This website uses cookies to ensure you have the best experience. Learn more

Starbucks Maintaining Growth Essay

1844 words - 8 pages

Description and "Diagnosis" of the Organizational Problem
        Since its creation in 1971, Starbucks had managed to consistently expand to and increase profit, yet in 2008 Starbucks began to report declines in profit and by 2009 net income had dropped 77% (Starbucks, Awaiting Recovery…). Furthermore, the quality of the once admired coffee began to decline as customers noted a charred flavor and while some even ranked the supposedly lower-end McCafes above Starbucks (Consumer Reports). Although, “some industry forecasters foresaw Starbucks’ disappointing performance as an early indicator of a weakening economy”, Starbucks’ own internal research indicated that that this was not the case. ...view middle of the document...

While Starbucks considered both Dunkin Donuts and McDonald’s to be lower end competitors, Panera Bread Company also entered the market offering high-end gourmet style coffees in a pleasant, relaxing atmosphere (Starbucks: Maintaining…). The increased competition created by these companies in addition to Starbucks’ desire to continue expanding pressured Starbucks to make a number of changes throughout the organization.
        Many of the changes that Starbucks implemented were successful in increasing profit yet often at the cost of Starbucks’ original founding image. The company’s current chairmen and founder, Howard Schultz, has even said that, “stores no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighbourhood store” (Starbucks – The Growth Trap). Such changes have included automated coffee machines, drive through windows, and diversification of products sold in stores to include CDs, books, and an increased variety of food. The introduction of the automated coffee machines was implemented with the intent to maximize volume of customers by decreasing time to prepare the coffee. However, while these automated coffee machines did increase efficiency, they sacrificed a number of things customers liked about Starbucks. The new machines decreased the time during which customers could chat with baristas and their increased size eliminated eye contact with the baristas making the interaction less personal. Furthermore, customers thought that the coffee tasted burned, leading some to refer to Starbucks as “Charbucks” (Starbucks – The Growth Trap). After testing out and having success with drive-through windows in a few select locations, Starbucks began including them in numerous locations. While “these new additions…w[ere] successful in increasing immediate sales and profits”, Schultz expressed “concerns that Starbucks was weakening its brand image with these ongoing modifications” (Starbucks: Maintaining…). Finally, by beginning to offer an increased variety of food and other products including books and CDs, Starbucks did manage to increase profit yet only by small margins and at the cost of further dilution of the Starbucks image. “Although food products added an average of roughly $35,000 to a store’s sales volumes in 2006, same store sales only rose 7% that year.  By comparison, same store sales had grown at a rate of 10% in 2004”, and in the final quarter of 2007 same stores sales had only grown 1% (Starbucks: Maintaining…). It can be seen that while Starbucks managed to increase profit in the short run though certain changes, these changes negatively affected Starbucks’ culture and helped lead to Starbuck’s huge dip before and during the financial crisis.

Analysis of the Organizational Problem
*
* We don’t have DEFINE quality?

The corporatization of Starbucks’ values, as the goals of profitability and growth came to dominate managerial decision-making, make it clear how a symbolic...

Other Papers Like Starbucks Maintaining Growth

Starbucks Strategy Essay

1607 words - 7 pages Starbucks’ Mission Statement Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow. The following six guiding principles will help us measure the appropriateness of our decisions: • Provide a great work environment and treat each other with respect and dignity. • Embrace diversity as an essential component in the way we do business. • Apply the highest

Starbuck-Going Global Fast Essay

1283 words - 6 pages expansions of business of Starbucks in Vienna tend to be positive advantages. 2. What are the major sources of risk facing the company and discuss potential solutions. One of the risks is due to the limitation products choice that restricted the business growth and customers may get bored of it and tend to switch to others. Secondly, the market concentrations are more to United State and Canada. Back to 15 years ago, 17 coffee shops in

Starbucks Swot

1372 words - 6 pages by 2015,(Marcus, A.A. (2011)). the future challenge for Starbucks in 2006 will be to open 1,800 new stores globally, top management believe that it can generate revenues by 20% annually and net earnings by 20- 25% annually. For the next three to five years Schultz and CEO Donald view China, Brazil, India and Russia as opportunities for growth. Schultz felt that to make Starbucks the world's preeminent global brand of coffee that they had to

