starbucks coffee
TO: Ms. Shay Hope, Assistant ProfessorRE: Case Analysis: Starbucks Coffee CompanyThis 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 reasoningThe 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
Starbucks could maintain their status quo. Starbucks' target include adults between ages of twenty-five to the mid fifteen. Employees are trained to understand the different types of coffee and assist consumers in any way needed. · Comparable store sales increased by 9%, 6% and 5% in fiscal 2000, 1999 and 1998, respectively. To consumers, the Starbucks brand represents a high quality product. in the late 1980's began to fall due to the rise of sales in soft drinks, bottled water, juices and iced teas. IMPLEMENTATION OF OUR DECISIONIn order to implement alternative two, which is Starbucks broadening their customer base, they could implement new distribution channels such as college campuses and shopping malls. The disadvantage here will be that some consumers may prefer the convenience of buying Starbuck products at supermarkets or any place of convenience that might carry the product so much so that, the store traffic will decrease reducing sales. Starbucks can defend its position by continuing to set their priority on its products and excellent customer service. · 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. Whereas alternative one which is to leave the situation as is will only be assisting the increase in the issue at hand, which is the concentration of Starbucks shops in one area. The disadvantage however, will be the fact that expansion may be expensive and the new markets may not be as profitable. Another challenge is the emergence of similar stores.
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