Question

Since 1987, Starbucks had transformed itself from a modest 9-store operation in the Pacific Northwest into a powerhouse multinational enterprise with 10,241 store locations, including some 2,900+ stores in 30 foreign countries. During Starbucks early years when coffee was a 50-cent morning habit at local diners and fast food establishments, skeptics had ridiculed the notion of $3 coffee as a yuppie fad. But the popularity of Starbucks’ Italian-style coffees, espresso beverages, teas, pastries and confections had made Starbucks one of the great retailing stories of recent history and the world’s biggest specialty coffee chain. In 2003, Starbucks made the Fortune 500, prompting CEO Howard Schultz to remark, “It would be arrogant to sit here and say that 10 years ago we thought we would be on the Fortune 500. But we dreamed from day one and we dreamed big.”
Starbucks reported revenues in fiscal 2005 of $ 6.4 billion, up 205% from $2.1 billion in fiscal 2000; after-tax profits in 2005 were $494.5 million, an increase of 423% from fiscal 2000 net earnings of $94.6 million.
Having positioned Starbucks as the dominant retailer, roaster, and brand of specialty coffees and coffee drinks in North America and spawned the creation of the specialty coffee industry, management’s long-term objective was now to establish Starbucks as the most recognized and respected brand in the world. In 2005, new stores were being opened at the rate of roughly 32 per week and management expected to have 15,000 Starbucks stores open worldwide going into 2006. Believing that the scope of Starbucks long-term opportunity had been underestimated, Schultz had recently increased the targeted number of stores from 25,000 to 30,000 worldwide by 2013, at least half of which were to be outside the United States. He noted that Starbucks only had an overall 7% share of the coffee drinking market in the United States and perhaps a 1% share internationally. According to Schultz, “85that still leaves lots of room for growth. Internationally, we are still in our infancy.” Although coffee consumption worldwide was standing, coffee was still the second most consumed beverage in the world, trailing only water.
In fiscal 2006, Starbucks planned to open 1,800 net new stores globally. Top management believed that it could grow revenues by about 20 percent annually and net earnings by 20-25 percent annually for the next 3 to 5 years. Howard Schultz and CEO Jim Donald viewed China as a huge market opportunity, along with Brazil, India, and Russia. To sustain the company’s growth and make Starbucks one of the world’s preeminent global brands, Howard Schultz believed that the company had to challenge the status quo, be innovative, take risks, and adapt its vision of who it was, what it did, and where it was headed. If the challenge of executing the company’s strategy was met successfully, in all likelihood the company’s best years lay on the strategic road ahead.

Require:

1) Referring back to the case, put forward some suggestions for Starbucks given the Covid 19 issues at the moment and what steps they can take Use the details from the following key words Types of planning Leadership - Strategies Organizational Structure
2) What would you suggest to Starbucks to do after the Covid 19 is resolved and things go back to normal?
3) What is your evaluation of Starbucks social responsibility strategy? Is it sincere or just something the company does and talks about to create a good public image? Link it to: Challenges for management in a global environment- recent changes in management practices
4) Identify the SWOT of Starbucks. You can also add from your experience and your knowledge of Starbucks. You can reflect from Oman's retail store.

Answer 1

Answer 1

Talking about the current issue of covid-19, most of the big companies of the world including Starbucks Coffee have a important role to play. The responsibility towards the society has increased. The most important responsibility of the company leadership should be that they should not fire any of their staff members who had been working for them since years and due to this pandemic not able to work. Starbucks should realize that they have the responsibility towards the society as they should take steps and go for social work wherever possible. They should help the poor and needy. Its planning and expansion strategy for future should be in consideration with the covid-19 health issues for its employees. The leader should attempt to resolve people priorities, they should lead the company from the front.
The entire workforce should be clustered not according to the the way its organizational structure was working previously but by the competency that people have. People must be divided into three categories depending upon the job performance critical ,replaceable or exposed.
Today during the time of covid-19 most of the companies they are integrating there advertisement with the message of social cleanliness. Promotional strategy should include tips to be safe from covid-19 suggest drinking regular hot water at different intervals, clean hand with sanitizer for at least 25 seconds.
Answer 2
I would suggest Starbucks to become more socially responsible after the covid-19. The company must keep on innovating new things, and stick to its decision of who it was , what it did and where it was heading. If the company is able to execute its strategy the company will perform its best in the coming years.
Answer 3.
Starbucks corporate social responsibility is based on three important pillars. The first is community second is ethical Sourcing and third is environment. I believe that it is a sincere towards its corporate social responsibility. Star Bucks built community stores with local partners for non profit. These not to profit stores meet the demands of the community where their locally located. The company also provides training and development for youth in the communities for which it has developed the Starbucks Foundation. The second pillar which the company has is ethical Sourcing, in this pillar the company only purchases its coffee tea and other materials from those farms and manufacturers who have certain standards of Ethical Treatment. Star Bucks refers to the planet as the most important business partners and it has always taken steps to reduce the environmental impact they have the LED certified stores ,recycling and conserving water and energy.
Answer 4.
SWOT analysis of Starbucks-
Strength-
1. It has a very strong brand image. It is a leading brand in the food and beverage industry. Its brand value is close to 11.7 billion US dollars.

2. Starbucks has well planned strategic decisions. The company re invests its profit into expansion at different locations .
Weakness-
1. Its prices are generally high. As compared to McDonald's Starbucks products are highly priced.
2. Its products almost the same which are available at Dunkin donuts and and McDonalds'.
Opportunities-
1. Expansion in the developing countries like India China and Africa have a great opportunity for the company.
2. The company can introduce new products which are suited to the taste of local market.
Threats-
1. Competition with low price coffee sellers is a concern.
2. Company products can be easily copied by other competitors.
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