Starbucks

1211 words - 5 pages , Starbucks is targeting a particular segment of its customer base that is comprised of professionals and on-the-go parents. To measure the effectiveness of these strategies, Starbucks is continuously comparing data between newly opened stores and existing stores, trying to increase the profitability of both units while maintaining a steady growth rate. Another strong point of Starbucks’ strategy is the value placed on customer satisfaction

Influence of Consumer Behavior on Business

3604 words - 15 pages fights on the upper edge of the market. Starbucks adds up its value by providing better environment than competing firms like: Dunkins Doughnut. Starbucks maintains its impression as the third place other than office and home by strictly maintaining this unique tone in its decoration and overall store environment. And Starbucks is thus meeting its target customers needs which is more than getting just a cup of coffee at good price rather getting

Starbucks Analysis

2264 words - 10 pages targeting a particular segment of its customer base that is comprised of professionals and on-the-go parents. To measure the effectiveness of these strategies, Starbucks is continuously comparing data between newly opened stores and existing stores, trying to increase the profitability of both units while maintaining a steady growth rate. Another strong point of Starbucks’ strategy is the value placed on customer satisfaction. By extensively

Mgt 500

1516 words - 7 pages the Children, Mercy Corps, the African Wildlife Foundation, and Planet Green. Management overall sets the precedence on an organization’s culture in creating, sustaining, and maintaining these concepts to its employees. A pyramid business model could be followed in the case of Starbucks, whereby you have the CEO, Howard Schultz who is the top manager, and middle managers, and lastly first line managers. The mission statement and vision

Global Responsibility

907 words - 4 pages their concerns. Starbucks, being a multinational business and corporation, has a responsibility to uphold ethical and social standards. They accomplish this by following fair-trade regulations and following C.A.F.E (coffee and farmers equity) protocols. By following these set standards, the company has managed to remain successful and sustain growth throughout the economy while maintaining a cultural and eco-friendly image to its consumers

Starbucks Mission Statement

2232 words - 9 pages 6%, to $1.9 billion, but operating margins shrank to 8.6% from 13.8% a year earlier (www.barons.com 2008). Analysis of 1990 Mission Statement & Principles and Growth The 1990 Mission Statement of -establishing Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow- was effective and in line with Starbucks deliberate and aggressive growth. But opening new

Starbucks

2833 words - 12 pages in 1987 and hasseen tremendous amounts of growth over the years. The company is known globallyand does business internationally, although it’s headquartered in the United States.Starbucks has historically had a differentiation strategy, with prices comparablyhigh and uniquely high-quality products, service and environment for the consumer.This differentiation strategy is used with a horizontal growth strategyinternationally. Starbucks currently

Cherns Case Study

1493 words - 6 pages operations, and so by inspiring each individual, with one well-made cup of coffee, followed by another individual, and so on until the whole neighborhood is inspired. Vision “Establish Starbucks as the premier provider of the finest coffee in the world while maintaining our uncompromising principles while we grow.” Values “Creating a culture of warmth and belonging, where everyone is welcome. Acting with courage, challenging the status quo

Related Essays

Starbucks Swot, Macro, And Mission Analysis

537 words - 3 pages practices to better control average store opening cost. Also, Starbucks Company has made relationships with big companies like Pepsi and craft food. Second of all, one of the biggest weaknesses that Starbucks Company has is they don’t focus in the market share globally as much as in the United State. In addition, Starbucks Company has many opportunities. For example, opening new stores in Asia clearly represent the most significant growth

Starbucks: Rapid Growth Strategy Essay

610 words - 3 pages Starbucks: Rapid growth strategy Internal growth usually means expansion of a business by opening new branches, shops or factories. This is also known as organic growth. Starbucks confirmed growth plans in which they have said they are considering opening over 10,000 new cafes over the next four years. This is a great example of internal growth as they are opening cafes in countries such as Brazil and Russia. Therefore, Starbucks is going to

Starbucks Essay

1288 words - 6 pages Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow. The following six guiding principles will help us measure the appropriateness of our decisions: - Provide a great work environment and treat each other with respect and dignity. - Embrace diversity as an essential component in the way we do business. - Apply the highest standards of excellence to the purchasing

Organization Development Implemented In Starbucks Essay

5410 words - 22 pages responsibility as a corporate value. Fourthly, developing innovative and flexible solution to bring the changes and encouraging its employees to share in the mission. Lastly, is to strive for buying and selling environmentally friendly products. 1.1 Problem Statement Starbucks‟ commitment towards the social responsibility gives a significant growth to the organization. Starbucks initiates to be more environmentally friendly with the