starbucks strategic management case study

Starbucks Change Management Case Study

Change is a constant in any business, and successful organizations must adapt to changes in the industry, market, and consumer preferences to remain competitive. 

The ability to manage change is crucial to the survival of businesses in today’s dynamic market environment. 

This is why change management is a vital aspect of business operations. 

In this blog post, we will explore the case study of Starbucks’ change management, discussing their need for change, strategies implemented, challenges faced, and the results of the change. 

We will also examine the lessons learned from this experience and the importance of change management in businesses. 

So let’s dive into the Starbucks change management case study and see how it can inform our understanding of successful change management. 

History and Growth of Starbucks

Starbucks is an American multinational coffee company founded in Seattle, Washington, in 1971. The founders of Starbucks were three friends, Jerry Baldwin, Zev Siegl, and Gordon Bowker.

Starbucks initially started as a single store selling high-quality coffee beans and equipment. It was only in the early 1980s that Howard Schultz joined Starbucks as the Director of Retail Operations and Marketing. It was his vision of a coffeehouse culture that transformed Starbucks into the iconic brand it is today.

Schultz convinced the founders to test a coffeehouse concept in downtown Seattle, and in 1984, the first Starbucks Coffeehouse was opened. The concept was an immediate success, and Starbucks quickly expanded throughout Seattle and the United States.

In 1992, Starbucks went public, and by 2000, the company had over 3,000 stores worldwide. By 2018, Starbucks had more than 30,000 stores across 80 countries.

Starbucks faced numerous challenges and crisis during its journey but it sailed through the tough times and surfaced as a text book examples of crisis management.

The need for change at Starbucks

 Despite its growth and success, Starbucks faced significant challenges in the late 2000s. In 2007-2008, the global financial crisis impacted Starbucks, leading to the closure of several underperforming stores. Furthermore, the company’s rapid expansion had led to a loss of focus on its core business, and the quality of its products had suffered. Starbucks’ profitability and customer satisfaction were on the decline, and the company needed to make significant changes to survive in the highly competitive coffee industry. In response, the company realized the need for change and embarked on a comprehensive change management program.

Reasons for the change

The need for change at Starbucks was evident, and the company identified several key areas that needed improvement. Firstly, Starbucks needed to streamline its operations to reduce costs and increase efficiency. Secondly, it needed to refocus on its core business of selling high-quality coffee and related products. Thirdly, Starbucks needed to improve its customer service and store experience to boost customer satisfaction and loyalty.

Strategies implemented by Starbucks

To achieve its goals, Starbucks implemented several strategies. Firstly, it closed underperforming stores and streamlined its operations to reduce costs. Secondly, it refocused on its core business by introducing new blends and improving the quality of its products. Thirdly, Starbucks launched a customer feedback program to understand customers’ needs and preferences better. Fourthly, Starbucks introduced new store designs and layouts to improve the in-store experience. Finally, Starbucks invested heavily in training its employees to provide excellent customer service and maintain the high standards of its products.

Challenges faced by Starbucks during the change

The change management process at Starbucks was not without challenges. Firstly, some employees resisted the changes, and there was a need to ensure that everyone was on board with the new direction of the company. Secondly, there was a need to balance the introduction of new products and store designs with maintaining the company’s core values and identity. Thirdly, there was a risk of losing customers during the change process, and Starbucks had to ensure that it maintained its customer base while attracting new customers.

Results of the change management at Starbucks

The change management program at Starbucks was successful, and the company saw significant improvements in its financial performance and customer satisfaction. Firstly, Starbucks’ profitability improved significantly, and the company’s share price increased. Secondly, the quality of Starbucks’ products improved, and the company introduced new blends and products that were well-received by customers. Thirdly, the in-store experience was improved, and the new store designs and layouts were well-received by customers. Finally, customer satisfaction and loyalty increased, and Starbucks regained its position as a leading brand in the coffee industry

05 Factors that explained successful implementation of change management at Starbucks

There were several factors that contributed to the successful implementation of change management at Starbucks. Here are five key factors:

1. Strong Leadership 

Starbucks’ success in implementing change management can be attributed to the strong leadership of the company. The leaders at Starbucks had a clear vision of what changes were needed, and they were committed to making those changes happen. They communicated the need for change effectively to all stakeholders and provided the resources and support necessary for the change process to succeed.

The leadership team also ensured that everyone in the organization understood their roles in the change process and provided guidance and direction throughout the implementation. Their leadership helped to create a sense of urgency and momentum, which was critical for the success of the change management program

2. Effective Communication 

Effective communication was a crucial factor in the success of Starbucks’ change management program. The company communicated the changes to employees, customers, and stakeholders effectively, ensuring that everyone was informed and understood the changes. Starbucks used a variety of communication channels, including town hall meetings, newsletters, and training sessions, to ensure that information was disseminated widely and consistently.

By keeping everyone informed and engaged, Starbucks was able to create a shared understanding of the changes and gain buy-in from employees, customers, and stakeholders. Effective communication also helped to build trust and credibility with stakeholders, which was essential for the success of the change management program

3. Employees Engagement 

Employee engagement played a critical role in the success of Starbucks’ change management program. The company engaged its employees in the change process by involving them in planning and implementation and ensuring that they had the necessary training and resources to implement the changes effectively. Starbucks also recognized and rewarded employees who embraced the changes and demonstrated excellent customer service.

This approach helped to create a sense of ownership and accountability among employees, which was essential for the success of the change management program. By empowering employees and recognizing their contributions, Starbucks was able to create a culture of continuous improvement and innovation, which helped to sustain the changes over time.

4. Customer Focus 

Putting the customer at the center of its change management program was a key factor in Starbucks’ success. The company listened to customer feedback and made changes to its products and services to meet their needs and preferences. Starbucks also focused on improving the in-store experience to enhance customer satisfaction. By focusing on the customer, Starbucks was able to improve its products and services, which led to increased customer loyalty and retention.

By enhancing the in-store experience, Starbucks was able to create a more inviting and comfortable environment for its customers, which helped to increase sales and revenue. By making the customer a priority, Starbucks was able to build a strong brand and create a loyal customer base, which was essential for the success of its change management program

5. Flexibility

Flexibility was a critical factor in the success of Starbucks’ change management program. The company was flexible and adaptable during the change process, making adjustments to its strategies and plans as needed. Starbucks was open to feedback and suggestions from employees and customers, which helped the company to identify areas for improvement and make changes accordingly.

Starbucks recognized that change was an ongoing process and continued to make improvements over time. This approach helped Starbucks to stay ahead of the curve and remain competitive in a rapidly changing market. By being flexible and adaptable, Starbucks was able to anticipate and respond to changes in the market, which was essential for the success of its change management program. 

Final Thoughts on Starbucks Change Management Experience 

The Starbucks change management experience offers valuable insights into how companies can successfully navigate and implement change. Through strong leadership, effective communication, employee engagement, customer focus, and flexibility, Starbucks was able to successfully implement changes that resulted in improved performance, increased customer loyalty, and sustained growth.

Starbucks’ approach to change management shows that it is possible to implement significant changes while still maintaining the core values and identity of a company. By keeping the customer at the center of its change management program and engaging its employees, Starbucks was able to create a culture of continuous improvement and innovation, which helped to sustain the changes over time.

Overall, the Starbucks change management experience serves as a valuable case study for companies seeking to implement change and improve their performance. By following the lessons learned from Starbucks, companies can increase the likelihood of successful implementation of change management and create a culture of innovation and continuous improvement that can drive sustained growth and success.

About The Author

Tahir Abbas

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More From Forbes

Starbucks, reinvented: a seven-year study on schultz, strategy and reinventing a brilliant brand.

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BY JULIA HANNA

Harvard Business School Professor and historian Nancy Koehn has studied Starbucks and its leader, Howard Schultz , for close to 20 years. For her, the company represents much more than a phenomenal success story.

In a recently published case, "Starbucks Coffee Company: Transformation and Renewal," (available soon) Koehn and coauthors Kelly McNamara, Nora Khan, and Elizabeth Legris trace the dramatic arc of the company's past seven-plus years—a period that saw Starbucks teeter on the brink of insolvency, dig deep to renew its sense of purpose and direction, and launch itself in new, untested arenas that define the company as it exists today.

"This case distills 20 years of my thinking about the most important lessons of strategy, leadership, and managing in turbulence in the frame of a very relevant company," says Koehn, the James E. Robison Professor of Business Administration. "As a brand, leadership, and entrepreneurship scholar, I've been dogging Starbucks for a long time."

On a 1995 trip to Seattle, Koehn visited a Starbucks store for the first time and was struck by what she saw and felt. The notion of a "third place" between home and work to relax and enjoy the small, affordable luxury of a special coffee beverage seemed to resonate with the social and economic moment, she recalls. Six months later she met Howard Schultz, an entrepreneur who acquired the company in 1987, and was struck by his seriousness of purpose and the breadth of what he wanted to accomplish.

Starbucks Chairman Howard Schultz (Photo credit: Wikipedia)

The case, Koehn's fourth to focus on Starbucks, opens in February 2007. Schultz, no longer Starbucks' CEO but still its chairman, is worried the company is losing its ability to be true to its values while providing a store experience that conveys a sense of comfort, connection, and respect for its product and the communities Starbucks serves.

So Schultz composed a heartfelt, searching memo to senior leadership. In it, he bemoaned decisions (for which he accepted responsibility) that improved efficiency and increased economies of scale but robbed stores of some of their essential magic, such as the smell of roasting coffee and the sights and sounds of traditional Italian espresso machines and baristas at work.

He also cited the company's rapid expansion and the potential "commoditization" of the Starbucks brand. "[W]e desperately need to look into the mirror and realize it's time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks Experience," Schultz wrote.

The scope and richness of Koehn's case gives it the feel of a page-turning novel; in that sense, Schultz's memo is the inciting action for all that follows.

Remaining True To Core Values

The challenge that had confronted Starbucks in the early- and mid-2000s was one common to many organizations: Could the company continue to grow while preserving its culture and values? In some areas, the drive to expand, egged on by Wall Street, was compromising the company's ability to invest in its partners (Starbucks' term for its employees), deliver personalized customer service, and maintain a close connection to the local community.

In addition, McDonald's and Dunkin' Donuts had emerged as serious competitors, offering their own lines of specialty coffee beverages. Even so, Starbucks' financials for 2007, the year Schultz composed his memo, didn't look so bad. But the entrepreneur became concerned as he dug more deeply into the numbers. Sure, revenues were up almost 21% over the previous year, but had slowed by over a third; transactions per store were up 1%, versus 5% the year before. Same-store sales rose only 5%, the smallest increase in five years.

In January 2008, Schultz returned as Starbucks CEO, replacing Jim Donald, the man he and other senior colleagues had chosen to lead the company.

Starbucks Sails Again

The case chronicles the blizzard of decisions and initiatives that follow what could have been the company's death knell as the financial crisis hit home and consumers cinched their belts.

"Schultz understood that you can't lift your foot off the gas pedal when you're attempting to transform a company," Koehn says. "Severe as its financial needs may be, you also have to figure out what you will invest in. Schultz knew that if he waited until the company was out of the woods to invest in new products, communication channels, and ways of doing business it would be too late—Starbucks would no longer be relevant."

From the start, Schultz sent the clear, unwavering message that Starbucks' transformation would represent a return to its roots and an uncompromising commitment to core values, such as health care benefits for any partners working at least 20 hours a week.

At a March 2008 gathering of 200 senior-level company leaders, Schultz unveiled a Transformation Agenda that included seven "Big Moves":

• Be the undisputed coffee authority;
• Engage and inspire our partners;
• Ignite the emotional attachment with our customers;
• Expand our global presence—while making each store the heart of a local neighborhood;
• Be a leader in ethical sourcing and environmental impact;
• Creative innovation growth platforms worthy of our coffee;
• Deliver a sustainable economic model.

The case provides a behind-the-scenes look at how the coffee company moved forward on these goals, including the introduction of the milder Pike Place Roast; the story of its VIA Ready Brew line; the launch of a loyalty program; investment in and engagement with social media; focus on a global expansion strategy; and the extension of social programs. The company closed stores, restructured its manufacturing and supply operations, and, perhaps most significantly, took steps to reengage its partners and store managers. In February 2008, Starbucks closed more than 7,000 of its stores across the country for "Espresso Excellence Training," taking the time to work with approximately 135,000 baristas to ensure they could pour a perfect espresso shot and steam milk properly.

For Schultz, however, that wasn't enough—he wanted to reach the company's store managers, recognizing them as essential to the transformation process.

