Issue
After more than a decade of steady growth and sales, Starbucks is besieged with slow sales growth, increased competition and manufacturing costs and approximately 50% decrease in shareholder value. Starbucks has more than 15,000 stores in 43 countries leading to saturation of the market place; Starbucks also plans to expand to 40,000 stores worldwide (Martin, 2008). The opening of a Starbucks, use to be the talk of the town or meant that the town had become worthy of a Seattle based company, but now a Startbucks is on almost every corner. Starbucks lost customers after an increase of 9 cents was levied on a cup of coffee, which caused some consumers to go to competitors, McDonalds and Dunkin Doughnuts. The cost of dairy and the lack of sales from breakfast sandwiches and salads have hurt margins for the coffee giant.
Managerial Decision
Howard D. Schultz is back at the helm of Starbucks in an effort to perk up and restore the company to its niche. Schultz wants to refocus on the customer experience to recapture the magic of the chain’s early years (Barbaro & Martin, 2008). The approach Starbucks is going to take is to reclaim the ambience the company had originally, limit growth and decrease brand dilution, in essence get back to the basics.
Outcomes
Starbucks has opened 745 new stores worldwide, bringing its total store count to 15,756. By next year, the company is planning to open more stores abroad than domestically (Goldman, 2008).
Starbucks has renewed the focus on the coffee quality, with new coffee blends and additional training for Baristas. A limited new logo has been formulated to rejuvenate coffee sales. The new logo is brown and based off the 1971 image that was used to ...