Howard Schultz on Starbucks’ Future Plans to Grow*! Noward Schulz th funder of Surbucks (www starbucks. com) rete othe amp as CEO in 2008, fe nt being invoked wth day-to-day responsibil with Struc fora ‘most eight years, Shortly after his return, he began to question the appropriateness of the company’s strategy in the recession: ay eavroament, Evidence of a major problem at Starbucks as hl many ofits underperoring shops fd Been cp for bosinss fers tha 18 ots. Schulz believes that too mary res manage thei companies onthe basis of same oe ses growth objectives ‘Although his esse oss on sales grothinexiting (er ‘se str), much ela on se: sore growth may cause aor manage crease sakes in Wa tha can under mine a brands lng ter image and eptatn, To state tis point, Sdukz ound tht ene of his managers decided to sell teddy bears to grow sales, even though the stuffed ani- mals ha no relatosti whatsoer to coffe. Asa rest, Schultz decided to stop reporting same-store sales each month, As a vehicle for long-term growth, Starbucks introduced _new products and brands within its stores, Instead of first sell jing VIA, a new instant coffee, in grocery stores and drugstores, ‘Sutucks decide ois el VIA in is on srs one six {ocight month time period. Aller VIA sscess was proven, it wsasthen old throug the ter trol chan The ini sales success of VIA reed he need fr socking payments (toting allowances) othe grocery srs and rst ako enibla the new rodct to action alna rliiity among conver Starbucks hes also had great success with its loyalty and program, which accom fo one ith al sore sed transactions. Is program ets estes revive rewards fc ‘porchasing Strbucks-branded products in grocery and drug sors Stabocks i counting on China a8 a major growth mar et. As of 2011, Starbucks had about 800 stores in Cina Ta the Kong ean it plas fo have thousands of sores tee. Suto’ fist Chinese sores were cated ia Shanghai and Bejing. Know bas locations in secondary and tertiary mar ets such as Fuzhos. Although many Wesemers have aver tear of Fehoo it has a popalaion of ve Sion pope (On its oping day there, Chinese consumers ied up ty Sabo coe dsp inclement weather, China has 140 cies with more thin 1 milion pope each Unie ter r- ‘ailers, Starbucks plans to develop territories before moving (0 new mares, Starbuck is ao loking a expanding in cer merging mart incang ada, Bea and Veta Starbucks is caefl to modify is prodts to rete the unique ass of foreign plates a8 wel as tobe respect of curl diferenes among consamers, Fer example, Chisese ‘Femara hs ae dwn fom Alles Web, "Sucks Quest for Healy Growth: Aneta vith Howael Sel” Meinsey ‘Quanery (arch 2011. pp 1-8 customers prefer black sesame sed to blucherry as a topping filling for muflias. To successfully implement its strate ‘Starbucks needs to decentalize planning and decision making ‘on. regional or even coutty-based level. ‘Acquisitions represent avother potential vebicl of growih for Starbucks. With $2 killin in cash on its balance sheet, ‘Starbucks is financially capable of buying successful compa ties in both the United States and abroad. Questions 1. Diseuss the pros and cons of evaluating aretilers sucess using same sore sales growth data 2.Comment on Starbucks” inteduction of VIA in its own stores before attempting to sel it ingrocery’and drugstores 3. Evaluate Statusks’ strategy of developing (saturating) isting foreign markets before expanding into new courte. 4. Describe the ros and cons of growing though acquis tions as opposed to inieral expansion Starbucks,