"I needed an unfiltered venue for expressing my empathy about all that we were asking our partners to do and telling them plainly what was at stake," he wrote in Onward: How Starbucks Fought for Its Life without Losing Its Soul . The answer, in Schultz's mind, was a three-day conference in New Orleans in October 2008, a moment when the global economy happened to be tanking. Starbucks' fourth quarter profits were down 97% from the same time a year earlier; for the fiscal year, net earnings were down 53% to $316 million. The Starbucks board was reluctant to send 10,000 partners to New Orleans at a cost of $30 million, but Schultz stuck to his guns.

In addition to rolling up their sleeves and taking part in community service projects to aid areas of the city still recovering from Hurricane Katrina, partners participated in team-building events that reviewed the company's guiding principles and reminded them of their central role in the customer experience. Schultz also brought in Bono, lead singer of U2, to announce a partnership to channel proceeds from holiday beverage sales to the Global Fund in support of AIDS relief programs in Africa.

The New Orleans conference was a turning point for Starbucks; in the "novel" of Koehn's case, it's the climax.

"Investing in a conference of that size is such an unusual thing to do when faced with a cash crunch," Koehn says. "Schultz understood that what saves and breaks businesses is much more than cash. In the midst of so much turbulence, it's all too easy to pull levers on the low-hanging fruit of cash and logistics. But you don't save a business and turn it around without speaking to, focusing, and calling on the spirit of your people."

Schultz's experience qualifies him for closer study in Koehn's HBS course Power and Glory in Turbulent Times: The History of Leadership from Henry V to Steve Jobs. Not all managers are confronted in their careers with the sort of transformation challenge faced by Starbucks, but Schultz's reflections and actions are instructive for anyone charged with finding sources of strength, innovation, and renewal in today's turbulent business environment, Koehn says.

About the author:  Julia Hanna is associate editor of the HBS Alumni Bulletin .

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Strategic Analysis of Starbucks Corporation: Management & Process Strategy

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Introduction

Starbucks strategy analysis: pestle analysis of the uk market, macro-environment analysis, pestle analysis of the uk market, microenvironment analysis, starbucks strategic management analysis, reference list.

Starbucks Corporation is a private limited company that was established in 1971. The firm operates within the specialty eateries industry. Upon its inception, the firms’ operation entailed roasting and retailing ground and whole coffee beans, spices, and tea. Its operations were solely based at Seattle’s Pike Place market.

Due to its focus to attain an optimal market share both domestically and internationally, the firm currently operates approximately 18,000 retail stores, which are located in 60 countries. The firm has adopted a unique mission that entails inspiring and nurturing the human spirit. In an effort to position itself in the market, Starbucks has adopted a unique market strategy, which entails product differentiation and growth.

The firm has achieved this goal by dealing with specialty products. Over the years, Starbucks has continued to provide a wide range of beverage products such as coffee, tea, and juices. The firm also deals with a variety of fresh food items such as pastries, salads, and oatmeal.

Its product differentiation strategy has enabled Starbucks to incorporate premium-pricing strategy. In line with its differentiation strategy, Starbuck has adopted a unique marketing strategy. The firm has attained this objective by adopting unconventional marketing strategies. The firm does not engage in aggressive marketing strategies such as advertising, but instead it focuses on branding and high-level marketing using alliances, partnerships, and word of mouth (Larson 2009).

Some of the most effective marketing strategies that the firm has adopted include provision of high quality coffee products, ensuring a high level of customer satisfaction, and establishing itself as the 3 rd place for consumers to patronise between home and work, brand marketing, and establishing a Starbucks’ community.

By adopting the unique marketing strategies, Starbucks has positioned itself as a market leader in an industry that is increasingly becoming very competitive. In a bid to develop a better understanding of Starbucks, the paper entails a detailed analysis of Starbucks internal and external environment. An analysis of the internal environment comes out clearly in the process of undertaking a comprehensive strategic management analysis.

Firms face numerous factors emanating from the external business environment, which makes it paramount for firms’ management teams to develop a comprehensive understanding of the environment in which they operate (Kotter & Schlesinger 2008, p. 136). Market environment analysis should take into account the macro-environment such as the economic, political, legal, social-cultural, and technological environments (Gilligan & Hird 2008, p. 36).

The analysis should also incorporate microenvironment analysis, which entails evaluating the industry in which a firm operates. The micro and macro environments vary across countries. Thus, it is paramount for firms’ management teams to conduct an analysis of the macro-environment of the country in which they operate.

One of the models that firm’s management team should undertake is the PESTLE model in a bid to undertake market environment analysis effectively. In its UK market, Starbucks’ operations are impacted by changes in the macro-environment.

Political environment

The UK has continued to experience a high level of political stability. Consequently, most local and foreign investors perceive the UK as an attractive investment destination. The UK is a member of a number of economic integration and trading blocs such as the G20 and the Euro Zone.

This aspect increases the probability of Starbucks marketing its products to a large number of countries in Europe. Companies operating in the UK benefit from the tariff-free market because of being a member of the European Union. The UK is also in a free trade agreement with Liechtenstein, Switzerland, and Norway.

The UK is also a member of the Organisation for Economic Co-operation and Development (OECD). As a multinational company, Starbucks sources its raw materials from different countries through importing. One of main challenges that the firm experiences in its importing process relates to the existence of international trade regulations and tariffs. These tariffs may adversely affect the firm’s competitiveness in the UK market.

Economic environment

The global economic environment has become very dynamic over the past one decade. The changes in the economic environment have adversely affected firms in different economic sectors. The 2007/2008 economic recession stands out as one of the worst economic recession of the 21 st century.

Due to the recession, Starbucks experienced a decline in its sales revenue, which occurred due to decline in the consumers’ purchasing power. The recession led to an increment in the rate of unemployment thus reducing the consumers’ ability to purchase, and thus there was a change in the consumers’ consumption behaviours.

For example, consumers who previously afforded Starbucks’ products became unable to purchase the same products. Most consumers adjusted their spending habits by being very cautious in their discretionary spending. As a result, consumers became more concerned with purchasing necessities rather than luxuries. The consumers’ regarded specialty products as luxuries.

The 2012 sovereign debt crisis being experienced in the Euro Zone is also adversely affecting business operations in the UK. Following the crisis, the UK has experienced an increment in the rate of unemployment to 11.2 per cent (Cha 2012). Consequently, the consumers’ spending has declined significantly.

The crisis has thrown UK consumers into deep uncertainty with reference to their economic future. In response to their uncertainty, consumers have reduced their spending on both big and small items such as cars and a cup of coffee. The severe nature of the crisis has forced the Moody’s (credit rating agency) to consider downgrading the country’s rating from its current AAA. This move will adversely affect the country’s competitiveness and attractiveness ( This Money 2012).

Social environment

The prevailing social trends in the UK present an opportunity for Starbucks to market its products. Most UK consumers spend a substantial amount on coffee. It is estimated that approximately 511 million cups are consumed in the UK every week. The largest percentage of coffee consumption takes place in shopping malls and franchises such as Starbucks. UK consumers greatly enjoy relaxing as they drink a cup of coffee (Walsh 2011).

Therefore, there is a high probability of the firm increasing its sales revenue. Changes in consumer tastes and preferences can adversely affect Starbucks’ sales. Consumers may shift to specialty coffee products offered by its competitors. The high rate at which consumers are becoming health-conscious in their consumption patterns may affect the firm’s future operations. Therefore, to align itself with these changes, it is critical for Starbucks’ management team to conduct a continuous analysis of the prevailing social environment.

Technological environment

The UK has experienced a wave of technological advancements over the past decades, and to benefit from these changes, it is important for Starbucks to implement the necessary technological changes. UK consumers have become technologically shrewd in their purchasing patterns. In an effort to exploit this phenomenon, Starbucks has embraced a new mobile phone payment system.

The system has played a vital role in reducing queuing at its outlets especially during peak times. Additionally, the emergence of social networks also presents an opportunity that the firm can exploit. Through these social networking sites, Starbucks can engage its customers through communication.

Legal environment

In a bid to improve the country’s competitiveness, the UK government has implemented a number of measures, which make the UK very attractive to local and foreign investors. One of the ways through which the UK government has attained this goal is by recognising intellectual property rights such as patents, copyrights, and trademarks. By ensuring an effective legal environment, Starbucks has managed to operate effectively in the UK.

The UK government has also established 21 new enterprise zones. The zones aim at stimulating economic growth in some areas in the UK. Moreover, to attract investors in such areas, the UK government has implemented a 5-year tax holiday amounting to GBP 275,000. The UK government has not incorporated any exchange control that would affect remittance of royalties, patent fees, and dividends (Deloitte, 2011).

Porter’s five forces

In an attempt to succeed in their respective industries, it is paramount for firms’ management teams to understand the prevailing industry dynamics. One of the ways through which a firm can understand the industry in which it operates is by taking into account the Porter’s five forces model (Grundy 2006, p. 215).

The model evaluates the characteristics of a particular industry by evaluating the potential entrants, the buyers and suppliers’ bargaining power, existence of substitute products, and degree of industry rivalry. The chart below illustrates the prevailing characteristics of the UK specialty eateries industry.

The industry is characterised by low supplier bargaining power because of the numerous coffee beans exported into the UK from other countries such as Brazil and Indonesia. The profitability potential of the UK specialty eateries industry has made most investors to consider the possibility of venturing in the industry.

One of the most common modes of entry that these firms are adopting is importation. The low capital requirement coupled with the fact that no special knowledge is required to venture into the industry has increased the attractiveness of the industry. Emergence of other beverage products such as hot chocolate and tea has led to an increment in the number of substitutes available to consumers.

The UK specialty and eateries industry continue to experience an increment in buyers’ bargaining power due to the low-switching cost associated with the industry.

The occurrence of the recent global economic recession coupled with the sovereign debt crisis has increased the degree of price sensitivity amongst consumers (Miller 2009). Consequently, Starbucks will be required to adjust to these industry dynamics.

The industry is characterised by a high degree of rivalry due to the large number of industry players. Some of the major firms in the industry include Costa, Nero, Caffee Ritazza, BB’s, and Pucchino. Despite this aspect, Starbucks has managed to attain an optimal market position.

Critical success factors

The success of every business organisation is dependent on the effectiveness with which it adheres to the critical success factors. These factors vary across firms and industries. In its operation, Starbucks has incorporated a number of critical success factors, which include attaining global dominance, offering a high level of customer service, and brand development. These factors have played an important role in the success of Starbucks over the years.

Effective strategy development is one of the ways through which a firm can attain coherence between its internal abilities, resources, skills, and the external factors affecting the firm’s operations (Srinvasan 2005).

Therefore, it is important for firms’ management teams to identify the external and internal factors that may affect their firms’ overall performance (Ghani, Nayan, Ghazali, Shafie, & Nayan 2010, p. 52). Different analytical tools can be used to conduct internal analysis of a firm. An example of such a tool is the strategic factor analysis summary matrix.

The chart below illustrates internal factor analysis summary of Starbucks.

Starbucks core capabilities/competencies

Starbucks has been committed to attaining a high level of competitive advantage, and to attain this goal, the firm has nurtured a number of capabilities that aim at improving the level of customer satisfaction.

Over the years, the firm has nurtured the capability of offering high quality specialty coffees and eateries. Starbucks has developed its stores in such a way that customers can enjoy and relax to enhance the level of customer satisfaction. Its ability to develop these capabilities arises from the fact that it has developed a sufficient financial and human resource base.

In the process of offering its products and services to customers, Starbucks greatly emphasises on good business practices and ethics. In 2011, Starbucks was ranked as one of the most worlds’ most ethical company ( Environmental Leader 2011). Considering the intense competition in the specialty coffee market, Starbucks has developed a strong competence with regard to product innovation.

Since its inception, the firm has developed sufficient competence with regard to market and customer innovation process. The objective of its innovativeness is to enable the firm to meet the needs of various market segments. Additionally, innovation contributes towards the firm being effective in addressing the changing consumer tastes and preferences.

Strategic Fit Analysis

Starbucks’ strengths, weaknesses, opportunities, and threats

In the course of its operation, Starbucks has managed to attain a number of strengths. However, its operations have not been without some weaknesses. From the above analysis, a number of strengths, weaknesses, opportunities, and threats in relation to Starbucks are evident as shown below:

In the course of its operation, Starbucks has managed to position itself as the market leader within the specialty and eateries industry. Its success has arisen from the adoption of effective market strategy, which entails product differentiation and growth. An analysis of the market environment depicts the UK as an attractive market.

The macro environment analysis shows that the UK has managed to ensure a high level of stability with regard to the political and legal environment. The stability established in the UK has made it possible for Starbucks to implement its aggressive expansion strategy. However, the recent global economic crisis coupled with the current sovereign debt crisis presents a major challenge for the firm. Through the Porter’s five forces, it is evident that the UK specialty and eateries industry is very attractive.

