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Diversification Strategies Case Study

Case Title:

Starbucks Diversion from Coffee: Will it Work?

Publication Year : 2007

Authors: Shital Vakhariya, Menaka Rao

Industry: Retailing


Case Code: DIS0024B

Teaching Note: Available

Structured Assignment: Available

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In 1999, Starbucks', the most famous specialty coffee shop chain in the world, acquired Hear Music to push itself aggressively in the music retail market and achieved immense success. It became a recognised music retail outlet due to the success of albums by Ray Charles, Bob Dylan and others that had been sold in its stores.

Meanwhile, Starbucks coffee chain posed a threat with the increased competition in coffee business. The company decided to expand into diverse business by leveraging on its parent coffee brand. Analysts had a skeptical view that it may be risky for Starbucks to be shifting its focus away from its coffee brand. It discusses strategies adopted by Starbucks to replicate its coffee success. This case highlighted the risks involved in diverting the focus from the core parent brand.

Pedagogical Objectives:

  • To discuss strategies adopted by Starbucks to replicate its coffee success
  • To analyse the risks involved in diverting the focus from the core parent brand.

Keywords : Coffee; Diversificatio; core brand; McDonalds; Apple; Digital piracy; Growth Strategy; Brand Equity; Diversification Strategies Case Study; Sczultz; Hear Music; XM Satellite Radio; Paul McCartney; Unification of two Brand

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