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

· 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.

2. Starbucks' retail mix is as follows:

· Comparable store sales increased by 9%, 6% and 5% in fiscal 2000, 1999 and 1998, respectively.

1. Starbucks could maintain their status quo. The advantages of not changing anything would be the fact that Starbucks will not incur any new expenses by expanding into smaller markets. The disadvantage with this alternative on the other hand is that, if Starbucks remains the same, they will not reach new potential consumers. Thereby, profits may begin to fall because no new customers are being pursued.

4. The principal drivers behind Starbucks success in the marketplace are its atmosphere of the stores and its excellent customer service. Having a great product and excellent customer service is a formula for success in business. To consumers, the Starbucks brand represents a high quality product. It can be considered an "upscale" coffee brand only using the best ingredients. The Starbucks brand gives consumers the opportunity to relax and enjoy their cup of coffee in an atmosphere that is conducive to reading books or holding conversations.

· Total net revenues were $2,169,218, 1,680, 145, and 1,308,702 for 2000, 1999 and 1998 respectively.

· Retail expansion remains a major company goal.

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Approximate Word count = 1515
Approximate Pages = 6 (250 words per page double spaced)