Analysis (another one) - Case Study Example

Starbucks Case Analysis Background/ Problem ment After 20 years that Starbucks has portrayed phenomenal growth, the company witnessed a decline in the price of its shares by 50 percent, as well as a decrease of its client base, particularly in North America in the last months of 2007. In January 2008, the firm announced closure of 100 stores in the United States, and the number rose to 600 stores by July 2008. The major contributing factor to the poor performance of Starbucks was the price increase per cup, which clients did not receive as hoped, tarnishing the company’s image (Ivey 1).

Strategic Analysis and OptionsStarbucks has exceptional strengths that help it realize a distinctive position in the marketplace. Before 2007, the firm realized same growth rate that exceeded five percent for 15 consecutive years. This growth helped the company to establish its brand in the market, setting it apart from its rivals. The company maintained “standardization,” which helped it build its brand regardless of its rapid expansion. A lucrative business, the company has manage to merge growth and profitability with its competitive advantage, particularly by espousing strong ethical values (Ivey 7).

In the recent years, however, Starbucks is showing weaknesses attributed to high prices, market saturation, and long waits in its stores due to the inexperience of its baristas and managers. The quality of coffee is low, and the food the company provides highly unattractive. With respect to opportunities, coffee culture is growing at a rapid pace globally, providing Starbucks with a chance to go up-market and compete with established coffee firms, especially in the luxurious European market and emerging markets such as China, India, Brazil, and Russia.

In this case, Starbucks will manage to cope with the threats posed by Dunkin Donuts, McDonald’s, and Peet’s Coffee & Tea, as well as those resulting from financial crisis and the company’s overexposure in the market (Ivey 8).RecommendationsBased on the strategic issues that Starbucks is encountering, which contribute to its downfall, the firm should hire additional managers and train its baristas appropriately to help streamline its menus, fill orders faster, and improve the overall services delivered to clients.

The organization should also offer more products and services beyond coffee to address the diverse needs of its clients. The company should also provide its clients with natural food that does not affect their health negatively. In addition, the firm should lower the prices of its products and enforce fair workplace arrangements for it to create a positive image in the eyes of its clients. Justification/ IntegrationThe recommendations will be effective to the company since customers prefer companies that address their needs appropriately.

They love an environment where their needs are addressed in a timely manner. In addition, consumers are becoming more concerned about their health, and aligned to a company that focuses on providing quality food, rather than just profitability. The recommendations address the strategic issue facing Starbucks because the company realizes its weaknesses and threats, allowing it to formulate strategies that will help it address the market needs appropriately. Therefore, the analysis I carried out led to these recommendations because the performance of Starbucks has been deteriorating in the recent years, creating a need for the firm to understand market trends and help it remain the market leader in the industry.

The following table and chat reflect the deteriorating performance for Starbucks in the market, creating a need for intervention strategies that will help reinstate its position in the market. From 1996 to 2007, the growth of the company’s net revenues and earnings have been on a constant decline Source: (Ivey 13)Source: (Ivey 13)Works CitedIvey. A Crack in the Mug: Can Starbucks Mend it? Ontario: Iey Management Services, 2008. Print.