and investors in an industry which has never been so competitive while following the trend of global expansion, growth, outclassing its competitors and staying loyal to its ...