Consequently, Starbucks should implement effective strategies to exploit the presented market opportunities. Starbucks’ success in the UK market has emanated by the fact that it has nurtured a number of unique resources, core capabilities, and competences. With regard to resources, Starbucks has nurtured a strong human resource base. As a result, it has managed to offer sufficient customer service. Other capabilities that the firm has developed relate to product innovation and adherence to quality.

These capabilities have made Starbucks a favourite amongst many customers. The capabilities have also enhanced the firm’s strengths. In an attempt to survive in the future, it is paramount for Starbucks to assess its threats and weakness and make the appropriate adjustments. The firm should also exploit the opportunities available in the external business environment.

Cha, A. 2012 , European financial crisis has ripple effect on US businesses. Web.

Deloitte: Taxation and investment in United Kingdom 2011. Web.

Environmental Leader: Ford, Starbucks, among most ethical companies . Web.

Ghani, K., Nayan, S., Ghazali, S., Shafie, L. & Nayan, S. 2010, ‘Critical internal and external factor that affect firm’s strategic planning’, International Research Journal of Finance and Economics, vol. 3 no 51, pp. 50-57.

Gilligan, C. & Hird, M. 2008, International marketing: strategy and management , Taylor and Francis, New York.

Grundy, T. 2006, ‘Rethinking and re-inventing Michael Porter’s five forces model’, Strategic Change , vol. 15 no. 5, pp. 213-229.

Kotter, J. & Schlesinger, L. 2008, ‘Choosing strategies for change’, Harvard Business Review , vol. 2, pp. 130-150.

Larson, R. 2009, Marketing strategy and alliances; analysis of Starbucks Corporation, Liberty University, New York.

Miller, C. 2009, Will the hardcore Starbucks customer pay more? The chain plans find out . Web.

Srinvasan, L. 2005, Strategic management, the Indian context , PHI Learning PVT, London.

Theodore, S. 2002, Expanding the coffee experience; Starbucks keeps sales brewing with new products, innovation and global expansion, Beverage Industry , vol. 1, issue 3, pp. 57-62.

This Money: Moody’s could downgrade UK’s ‘AAA’ credit rating in early 2013 if the economy fails to shape up . Web.

Walsh, J. 2011, Britain’s caffeine boom: Why can’t we wake up without smelling coffee . Web.

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Starbucks Reinvented

Harvard Business School Professor and historian Nancy Koehn has studied Starbucks and its leader, Howard Schultz, for close to 20 years. For her, the company represents much more than a phenomenal success story.

In a recently published case, "Starbucks Coffee Company: Transformation and Renewal," (available soon) Koehn and coauthors Kelly McNamara, Nora Khan, and Elizabeth Legris trace the dramatic arc of the company's past seven-plus years—a period that saw Starbucks teeter on the brink of insolvency, dig deep to renew its sense of purpose and direction, and launch itself in new, untested arenas that define the company as it exists today.

"This case distills 20 years of my thinking about the most important lessons of strategy, leadership, and managing in turbulence in the frame of a very relevant company," says Koehn, the James E. Robison Professor of Business Administration. "As a brand, leadership, and entrepreneurship scholar, I've been dogging Starbucks for a long time."

On a 1995 trip to Seattle, Koehn visited a Starbucks store for the first time and was struck by what she saw and felt. The notion of a "third place" between home and work to relax and enjoy the small, affordable luxury of a special coffee beverage seemed to resonate with the social and economic moment, she recalls. Six months later she met Howard Schultz, an entrepreneur who acquired the company in 1987, and was struck by his seriousness of purpose and the breadth of what he wanted to accomplish.

The case, Koehn's fourth to focus on Starbucks, opens in February 2007. Schultz, no longer Starbucks' CEO but still its chairman, is worried the company is losing its ability to be true to its values while providing a store experience that conveys a sense of comfort, connection, and respect for its product and the communities Starbucks serves.

So Schultz composed a heartfelt, searching memo to senior leadership. In it, he bemoaned decisions (for which he accepted responsibility) that improved efficiency and increased economies of scale but robbed stores of some of their essential magic, such as the smell of roasting coffee and the sights and sounds of traditional Italian espresso machines and baristas at work.

He also cited the company's rapid expansion and the potential "commoditization" of the Starbucks brand. "[W]e desperately need to look into the mirror and realize it's time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks Experience," Schultz wrote.

The scope and richness of Koehn's case gives it the feel of a page-turning novel; in that sense, Schultz's memo is the inciting action for all that follows.

Remaining True To Core Values

The challenge that had confronted Starbucks in the early- and mid-2000s was one common to many organizations: Could the company continue to grow while preserving its culture and values? In some areas, the drive to expand, egged on by Wall Street, was compromising the company's ability to invest in its partners (Starbucks' term for its employees), deliver personalized customer service, and maintain a close connection to the local community.

In addition, McDonald's and Dunkin' Donuts had emerged as serious competitors, offering their own lines of specialty coffee beverages. Even so, Starbucks' financials for 2007, the year Schultz composed his memo, didn't look so bad. But the entrepreneur became concerned as he dug more deeply into the numbers. Sure, revenues were up almost 21 percent over the previous year, but had slowed by over a third; transactions per store were up 1 percent, versus 5 percent the year before. Same-store sales rose only 5 percent, the smallest increase in five years.

In January 2008, Schultz returned as Starbucks CEO, replacing Jim Donald, the man he and other senior colleagues had chosen to lead the company.

Starbucks Sails Again

The case chronicles the blizzard of decisions and initiatives that follow what could have been the company's death knell as the financial crisis hit home and consumers cinched their belts.

"Schultz understood that you can't lift your foot off the gas pedal when you're attempting to transform a company," Koehn says. "Severe as its financial needs may be, you also have to figure out what you will invest in. Schultz knew that if he waited until the company was out of the woods to invest in new products, communication channels, and ways of doing business it would be too late—Starbucks would no longer be relevant."

From the start, Schultz sent the clear, unwavering message that Starbucks' transformation would represent a return to its roots and an uncompromising commitment to core values, such as health care benefits for any partners working at least 20 hours a week.

At a March 2008 gathering of 200 senior-level company leaders, Schultz unveiled a Transformation Agenda that included seven "Big Moves":

• Be the undisputed coffee authority;
• Engage and inspire our partners;
• Ignite the emotional attachment with our customers;
• Expand our global presence—while making each store the heart of a local neighborhood;
• Be a leader in ethical sourcing and environmental impact;
• Creative innovation growth platforms worthy of our coffee;
• Deliver a sustainable economic model.

The case provides a behind-the-scenes look at how the coffee company moved forward on these goals, including the introduction of the milder Pike Place Roast; the story of its VIA Ready Brew line; the launch of a loyalty program; investment in and engagement with social media; focus on a global expansion strategy; and the extension of social programs. The company closed stores, restructured its manufacturing and supply operations, and, perhaps most significantly, took steps to reengage its partners and store managers. In February 2008, Starbucks closed more than 7,000 of its stores across the country for "Espresso Excellence Training," taking the time to work with approximately 135,000 baristas to ensure they could pour a perfect espresso shot and steam milk properly.

For Schultz, however, that wasn't enough—he wanted to reach the company's store managers, recognizing them as essential to the transformation process.

"I needed an unfiltered venue for expressing my empathy about all that we were asking our partners to do and telling them plainly what was at stake," he wrote in Onward: How Starbucks Fought for Its Life without Losing Its Soul . The answer, in Schultz's mind, was a three-day conference in New Orleans in October 2008, a moment when the global economy happened to be tanking. Starbucks' fourth quarter profits were down 97 percent from the same time a year earlier; for the fiscal year, net earnings were down 53 percent to $316 million. The Starbucks board was reluctant to send 10,000 partners to New Orleans at a cost of $30 million, but Schultz stuck to his guns.

In addition to rolling up their sleeves and taking part in community service projects to aid areas of the city still recovering from Hurricane Katrina, partners participated in team-building events that reviewed the company's guiding principles and reminded them of their central role in the customer experience. Schultz also brought in Bono, lead singer of U2, to announce a partnership to channel proceeds from holiday beverage sales to the Global Fund in support of AIDS relief programs in Africa.

The New Orleans conference was a turning point for Starbucks; in the "novel" of Koehn's case, it's the climax.

"Investing in a conference of that size is such an unusual thing to do when faced with a cash crunch," Koehn says. "Schultz understood that what saves and breaks businesses is much more than cash. In the midst of so much turbulence, it's all too easy to pull levers on the low-hanging fruit of cash and logistics. But you don't save a business and turn it around without speaking to, focusing, and calling on the spirit of your people."

Schultz's experience qualifies him for closer study in Koehn's HBS course Power and Glory in Turbulent Times: The History of Leadership from Henry V to Steve Jobs. Not all managers are confronted in their careers with the sort of transformation challenge faced by Starbucks, but Schultz's reflections and actions are instructive for anyone charged with finding sources of strength, innovation, and renewal in today's turbulent business environment, Koehn says.

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Decoding The Starbucks Marketing Strategy: A Complete Guide

By Aditya Shastri

Quick Read   Discover how Starbucks has perfected its marketing strategy to dominate the coffee industry. This Starbucks case study delves into its innovative marketing techniques, digital strategy, and recent campaigns, showcasing why it remains a market leader.

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About Starbucks

Established in 1971 in Seattle, Washington, Starbucks began as a lone storefront specializing in premium coffee beans and equipment. It has grown into a global coffeehouse chain with over 30,000 locations worldwide. The company’s mission is to uplift and nourish the human spirit—one individual, one cup of coffee, and one community at a time. Known for its commitment to sustainability and ethical sourcing, Starbucks is a pioneer in creating a unique coffee culture.

Source: Google

Relevant Updated Statistics

• As of 2023, Starbucks operates in over 80 countries with 33,833 stores globally【source: Statista】
• Starbucks’ revenue for 2022 reached $29.06 billion, a 24% increase from the previous year【source: Starbucks Annual Report 2022】
• The brand’s loyalty program, Starbucks Rewards, has over 24.8 million active members in the United States【source: Starbucks Investor Relations】.

What’s New With Starbucks

Business news.

Starbucks announced plans to open 1,000 new stores in China by 2025, strengthening its presence in one of its fastest-growing markets.

Product Launch

In 2023, Starbucks introduced the Oleato range, featuring coffee infused with olive oil, a bold new addition to their beverage lineup.

Marketing News

Have you ever been called the wrong name? It might seem like a minor detail, but for transgender and non-binary individuals, it can be a daily experience. Starbucks recognized this in their powerful campaign, “Every Name’s a Story.”  This campaign wasn’t just about selling coffee – it was about celebrating inclusivity and diversity.

Celebrity News

In collaboration with singer Taylor Swift, Starbucks promoted the ‘Red (Taylor’s Version)’ album by featuring her favourite drink, the Caramel Nonfat Latte, in stores worldwide.

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But for now, let us continue with our case study on the marketing strategy of Starbucks.

Starbucks Target Market

Starbucks, a premium coffee brand, strategically positions itself in the market with a keen focus on high-income spenders and health-conscious professionals. The market positioning of Starbucks is evident in its appeal to urban, on-the-go consumers seeking quality coffee and a tranquil environment to unwind.

This market positioning of Starbucks attracts a diverse clientele, including technology early adopters and those flexible to change, primarily aged 25-45. Starbucks’ success is built on a deep understanding of its target audience.

This allows them to constantly adapt their offerings and marketing strategies to meet evolving consumer trends and preferences.  This case study will explore how Starbucks uses this knowledge to stay ahead of the curve.

This approach underscores Starbucks’ commitment to reaching beyond the storefront, offering not just coffee but an experience tailored to its discerning clientele.So summed up, their target audience is-

• High-income spenders
• Technology early adopters
• Health-conscious professionals
• Flexible to change
• Reaching beyond the storefront (Online Sales & Engagement)

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Buyer Persona

To provide a clearer understanding of Starbucks’ target audience, refer to the Buyer Persona outlined in our Starbucks case study blog.

Buyer’s Persona

Profession:

Web-Developer

• Seeking a premium coffee experience
• Interested in sustainable and ethically sourced products
• Value convenience and loyalty rewards

Interest & Hobbies

• Enjoying quality time at coffee shops
• Passionate about environmental causes
• Engaged in social media and digital trends

Pain Points

• High prices compared to local coffee shops
• Limited seating in busy locations
• Preference for non-dairy or alternative milk options

Social Media Presence

Starbucks in india.

In the 2010s, Starbucks’ marketing strategy focused on entering the Indian market to capitalize on the ever-growing coffee culture, particularly targeting the niche upper-class segment. Despite an initial announcement in 2007, Starbucks withdrew its plans without explanation, finally making a grand entry in 2011. To establish a strong foothold, the world’s biggest bistro chain forged a 50-50 joint venture with Asia’s largest coffee grower, Tata Consumer Products Limited, for their Starbucks coffee marketing strategy.

