lOMoARcPSD|13111427
Starbucks case study
Leadership And Management (University of California,
Berkeley)
, lOMoARcPSD|13111427
STARBUCKS
1. What were the most important factors behind Starbuck’s decline in 2007
and 2008? How much of this did Schultz see in 2007? Which factors were less
obvious?
If Starbucks becomes a mass brand, it will lose its exclusivity. Then it will lose their
loyal customers. In 2007, this happened after Starbucks has extremely grown far.
Not only open a lot of new branches but also launch a blizzard of new products.
Obviously, Starbucks doesn't care about the loyalty of the customer. In the customer
loyalty theory, if the company does have a loyalty marketing strategy, it will affect its
own development. However, Starbucks reduce the value of the brand for coffee
purists. They make the order delivery faster than before, barista have no time to
dialogue with customers. And it means that customers cannot customize their drinks.
Therefore, more and more people start to switch to Caribou Coffee, Peet's Coffee and
other exclusive brands.
Another factor was that the coffee industry became a red ocean industry. The market
is saturated. In the 2007 consumer report, McDonald's coffee was welcome by
consumers, and it eventually defeating Starbucks. Dunkin Donuts and McDonald’s
are cheaper than Starbuck's coffee, and they also served the meals in their shops.
These brought a big challenge for Starbucks. Why brand experience is important?
This is also relevant to customer loyalty. Customer not only buy the products, but they
also buy for the brand. For the company, they can maintain minimum consumption
and they can be famous in the global community. Brand image is a crucial thing for
the company. Besides, brand loyalty can also include the team in the company. if the
company have the loyalty from their group, growing up is like a duck to water.
Schultz knew what was coming to him in 2007/8. So, he established the warning for
the commoditization of the brand in the company, and yet, he found the way to deal
with these problems. That's why he started to close the shops that were poor
management. And purchased the automatic espresso machines to speed up the service.
He began to slow down his every step and put his eyes on expansion the shops
overseas.
2. What were the most important aspects of Starbuck’s transformation? Why
did these matter to the transformation and survival of the company? How
generalizable are such initiatives in the broader context of business
turnarounds?
1
Starbucks case study
Leadership And Management (University of California,
Berkeley)
, lOMoARcPSD|13111427
STARBUCKS
1. What were the most important factors behind Starbuck’s decline in 2007
and 2008? How much of this did Schultz see in 2007? Which factors were less
obvious?
If Starbucks becomes a mass brand, it will lose its exclusivity. Then it will lose their
loyal customers. In 2007, this happened after Starbucks has extremely grown far.
Not only open a lot of new branches but also launch a blizzard of new products.
Obviously, Starbucks doesn't care about the loyalty of the customer. In the customer
loyalty theory, if the company does have a loyalty marketing strategy, it will affect its
own development. However, Starbucks reduce the value of the brand for coffee
purists. They make the order delivery faster than before, barista have no time to
dialogue with customers. And it means that customers cannot customize their drinks.
Therefore, more and more people start to switch to Caribou Coffee, Peet's Coffee and
other exclusive brands.
Another factor was that the coffee industry became a red ocean industry. The market
is saturated. In the 2007 consumer report, McDonald's coffee was welcome by
consumers, and it eventually defeating Starbucks. Dunkin Donuts and McDonald’s
are cheaper than Starbuck's coffee, and they also served the meals in their shops.
These brought a big challenge for Starbucks. Why brand experience is important?
This is also relevant to customer loyalty. Customer not only buy the products, but they
also buy for the brand. For the company, they can maintain minimum consumption
and they can be famous in the global community. Brand image is a crucial thing for
the company. Besides, brand loyalty can also include the team in the company. if the
company have the loyalty from their group, growing up is like a duck to water.
Schultz knew what was coming to him in 2007/8. So, he established the warning for
the commoditization of the brand in the company, and yet, he found the way to deal
with these problems. That's why he started to close the shops that were poor
management. And purchased the automatic espresso machines to speed up the service.
He began to slow down his every step and put his eyes on expansion the shops
overseas.
2. What were the most important aspects of Starbuck’s transformation? Why
did these matter to the transformation and survival of the company? How
generalizable are such initiatives in the broader context of business
turnarounds?
1
