Starbucks Corp: Clouds in Your Coffee Analysis - Research Paper Example

Similarly, Starbucks has been facing store closure challenges since 2008. As in the general case, increasing competition becomes the major constraint to the rapid growth of the Starbucks Coffee Company. This paper will explore several potential challenges that impede Starbucks’ operational efficiency and economic growth. Company background Starbucks was founded in 1971 and became the largest coffeehouse company in the world. The firm mainly deals with food products like drip brewed coffee, coffee beans, salads, snacks, pastries, espresso-based hot drinks, and other hot and cold drinks.

The company also possesses an entertainment division that markets film, music, and books. The company wishes to be a social responsible firm in addition to its vision of becoming most leading coffeehouse in the world. The company’s excellent growth rate can be clearly attributed to its outstanding business decisions and strategies. Since Starbucks is a globally spread company, it considers geographical variances, cultural differences, and market conditions for the establishment and expansion of its branches.

According to Pahi (2008, p.6), the important elements regarding a business decision are selection of business area, scope of business place, ways to attract customers, and speed and accuracy of business moves; Starbucks always tries to include theses elements while formulating a business decision. . In addition, the company has also faced working capital deficiency as a result of 2008 financial crisis. Naturally, this situation adversely affected economic interests of the shareholders and they hesitated to invest more.

Therefore, the Starbucks faced difficulties to meet operational capital requirements. As discussed earlier, store closures were the most threatening challenge that Starbucks faced in 2008. The rampant growth of Starbucks increased its business areas and number of subsidiaries globally. As a result of this tremendous growth, the company faced the risk of exposure and it later forced to reduce the subsidiaries in USA. As the first step, in July 2008, Starbucks announced that the company would close its 600 stores in the United States.

In order to overcome the losses related with downsizing process in the US, Starbucks transplanted more than 70% of its business to China which is the world’s largest market. By this transplantation, the Starbucks coffee became one of the most popular coffee brands among the Chinese people so that the company could generate lion’s part of its revenue from Chinese market. So as to get ease access to Chine market, the Starbucks Corporation offered many charitable programs to Chinese society.

Therefore, the Chinese government welcomed. After the implementation of Starbuck’s project in China, the Chinese government realized that the Starbucks products costs were beyond the affordable rate of Chinese society. In addition, Starbucks caused the collapse of traditional Chinese industries since these industries met huge difficulties to confront with this global giant. Even though Starbucks offered many social welfare programs to