Successfully launching its brand, Starbucks’ next critical move was to meticulously define and engage its target audience in India, ensuring sustainable growth and market presence. This strategic approach, outlined in this Starbucks case study, highlights its methodical entry into the Indian market and the partnership that facilitated its successful establishment in the region.

Now, without further ado, let’s get straight into Starbucks’s marketing tactics, exploring their strategic approaches and methods in the market.

Marketing Strategies of Starbucks

Initially, Starbucks’s marketing tactics in India focused on segmenting consumer markets on a socio-economic basis, targeting working professionals seeking a soothing workspace. They strategically placed stores in locations where this demographic was prevalent.

Like many companies entering new markets, Starbucks started with a single segment and expanded upon achieving initial success. Over time, they diversified their target audience to include teenagers and young adults, bolstering their Starbucks coffee marketing strategy through product range expansion and enhanced social media presence.

The market positioning of Starbucks hinges on delivering a unique, differentiated experience that solidifies its reputation as a highly esteemed brand. Their marketing mix integrates digital technology and social media extensively, engaging the modern, tech-savvy generation for promotions and customer interaction.

This approach has not only fortified their brand identity but also fostered a deep connection with their diverse customer base.

Note: To enhance your expertise, you can explore various courses on digital marketing online that provide in-depth knowledge and the latest industry trends.

Digital Expansion

One of the key priorities of Starbucks’s marketing strategy is expanding its digital interactions with customers. To achieve this goal, it implements several strategies to attract digitally registered customers beyond the rewards program. For example, the coffee chain is offering mobile order services and leveraging Wi-Fi sign-ins at its physical stores.

Starbucks Social Media Strategy

Most people are familiar with Starbucks on social media. The company features several social media accounts that are known for their distinctive branding, interactive posts, and visually pleasing content. The diverse range of content includes recipes, photography, articles, and features. But there’s more than meets the eye. The stream of content can be broken down into a series of campaigns geared at creating a greater sense of Starbucks marketing techniques, enhancing brand awareness, and fostering a sense of community.

Starbucks Product-based Marketing Campaigns

The company focuses on promoting unique and fan-favourite beverages as part of its Starbucks coffee marketing strategy. The brand understands the popularity of its flagship items, particularly the Pumpkin Spiced Latte and Frappuccino, and recognises the demand for this type of content among its audience.

They have even established dedicated social media accounts for these customer favourites, where they actively share relevant and relatable memes to engage their loyal fan base. Additionally, Starbucks leverages user-generated content (UGC), often featuring consumer images of visually appealing products like the Unicorn Frappuccino.

These images are not only reshared across official channels but also incorporated into influencer campaigns, further amplifying their digital marketing efforts.

Starbucks Corporate Social Responsibility-based campaign

Starbucks’ marketing tactics involve leveraging social change as a tool, positioning itself as open-minded and inclusive. One notable example is the #ExtraShotOfPride campaign, which actively supports the LGBT+ community.

Community-based campaigns

#RedCupArt campaign

Another facet of Starbucks’s marketing strategy is its emphasis on highlighting individuals and communities. Take a look at the #RedCupArt campaign, which not only increases engagement but also provides them with a library of UGC content. They use storytelling to showcase acts of courage and kindness in American communities, localizing the content.

Starbucks’s marketing techniques consciously humanize the company by sharing stories on their account, spotlighting employees who play an essential role, especially when consumers are distrustful of big brands.

Just like Starbucks coffeehouses fostered a sense of community in person, their online coffee content creates a similar social experience. This reflects their pioneering role in shaping modern coffee culture.

Festive Marketing

Starbucks has also initiated a new seasonal whole-bean coffee, #StarbucksDiwaliBlend, for its consumers across the country and select global markets. The latest exquisite blend is hand-picked and sourced from Tata Estates in Karnataka and Tamil Nadu.

The Starbucks Diwali Blend was intended as a tribute to the region’s rich and cultural coffee heritage and expertise. They launched the #SketchTheBlend campaign where customers have to share their creativity on the Diwali Blend cup and sleeve and could win 5 free beverages.

Now that you understand the various strategies that comprehensively contribute to their top-notch Starbucks coffee marketing strategy. Let’s dive deeper and analyse their overall digital presence.

Digital Marketing Strategies

Seo (search engine optimization) strategy:.

Starbucks’s marketing tactics involve optimising its online presence by incorporating relevant keywords, high-quality content, and a user-friendly website to improve search engine rankings.

Social Media Marketing  Strategy:

Starbuck’s marketing strategy includes actively engaging with customers on social media platforms, by running targeted ads and interactive content to boost engagement. The brand actively engages with customers on social media platforms, running targeted ads and interactive content to boost engagement.

E-commerce Strategy:

Starbucks’ online store offers a seamless shopping experience, from purchasing coffee beans and equipment to ordering ready-to-drink products.

Mobile App:

The Starbucks mobile app enhances customer convenience with features like mobile ordering, payment, and rewards tracking, showcasing a key aspect of Starbucks’s coffee marketing strategy.

Influencer Marketing Strategy:

Collaborating with influencers and celebrities, Starbucks effectively reaches a broader audience and creates buzz around new product launches and campaigns.

Bonus: Enrolling in a digital marketing course can provide you with the essential skills and knowledge to understand and implement successful strategies, much like those employed by Starbucks.

Starbucks knows its audience is technologically advanced, which makes it imperative for them to have a strong digital marketing strategy. It’s clear how Starbucks prefers marketing on platforms where they have two-way communication instead of platforms like print and television which is more of a one-way communication.

Marketing and Advertising Campaigns

One of Starbucks’ most famous campaigns is “Meet Me at Starbucks,” a global initiative that highlights the diverse ways people connect at their stores. The campaign emphasized the brand’s mission to foster human connection and resulted in increased customer engagement and brand loyalty.

Starbucks launched its social media campaign in 2 phases. The first phase was where they asked their customers to share their ways of reconnecting amidst the pandemic and share their favourite Starbucks memories on their personal Instagram handles with the hashtag Starbucks advertising strategy. In the second phase- ‘Half Cup Full’- they asked their customers to comment on their favourite beverage on the post. They then sent these customers voice notes of baristas hollering the customers’ names along with their favourite beverage to remind them of the famous in-store experience.

This was a great campaign as it not only reminded the people of all the good memories with Starbucks but also made them feel important and valued.

Campaign Analysis:

Starbucks employs a variety of marketing techniques to maintain its market positioning. These include personalised marketing through their rewards program, located store experiences, and a focus on sustainability. Their recent ‘Every Name’s a Story’ campaign is an excellent example of leveraging social issues to build brand loyalty.

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Failed Campaigns

#racetogether campaign.

The campaign aimed to spark conversations about race by having baristas write “Race Together” on cups, which was met with widespread criticism.

Customers and employees felt uncomfortable and questioned the appropriateness of discussing such a sensitive topic in a coffee shop setting.

Starbucks quickly scaled back the campaign, focusing instead on internal initiatives to promote diversity and inclusion.

Top Competitors

In this Starbucks case study, we will explore its competitors and how Starbucks consistently rises above them, showcasing its resilient Starbucks marketing strategy.

Dunkin’ Donuts

Renowned for its extensive range of coffee blends and delectable baked goods, Dunkin’ Donuts has established itself as a favourite among coffee enthusiasts and snack lovers alike.

McDonald’s coffeehouse brand offers a budget-friendly assortment of coffee beverages, providing customers with a convenient and affordable coffee experience alongside their meals.

Costa Coffee

A prominent British coffeehouse chain, Costa Coffee is celebrated for its European presence and commitment to delivering quality coffee in a cosy café atmosphere.

Peet’s Coffee

Known for its artisanal approach to coffee roasting, Peet’s Coffee specialises in high-quality, hand-roasted beans that cater to discerning coffee connoisseurs seeking exceptional flavour profiles.

Tim Hortons

A beloved Canadian institution, Tim Hortons is cherished for its signature coffee blends and freshly baked doughnuts, offering a comforting taste of Canadian hospitality to customers nationwide.

Be it Starbucks or any other company, competition is everywhere. So if you are someone who likes doing research on competitor analysis for other companies, let me help you out. Check out these case studies on the marketing strategy of Jollibee , McDonald’s marketing strategy and the marketing strategy of Dunkin Donuts .

In conclusion, Starbucks’ marketing strategy is a testament to its success in the coffee industry. By focusing on high-income spenders, urban professionals, and tech-savvy individuals, Starbucks has effectively positioned itself as a premium brand.

Their innovative campaigns, such as ‘Every Name’s a Story’ and ‘Meet Me at Starbucks,’ highlight their commitment to inclusivity and human connection. The integration of digital strategies, social media engagement, and a robust rewards program further strengthens their market presence.

By continuously adapting to consumer trends and leveraging strategic partnerships, Starbucks remains a leader in the global coffee market.

Additional Information

Want to learn the essentials of digital marketing in no time? Our extensive Online Digital Marketing Course will help you unlock success in this evolving industry.If you have reservations about enrolling, try our Free Digital Marketing Masterclass first! Get a preview of the content and decide if it’s a good match for you.

Alternatively, if you’re interested in the world of social media, our Free Instagram Marketing Course might be the perfect fit.

Lastly, if you enjoyed this blog, we recommend exploring our digital marketing case studies. We’ve covered some of the best companies out there. A few the examples are marketing strategy of Amazon , the marketing strategy of Red Bull and the marketing strategy of LinkedIn .

Don’t forget to check out our digital marketing blogs as well. You might find your perfect course among them!

We appreciate you reading this blog. Comment down below if you want more such case studies.

Frequently Asked Questions- Marketing Strategy Of Starbucks

Starbucks' mission is to inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time.

Starbucks operates over 32,000 stores worldwide, making it one of the largest coffeehouse chains globally, known for its extensive global presence and accessibility.

Starbucks' latest product launch includes a range of summer-inspired beverages like the Iced Guava Passionfruit Drink and the Nitro Cold Brew with Salted Honey Cold Foam.

Starbucks' main competitors include Dunkin' Donuts, McCafé (McDonald's coffeehouse brand), Costa Coffee, Peet's Coffee, and Tim Hortons, each vying for market share in the coffee and quick-service restaurant industries.

The Starbucks Rewards program is a loyalty program where customers earn points (stars) for purchases, which can be redeemed for free drinks and food items, along with personalised offers and early access to new products.

Through initiatives like ethically sourced coffee, reducing waste, and promoting recycling.

The 'Race Together' campaign was an initiative by Starbucks aimed at sparking conversations about race relations. It encouraged employees to write ‘Race Together’ on cups to prompt dialogue among customers and staff.

Starbucks' digital marketing strategy leverages social media platforms and mobile apps to engage customers with personalised offers, loyalty programs, and interactive content, enhancing brand visibility and customer experience.

Starbucks' target audience is motivated by quality coffee, a cosy ambience, and a sense of community fostered by the brand's commitment to social responsibility and customer-centric experiences.

Starbucks leverages social media to engage customers through creative campaigns, customer interactions, and promotions, enhancing brand visibility and fostering a sense of community among coffee enthusiasts worldwide.

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

Clicking on the image of the Starbucks cup is my thing too. This blog provides great and deep insights into their strategy.

Starbucks marketing strategy brewed! served! and I’m here for it!

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Starbucks Coffee Company: Transformation and Renewal

• Format: Print
• | Language: English
• | Pages: 71

Starbucks Coffee Company: Transformation and Renewal analyzes the turnaround and reconstruction of Starbucks Coffee Company from 2008 to 2014 as led by CEO and co-founder Howard Schultz. The case offers executives and students an opportunity to examine in depth how Schultz and his team saved Starbucks from near-collapse, by both executing a deep, comprehensive return to its core values and, at the same time, investing in a range of new products, customer experiences and organizational capabilities designed to make the company fit for enduring success in a turbulent global economy. Set against the backdrop of the Great Recession, the case also considers the impact of unprecedented important shifts in consumer spending and confidence as well as new competitive forces on Starbucks' transformation. The case concludes by examining Schultz's own leadership journey, the lessons he learned personally during Starbucks transformation, and how he is using these lessons—within Starbucks and on the national stage—to redefine the roles and responsibilities of a public corporation in the 21st century.

Based on extensive interviews conducted with Schultz and other Starbucks executives from 2011 to 2014, the case offers a range of vital lessons on leadership, organizational transformation, restructuring, strategy, innovation, entrepreneurial vision, and customer service.

About The Author

Nancy F. Koehn

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How Starbucks’s Culture Brings Its Strategy to Life

• Varya Davidson
• Paul Leinwand

They focus on a few positive attributes and amplify them.

