Question

Identify two mistakes in the following quote from the Starbucks case:

“Starbucks grew from 17 coffee shops in Seattle 15 years ago to over 19,000 outlets in 58 countries. Sales have climbed an average of 20 percent annually since the company went public, peaking at $10.4 billion in 2008 before falling to $9.8 billion in 2009. Profits bounded ahead an average of 30 percent per year through 2007 peaking at $673, then dropping to $582 billion and $494 billion in 2008 and 2009, respectively. The firm closed 475 stores in the U.S. in 2009 to reduce costs. But more recently, sales revenues rebounded to $11.2 billion in 2011, and profits reached a record $1.2 billion.”

Answer 1

Solution:
Starbucks will take to raising their efforts to expand in the US. Continued ambitious efforts to expand in the US by opening as many new store locations as in the past would eventually serve to cannibalize the same store sales at existing locations. The underlying reason Starbucks would minimize their U.S. expansion plan and why this is valid is the inference.In the United States the specialty coffee industry has reached a mature stage. One of the qualities inherent in the mature stage of an is overcapacity industry lifecycle. Any significant expansion efforts in an area where overcapacity is present would fail. By reducing their expansion efforts in the US, Starbucks will channel the saved money through their attempts at international expansion. For three important reasons the foreign market offers an ideal expansion target:

First is the lack of specialty coffee penetration in many nations, and the potential market share that these nations serve. For instance , Starbucks currently operates about 16,000 stores in the United States with 10,000 stores and 6,000 stores internationally. Yet, in the last 25 years , the United States has not been ranked in the top 10 for overall per person coffee consumption.

Another reason that international expansion presents a particularly good
opportunity is due to the likelihood that such expansion would act as a catalyst for
innovation