Human Resource Theory & Practice - Assignment

Assignment Topic HR Organization Strategy

Date Given November 4, 2020 Due Date 17-11-2020
Group/Individual Individual Maximum Marks 15

INSTRUCTIONS:

Attempt question on the same page.

Q1:https://www.youtube.com/watch?v=XUBeH7VQaFY

Watch the above youtube link. The Case Study on “Starbucks”. According to your
understanding, Explain with diagrams and examples, what are the strategies Starbucks
established to grow the business in all over the world. Also what are the challenges and
hurdles Starbucks faced geographically and how “You” will make strategies to solve those
problems.
Answer:
Strategies Starbucks established for international growth and expansion:
1. Aggressive expansion strategy:
The initial objective of Starbucks was to provide beans of high quality to consumers
which originally had a habit of consuming canned or instant coffee. When Starbucks
hired its first Director of Marketing and Sales, Howard Schultz, he advised it to start
selling beverages. Thus, this idea from Italy in 1983 to turn Coffee beans stores into
cafes led to the first ever latte being sold by Starbucks in 1984, a great success in
various aspects. He bought Starbucks for 3.8 million dollars at 1988 and then pursued
an aggressive expansion strategy. This rapid growth strategy meant that Starbucks
had 165 stores in 1992 by the time it went public and in 1996 it had set up above a
1000 locations which included its first global café at Japan and Singapore and in 1999,
it had 2000 locations. It accelerated its growth rapidly in terms of expanding globally.
In the year 2000, Starbucks had 3500 stores under operation over more than 12
countries when Howard Schultz, originally CEO became Executive Chairman and till
2007, the number of stores increased by more than four times from an initial number
of 3500 to a final number of 15,000 stores which meant that in 2007, Starbucks set
up more than 1500 stores per year on average and 2500 were opened up in 2007.

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 Sales increased from 2 billion dollars to 9.4 billion dollars. Similar to this example,
other companies can also expand internationally and increase their sales, therefore
fastening the growth process.

2. Focus on Consumer experience:

But after that, the rapid growth of Starbucks suddenly stopped and stock prices faced a
decrease of 50 percent. This was because consumers who were generally short of money
stopped spending money on expensive coffees. Howard Schultz had to stop growth for a
while and focus on customer experience. He shuttered cafes and laid off baristas. He ordered
to shut down several US locations for one afternoon by teaching baristas how to make their
signature espresso in a way that made a stores seem like an experience instead of a way to
get a quick coffee, encouraging in-house grinding , removed automatic and stopped selling
sandwiches.

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