In most organizations, culture and strategy tend to be discussed in separate conversations. Executives know that culture is important and that a negative culture can hurt company performance, but they often don’t know what to do about it. Or they attempt to improve the situation by launching a culture initiative to “make the workplace more positive.” What most executive teams typically fail to do is to connect the company’s culture with how the company makes its strategy work.

• Varya Davidson leads the people and organization business for Strategy& in Australia, Southeast Asia, and New Zealand and sits on the Katzenbach Center’s global leadership team. She is a partner with PwC Australia, and has worked with leading public and private sector organizations across Europe, the Middle East, North and South America and Asia-Pacific.
• Paul Leinwand is a principal at PwC U.S., a global managing director at Strategy&, and an adjunct professor at Northwestern’s Kellogg School. He is a coauthor, with Mahadeva Matt Mani, of Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future (HBR Press, 2022).

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Starbucks’ International Strategy: A Comprehensive Analysis

• January 25, 2024

Table of Contents

Unveiling the success of starbucks’ international strategy, starbucks’ adaptability to diverse cultures, multi-domestic strategy: balancing local responsiveness and global integration, factors contributing to starbucks’ international success, starbucks’ expansion phases and emerging markets, lessons learned and future outlook, faqs about starbucks’ international strategy.

In the heart of Seattle, Washington, a small coffee shop named Starbucks opened its doors in 1971, offering a haven for coffee enthusiasts seeking an exceptional cup of joe. Little did they know that this humble beginning would transform into a global phenomenon, with over 32,000 stores spanning over 80 countries , serving billions of customers annually (Schultz, 2019). Starbucks’ remarkable international expansion stands as a testament to its astute strategy , unwavering commitment to quality, and ability to adapt to diverse cultures worldwide.

Starbucks’ international strategy, dubbed the “multi-domestic approach,” strikes a delicate balance between global standardization and local responsiveness . This strategy recognizes the importance of maintaining a consistent brand identity across all locations while simultaneously tailoring offerings to meet local preferences. Starbucks has successfully navigated this delicate balance by delegating decision-making to local franchisees, adapting menu items, and customizing marketing campaigns (Keegan, 2019).

A prime example of Starbucks’ adaptability is evident in its Japanese stores, where it offers matcha-infused beverages and traditional Japanese décor to resonate with local tastes and customs (Nishiyama, 2023). In China, Starbucks has embraced the concept of “social drinking,” creating a welcoming atmosphere that encourages customers to linger and socialize (Sang, 2018). This cultural sensitivity has been instrumental in Starbucks’ success in these markets , demonstrating its ability to connect with customers on a deeper level.

Key factors contributing to Starbucks’ international success include its premium positioning, strong brand identity, and customer-centric approach. The company has consistently maintained its premium brand image , charging slightly higher prices than its competitors, while simultaneously offering a unique and differentiated customer experience (Berman, 2018). Starbucks’ strong brand identity is evident in its sleek store designs, recognizable logos, and loyal customer base.

Starbucks’ commitment to customer satisfaction has been a driving force behind its success. The company has consistently invested in training its baristas to deliver exceptional customer service , ensuring a consistent and welcoming experience across all locations (Nishiyama, 2023). Additionally, Starbucks has embraced social responsibility initiatives, such as fair trade practices and sustainable sourcing, further strengthening its brand reputation and attracting socially conscious consumers.

Starbucks’ international expansion journey has unfolded in distinct phases, with its initial focus on North America followed by a foray into Europe and Asia. The company has faced challenges and opportunities along the way, particularly in emerging markets such as China and India, where it has partnered with local companies to gain a foothold and adapt to local regulations (Schultz, 2019).

Starbucks’ global strategy reflects its understanding of the intricate interplay between local customs and global trends. By balancing local responsiveness with global integration, Starbucks has successfully captured the hearts and palates of coffee enthusiasts worldwide . As the company continues to expand into new markets , it will undoubtedly face new challenges and opportunities. However, with its proven track record of adaptability, cultural sensitivity, and strategic decision-making, Starbucks is well-positioned to continue its remarkable global journey.

In its relentless pursuit of global domination, Starbucks has mastered the art of cultural sensitivity, seamlessly blending its core brand identity with local customs and preferences to create a truly inviting and authentic experience for its patrons worldwide. This deep cultural understanding has been instrumental in Starbucks’ remarkable success in expanding into diverse markets, from the traditional tea-drinking culture of Japan to the vibrant coffee scene of Italy.

Harnessing Regional Flavors and Traditions

One of Starbucks’ most effective strategies for adapting to local cultures is its incorporation of regional ingredients, flavors, and design elements into its international stores. In Japan, for instance, Starbucks has introduced matcha-infused beverages, a nod to the country’s deep-rooted tea culture. Similarly, in France, the company has introduced Vienesse coffee, as well as foie gras and brioche sandwiches.

Beyond beverages and pastries, Starbucks has also embraced local design elements to create a sense of place in its international locations . In China, Starbucks stores often feature traditional Chinese décor, such as red lanterns and bamboo accents, while in Korea, stores may feature Korean-style seating arrangements and traditional artwork .

Understanding Local Customs and Traditions

Beyond menu items and décor, Starbucks’ cultural sensitivity extends to understanding and respecting local customs and traditions . In China, where social gatherings are a significant part of the culture, Starbucks has created a welcoming atmosphere that encourages customers to linger and socialize. In Japan, where politeness and respect are paramount, Starbucks staff is trained to greet customers with a bow and maintain a respectful demeanor.

Balancing Global Standardization with Local Responsiveness

Starbucks’ ability to balance global standardization with local responsiveness is a key factor behind its success in diverse markets. The company maintains a core set of brand standards , ensuring consistency in quality and customer experience across all locations . However, it also delegates decision-making to local franchisees, allowing them to tailor offerings to meet local preferences. This approach allows Starbucks to leverage its global brand while adapting to the unique nuances of each market.

In India, for instance, Starbucks has adapted its menu to incorporate chai , a traditional Indian tea, as well as local bakery items. In the United Arab Emirates, the company has partnered with a local coffee roaster to source premium Arabica beans, catering to the region’s preference for strong coffee. By striking this delicate balance, Starbucks has successfully navigated the cultural landscape of each market , winning over new customers and solidifying its position as a global coffee leader.

Starbucks’ international expansion strategy is characterized by its ability to strike a delicate balance between global standardization and local responsiveness, a concept known as the multi-domestic strategy. This approach allows Starbucks to maintain its core brand identity and operational standards while simultaneously adapting its offerings and marketing strategies to meet the unique preferences and customs of each market.

Delegation of Decision-Making

At the heart of Starbucks’ multi-domestic strategy lies the delegation of decision-making power to local franchisees . This localization approach empowers local partners to understand and respond to the specific needs of their respective markets. By giving franchisees the autonomy to adapt menu items, design elements, and marketing campaigns, Starbucks ensures that its presence in each market feels authentic and resonates with local tastes.

Examples of Local Adaptation

In India, where tea is a deeply ingrained cultural beverage, Starbucks has introduced chai-infused drinks and partnered with local tea suppliers to offer authentic Indian tea experiences. In Japan, the company has incorporated matcha-flavored beverages and traditional Japanese décor to cater to the country’s tea-drinking culture . These examples demonstrate Starbucks’ ability to seamlessly integrate local flavors and customs into its global brand identity .

Customizing Marketing Campaigns

Starbucks’ marketing efforts are equally tailored to local markets. In China, where social gatherings are commonplace, Starbucks has launched campaigns that promote its stores as a gathering place for friends and families. In Japan, where politeness and respect are highly valued, Starbucks has emphasized its commitment to providing a welcoming and customer-centric experience .

Balancing Standardization with Responsiveness

The multi-domestic strategy presents a delicate balancing act , requiring Starbucks to maintain a consistent brand identity while adapting to local preferences. The company achieves this balance by setting clear global standards for quality, service, and customer experience , while simultaneously delegating decision-making on non-essential aspects to local franchisees.

Starbucks’ remarkable international expansion is not merely a matter of luck or coincidence. The company’s success can be attributed to a combination of strategic decisions, cultural sensitivity, and a commitment to providing an exceptional customer experience .

Premium Positioning and Strong Brand Identity

Starbucks has successfully positioned itself as a premium coffee brand , charging slightly higher prices than its competitors. This premium positioning has allowed the company to maintain a consistent and differentiated customer experience across all international locations. Starbucks’ strong brand identity, characterized by its iconic logo, sleek store designs, and consistent quality, has further solidified its position as a global leader in the coffee industry (Berman, 2018).

Consistent Quality and Brand Standards

Despite operating in diverse markets, Starbucks has maintained a high level of consistency in terms of product quality and brand standards . The company’s global quality assurance program ensures that its coffee beans are sourced sustainably and roasted to a consistent standard. Additionally, Starbucks’ training programs for baristas help maintain consistent customer service and beverage quality across all locations (Keegan, 2019).

Effective Marketing Strategies and Social Responsibility Initiatives

Starbucks has effectively leveraged marketing campaigns to connect with customers and enhance its brand image. The company’s “Share a Cup of Happiness” campaign, for instance, tapped into the emotional appeal of coffee as a social and cultural beverage. Starbucks has also demonstrated a commitment to social responsibility, supporting initiatives such as fair trade practices and environmental sustainability . These efforts have further bolstered the company’s reputation and attracted socially conscious consumers (Nishiyama, 2023).

Starbucks’ international expansion has unfolded in distinct phases, reflecting the company’s evolving strategy and market opportunities. From its initial focus on North America, Starbucks has steadily expanded its presence across Europe, Asia, and more recently, emerging markets like China and India. Each phase has brought unique challenges and opportunities, requiring the company to adapt its approach and leverage strategic partnerships to succeed in these diverse markets.

Early Expansion in North America: Laying the Foundation

Starbucks’ international journey began in 1996 with its first store in Japan , marking the company’s foray beyond its home market of Seattle, Washington. This initial expansion was followed by a steady growth in North America, with Starbucks establishing a strong foothold in the United States and Canada. During this phase, the company focused on replicating its successful formula of premium coffee, comfortable ambiance, and exceptional customer service .

European Expansion: Adapting to Local Tastes

In 2000, Starbucks entered the European market, targeting major cities like London, Paris, and Milan. However, the company faced challenges adapting its American-centric approach to the European market , where coffee culture is deeply rooted and preferences vary significantly from country to country. To address these challenges, Starbucks adopted a more localized approach, tailoring its menu items and store designs to suit local tastes and preferences. For instance, in Italy, Starbucks introduced espresso-based beverages and partnered with local coffee roasters to source premium Italian beans.

Asian Expansion: Navigating Diverse Markets

Starbucks’ expansion into Asia presented another set of challenges, with the region encompassing diverse cultures, tastes, and market conditions. In China, Starbucks encountered a market where tea is deeply ingrained in the culture . To cater to local preferences, Starbucks introduced chai lattes and adapted its store designs to incorporate Chinese elements . In India, where coffee consumption is relatively low, Starbucks partnered with local tea companies to offer chai-infused beverages and adapt its menu to align with local tastes.

Emerging Markets: Strategic Partnerships and Cultural Sensitivity

Starbucks’ expansion into emerging markets like China and India has highlighted the importance of cultural sensitivity and strategic partnerships . In China, Starbucks has partnered with local conglomerate Alibaba to leverage its e-commerce platform and expand its reach. In India, the company has partnered with Tata Consumer Products , a leading Indian consumer goods company, to gain access to local distribution networks and consumer insights.

Throughout its international expansion, Starbucks has demonstrated a remarkable ability to balance global standardization with local responsiveness, adapting its approach to suit the unique nuances of each market. The company’s success in emerging markets like China and India is a testament to its commitment to cultural sensitivity and its ability to form strategic partnerships that leverage local expertise and resources.

Starbucks’ remarkable international expansion journey has been marked by a series of strategic decisions, cultural adaptations, and strategic partnerships that have propelled the company to become a global coffee giant . As Starbucks continues to expand its reach, it is crucial to reflect on the lessons learned from its past experiences and identify key factors that will shape its future growth.

Key Takeaways from Starbucks’ International Strategy

Throughout its international expansion, Starbucks has accumulated valuable insights that serve as valuable lessons for other businesses seeking to venture into new markets. These lessons include:

• Adaptability and Cultural Sensitivity: Starbucks’ success hinges on its ability to adapt its offerings and marketing strategies to align with local customs and preferences. Understanding the nuances of each market is essential for building a strong brand presence and fostering customer loyalty.
• Balance of Global Standardization and Local Responsiveness: Starbucks has successfully navigated the delicate balance between maintaining global consistency and adapting to local preferences. This requires a multi-domestic strategy that empowers local franchisees to make decisions while adhering to core brand standards.
• Strategic Partnerships: Starbucks has leveraged strategic partnerships to gain access to local expertise, distribution channels, and consumer insights. These partnerships have been instrumental in the company’s success in emerging markets like China and India.
• Commitment to Quality and Customer Experience: Starbucks has consistently maintained its focus on providing high-quality products and exceptional customer service across all international locations. This commitment has been a cornerstone of the company’s success in building a loyal customer base.

