Starbucks international operations case study

Overseeing more than 16,000 stores worldwide, creating a new coffee lingo, Schultz indicates that there are over 70,000 different ways to order a Starbuck’s coffee which makes up the Starbucks experience. Now, seen as a symbol of grandeindulgence, Starbuck’s is struggling. The company has announced the closing of 600 underperforming stores in the U.S. and the need to cut more than 1,000 jobs. Schultz admits that Starbucks may have grown too big too fast given today’s economy and a business plan was not in place for the severity of the economic downturn. Schultz recognizes that such a recession has created more discretionary coffee decision making purchases. Dunkin Donuts, with its expansion, is providing some strong competition by offering an upgraded coffee experience at a lesser consumer cost. When asked if he would bring the Starbuck’s prices down, Schultz maintains that Starbuck’s will not cut corners but will reduce waste to save the company more than $400 million and continue to sell more than a cup of coffee. He says, post 911, that Starbuck’straffic increased because of the need for a sense of community and that they don’t want to do anything to fracture the community experience. He also plans to continue to provide health insurance to all employees including part-time. When asked if Starbucks can keep its mission statement in this economy, he says he is optimistic and realistic and offers would be entrepreneurs this advice: Opportunities can be and have been created during tough economic times. Starbucks was created by believing in big dreams so dream big and dream bigger.

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Describe Starbuck’s business-level strategy.
How is Starbucks managing its relationship with customers?
How would you describe the market segment(s) that Starbuck’s serves?
Is the differentiation strategy appropriate for Starbucks? Why or why not? Now or in the future?
Using the five forces model of competition, how should Starbuck’s plan to position itself in these economic times?