Case Study On Starbucks

Cory Gump

MGMT 495

Case Study: Starbucks

August 7, 2007

Before Howard Schultz joined Starbucks, they were a small company in the market of selling fine quality coffee beans. Howard Schultz's strategic vision was to modify the format of Starbucks' stores, incorporating an American version of the coffee bar culture. His vision was met with great initial resistance by Starbucks' management, which was eventually quelled by strong sales performances. Also included in Schultz's strategic vision for a new Starbucks was a plan for massive expansion.

Before Schultz implemented his vision of expansion he wanted to make sure his employees were devoted to the Starbucks brand. Schultz developed a strategy to make Starbucks a great place to work. By adding employee health benefits, a stock option plan, a stock purchase plan, and improving the overall workplace environment, Schultz executed his strategy for employee satisfaction.

In the early 90's Schultz shifted his strategic vision again, this time towards store expansion. Starbucks' strategy was to blanket major metropolitan areas with stores even if some stores cannibalized another stores business. In international markets, Starbucks had a two-pronged store expansion plan: either open company owned and company operated stores, or license a company in the host country to operate Starbucks' stores. Starbucks created a new subsidiary, Starbucks Coffee International and began to build the brand globally. Now that Starbucks has become a more established firm moving towards the mature stage in its life cycle its strategy has shifted again towards one of social responsibility. Schultz is now able to shift his focus from rapid expansion and growth to one of contributing positively to the community.

Starbucks has very high social and environmental values. During Starbucks corporate rise, they have always been a leader in promoting environmental and social stewardship. Starbucks' coffee sourcing strategy is to help conserve the environment. Starbucks promotes coffee cultivation methods that protect biodiversity and maintain a healthy environment. A growing percentage of their coffees are grown organically. Starbucks also values and takes extremely good care their suppliers. They make sure to pay prices high enough that coffee grower's were able to cover their production costs and provide for their families. Starbucks is also very committed to giving back to the communities in which they operate. They also sponsor health education and humanitarian aid programs in almost all of third world countries in which they do business.

Starbucks' social responsibility strategy is not just all talk. They participate in numerous promotions and in cooperation with many philanthropic organizations to initiate this strategy. Starbucks provides substantial financial aid to community literacy programs. Starbucks formed an alliance with Appropriate Technology Inc. to help poor, small-scale coffee growers in Guatemala