Future Outlook and Potential for Further Growth

Starbucks is well-positioned for continued international growth , with over 32,000 stores spanning over 80 countries. The company’s strong brand reputation, customer-centric approach, and ability to adapt to local markets are key factors that will drive its future success.

However, Starbucks faces several challenges in its quest for further international expansion. These challenges include:

• Evolving Consumer Preferences: The coffee industry is constantly evolving, with changing consumer preferences and the emergence of new competitors. Starbucks will need to remain agile and adapt its offerings to stay ahead of the curve.
• Economic and Political Factors: Economic and political instability in certain markets can pose significant challenges for Starbucks’ operations and growth prospects. The company will need to carefully assess these risks and tailor its expansion strategies accordingly.
• Competition from Local Coffee Brands: Starbucks faces stiff competition from local coffee brands that possess a deep understanding of their respective markets. The company will need to differentiate itself through its brand image, product quality, and customer service to maintain its competitive edge.

Despite these challenges, Starbucks is poised to remain a dominant player in the global coffee industry . The company’s strong brand, customer focus, and adaptability will continue to drive its growth in new markets. Starbucks is well-positioned to capitalize on emerging trends in the coffee industry, such as the increasing demand for specialty coffee and the growing popularity of mobile ordering and delivery.

Starbucks’ international strategy is a multi-domestic strategy, which means that the company adapts its products, marketing, and operations to local preferences in each market it enters. This approach allows Starbucks to maintain its core brand identity while resonating with customers in diverse cultures.

Several factors contribute to Starbucks’ international success, including: • Cultural Mindfulness : Starbucks carefully considers local customs, tastes, and preferences to tailor its offerings and marketing strategies accordingly. This cultural sensitivity has enabled the company to gain a foothold in markets with varying coffee cultures. • Market Research : Starbucks conducts extensive market research to gain a deep understanding of each market’s unique characteristics, consumer demographics, and competitive landscape. This data-driven approach informs strategic decisions and ensures that Starbucks’ offerings are relevant to local customers. • Local Partnerships : Starbucks forms strategic partnerships with local companies and experts to gain access to market insights, distribution channels, and cultural understanding. These partnerships have been instrumental in Starbucks’ success in emerging markets like China and India. • Strong Brand Integrity : Despite adapting to local preferences, Starbucks maintains a strong and consistent brand identity across all international locations. This consistency reinforces the brand’s reputation for quality, innovation, and customer service.

No, Starbucks is not using a translational strategy. A translational strategy involves imposing a standardized approach across all international markets, regardless of local differences. Starbucks’ multi-domestic strategy, on the other hand, emphasizes adaptability and customization to suit local preferences .

Starbucks employs three strategies for market entry: 1. Wholly-Owned Subsidiaries : Starbucks directly owns and operates its stores in these markets, allowing for complete control over operations and brand consistency. 2. Joint Ventures : Starbucks partners with local companies to jointly own and operate stores, leveraging local expertise and market knowledge. 3. Licensing : Starbucks grants local companies the right to use its brand and operate stores in exchange for royalties and fees . This approach expands Starbucks’ reach without the need for direct investment.

Starbucks’ multi-domestic strategy has been a key driver of its global success by enabling the company to seamlessly integrate into diverse markets while maintaining its core brand identity. The company’s commitment to cultural mindfulness, market research, local partnerships, and strong brand integrity has allowed it to cultivate a loyal customer base worldwide.

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Starbucks Operations Management, 10 Decision Areas & Productivity

Starbucks Corporation’s operations management (OM) represents business decisions encompassing coffeehouse operations and corporate office activities. These decisions also influence the productivity and operational efficiency of franchisees and licensees. Strategic decisions in operations management direct business development toward the realization of Starbucks’ mission statement and vision statement . However, the diversity of coffee markets worldwide requires the company to apply different approaches to ensure the suitability of operations management to different business environments. Licensed and franchised Starbucks locations flexibly adjust to their local market conditions.

The 10 strategic decisions of operations management facilitate the alignment of all business areas in Starbucks’ organization. The business objectives in these decision areas implement strategies for industry leadership, such as the Coffee and Farmer Equity (C.A.F.E.) program in supply chain management. Effective operations management fortifies the strong brand image and other business strengths discussed in the SWOT analysis of Starbucks .

Starbucks’ Operations Management – 10 Critical Decisions

1. Goods and Services require decisions on the characteristics of business processes to meet the target features and quality of Starbucks products. This decision area of operations management affects other areas of the coffeehouse business. For example, the specifications of Starbucks’ roasted coffee beans establish the cost and quality limits and requirements in corresponding production operations. The coffee company’s emphasis on premium value and premium design means that production operations and productivity measures involve small margins of error to support high quality and value.

This decision area of operations management demonstrates the influence of the coffee industry environment on the company and its target consumers. Food product specifications are made to match social and economic trends, as well as the other external trends discussed in the PESTLE/PESTEL analysis of Starbucks . In addition, distribution channels affect food, beverage, and service design decisions in this area of operations management. For example, the packaging features of Starbucks instant coffees consider the logistics and inventory processes of distribution channels and retailers.

2. Quality Management ensures that business outputs satisfy Starbucks’ quality standards and the quality expectations of customers. Decisions in this area of the coffee company’s operations management aim for policies and processes that meet these standards and expectations. For example, Starbucks sources its coffee beans from farmers who comply with the company’s quality standards. The firm also prefers to buy from farmers certified under the Coffee and Farmer Equity program. Starbucks’ generic competitive strategy and intensive growth strategies are applied to use quality specifications as a selling point.

This critical decision area of operations management also accounts for customer experience in the company’s cafés and online operations. Starbucks’ strategic objective is to maintain consistent quality of service for consistent customer experience in brick-and-mortar and e-commerce environments. Premium service quality is ensured through a warm and friendly organizational culture at Starbucks coffeehouses. This service quality contributes to competitiveness against other coffeehouse firms, like Costa Coffee and Tim Hortons, as well as food-service companies that serve coffee, such as Dunkin’, McDonald’s , Wendy’s , Burger King , and Subway . Thus, Starbucks’ competitive advantage partly depends on this decision area of operations management.

3. Process and Capacity Design contributes to Starbucks’ success. The company’s operations management standardizes processes for efficiency, as observable in its cafés. Also, Starbucks optimizes capacity utilization to meet fluctuations in demand for coffee and food products. For example, processes at the company’s stores are flexible to adjust personnel to spikes in demand during peak hours. In this decision area of operations management, strategic planning at Starbucks aims to maximize productivity and cost-effectiveness through efficiency of workflows and processes.

4. Location Strategy in Starbucks’ operations management for its coffeehouses focuses on urban centers. Most of the company’s locations are in densely populated areas where demand for coffee products is typically high. In some markets, Starbucks uses strategic clustering of cafés in the same area to gain market share and drive competitors away. Strategic effectiveness in this decision area of operations management comes with a suitable marketing strategy to ensure the profitability of these cafés. Starbucks’ marketing mix or 4P helps bring customers to the company’s restaurant locations. Also, the organization of operations in these locations is supported through a suitable corporate structure. Thus, Starbucks’ organizational structure (corporate structure) reflects this location strategy.

5. Layout Design and Strategy for Starbucks cafés address workflow efficiency. The strategic decision in this area of operations management focuses on high productivity and efficiency in the movement of information and resources, including human resources, such as baristas. This layout strategy maximizes Starbucks coffeehouse space utilization with emphasis on premium customer experience, which involves higher prices for a more spacious dining (or drinking) environment. In this decision area of operations management, the company uses customer experience and premium branding to guide layout design and strategy.

6. Human Resources and Job Design have the objective of maintaining stable human resources to support Starbucks’ operational needs. At coffeehouses, the company has teams of baristas. In other parts of the organization, Starbucks has functional positions, like inventory management positions and marketing positions. This decision area of operations management considers human resource management challenges in international business, such as workforce development despite competition with other large food-service firms in the labor market. This area of operations management also integrates Starbucks’ organizational culture (corporate culture) to enhance job satisfaction, combat employee burnout, and support high productivity and operational efficiency.

7. Supply Chain Management focuses on maintaining adequate supply that matches Starbucks’ needs, while accounting for trends in the market. With this strategic objective, operations managers apply diversification in the supply chain for coffee and other ingredients and materials. Starbucks’ diverse set of suppliers ensures a stable supply of coffee beans from farmers in different countries. The company also uses its Coffee and Farmer Equity (C.A.F.E.) program to select and prioritize suppliers based on ethical practices, sustainability, and community impact. Thus, this decision area of operations management integrates ethics and Starbucks’ corporate social responsibility (CSR), ESG, and corporate citizenship into the supply chain. The Five Forces analysis of Starbucks indicates that suppliers have moderate bargaining power in the industry. Decisions in this area of operations management create a balance between the coffee company and its suppliers’ bargaining power, in order to benefit all parties involved.

8. Inventory Management is linked to Starbucks’ supply chain management. The critical decision in this area of operations management focuses on maintaining the adequate availability and movement of inventory to support the coffee company’s production requirements. At restaurants, inventory management involves manual monitoring combined with information technology to support managers and baristas. In supply and distribution hub operations, Starbucks uses automation comprehensively. Such an approach to this decision area of operations management minimizes stockout rates and guarantees adequate supply of food and beverage products and ingredients.

9. Scheduling has the objective of implementing and maintaining schedules that match market demand and Starbucks’ resources, processes, operating capacity, and productivity. In this decision area of operations management, the company applies a combination of fixed and flexible schedules for personnel at corporate offices, coffeehouses, and other facilities. Also, automation is widely used to make scheduling processes efficient and comprehensive, accounting for different market conditions affecting Starbucks locations.

10. Maintenance concerns the availability of resources and operating capacities to support the coffeehouse chain. The strategic objective in this decision area of operations management is to achieve and maintain the high reliability of Starbucks’ resources and capacities, such as for ingredient production processes. The company uses teams of employees and third-party service providers for maintaining facilities and equipment, like machines used for roasting coffee beans. Also, in this area of operations management, Starbucks maintains its human resource capacity through training programs and retention strategies. This approach satisfies the company’s workforce requirements for corporate offices and facilities and supports franchisees and licensees.

Productivity at Starbucks Coffee Company

Operations management at Starbucks uses various productivity criteria, depending on the area of operations under consideration. Some productivity metrics that are applicable to the company’s operations are as follows:

• Average order fulfillment duration (Starbucks coffeehouse productivity)
• Weight of coffee beans processed per time (roasting productivity)
• Average repair duration per equipment type (maintenance productivity)
• Bai, J. (2023). The Starbucks Crisis – External and endogenous pressures of coffee market giants. Frontiers in Business, Economics and Management, 8 (1), 272-275.
• Faeq, D. K. (2022). The importance of employee involvement in work activities to overall productivity. International Journal of Humanities and Education Development (IJHED), 4 (5), 15-26.
• Molnárová, Z., & Reiter, M. (2022). Technology, demand, and productivity: What an industry model tells us about business cycles. Journal of Economic Dynamics and Control, 134 , 104272.
• Reid, R. D., & Sanders, N. R. (2023). Operations Management: An Integrated Approach . John Wiley & Sons.
• Starbucks Corporation – Form 10-K .
• Starbucks Ethical Sourcing of Sustainable Products .
• Starbucks Ethical Sourcing – Coffee .
• Szwarc, E., Bocewicz, G., Golińska-Dawson, P., & Banaszak, Z. (2023). Proactive operations management: Staff allocation with competence maintenance constraints. Sustainability, 15 (3), 1949.
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• Educators, Researchers, and Students: You are permitted to quote or paraphrase parts of this article (not the entire article) for educational or research purposes, as long as the article is properly cited and referenced together with its URL/link.

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Starbucks’ customer relationship management (CRM) strategy is the bedrock of the coffee conglomerate. From its inception, Starbucks has consistently created innovative CRM strategies and programs to reinforce its commitment to customer value.

Founded in 1971, Starbucks operates a chain of coffeehouses and roastery reserves, with headquarters in the United States of America. As of writing, they had 33,833 stores in 80 countries. This article is a Starbucks CRM case study that examines the key strategies behind the company’s growth.

I am concerned about any attrition in customer traffic at Starbucks, but I don’t want to use the economy, commodity prices, or consumer confidence as an excuse. We must maintain a value proposition to our customers as well as differentiate the Starbucks Experience. That is the key.

– Howard Schultz

History of Starbucks Timeline and Facts

Starbucks is founded

Howard Schultz joins Starbucks as director of retail operations and marketing.

