UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA – Molino Campus

College of Engineering
UNDERGRAD RESEARCH

Statement of the Problem font 13 / arial narrow / bold

How Starbucks Corporation should improve its business? font size 11 / spacing 1.5

Key Issues font 13 / arial narrow / bold

External Key Issues (Opportunities & Threats) font 12 / arial narrow / bold one for each

Limited Growth Opportunities font size 11

Since the days Starbucks was a Seattle based 17 coffee shops company (Cateora & Graham, 2007, p. 596) it has grown to an
international player, operating in 39 countries with 12,440 stores (Star bucks, 2007). But besides this astonishing development,
Starbucks is facing a more and more saturated home market. Especially in cities, affluent suburbs and shopping malls, Starbucks in
some areas is reaching “the upper limit of coffee-shop saturation”

Customer and Image

Similar to its economic situation, Starbucks is confronted with a different consumer perception in its home market and its foreign
markets. Starbucks is one of the fastest-growing brands worldwide (Cateora & Graham, 2007, p. 596) and has become one of the Top
100 Brand s in 2007. With a brand va lue of US$ 3.631 billion, Starbucks ranks 88 th in the world (Interbrand, 2007). Another ranking,
regarding the beverage industry sales, lists Starbucks on position ten (Korolishin, 2007).

Internal Key Issues (Strengths & Weaknesses) font 12 / arial narrow / bold one for each

Product Range font size 11

Starbucks has a product range of more than 30 blends and single origin coffees, handcrafted beverages, bottles frappuccino coffee
drinks (in Japan and Taiwan), coffee beans, coffee liqueurs, line of ice creams, music, books, films, home espresso machines, premium
chocolate, coffee mugs, coffee accessories, Starbucks card, a stored value card, and gift items (Starbucks, 2007). Contrary to the
apparently broad product range, beverages represent 77% of retail sales whereas food items and other products account for 15% and
8%, respectively , which means that the company strongly depends on beverages and also that the variety of products developed has
not worked as it should have, which may be risky if market and competition conditions change (Datamonitor, 2004).

Employees
On 18 August 2007 Industrial Workers of the World (IWW) had a “National Day of Action against Starbucks”. It took place in several
cities around the UK protesting against unfair labour practices (Krauthamer, 2007). A great number of cases and disputes between
employees and Starbucks have resulted in creating the “Starbucks Union” which is part of the retail worker’s division of the IWW. The
intention of this union is to unify Starbucks employees all around the world in order to improve wage and working conditions.
(Starbucks Union, 2007). It can be inferred from the Starbucks Union webs ite that employees do not at all agree with their
working conditions, which is why they had to take action on their own so that problems could be properly solved.

STARBUCKS – Case Study

 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA – Molino Campus
College of Engineering
UNDERGRAD RESEARCH

SWOT ANALYSIS font 13 / arial narrow / bold

Note : Make a table to show the swot analysis. 3 for each.

ALTERNATIVE COURSES OF ACTION font 13 / arial narrow / bold 3 ACA

The discussion of the key issues that Starbucks currently faces as well as the SWOT analysis that was conducted based on those
issues shows that in order to achieve its ambitious goals and continue to be the major player in the specialty coffee market Starbucks
must undergo a number of changes.

• Alternatives regarding the business model

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• Alternatives regarding the product range

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• Alternatives regarding marketing activities

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STARBUCKS – Case Study

 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA – Molino Campus
College of Engineering
UNDERGRAD RESEARCH

RECOMMENDATION font 13 / arial narrow / bold

Evaluation Criteria (Key Issues)

To ensure that the recommendation given in this part really is a do able and effective solution to Starbucks’ problems, four different
evaluation criteria must be considered. These criteria can be derived from the key issues that Starbucks faces as identified in part two.
The criteria against which the recommendation has to be measured are :
 Enabling future sustainable growth in both, the US and overseas.
 Improving customers’ perception in the US and retaining positive perceptions overseas.
 Enabling a broader product range suiting US and international demands.
 Increase employee satisfaction in the US and become a preferred employer overseas.

CONCLUSION font 13 / arial narrow / bold

Nowadays almost every person in the world for one reason or another knows about Starbucks. But as every leading company it has to
deal with and manage a big amount of external and internal issues in order to maintain itself as the top coffee shop in the world. After
outlining the key issues Starbucks currently faces, a SWOT analysis was conducted. Furthermore, different possible alternatives of how
the company could solve its burning issues were identified, based on a structured and analytical framework – the Starbucks Solutions
Cube. Following this approach Starbucks needs to make changes to its overall business model, its product range as well as its
marketing strategy. The final recommendation given was to introduce a second brand as a fighter brand.

STARBUCKS – Case Study