Aldis Moch Sajawandi

014201900250
MGT – 3
ENTREPRENEURSHIP 2
Mid-Exam Individual Assignment
Starbucks Case Study

1. How did Starbucks create its uniqueness in the first place? Why was so it so
successful? (Until the Mid 2000s)
The first Starbucks opened in 1971 in Seattle’s historic Pike Place Market, a
popular tourist attraction. They was very succesfull coffe company that because
Started Starbucks in order to sell freshly roasted coffee beans. Focusing exclusively
on serving customers that demanded high quality coffee beans and equipment. In
1987 Starbucks transform the company from a niche coffee bean roaster to the
beverage retailer we know today. Starbucks also rapidly expanded the company
across the United States and North America, opening its first store abroad in
Vancouver, Canada, in 1987. On June 26, 1992, Starbucks had its initial public
offering (SBUX), with shares closing well above the opening price after its first day
of trading, representing a market capitalization of nearly $46 million. Starbucks used
its IPO funding to fuel domestic and international store growth (Exhibit 2), as well as
a more diverse menu throughout the 1990s. In a little more than a decade, Schultz as
CEO Starbucks at that time had built the world’s most successful global chain of
coffee stores that was earning the highest revenue, income, and profit margin in the
company’s history.
2. Why and how did Starbucks lose its uniqueness and struggle in the mid 2000s?
Schultz immediately launched several strategic initiatives to turn the company
around. Just a month after coming back, Schultz ordered more than 7,000 Starbucks
stores across the United States to close for a day, so that baristas could learn the
perfect way to prepare coffee. The company lost over $6 million in revenue on that
one day. This loss exacerbated investor jitters, but Schultz felt that relearning how to
create a unique Starbucks experience was key to bringing back its unique corporate
culture. During his eight-year hiatus, Schultz felt that that Starbucks was losing its
unique ambience and customer experience. Even though revenues for the company
were still growing, the projected trend did not look positive: growth in overall revenue
and same-store sales were much smaller than in the previous year. The company had
grown to over 17,000 stores by 2008, but its stock price was falling.
3. What strategic initiatives did Howard Schultz put in place to re-create Starbucks
uniqueness after his return in 2008?
He immediately launched several strategic initiatives to turn the company
around. Schultz wrote a memo to Starbucks’ leadership bemoaning decisions that
improved efficiency, economies of scale, and company growth at the cost of customer
experience. In 2008, Schultz presented a “transformation agenda” that included goals
such as “ignite the emo- tional attachment with our customers,” “...[make] each store
the heart of a local neighborhood,” “engage and inspire partners,” among others. As
part of the turnaround strategy, in 2009, Starbucks introduced Via, its new instant
coffee, a move that some worried might further dilute the brand. In 2010, Schultz
rolled out new customer service guidelines: baristas would no longer multitask,
making multiple drinks at the same time, but would instead focus on no more than
two drinks at a time, starting a second one while finishing the first. Attempting to
drive more store traffic other than the morning hours where customers need their daily
caffeine shot, Starbucks continued to diversify its menu. To get more customers into
its stores in the later afternoon and early evening—traditionally its slowest time of the
day—Starbucks stores now offer items such as vegetables, flatbread pizza, plates of
cheese, and desserts. Schultz also pushed the adoption of new technology to engage
with customers more intimately and effectively. The latest tech innovation is a
Starbucks app that allows customers to order and pay for drinks and food before
reaching the store in order to pick up their order directly from the barista, allowing
them to bypass standing in line.
4. Is Howard Schultz an effective strategic leader? Please elaborate your answer
with your own argument either yes or not?
Of course Yes, Although He had loss The Starbuck’s Uniqueness than the
company has lost over $6 million only in one day. But He briefly take that risk and
strongly responsible from what decision he took. He is so perfect strategical person
who can see market research and adapt the era so obviously I can say He is the perfect
strategic leader one, Has proven by the growing of the Starbucks Company after get
lost, as we know until know Starbucks still exixting and The most Perfect Coffe and
Beans one in the World. He is also Transformational leaders inspire their team and
encourage members to develop as individuals and be part of a collective team to work
 towards achieving objectives. This is the type of leader Howard Schultz is and he
ensures there is trust, respect, honesty and commitment in the company he is running.

5. How is Starbucks trying to grow in the future? What are the biggest challenges?
Starbucks and secure future contracts to hedge against short-term coffee price
volatility, smaller coffee stores are more likely to be adversely affected by such
changes and pass on price increases to their customers. In accordance with its social
responsibility and sustainability goals, Starbucks established Coffee and Farmer
Equity (C.A.F.E.) practices, which “help farmers grow coffee in a way that’s better
for both people and the planet. As a result of its efforts, Starbucks is recognized for its
ethical sourcing; in 2009 and 2010, Starbucks was voted the “Most Ethical Company”
in the European coffee industry.55 It has also been on Ethisphere Institute’s list of the
world’s most ethical companies every year since the list’s incep- tion in 2007.56 In
2016, Fortune magazine ranked Starbucks number six on its prestigious ranking of
“The World’s Most Admired Companies,”. The Starbucks’s Challenges are
SATURATION OF U.S. MARKET : Starbucks’ quarterly earnings
throughout 2016 showed the potential problem of such a reliance on a single market.
In the third quarter of 2016, comparable- store sales grew by only four percent in the
Americas, whereas comparable-store sales growth “had been at or above five percent
for the 25 consecutive quarters prior to Q3 [2016],” according to Schultz. The limited
growth in comparable-store sales growth suggests to some analysts that Starbucks was
nearing saturation of its largest market. Would Starbucks’ efforts to diversify its menu
be enough to alleviate these fears?
GLOBAL GROWTH : In China alone, Starbucks is planning to operate 5,000
stores by 2021, more than double the 2,400 stores in 2016. Outside China and Japan,
Starbucks also plans to double its number of cafés elsewhere in Asia to more than
4,000 in the next few years. Will Starbucks be able to recreate the magic of the “third
place” in countries around the world?
DIGITAL STRATEGY : Starbucks also faces the challenge of improving and
enhancing digital customer engagement. Starbucks also partnered with Google to
offer faster in-store Wi-Fi, and subsequently partnered with several other service
providers, such as the music-streaming service Spotify and the ride-sharing service
Lyft. Starbucks’ Digital Network provides easy access to news and local information
from one browser when connected to the store. However, these digital platforms also
 brought challenges. In 2014–15, for instance, hackers used the Starbucks app to
access customer bank accounts.97 And could Starbucks continue to drive customer
loyalty through the app, even if it reduced interaction with the barista or time spent in
the store?
6. Based on Challenges that you write for question no 5 answers, What
recommendation would you give to new Starbucks CEO Kevin Johson to address
the challenges? Be specific
It is undeniable that Starbucks has a competitive advantage when it comes quality,
especially when compared to other geneic coffee commodity. However, in terms of
convenience, despite arduous efforts to establish Starbucks at every corner, there are
still more supermarkets than there are Starbucks bars. Realizing the potential for this
convenience sector of the coffee market, Starbucks should actively pursuing
substitutes that compete in these areas, for example a pre-packaged drinks or offer tea
in its shops as a preemptive measure to fight off any teahouse looking to steal away
the coffe drinkers.
Sometime Asia can be mistakenly seen as one culture by outsiders. It can be
true somehow yet to be successful in the region. The countries in Asia are totally
different when it comes to culture, value, religion, tastes etc. Many Asians prefer for
tea especially in China, a country of devoted tea drinkers who don’t take readily to the
taste of coffee. Starrbucks should set different strategies and approaches for each
market to make Starbucks’s experience to be a part of the culture.
To meet local tastes or preferences, Starbucks can act local, for example by
introducing alcoholic beverage for special happy hour set in some countries or region.
Traditionally Korea and China are huge alcohol consuming culture as well as coffee.
High margin of beer, wine or cocktail may help Starbucks match local tastes and
preferences, most importantly, can boost revenue itself.
Starbucks also should increase the length of time that brand new baristas
spend in training. New Starbucks partners experience near trial by fire. They learn
very little about corporate history, MyStarbucksRewards, the Starbucks experience, or
even coffee and espresso beverages. Memorizing beverage recipes is critical but there
needs to be much more.
Last but not least, Starbucks should make time for coffee education including
coffee seminars including customers. There isn’t enough time for coffee education
and most customers never experience a tasting inside a store. One way to spread
enthusiasm for the whole bean coffee wall is to share that love of coffee with
customers. A person knows a subject matter well when they can teach it to others: it
would be fun to create a customer coffee master program.