Schultz convinces the founders of Starbucks to test the coffeehouse concept

Il Giornale acquires Starbucks

Becomes the first privately owned U.S. company to offer a stock option program that includes part-time employees.

Completes initial public offering (IPO)

Begins selling bottled Frappuccino®

Establishes The Starbucks Foundation

Establishes Starbucks Coffee Trading Company (SCTC) in Lausanne.

Acquires Seattle Coffee Company

Chairman Howard Schultz returns as chief executive officer

Acquires Evolution Fresh

Creates Starbucks College Achievement Plan with Arizona State University

Opens store and on-site training center in Queens, N.Y., and Ferguson, Mo

Announces new sustainability aspiration

4 Ways Starbucks Uses Customer Relationship Management (CRM)

1. Starbucks Loyalty Program

The Starbucks  loyalty program is the company’s most significant and effective CRM strategy. This program has supposedly earned Starbucks a spot as the number one loyalty retail brand in the United States.

With an estimated active membership of 20 million, the loyalty program is the critical driver of Starbucks’s business growth. In 2019, Starbucks attributed 40% of its total sales to the Rewards Program. And even today, the program continues to deliver phenomenal results for the company.

“The Reward Program continues to be our most important business driver as new members contribute short-term increases in revenue and profit and long-term loyalty for years to come.” – Howard Schultz

Here’s how the program works. It is categorized into three levels – welcome, green, and gold. Users can transition from the welcome stage to the gold stage by increasing their purchase frequency, which earns them “stars”. The stars can be redeemed at any of their store locations for free food, drinks, and much more.

Besides the program’s free refills, it enables users to qualify for the Birthday Reward. Customers now shop at Starbucks for fun, not just to satisfy their immediate food or drink needs. Starbucks enjoys customer loyalty, retention, and revenue growth due to its innovative CRM strategy.

2. My Starbucks Idea

Launched in 2008 by Howard Schultz, the My Starbucks Idea aimed to put the customer at the center of their CRM strategy. It was Starbucks’ way of telling their customers that their ideas matter and are valuable.

A dedicated website page was created for the My Starbucks Idea initiative, which allows users to view and submit their ideas. Basically, the website has three main functionalities enabling users to submit a new idea, view other customers’ ideas, and see the implemented ideas.

Starbucks created an idea validation panel that validates all submitted ideas for the vital ones to implement. Also, it is with noting that the My Starbucks Idea was a wildly successful initiative. At the end of it, tons of ideas were captured, and the most potent ones were implemented. Here are some stats from the program:

• More than 150,000 ideas were generated

• About 277 of those ideas were implemented

• Cake Pops, Hazelnut Macchiato, and Free Wi-Fi are a few of the ideas that were borne out of this initiative.

3. Cansona Software

One of the most frequently asked questions about Starbucks is: What CRM does Starbucks use?

As of writing, Starbucks uses Cansona CRM software – an enterprise-grade business software system. This platform allows Starbucks to create and maintain its customer database, curate and collates customer data, and personalize customer experiences.

Since Cansona is an enterprise system, it might not be entirely convenient for small or medium-scale businesses. Therefore I will recommend the following:

• Pipedrive  – If you’re big on sales and pipelines
• Salesmate  – If you’re a coach, consultant, or trainer
• Zoho  – If you’re looking for a CRM that is both affordable and efficient
• Salesforce  – If you’re looking for an enterprise-grade CRM like Cansona System

The Best Overall

A sales-focused CRM that leverages AI to automate sales, lead & demand generation. 

Best Budget Choice

Freshsales automates your sales process, and helps drives sustainable business growth.

Best for Workflows

Customize your workflows to track all aspects of the sales cycle, from lead gen to post-sale support.

Conclusions

Starbucks has indirectly created a  CRM  strategy playbook for customer loyalty. The core secrets of their age-long growth and customer allegiance have been summarised in this article.

Pick a few or all and run with them. Additionally, replicating their strategies is optional. You need to be creative with them. Once more, I recommend  Pipedrive CRM ,  Salesmate ,  Salesforce , and  Zoho CRM . Check and try them out. It’s a shortcut to replicating some of the strategies listed here.

Frequently Asked Questions

Starbucks’ CRM strategy focuses on leveraging technology to create personalized customer experiences. This includes the Starbucks Rewards program, mobile app integration, and the use of AI and data analytics to tailor promotions and offers to individual customer preferences.

Starbucks personalizes the customer experience through its mobile app and AI-driven insights. The app uses customer data to recommend drinks based on past purchases and preferences. AI-powered chatbots provide personalized assistance, while targeted marketing messages are crafted from analyzing customer behavior and preferences​.

Starbucks uses AI to analyze customer data and provide personalized recommendations. The mobile app uses AI to suggest drinks based on a customer’s purchase history and preferences. AI-powered chatbots also offer personalized customer service, making recommendations and answering queries​.

Viktor. A is a writer and researcher with experience writing about various topics, including CRM software, SaaS, finance, and technology. When he's not writing, he's swimming and traveling

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Strategic Management Analysis: Starbucks

Introduction – Background

Starbucks. A name that surely rings a bell in the minds of people all around the world. Afterall, they have successfully built their brand globally, gaining a lot of fame. Most people know Starbucks as a company that sells coffee. While it is true, that is but the surface. Starbucks is in fact, in a coffee house chain business. As a coffee house business, they naturally offer not only coffees but a full coffee house experience with fine selection of teas, pastries, and other delicacies alongside coffees. However, people tend to mistake them as a coffee business. Regardless, as of now, they are a hugely successful multinational chain of coffee houses and roastery. As for their rise to the top in the industry, their tale, shall be told as follows.

Starbucks was founded during the year 1971 in Seattle by Jerry Baldwin, Gordon Bowker, and Zev Siegl. In the beginning, they started strictly as a coffee and equipment seller. In 1980, Zev Siegl left Starbucks to pursue his other interest. In 1982, a man called Howard Schultz joined Starbucks as a director of retail stores and marketing. During a trip to Milan, he was impressed by the popularity of espresso bars, it inspired him to do the same as he saw the potential of opening similar coffeehouse chain back in Seattle. He tried to convince Baldwin and Bowker of the coffee house concept however, it was futile as his suggestion fell on deaf ears. He then left Starbucks and started his own coffee house chain business called II Giornale which turned out to be a success as it was able to expand into multiple cities quickly. In 1987, Jerry Baldwin and Gordon Bowker decided to sell Starbucks. Aware of this, Howard Schultz immediately bought Starbucks and integrated all his operations under the Starbucks brand. He revamped Starbucks’ business model and turned it into a coffee house or café model for the business along with additional sales of coffee beans, equipment, and other items. Howard Schultz led Starbucks to a new and prosperous era. With the revolutionized business model, Starbucks quickly expanded its business. They started opening stores outside North America in the 1996 and soon after they became the largest coffee house chain in the world.

Introduction – Market and Consumer Segments

As of now, Starbucks presence can be felt in all over the world with over 30,000 stores all across the globe in 80 different countries / market. Starbucks can mostly be found in an urban area with a lot of foot traffic as well as big cities since it is their targeted geographic consumer segment. Demographic wise, their targeted consumer segments are with high income and high spending irrelevant of age and gender. Behaviourally, they target people who are usually busy or the so called on the go people and loyal people to be their regular customers. As for psychographic, they target people who are aware and mindful of their social status, which are most often middle and upper classes.

Introduction – Products

Regarding products, Starbucks currently maintain its focus as a coffee house business which means they sell coffee first and foremost. However, they have expanded their products to a lot more than just coffee. Now, they sell coffee beans, other kinds of beverages along with coffees, foods like pastries and other delicacies, coffee brewing equipment, custom Starbucks mugs and tumblers, along with ready to drink bottled beverages.

Introduction – Competitors

Now then, moving on to competitors, because they are a coffee house not just a coffee business, their competitors are not strictly limited to coffee and coffee house chain businesses but also restaurant, bars, and café chains. After all, they are selling not only the coffee but also a place that provides experience and enjoyment for the time spent in the particular place which is also something that other chains have to offer. Thus, some of the big competitors they compete with are the likes of McDonalds, KFC, Costa, Dunkin Donuts, and else.

Introduction – Philosophy

Like every other huge and successful companies, Starbucks has their own vision and mission that they adhere to.

To inspire and nurture the human spirit – one person, one cup, and one neighbourhood    at a time.

• Creating a culture of warmth and belonging, where everyone is welcome.
• Acting with courage, challenging the status quo and finding new ways to grow our company and each other.
• Being present, connecting with transparency, dignity and respect.
• Delivering our very best in all we do, holding ourselves accountable for results.

To be the best coffee house, offering only the best, while sticking to the values and principles of family culture

The fundamental essence of Starbucks’ philosophy is an emphasis on family culture. As expressed by their values, they hold family culture in high regards which is why they try to create a culture of warmth and belonging to welcome everyone and also an emphasis in the human spirit of togetherness as stated in their mission. True to their philosophy, Starbucks always strive to provide a full coffee house experience where people can gather to get along, chat, and work. As well as engaging their customers. This family culture, however, is not only limited to their customers but also to their partners and in particular their employees which they consider a partner. It is in the best interest of Starbucks to treat their employees with the same respect and dignity that they show to their customers. Afterall, the employees are at the heart of the Starbucks experience. Naturally, these ideals are followed up by concrete actions. As a token of sincerity, Starbucks offer programs for their partners such as; comprehensive health coverage for both full and part time partners, access to full college tuition coverage through the Starbucks College Achievement Plan, and equity in the company through Bean stock.

Introduction – Marketing Extent

Despite the success that they have enjoyed, Starbucks kept on going strong with their marketing activities spending a lot of money on marketing and making use of the advanced digital era to improve their marketing depth and range. Afterall, marketing has always been a key for success. As for Starbucks themselves, what they try to communicate the most is their brand, their “Starbucks experience”, as well as their philosophy. Everything in order to build a strong brand recognition and loyalty in the minds and hearts of their consumers.

This shall be where my introduction ends.

Competitive Dynamics

First, we shall define competitive dynamics as a set of actions and reactions in a competitive business environment that firms display, which will affect competitive advantage of firms involved.

Competition is inevitable in an industry as saturated as this food chain industry. As a coffee house chain, the competition that Starbucks faces are not limited to other coffee house chain but also to all food chains such as restaurant and bars. After all, their consumer segments may overlap with each other. Now then here are some of their big competitors, which includes the likes of McDonalds, KFC, Costa, and Dunkin Donuts.

KFC and McDonalds are one of the biggest restaurant chains in the world, meanwhile Dunkin Donuts are even more similar to Starbucks as a coffee house chain. In fact, if we are strictly speaking of coffee house, then Costa would be Starbucks’ biggest rival as they are the second largest coffee house chain in the world after Starbucks.

Starbucks in order to survive in this harsh competitive environment, they will need some kind of competitive advantage. These are how they obtain those competitive advantages.

First of all, Starbucks innovate. Compared to their competitors, they are considered as one of the earliest companies to adapt a seasonal tweak on their products where they provide different variations or new products during festive seasons such as Christmas. They also tend to offer a product unique to a country such as during cherry blossom season in Japan. The innovation is not strictly limited to their coffee and other beverages but also to their merchandise such as cards and tumblers.

Second, its about flexibility. Starbucks is very flexible, they read the changes in customer taste and preferences and are open to adapt to it. It can be seen from their introduction to non-dairy milk products, but it is most evident from Starbucks’ attempt in China’s market which heavily revolves around tea-drinking. They willingly shifted to offering teas with traditional Chinese tea while slowly introducing coffee drinking alongside it.

Third, Starbucks’ experience is something that is different from the experience that their competitors have to offer. Starbucks’ does the best to make you feel at home as a part of the Starbucks family. It is something that most other food chains including the big ones like KFC and McDonalds are lacking. While other coffee house chains might follow suit, the extend of it is not as far as Starbucks.

Finally, Starbucks value loyalty and they expect loyalty in return from their family environment and experience. But, one of the concrete ways in which they try to gain the loyalty of their customers is through their reward program. They have a Starbucks rewards card which give benefits for the card holders and this way they ensure that they will come back again and again. While this may be adapted but their competitors, the reality is not every competitor including the big ones like KFC and McDonald does it. Even when other competitor does it, its not as effective because Starbucks already has a strong brand which in itself is perhaps the greatest asset that gives a competitive edge.

International Entry

When a company or a brand wants to go global then they have to choose an entry mode. There are a variety of entry modes such as exporting, franchising, licensing, joint venture, and foreign direct investment.

In a brief, exporting can be defined as the act of selling domestic products to foreign countries. Franchising can be defined as a relationship in which a party called the franchisor gives the right to another party called the franchisee to establish and develop the franchisor’s business. Licensing, a relationship in which a party called the licensor gives the other party called the licensee a right to use their trademark. Joint venture is where two companies decided to work together towards a same goal by pooling their resource together. Foreign direct investment is when a company directly invest into a business located in another country.

