Lela Menicanin

February 18, 2017

Starbucks: Schultz serves up a Turnaround

I Analysis of Case Problem/Opportunity

1. How did Starbucks create its uniqueness in the first place? Why was it so successful?
From the start Starbucks’s main goal was to create an atmosphere for their customers that they
can go to a place aside from work and home and have the comfortable feel. Starbucks was
successful because they offered their customers a home away from home. They offered their
customers a place to access free WiFi, coffee, music, and a place to relax comfortably by
themselves or with friends.
2. To be a source of competitive advantage over time, core competencies need to
continuously be honed and upgraded. Why and how did Starbucks lost its uniqueness and
struggle in the mid-2000s”
Starbucks struggled to upgrade their core competencies which damaged their intake of
customers. They were not able to uphold the competitive advantage of why consumers should
choose their store over multiple other ones. The uniqueness was most affected when Starbucks
kept opening stores around every corner. What started with coffee and a relaxing environment
shifted into merchandise sales which moved away from their core competencies and began
losing its unique culture.

II Formulation – Proposed Solutions

3. What strategic initiatives did Howard Shultz put in place to re-create Starbucks’ uniqueness
after his return in 2008? Detail each strategic initiative, and explain why a specific strategic
initiative was successful, if so.
The strategic initiative was to return Starbucks to its roots. Shultz began by firing the CEO and
worked to create value to his brand through customer experience. He first action was to close
all Starbuck’s for a day while the baristas got a chance to show them the art of making coffee. I
think that this was a great idea because even though its coffee, Starbucks has always had a
special touch with their coffee. The next initiative was to redesign the stores to put off a
contemporary feel which gave consumers the feel of being to relax in a clean and open
environment. This was a great action for Shultz because with open clean spaces this allows
consumers to focus on their work without feeling over crowded. The next initiative Shultz took
was a halt on selling breakfast sandwiches. The reason behind this was that he claimed that the
scent of breakfast food took away from the morning smell of coffee brewing. I think that this
was a nice touch for the stores but not a deal breaker. A store that brews coffee so often it will
have a lingering smell but I feel that Shultz was desperate to make as many changes as possible
to ensure that customers noticed the changes. Lastly, Shultz initiative to re-create the
uniqueness of Starbucks he went forward in closing 600 underperforming U.S stores. I think this
was the most important initiative thus far because as mentioned when there was the large
expansion is when the uniqueness was stripped from Starbucks. Therefore, with the decision to
close many stores this allowed Shultz to focus in on the stores that were bringing in the loyal
consumers!

III Implementation – Justification of the Proposal 

4. What makes Shultz a great strategic Leader?
I think what makes Shultz a great strategic leader was that he was able to identify that his
brand was no longer following the core competencies it once was and he needed to do
something about it. It’s very easy to allow the stores to go the pace they were and eventually
call it a loss but it’s another to take initiative and make the appropriate changes. Shultz also saw
the growing opportunity with technology which he made a jump to be more active over
Facebook and Twitter with consumers. In addition, the mobile app has really put them at an
advantage with allowing customers to pay by mobile and even the option to prepay and pick up
the drinks in a faster manner.
5. How is Starbucks trying to grow in the future? Do you think it will continue to be so
successful? Why or why not?
Starbucks is trying to grow the cafés overseas and expand to a total of 3,000 stores in China by
2019 to compliment the 1,500 stores he has currently. I believe that Starbucks definitely has
the potential to be successful and will be able to do so. The main core competency that
Starbucks has to their advantage is their uniqueness and more importantly a matured brand
name. I think Starbucks has come a long way from 2008 and have taken the right steps thus far
to keep them as a leading competitor. They have room for growth with customer trends as well
as technological factors to increase their productivity. I don’t think there will be a time that
Starbucks hits a wall causing them to fail because of the necessity to be able to function before
7am!