Presentation on MCCP

Case Study on STARBUCKS-Back to Basics

Submitted By: Mahek Poddar Jitendra Ratwani Heena Tewani Radhika Thakkar Ankit Yadav

11057 11064 11079 11086 11095

Submitted To: Prof. MIRAL PANDYA {Lecturer, TIMS-Adipur}

SYNOPSIS
1970-80 1971:First store opened in Seattle by three owners. Initially it sold coffee, tea and spice. By 1980: Became Largest roaster of coffee by 6 retail outlets.

1980-90
1987: Howard Schultz as CEO. Conversion of retail shops into classy and comfortable coffee house.

1990-00 In 1990s it expanded rapidly. 1996: 1st international outlet in Tokyo. 1999: Acquired Hear Music Manual espresso machines replaced with automated ones.

2000-08
2000: Schultz retired from CEO & Orin smith then Jim Donald were appointed as CEO. 2007: Slowdown due to economic crisis and other reason. 2008:Schultz returned as CEO and his new initiatives brought changes in bringing back the Starbuck experience.

Case Viewpoint
The rapid expansion during the 1990s-2000s

reduced the exclusivity of the Starbucks brand.

In 2007,

there was slowdown mainly due to economic crisis that had an impact till 2008. drop in customer traffic and profits in 2008.

The case discusses the reasons for

Statement of problem
Installation of new automated espresso machine limiting the interaction between baristas and customers and diluting the Starbuckss experience. It introduced hot food due to which the aroma of coffee got diluted. Cost of opening new stores as well as prices of coffee and milk were touching new highs. Its major competitor Mc DONALDS priced its coffee 6080 cents lower and so there was a drip in sale of STARBUCKSS coffee.

Areas of Consideration
Bringing back their

customers. To decrease the number of its outlets & lower their costs. To increase the international sales. To increase the motivational levels of employees and bringing back the Starbuckss experience. To change management strategies. Change in the menu card.

Objectives

The companys objective is to establish STARBUCKS as the most recognized and respected brand in the world. Provide a great work environment and treat each other with respect and dignity. It aimed to become the one place outside of work and home where a person could feel at home.

Focus on customer experience and innovation.

Profitability.

Course of Action by Schultz

FIVE

INITIATIVES:
of semi automatic espresso

Introduction

machine. Complete reinvention of brewed coffee in-store. Introduction of loyalty program to reward registered card holders. Launch of mystarbucksidea.com. Relationship with CI to educate coffee growers.

Training to baristas to relearn the art of coffee making.

Warm sandwiches were removed from the menu. Free Wi-Fi services for 2 hours at company stores.

Introduction of new fruit- based drink & health beverages.

Alternative Course of Action

(1) Advertisement:
The company invested less in advertisement.

Pros: It would help in increasing sales.

Cons: It would increase the expenditure of the company

(2)Product line:
Starbucks should keep its focus on its main product (coffee) rather than creating too many additional products (Ice Cream, CDs, T- shirts, Books)
Pros: Sales will continue to increase and its customers will regularly get same quality product.

Cons: The customers would be least attracted.

(3)Status quo:
Starbucks could maintain their status quo.

Pros: Starbucks will not incur any new expenses by expanding into smaller markets. Cons: If Starbucks remains the same, they will not reach new potential consumers. Thereby, profits may begin to fall.

Plan of Action
We therefore

conclude that company should maintain status quo but also should advertise its product in newspaper, television etc. to attract customers and increase sales and there by reduce its cost in future. our survey Starbucks historically invested very little in advertising - less than $100 million in its entire history.

As per

Concepts Related to Case

(A) Total Quality Management (TQM):

It launched mystarbucksidea.com which invited suggestion and ideas from registered customers.The top rated suggestion were been implemented by the company. Starbucks was obsessed with quality and took care while choosing coffee beans and also developed process of roasting as an art.

(B) Green Management:

Starbucks and CI made efforts

to educate coffee growers on the most eco-friendly methods of farming as well as on protecting the land, water, and forests that surrounds their farms.

(C) Growth strategy:

Forward vertical integration: from being a small sized company with around 165 stores in the us in 1992, Starbucks became a global behemoth with around 15000 stores in more than 40 countries by early 2008. Horizontal integration: in 1998, it entered the UK by acquiring the UK based seattle coffee company and renamed the existing stores to Starbucks.

(D) Renewal strategy:

After facing economic crisis in 2008 with rapid expansion Schultz decided to change the way the Starbuck operated. He closed down around 600 underperforming stores . Removing warm breakfast from menu and maintaining the aroma of coffee. Introduction of new equipment-the clover brewing system. Launch of nourishing blends and new health and wellness beverages.

(E) SWOT Analysis: