3. Changing Strategy at Starbucks By Group 7: Akhil Bheda GMAY08IB085 BandhanKabli GMAY08IB090 Himanshu Vyas GMAY08BM066 Kunal Sidhwani GMAY08BM069 Swati Sharma GMAY08IT051 Uphar Gandhi GMAY08WM151
4. The Article “The coffee consumption landscape is ripe for disruption” Howard Shultz, CEO, Starbucks
5. Starbucks – The History Opened by 3 partners in 1971 in Seattle, US Inspired by Alfred Peet who ran high quality coffee beans and equipment company called Peet’s The original store is still open In 1984 bought Peet’s In 1987 sold the chain to Schultz’s II Giornale which rebranded the chain as Starbucks Came with an IPO in 1992 Current CEO Howard Schultz
6. Starbucks – Over the years Largest coffee house company in the world Based at Seattle, USA Owns more than 16000 stores in 48 countries Operates through company owned retail stores Sells drip brewed coffee, espresso based hot drinks, other hot and cold drinks, snacks and other items like mugs. Starbucks Entertainment division and Hear Music Starbucks mission
8. Old Strategy Expand aggressively Opened almost 1 store each working day in the last 2 decades Associated itself as a premium brand Focused on high end, upper middle class customer Promoted itself as a status symbol Sold only pricy lattes and other “affordable luxuries” Moved into selling some premium brands like Frappuccino
10. Changing Strategy Comments from the current CEO – “This is a big move for us – an opportunity to reinvent a category, create new rituals and grow our customer base.” Closure of cafes from low revenue markets Retrenchment Focus on new customer prices Product Development – Via instant coffee, bundled products Lowered the price of the products Concentric diversification into new markets
11. Actions taken in 2008 A plan to close approximately 600 underperforming stores in the US market, of which 205 were closed as of fiscal year-end Restructuring the Australia business by closing 61 stores and focusing on 23 stored in 3 metros Rationalize infrastructure usage Introduce new beverage platforms like breakfast food offerings, bakery and chilled foods, and a new everyday brewed coffee
