Starbucks: Back to Basics?
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Case Details:
Case Code : BSTR307
Case Length : 18 Pages
Period : 2007-2008
Pub Date : 2009
Teaching Note : Available
Organization : Starbucks Corporation
Industry : Coffee Retailing
Countries : USA, Global
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Background
Starbucks was the brainchild of English teacher Jerry Baldwin (Baldwin), history teacher Zev Siegl, and writer Gordon Bowker (Bowker). They opened the first Starbucks store in 1971 in Pike Place Market, Seattle and called it Starbucks Coffee, Tea and Spice. The first store sold fresh-roasted, gourmet coffee beans and brewing and roasting accessories. Company legend had it that
"Starbucks"was named after the coffee-loving first mate in Moby Dick...
Storm in a Coffee Cup?
Beginning 2007, Starbucks saw a slowdown after years of growth. The company's shares fell 20 percent by mid-2007, compared to their value in mid-2006. The slide was attributed to several factors, but the main one was the economic situation in the US, believed to be the worst in decades. The plummeting US housing market was at the epicenter of the crisis...
Schultz Returns
In January 2008, Schultz replaced Donald as the CEO of Starbucks. Schultz said in an official communiqué that he would focus on
"customer experience and innovation"to reverse the slide in shareholder value...
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Outlook
In July 2008, the company announced that some 600 stores would be shut down across the US, resulting in the loss of 12,000 full and part time jobs. The company also planned to shut down 61 of its 85 stores in Australia . Schultz said,
"The current economic environment is the weakest in our company's history, marked by lower home values, and rising costs for energy, food and other products that are directly impacting our customers."...
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Exhibits
Exhibit I: Starbucks' Logos - Old and New
Exhibit II: Starbucks' International Presence
Exhibit III: A. International Coffee prices in US cents per lb
Exhibit III: B. Reduced Fat (2%) # Milk* Prices in the US
Exhibit IV: The Starbucks Experience
Exhibit V: Starbucks' Retail Sales Mix
Exhibit VI: Starbucks' Financial Highlights
Exhibit VII: Starbucks' Stock Price (in US$) between 1999 and 2008 |
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