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Starbucks Case Study: Growth vs. Authenticity

Starbucks grew rapidly through expansion but lost its neighborhood store feeling. A 2007 internal memo from founder Howard Schultz noted stores no longer had the soul of past stores and felt like chains instead of neighborhood shops. As a mass brand trying to command premium prices, the experience was no longer special. To restore authenticity despite growth, Starbucks must focus on food/drink service over ventures and close stores too close together while lessening delivery partnerships to retain its neighborhood store authenticity. The company should avoid over-commercializing areas and build in less commercialized locations.

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Joyce Anne De Vera Ramos
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235 views3 pages

Starbucks Case Study: Growth vs. Authenticity

Starbucks grew rapidly through expansion but lost its neighborhood store feeling. A 2007 internal memo from founder Howard Schultz noted stores no longer had the soul of past stores and felt like chains instead of neighborhood shops. As a mass brand trying to command premium prices, the experience was no longer special. To restore authenticity despite growth, Starbucks must focus on food/drink service over ventures and close stores too close together while lessening delivery partnerships to retain its neighborhood store authenticity. The company should avoid over-commercializing areas and build in less commercialized locations.

Uploaded by

Joyce Anne De Vera Ramos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

CASE STUDY

Name of the company: Starbucks Corporation

Point of View: A leaked internal memo written by founder Howard Schultz showed that
he recognized the problem that his own growth strategy had created: “Stores no longer
have the soul of the past and reflect a chain of stores vs. the warm feeling of a
neighborhood store.” Starbucks is a mass brand attempting to command a premium
price for an experience that is no longer special.

Time Context: February 2007

Historical Background: Starbucks was founded by Jerry Baldwin, Gordon Bowker,


and Zev Siegel, opening its first store in 1971 across the street from the historic Pike
Place Market in Seattle. The three Starbucks founders had two things in common; they
were all coming from academia, and they all loved coffee and tea. They invested and
borrowed some money to open the first store in Seattle and named it “Starbucks” after
the first mate in Herman Melville’s classic novel Moby Dick. By the early 1980s,
Starbucks had opened four stores in Seattle that stood out from the competitors with
their top-quality fresh-roasted coffees. In 1980 Siegel decided to pursue other interests
and left the two remaining partners, with Baldwin assuming the role of company
president.
In March 1987 Baldwin and Bowker decided to sell Starbucks, and Schultz was
quick to purchase the company. He combined all his operations under the Starbucks
brand and committed to the café concept for the business, with additional sales of
beans, equipment, and other items in Starbucks stores. The company entered into a
meteoric period of expansion that continued after the company went public in 1992.
Starbucks soon became the largest coffee-house chain in the world. By the early 21st
century, Starbucks had a presence in dozens of countries around the globe and
operated over 20,000 stores.

Statement of the problem


1. How can Starbucks Corporation restore the authenticity of the experience they
want their consumers to feel despite the growth strategy?
2. Can the company still retain their status as premier coffee shop with its premier
cost?
Area of Consideration (SWOT analysis)
 Strengths
- Strong brand image
- Extensive global supply chain
Moderate diversification through subsidiaries

 Weakness
- High price point
- Generalized standards for most products
- Imitability of products

 Opportunities
- Expansion in developing markets
- Business diversification
- Partnerships or alliance with other firms

 Threats
- Competition involving low-cost sellers
- Imitation
- Independent coffee house movement
-
Alternative Courses of action
1. Starbucks Corporation must focus more on food and beverage service instead of
investing on too many ventures.
2. The company should close down some of their branches on locations with stores
too close to each other
3. Starbucks must lessen their partnership with delivery companies to retain its
authenticity as a neighborhood store.
Conclusion: Starbucks Corporation failed to continue their legacy due to their growth
strategy and expansion not only in the United States but worldwide.
Recommendation: The company should avoid building branches near each other and
build ones in locations that aren’t much commercialized.

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