Restructuring / Turnaround Strategies Case Study

Starbucks Suffers: Schultz Returns

OR

Abstract:
Howard Schultz (Schultz), Starbucks' founder, was also its CEO for most of its history. He became the chairman and chief global strategist in 2000, to overlook Starbucks' international expansion. Now in 2008, after 7 years, he is again donning the mantle of CEO, to bail the company out of a crisis. Starbucks, with more than 15,000 stores in 43 countries, is the world's largest coffee chain. However, the company saw its share price dip and customer traffic wane in US stores in 2006. Shareholder unrest triggered the departure of CEO James Donald, who held the post for less than 3 years. Schultz wants Starbucks to get back to basics. The plan he has outlined involves slowing the pace of opening new US stores while speeding up international expansion, getting back to providing customers the Starbucks' 'experience' and re-training baristas. This case study details Starbucks' growth, international expansion and the changes that were instituted over its history. Focus is on Schultz's strengths as CEO and the role he played in Starbucks' growth. The case, talking about the changed landscape in the coffee business, enables a discussion on these dilemmas. Is Schultz the right person to lead Starbucks now? What options does he have? Do changed circumstances call for new ways of doing business at Starbucks? Can Schultz do it, without carrying any baggage from the past?

Pedagogical Objectives:

The case is structured to let the students analyse and understand:
• Reasons for Starbucks' success and its growth into the world's largest coffee chain
• Why companies turn to founder CEOs, long after they have given up the post, to bail them out of a difficult situation?
• What options does a returning CEO have and, what positive and negative impact can he have on the organisation?

Keywords : Starbucks; Howard Schultz; Products / Services; Business Model; CEO 2nd Act; Starbucks culture; Succession Planning Case Study; Founder CEO; Outsider CEO; Competition; Business Environment; Industry Dynamics; Succession problems at Nike; International Business; Growth Strategies of Starbucks