Starbucks: Business revival in recession

Starbucks: Business revival in recession

Published: October 2012
Publisher: MarketLine
Product ref: 154280
Pages: 18
Format: PDF
Delivery: By product vendor

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Starbucks Corporation, established in 1971, was named the "Number One World's Most Innovative Food Company" by Fast Company in 2012. This was attributed to the company's revival of its business during recession. This case study will examine how Starbucks was affected during the recession, the strategy used to pull the company back into profit, and the effects that this strategy had on the company.

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When Starbucks was first established it did not sell drinks; it was not until Howard Schultz bought the company in 1987 that it began to operate as a chain of coffee bars. The establishment of Starbucks as a coffee retailing chain marked the beginning of a new consumer trend.
Prior to 2008, Starbucks had been growing rapidly in terms of store openings, revenues, and operating profit. However, this all changed as the recession hit and the company struggled to cope. Starbucks became a victim of its own overexpansion. Furthermore, mass branding became detrimental to the company.
Starbucks embarked on a new strategy to turn the business around. The company shifted its focus from expanding the brand to enhancing the brand. A range of initiatives were introduced, including closing stores, expanding internationally, introducing new products and initiatives, and debranding stores.

Your key questions answered

  • What difficulties did Starbucks fall into in recession?
  • What were the causes of these financial problems?
  • What strategy did the company use in an attempt to turn the business around?
  • How successful was this strategy?

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