Starbucks Harvard Case Solution & Analysis


Approach to the Case


Analysis of past financial analysis reveals that growth and profitability ratios are constantly declining, which means that Starbucks’ performance is declining every year. However, based on the future projection of financial results; the profitability of Starbucks will began to improve but growth rate in revenues will still follow a declining trend and the decline in growth rate will be lower than the decline in past performance, this will be confirmed by the 15% growth in specialty coffee industry and fall in per capita consumption of coffee in the US, however, launch of Starbucks’ new marketing strategy will be to attract more customers with project profitability. Additionally, the impact of selling through specialty sale agreements on brand image of Starbucks is expected to decline in future and this is confirmed by the marginal growth in sales revenues as per the forecast. Moreover, the gross profit margins will start to grow, which means Starbucks will be able to control its cost of sales that will also decline each year as the projected results, however, the fall in cost of sales show that Starbucks will be able to establish good relations with not only farmers but also with the exporters and decline in cost of sales is confirmed by lower cost of fuel in future.

Meanwhile, the projected results show that asset utilization will be improved in future that will be confirmed by the effective management of inventory through improved inventory control system. In addition to this, accounts payable turnover ratios will increase over the three year projected results but it conflicts with the fact that effective management of inventory will lead to the orders place only when they are needed in order to avoid cost tied up in inventory.

External Environment

Starbucks has been able to secure a competitive position through introduction of innovative coffee products and integration of technology systems in its operations. Moreover, Starbucks consumers are very small and individual consumers, which cannot affect Starbucks’ profitability by influencing its offered prices and the advanced technology used to produce unique taste of Starbucks coffee that has given it a competitive edge over its competitors and alternate coffee products and Starbucks has developed its distribution channels through grocery stores that gives access to coffee lovers in remote areas of US.

However, if Starbucks does not take care of the technological changes in coffee industry then it may lose its competitive position because the quality and taste of coffee depends on the technology used to produce coffee. Moreover, the offering of coffee to some corporate clients will lead to increased consumer power to influence Starbucks for the prices they charge for coffee products.

Business and Corporate Strategy

Starbucks’ strategy is to develop its worldwide coffee brand through high quality and innovative products by using the worlds’ best work force,. Moreover as part of the expansion strategy, Starbucks is opening more outlets around the world. It wants to exceed customer expectations and give a memorable experience through every interaction with Starbucks. Additionally, it gives importance to cultural values and makes sure that growth and expansion do not erode their cultural values. All in all, Starbucks’ strategy is focused on its product and the people who make and deliver that product and its strategy leads to the achievement of its stated mission statement.

Starbucks’ strategy and mission will lead to the success in future as well because the innovation and customer satisfaction is at the heart of success for any business operation, therefore, the strategy of winning customers through exceeding their production with innovative and unique products will definitely improve the profitability of Starbucks.

Operations and Organization

Starbucks purchases the high quality coffee beans from farmers and its quality control system makes sure the desired quality and unique taste of coffee is being made available through latest technology and its experienced and well trained staff. Moreover, Starbucks has reached the wide market through establishing relation with grocery retailers and its improved supply chain system helps effective and efficient management of inventory at all the outlets and grocery retail stores. In addition to that, Starbucks retail stores offer a unique experience every a customer visits their outlet and these outlets also serves community services to its consumers, which gives it a competitive advantage. Meanwhile, business ventures and specialty coffee agreements have played a remarkable role in order to increase the customer base of Starbucks coffee products.

However, the availability of good quality coffee beans can be affected though natural events and the skills of farmers coupled with exporters’ attitude towards the Starbucks strategy of bypassing exporters and these can affect Starbucks ability to deliver unique quality of coffee products. Moreover, rapidly changing technology can affect the uniqueness of its coffee taste and since the supply chain is largely dependent on fuel prices and increase in fuel prices can erode Starbucks profit through increase cost of inventory management. Meanwhile, the marketing strategy is not targeting the whole market and is only limited to the staff who will visit retail stores, however, proposed marketing strategy will target the world market of coffee lovers which will help in order to achieve growth in sales revenues.............................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Share This


Save Up To




Register now and save up to 30%.