Since 1987, Starbucks had transformed itself from a modest 9-storeoperation in the Pacific Northwest into a powerhouse multinationalenterprise with 10,241 store locations, including some 2,900+stores in 30 foreign countries. During Starbucks early years whencoffee was a 50-cent morning habit at local diners and fast foodestablishments, skeptics had ridiculed the notion of $3 coffee as ayuppie fad. But the popularity of Starbucks’ Italian-style coffees,espresso beverages, teas, pastries and confections had madeStarbucks one of the great retailing stories of recent history andthe world’s biggest specialty coffee chain. In 2003, Starbucks madethe Fortune 500, prompting CEO Howard Schultz to remark, “It wouldbe arrogant to sit here and say that 10 years ago we thought wewould be on the Fortune 500. But we dreamed from day one and wedreamed big.â€
Starbucks reported revenues in fiscal 2005 of $ 6.4 billion, up205% from $2.1 billion in fiscal 2000; after-tax profits in 2005were $494.5 million, an increase of 423% from fiscal 2000 netearnings of $94.6 million.
Having positioned Starbucks as the dominant retailer, roaster, andbrand of specialty coffees and coffee drinks in North America andspawned the creation of the specialty coffee industry, management’slong-term objective was now to establish Starbucks as the mostrecognized and respected brand in the world. In 2005, new storeswere being opened at the rate of roughly 32 per week and managementexpected to have 15,000 Starbucks stores open worldwide going into2006. Believing that the scope of Starbucks long-term opportunityhad been underestimated, Schultz had recently increased thetargeted number of stores from 25,000 to 30,000 worldwide by 2013,at least half of which were to be outside the United States. Henoted that Starbucks only had an overall 7% share of the coffeedrinking market in the United States and perhaps a 1% shareinternationally. According to Schultz, “85that still leaves lots ofroom for growth. Internationally, we are still in our infancy.â€Although coffee consumption worldwide was standing, coffee wasstill the second most consumed beverage in the world, trailing onlywater.
In fiscal 2006, Starbucks planned to open 1,800 net new storesglobally. Top management believed that it could grow revenues byabout 20 percent annually and net earnings by 20-25 percentannually for the next 3 to 5 years. Howard Schultz and CEO JimDonald viewed China as a huge market opportunity, along withBrazil, India, and Russia. To sustain the company’s growth and makeStarbucks one of the world’s preeminent global brands, HowardSchultz believed that the company had to challenge the status quo,be innovative, take risks, and adapt its vision of who it was, whatit did, and where it was headed. If the challenge of executing thecompany’s strategy was met successfully, in all likelihood thecompany’s best years lay on the strategic road ahead.
Require:
1) Referring back to the case, put forward somesuggestions for Starbucks given the Covid 19 issues at the momentand what steps they can take Use the details from the following keywords Types of planning Leadership - Strategies OrganizationalStructure
2) What would you suggest to Starbucks to do after the Covid 19 isresolved and things go back to normal?
3) What is your evaluation of Starbucks social responsibilitystrategy? Is it sincere or just something the company does andtalks about to create a good public image? Link it to: Challengesfor management in a global environment- recent changes inmanagement practices
4) Identify the SWOT of Starbucks. You can also add from yourexperience and your knowledge of Starbucks. You can reflect fromOman's retail store.