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Starbucks Case Solution
The case is focused on the challenge that Starbucks is faced for growth and expansion. The coffee brand is challenged to make the best of its core competencies against the different growth opportunities present. These opportunities include, for example, expansion of retail operations as well as expansion of the product offerings. In addition, the Starbucks brand is also presented with the opportunity to retail its coffee with competitors such s Mcdonald's. The case identifies the various competencies and strengths that Starbucks enjoys in its value chain, and how these strengths can facilitate Starbucks' expansion through the realization of the various opportunities for expansion and growth. The case is critical in understanding and identifying how brands like Starbucks need to be careful not to erode their brand position and promise in the process of growth and financial expansion, and how to achieve expansion and development while keeping core brand promise and values intact.
Following questions are answered in this case study solution:
Section I: Situation Analysis. Write a summary of the situation of the market Starbucks is operating in at the time of the case. The purpose of the Situation Analysis is to frame the environment in which Starbucks is operating and planning to grow. In order to assist in this section a copy of a well-respected tool entitled the 5Cs. This is a format you can use as a general reference in order to develop a picture of Starbuck’s opportunities and challenges.
Section II: Starbucks Position. Describe Starbucks' apparent position in the market. Describe the primary values that Starbucks brings to its target audience(s). Highlight critical features and attributes that make the Starbucks brand “real” and believable in the eyes of consumers.
Section III: Options. In your analysis of the Market and Starbucks position, develop 3 options you believe Starbucks should consider as they move to expand and grow the business. Cite, and briefly explain, one primary reward that might be achieved for each option and one primary risk that might cause the option to fail.
Section IV: Proposal. Develop a set of Guidelines for Starbucks management to follow in making decisions to adopt options and expand the business while staying true to the delivery of market expectations. This section should be reasonably specific as to the things and values Starbucks would want to include in any expansion of its brand, including internal growth and external opportunities (e.g. Frappuccino).
Case Study Questions Answers
1. Section I: Situation Analysis. Write a summary of the situation of the market Starbucks is operating in at the time of the case. The purpose of the Situation Analysis is to frame the environment in which Starbucks is operating and planning to grow. In order to assist in this section a copy of a well-respected tool entitled the 5Cs. This is a format you can use as a general reference to develop a picture of Starbuck's opportunities and challenges
Company: Starbucks offers sociality coffee. The company has worked to not only become a retailer specialty brand but also owns multiple coffee houses that serve as the third place for customers – between homes and offices. Starbucks not only offers specialty coffee but has also ventured into packaged fraps as a growth venture. In addition, the company promises to provide more than just a cup of coffee- instead, it promises a memorable experience.
Collaborators: Starbuck's success lies within its strong relation with its collaborators. Fore mostly, the internal staff and employees, who are more commonly referred to as partners have allowed Starbucks to build a competitive advantage through high service training and exceptional customer relations. The company's relation with its suppliers from three different regions for sourcing the highest quality coffee has also allowed it to consistently maintain high product standards. Lastly, the company’s relation with its real-estate agents and networks has allowed it to grow exponentially through identifying lucrative store locations that have allowed a high footfall.
Customers: the company started as a regional coffee house in the USA, and as a result, has the largest customer base in the country. Customers for Starbucks enjoy specialty coffee and come from middle-upper aspirational socioeconomic classes, as well as upper social-economic classes with affordable incomes. Seen as an affordable luxury, the Starbucks consumers came to the coffee brand for not only coffee but for social gatherings and the Starbucks experience as well.
Competitors: Starbucks competed with a number of other specialty coffee brands at retail, including for example Caribou, Barnie's Coffee, and Tea Company, Green Mountain Coffee Inc., and Coffee people. These retail specialty coffee brands focused on aggressive growth and had developed a commendable regional presence. Similarly, Starbucks also faced competition from the second cup coffee which was growing its national presence and operated with low-risk levels, and high positive cash flows.
Climate: with increased consumer interest in specialty coffee, and a potential of expanding consumer base, Starbucks has been working to expand and grow operations. The company wants to increase its physical penetration as well as experiment with new ventures and diversification for growth such as grocery retailing and packaged fraps. In addition, the company is also looking for international expansion to maintain a first-mover advantage against the increased number of competitors in the specialty coffee industry.
Based on the situational analysis, Starbucks is faced with a number of threats and opportunities. The threat largely is grounded in the increased number of competitors in the specialty coffee industry. Another looming threat comes from the potential regulations that the company will face in its international experience. The company was also challenged in its growth through restricted supplies of high-quality coffee beans that matched its product offerings – reflecting on the limited menu offering the brand made. Moreover, with increased presence regionally, physical penetration was also challenging owing to the unavailability of prime locations.
However, the company was also faced with different opportunities. These include the opportunity to expand its menu and offer multiple coffee blends as well as introduce snack items to appeal to customers more. In addition, the company could also explore packaged items for its different offerings as a means of growth. Further, Starbucks can invest in marketing to build on its unique brand image to maintain competitive differentiation in the market.
2. Section II: Starbucks Position. Describe Starbucks' apparent position in the market. Describe the primary values that Starbucks brings to its target audience(s). Highlight critical features and attributes that make the Starbucks brand “real” and believable in the eyes of consumers.
Starbucks was positioned in the market as a provider for not only great coffee but as a provider for a memorable experience. The company's position aimed for Starbucks to become the third place for individuals between work and home – where they could meet, socialize, hang out and relax over a cup of coffee. The company operated with the values of respect and diversity. In its fair treatment of employees as partners, Starbucks created a great working environment that was reflected in the employees' excellent service and customer relationship management as well as store management. As a result, Starbucks was able to bring values of honesty, integrity, respect, ethics, and entrepreneurship to the table even for its customers. The customers saw it as a responsible coffee house with innovations in the product offerings well as the setting – allowing it to truly become a place between work and home. The reality of the brand was grounded in the fulfillment of the brand promise – great coffee which was carefully prepared through unique blending and roasting techniques as well as high-quality service and customer management by its employee partners. In addition, the brand provided the right ambiance to match its promised rich experience – high rate music, comfortable and upbeat meeting place, as well as guidance on brewing excellent coffee at home, allowed people to relate more to the brand directly. The ability of Starbucks to create a unique connection with each of its customers – through personalized cups and conversations with baristas made the place more real and believable. Consumers are able to easily converse with the staff and the baristas – who personalize the experience and ensure that all customer requests are taken into account when making a coffee. At the same time, the availability of different Starbucks coffee beans for retail on the shelves and advice on how to brew coffee like Starbucks furthered the unique bond that customers shared with the brand which made it so real and believable.
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