CASE STUDY: STARBUCKS

Lucero, Colin Jude M.

STEM 123
 1.) Introduction

Starbucks Corporation is an worldwide espresso company found in Seattle, Washington

of United States of America. It offers coffee menu items, refreshments and cakes, merchandise,
endowments, gifts and books to their valued customers. Their target customers are people aging
between 25 to 40 years old who’s working on paperwork and taking overtime to their work.
Most of their customers live in urban areas, mostly a professional like teacher, engineer and etc.
However, there has been growing pressure, key problems and issues, so they keep on struggling
about their business. One of them is their expensive product. As we all know, many customers
were buying beverages and get crowded in a second in their store even it’s expensive. If
customers found a coffee shop that the beverages of Starbucks taste same as the beverages of
newly found coffee shop, they might lose a lot of customers. In every mall, they had only one
shop of a Starbucks and in any time, their shop will get crowded. The third issue is the company
has no service for the children because it’s not allowed for the age of children. Therefore, the
company is successful nowadays. People like to drink coffee to get out of their stress and think
deeply. Many company’s products are expensive but they didn’t ensure the satisfaction of their
customers unlike Starbucks do.

2.) Background

The Starbucks’ location is opened first in Seattle, Washington in 1971. It was first started
as coffee retailer and added coffeehouses to its services. Then, it was incorporated in 1985
and became successful until now. Their products made its the biggest coffee retailers
worldwide. Starbucks experienced brisk improvement opening up to the world in 1992, then
developing multiple times by 1997, with regions around the Japan, Singapore and United
States. The company started expanding their brand itself. Their tasks are incorporate as much
7,300 bistros and corners in the United States, 3,000 in 34 of every different nation, with the
biggest numbers that are arranged in Canada, Japan, Philippines and etc. As of Dec 27, 2009,
they have 16,706 stores in 50 countries instantly. Because of expanding rapidly and
continuing to spread its reach to various area, Starbucks reach over 31,000 stores spread
across all over the globe as of March 10, 2020.

3.) Evaluation of the Case

In the business of coffee industry, there are key conditions that are out of every
individual organization’s control. Starbucks has no founding team that makes them a
successful company but it did have a three person who made it a good one coffee shop.
That would be Gordon Bowker, Jerry Baldwinand Zev Siegl, a founder of Starbucks.
Starbucks’ workers forced themselves in giving its customers a great cup of coffee. The
 v
g
ti
l
b
s
i
t
n
H
-
e
k
a
c
u
d
o
r
B
I
D
S
F
T
P
p
m
main skill of Starbucks is their capacity to expand their technique by ceaselessly
advancing its good quality of drinks or beverages. Problems are coming for Starbucks for
a long year, but they managed them correctly. With having greatest contenders, for
example, McDonald and Dunkin’ Donut, it is because of their expensive products.
Everybody can buy cheaper products like McDonald and Dunkin’ Donut than Starbucks.
Because of its reports, Starbucks has a new plan. It implies more income and lower costs
claiming that Starbucks has shut down 900 stores and dispensed 34,000 employees. It’s
newly methodology is to arrange on a portion of a bit that decline hazard and up
speculation. However, the development has slowed and need to close huge numbers of
stores. They are presently concentrating efforts on past undertaking and international
expansion (Allison, 2010).

Above is Starbucks’ old value chain. The first part of the value chain shows the product
advancement including teas and international impacts, to the exploration that occured to build up
the VIA instant espresso stand. They also check the globe for Fair Trade providers of high
quality beans. These products are then dispersed to assemble store with tents, establishment
areas, markets and more. Lastly, it gives offering with espresso and gift voucher to bring it to
their respective homes.
 v
n
a
g
ti
l
e
c
u
d
o
b
r
t
s
i
B
I
S
P
D
m
p
Above is a new Starbucks’ value chain with international development added against the
current to take into global marketplaces to promote newly products that could match their
societies that could enhance potentially the US market too. In Japan’s Starbucks, it is where
Green Tea Latte is established. Below is Online Storefront Customization that would permit you
to make account on the web, order online, make latest and new refreshment and etc. Likewise
included is a mobile application that could find Starbucks locations, put in drink orders etc.

There’s a key problems that company needed to face it with caution. Every individual
becoming health conscious and aware of issues about a big consumption of coffee in human
person can be dangerous. Likewise, there is an extended cost of price of espresso beans which it
could be able to drive Starbucks to withdrawal particular espresso mixes. One more problem
could be the hurting of Starbucks’ notoriety and brands out of activities led by outsiders or those
individual who doesn’t have a direct connection with a legal transaction out of their control.
These key problems might impact the company because of unnecessary actions. This will force
out Starbucks to withdraw from anything.

4.) Proposed Solution/Changes

If there’s a big problem, Starbucks always had a future plan from the beginning it was
started. These future plans for Starbucks are intended to a drawn out investor esteem. It should
build its extension in rising global markets in portion of China and India. Since Starbucks has
gotten so enormous, it should be the time to teach others their skills on how they handle the
company in many countries to facilitate better with incorporating themselves and serve part in
the community. With that, the company should conduct a research and look for supervisory
groups to assist the client requests and improve its merchandise.
 The solution used by the company is Porter’s Five Cases (Microeconomic Level). This
strategy tool is to analyze company’s competitors in environment and a guide business strategy
to increase competitive advantage like knowing the supplier and target customers of a rival
competitor. There’s lot of company in competition with Starbucks and its coffee contribution to
the world. The top two competitors of Starbucks are McDonald and Dunkin’ Donut. Negotiating
better terms, keeping a good relationship with the suppliers, driving customers to buy product in
a lower price and having substitute goods or services made Starbucks to be on the top.

5.) RECOMMENDATIONS
There is great opportunity to make changes before the company withdraws from the
industry of coffee. Since people becoming aware of their health, I recommend Starbucks
to have beverages like juices and teas for health conscious customers. If they had only
coffee products while customers keep on buying it, they might have infection to the
urinary system. Also, I recommend Starbucks to add healthier foods like plain bread or
“pandesal” to their menu because it’s good for the morning. For the better company, I
recommend that Starbucks need to build relationships to their suppliers in order to get the
trust of them. For continuously development, I recommend Starbucks to use mobile apps
for short-tempered customers so they didn’t have to wait long. Lastly, I recommend
Starbucks need to build up customers’ trust so they’ll keep on buying only one brand, that
would be Starbucks for the rest of their lives.