Now that we know of the various entry modes, it will help in understanding Starbucks’ entry mode of choice. Starbucks themselves, since they belong in a coffee house chain business and they want to open a lot of stores, they will naturally choose franchising or licensing or even both. However, in reality, they mostly do licensing. They allow people to sign up for a license in their own website. This is because they position themselves as a premium business that requires intensive preparations, educated staff, and the ability for the stores to replicate the atmosphere also known as the Starbucks experience. Franchise poses a risk to the Starbucks brand whereas License does not, provided that they give their supports to their licensee. Here is what Starbucks CEO said.

Starbucks CEO, Howard Schultz in 2003 said “We believed very early on that people’s interaction with the Starbucks experience was going to determine the success of the brand. The culture and values of how we related to our customers, which is reflected in how the company relates to our [employees], would determine our success. And we thought the best way to have those kinds of universal values was to build around company-owned stores and then to provide stock options to every employee, to give them a financial and psychological stake in the company.”

“I always viewed franchising as a way to get access to capital, because you’re using other people’s money to grow, essentially. And we were dealing with a premium product — something that can be hard to learn, that you have to explain to the customer, that requires an educated staff. It would have been hard to provide the level of sensitivity to customers and knowledge of the product needed to create those Starbucks values if we franchised. You can be just as entrepreneurial and experimental in a company-owned model.”

Aside from that, in some cases, Starbucks does joint venture as well. In fact, in order to break through the Chinese market, they chose to do a joint venture with Chinese firm to gain a foothold in the Chinese market. Afterwards, they proceed to buy out the joint venture in order to absorb all the profits for themselves instead of sharing it with their partner.

International Opportunities

Jumping on international opportunities is necessary for a business to grow. Entering new markets will allow them to increase their market size. The bigger your market the more customers you would have, the more sales you would make, and the more revenue you would get. Obviously, Starbucks is aware of this since they themselves have already expanded to around 80 markets all across the world with more than 30000 stores. They even managed to break through the Chinese market. You might be wondering what other international opportunities are left for them. Well, they could still try to improve and strengthen their market share in some countries, and there are some countries in which they failed as well. So, there are still international opportunities left up for grab.

Let us begin with how they failed in this particular huge coffee market, Australia.

First of all, they failed to adapt to the Australian market. This is uncharacteristic of Starbucks. They are known to be able to be flexible and adapt well. Yet, they failed in the Australian market because they did not adapt. The coffee that they offered were apparently too sweet for the taste and preferences of the Australians. They most likely did not prepare well by doing some market research of the Australian coffee culture. It is also probable that they thought Australian shares the same taste and preference as the American consumers.

Secondly, they did not have the patience. When they entered the Australian market, they did not have the patience to wait for their brand to slowly integrate and resonate with the Australian market. Instead, they tried to grow as fast as possible by opening multiple stores in multiple locations. The Australian were then deprived of the feeling of want for Starbucks.

Finally, there were already many existing coffee houses in Australia. The coffee house industry in Australia were already blooming and Starbucks were late to the party. However, what they did wrong was that they did not study their new environment and their competitors. The Australians did not fancy Starbucks because they are different to the existing coffee house in Australia. From the taste to the execution of the business. Even though supposedly Starbucks have the family culture which should resonate well with the Australian, in reality, it did not, and that is because they did not integrate Starbucks to the market properly.

Another opportunity is to strengthen their hold in the markets that they have entered. There are three countries with huge population, decent buying power, drink coffee, love sweets, and loves a place to gather. China, India, and Indonesia. The huge population means that there is huge potential market up for grasp. The population of those countries are also considered consumptive in nature. Coffees and other sweet beverages and snacks are perfect for their taste and preferences. While China may not drink a lot of coffee, India and Indonesia does. Then again, the three countries love a place to gather to which mean Starbucks can be one of those places where the people can gather. All those traits make them the perfect market for Starbucks to strengthen their hold and gain bigger market share. Obviously, there are other markets where they could strengthen their position but those 3 are ideal.

Risk in International Environment

When a company goes global, they will face certain risks or threats which are usually classified into 6 categories which includes political, economic, socio-cultural, technology, legal, and environment. Those threats or risks obviously applies to Starbucks as well. In general, most business regardless of their field, carries the same external risks or threats when trying to go global. When entering a foreign market, they will have to perform an external analysis which is usually done through PESTLE analysis. Below are some PESTLE considerations for Starbucks in entering a new market.

First up, political risks or threats. This is related to the political stability of the country. When a country is politically unstable, there will be disruption on the day to day activities and economy which will be harmful for a business. Starbucks like any other companies would definitely avoid entering a politically unstable country. One other thing to note is that Starbucks is not a political organisation so, they do not lean towards any political faction. This also allow them to avoid being pulled in a political conflict between different countries which would then hinder their business.

Next up, economic risks or threats. It is quite obvious that economy matters after all it affects business directly. Starbucks will assess the health of the economy, its growth, potential market, profitability, and tax level. Starbucks will obviously avoid country that does not have sufficient buying power considering their targeted market and consumer segments.

Then we have socio-cultural. This is a rather subtle issue. Sometimes the values and principles of the targeted country will clash with the company and its product. Therefore, it is a risk since it hinders the business operation. For example, Starbucks had to change their logo in Arab to better fit their culture.

Technological. The crucial thing here is the availability and serviceability of the technological infrastructure in the targeted countries. For example, Starbucks is all about the coffee house experience and comfortability. In this day and age, it depends on internet. In fact, the availability of wi-fi is one of the things that plays a huge role in attracting consumers. In an underdeveloped country with limited technological infrastructure that does not allow this kind of technology, it would be a bad choice for Starbucks to enter to.

Legal. Now, this is also an obvious risks or threats. Different countries will have different laws and regulations to follow. Starbucks will have to learn about it and assess whether or not it is favourable for them before entering the market.

Lastly, environmental. This issue is growing as people are becoming more aware and mindful of their environment. Fortunately, Starbucks themselves are committed to preserving the environment. So, in order to keep their brand image and the consumers’ trust on them regarding preservation of environment they will have to enter foreign markets that are environmentally friendly.

Those are some fundamental things that they should consider regarding external risks or threats via PESTLE analysis.

Starbucks is a coffee house chain business that was founded in 1971 in Seattle by Jerry Baldwin, Gordon Bowker, and Zev Siegl. However, only after Howard Schultz took over and revamped their business model did, they start to prosper. Nowadays, they are the biggest coffee chain business in the world with over 30000 stores in 80 different markets all around the world. Their products range from coffees, teas, other beverages, coffee making equipment, pastries and other delicacies, and ready to drink beverages. They are also well known for their family culture philosophy which are expressed through their vision, mission, and values. It is also proven by their action in how they treat their business, customer, and partners.

Belonging in a food chain industry, they have plenty of competitors that are not limited only to coffee house chains. Some of their biggest competitors are the likes of McDonalds, KFC, Dunkin Donuts, and Costa. In order to survive in the harsh competitive landscape and even win, they need to gain some competitive advantages. Which they obtained through innovation, flexibility, unique experience offered, and loyalty development program.

When it comes to entering a new market, out of the various ways in which they could enter a market, they chose licensing and joint venture. They chose those methods because they wanted to have some control over the business in order to ensure that all stores can offer the same Starbucks experience and avoid their brand image to be ruined. Meanwhile, they tried joint venture on some occasions such as when they tried to enter a more difficult market that is China.

Even with their global presence, there are still international opportunities left for them to take on. They could try to re-enter the markets in which they failed and improve it such as the Australian market. They could also try to strengthen their position in the markets that they are currently in and look towards increasing their market shares in those markets. Three standout markets would be China, India, and Indonesia. Those three markets have traits that are perfect for Starbucks to target.

Still, they have to bear in mind that going international also carries risks and threats which are also known as external threats. The external factors are political, economic, socio-cultural, technological, legal, and environmental. They have to assess the risks and threats of those matters when they want to enter a foreign market. The analysis can be done through PESTLE analysis which covers all the factors.

Starbucks is already at the top of the coffee chain industry. They have a strong brand reputation and the loyalty of their customers. They should obviously keep up what they are doing. If I were to suggest anything, it would be as follows:

• They have to strengthen their position, increase their market share in huge developing market such as China, India, and Indonesia, once the markets have developed, they can reap their bounty.
• They have so many stores and I think it would be great if they can make sure that all the stores are up to standards and can offer the full Starbucks experience.
• Trends in beverages tends to be fickle therefore, they should always keep track of the changes in trends and adapt their product offerings
• Let alone the food chain industry, even the coffee house chain industry alone is saturated already. They need to find ways to innovate not only their products but perhaps their service, their model, or their relationship with their customers and partners. Especially since they are the market leader, they would have some budget and time that can be spared on designing an innovation that would give them an edge over their competitors.

Bhasin, H. (2020, October 17). 11 Starbucks competitors – competition analysis of starbucks. Retrieved February 12, 2021, from https://www.marketing91.com/starbucks-competitors/

Colt, G. (2013, October 31). Sustained competitive advantage of Starbucks – Toughnickel – money. Retrieved February 12, 2021, from https://toughnickel.com/industries/Sustained-Competitive-Advantage-of-Starbucks

Contributor. (2020, September 16). PESTLE analysis of Starbucks. Retrieved February 12, 2021, from https://pestleanalysis.com/pestle-analysis-of-starbucks/

Joint venture strategy in China: Learning from Starbucks and McDonald’s. (2019, February 27). Retrieved February 12, 2021, from https://www.china-briefing.com/news/joint-ventures-in-china-learning-from-starbucks-and-mcdonalds/

McCreary, M. (2019, December 27). You can’t buy a Starbucks Franchise: Here’s why and what you can do instead. Retrieved February 12, 2021, from https://www.entrepreneur.com/article/311377

The secret to Starbucks’ Brand Success. (2021, February 09). Retrieved February 17, 2021, from https://martinroll.com/resources/articles/strategy/secret-starbucks-brand-success/

Team, T. (2016, January 18). How Starbucks plans to grow its international operations. Retrieved February 12, 2021, from https://www.forbes.com/sites/greatspeculations/2016/01/18/how-starbucks-plans-to-grow-its-international-operations/?sh=7d8cb2be1941

Team, T. (2016, October 13). Starbucks is maintaining its competitive edge. Retrieved February 12, 2021, from https://www.forbes.com/sites/greatspeculations/2016/10/13/how-is-starbucks-maintaining-its-competitive-edge/?sh=7c1d557e759c

Turner, A. M. (2018, July 25). Why there are almost no Starbucks in Australia. Retrieved February 12, 2021, from https://www.cnbc.com/2018/07/20/starbucks-australia-coffee-failure.html

www.Starbucks.com

Bondarenko, P. (n.d.). Starbucks. Retrieved February 12, 2021, from https://www.britannica.com/topic/Starbucks

Dudovskiy, J. (2017, April 15). Starbucks segmentation, targeting and Positioning – Targeting premium customers with quality products and service – Research-Methodology. Retrieved February 12, 2021, from https://research-methodology.net/starbucks-segmentation-targeting-and-positioning-targeting-premium-customers-with-quality-products-and-service/

Last updated : October 19, 2021 00:00

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4 Starbucks—The ‘Coffee House’ Experts: A Case Study in Cultural and Strategic Alignment

• Published: June 2022
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Because of rapid globalization over recent years, the competition around the world becomes, more intense, especially for the service industry with similar products. The most critical point for business to succeed is not only the quality of products they supply, but the atmosphere of cooperating and the amount that teamwork yields in retail sales. The employees who always touch with customers and can realize what customers really need are first-line staff. Therefore, it is essential for companies to motivate, reward, and train their employees to be the best quality personnel. Starbucks Corporation, the most famous chain of retail coffee shops in the world, mainly benefits from roasting, selling special coffee beans and various kinds of coffee or tea drinks. It owns about 4000 branches in the whole world. Moreover, it has been one of the most rapid growing corporations in America as well. The reasons why Starbucks is popular worldwide are not only the quality of coffee, but also its customer service and cosy environment. Starbucks establishes comfortable surroundings for people to socialize with a fair price, which attracts all age ranges of consumers to get into the stores. Besides, it is also noted for its satisfaction of employees. The turnover rate of employees at Starbucks was 65% and the turnover rate of managers was 25% a year. However, the rates of other national chain retailers are 150% to 400% and 50% respectively. Compared with them, the turnover rate of Starbucks is much lower than other industries on an average. As a result, Starbucks would be one of the optimal business models for understanding the strategies of employee motivation, customer satisfaction, and cooperation of teamwork.

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