TO: Ms. Shay Hope, Assistant Professor
RE: Case Analysis: Starbucks Coffee Company
This memo is a case analysis about Starbucks Coffee Company written as a group assignment for our retail management class. Identify the problem
Decision and articulate reasoning
The main problem in this case is the fact that Starbucks is concentrating its business only in the central business area. Starbucks is heavily populated in large cities making it hard to locate one in smaller cities and suburbs.
· Starbucks is the nations largest specialty coffee chain.
· Starbucks has built an organizational culture based on two principle: (1) strict standards for how coffee should be prepared and delivered to customers and 2) a laid-back, supportive, and empowering attitude toward its employees.
· Starbucks historically invested very little in advertising – less than $100 million in its entire history.
· Since going public in 1992, earnings per share have grown at a 34% annual rate, compared to 22% for the S&P 500.
· Due to the training, empowerment, benefits and growth opportunities, Starbucks' turnover is only 60 percent, considerably less than 150-200 percent turnover at other firms.
· Despite their success going from $15 million in 1987 to over $1 billion this year, Starbucks still has less than 10% of the market share of coffee consumption in America.
· Retail expansion remains a major company goal.
· Company-operated retail stores accounted for approximately 84% of net revenues during fiscal 2000, whiles specialty revenues accounted for approximately 16%.
· Net revenues increased 29% from $1.7 billion in fiscal 1999 to $2.2 billion in fiscal 2000.
· Comparable store sales increased by 9%, 6% and 5% in fiscal 2000, 1999 and 1998, respectively.
· Total net revenues were $2,169,218, 1,680, 145, and 1,308,702 for 2000, 1999 and 1998 respectively.
1. Starbucks could maintain their status quo. The advantag...