Case analysis report

 
1. Take the time to carefully read and analyze Starbucks: Re-creating Its Uniqueness. You can download Starbucks Case Study from the “Files” section:Starbucks

2. Once you have completed the case analysis, answer each discussion question individually  Do not retype questions. The case analysis report must be at least 500 words in total.

3. Make the most of the information and knowledge covered in this class to do your assignment and also acknowledge all other sources used in your assignment.

 

Starbucks: Re-creating Its Uniqueness

INSPIRED BY ITALIAN coffee bars, Starbucks’s
CEO Howard Schultz set out to provide a completely
new consumer experience. The trade-
mark of any Starbucks coffeehouse is its
ambience—where music and comfort-
able chairs and sofas encourage custom-
ers to sit and enjoy their coffee beverages.
While hanging out at Starbucks, they can
use the complimentary wireless hotspot
or just visit with friends. The barista
seems to speak a foreign language as
she rattles off the offerings: Caffe Misto,
Caramel Macchiato, Cinnamon Dolce
Latte, Espresso Con Parma, or a Mint
Mocha Chip Frappuccino, among some
30 different coffee blends. Dazzled and
enchanted, customers pay $4 or more for a Venti-sized
drink. Starbucks has been so successful in creating its
ambience that customers keep coming back for more.

Starbucks’s core competency was to create a unique
consumer experience the world over. That is what cus-
tomers are paying for, not for the cup of coffee or tea.
The consumer experience that Starbucks created was a
valuable, rare, and costly-to-imitate intangible resource.
This allowed Starbucks to gain a competitive advantage.

While intangible resources are often built through
learning from experience, intangible resources can
atrophy through forgetting. This is what happened to
Starbucks. Recently, Starbucks expanded operations
by opening over 16,000 stores in some 50 countries.
It also branched out into desserts, sandwiches, books,
music, and other retail merchandise, straying from its
core business. Trying to keep up with its explosive
growth in both the number of stores and product offer-
ings, Starbucks began to forget what made it unique.
It lost the appeal that made it special, and its unique
culture got diluted. For example, baristas used to
grind beans throughout the day whenever a new pot
of coffee had to be brewed (which was at least every
eight minutes). The grinding sounds and fresh coffee
aroma were trademarks of Starbucks stores. Instead, to
accommodate its fast growth, many baristas began to
grind all of the day’s coffee beans in the morning and
store them for the rest of the day.

Coming out of an eight-year retirement, Howard
Schultz again took the reins as CEO and president in

January 2008, attempting to re-create
what had made Starbucks special. In late
2009, Starbucks introduced Via, its new
instant coffee, a move that some worried
might further dilute the brand. In the fall
of 2010, Schultz rolled out a new guide-
line: 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. The goal
was to bring back the customer experi-
ence that built the Starbucks brand.’

DISCUSSION QUESTIONS

Review Chapter 4: Internal Analysis: Resources,
Capabilities, and Activities.

1. How did Starbucks create its uniqueness in the first
place?

2. Was Starbucks’s uniqueness a VRIO resource?
Did it help Starbucks gain and sustain a competi-
tive advantage? Why or why not?

3. Why and how did Starbucks lose its uniqueness?

4. How is Starbucks attempting to re-create its
uniqueness? Do you think it will be successful?
Why or why not?

5. Explain Starbucks’s ups and downs using (a) stra-
tegic activity systems and (b) the dynamic capabil-
ities perspective. What implications can you draw?

6. What recommendations would you give Howard
Schultz? Support your arguments.

Endnotes
1. This MiniCase is based on: Schultz, H., and D. J. Yang
(1999), Pour Your Heart Into It: How Starbucks Built a
Company One Cup at a Time (New York: Hyperion); Behar, H.
(2007), It’s Not About the Coffee: Leadership Principles from
a Life at Sawbucks (New York: Portfolio); “Latest Starbucks
buzzword: ‘Lean’ Japanese techniques,” The Wall Street
Journal, August 4, 2009; and “At Starbucks, baristas told no
more than two drinks7 The Wall Street Journal, October 13,
2010, http://investonstarbucks.com.

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