Details

Abstract / Summary

By early 2009 Starbucks had nearly 17,000 stores worldwide, with about a third of these outside the United States. Despite multibillion-dollar annual revenues, the giant coffee retailer’s yearly growth had declined by half, quarterly earnings had dropped as much as 97 percent, same-store sales were negative, and its stock price was languishing. Factors such as a global economic downturn and increasing competition in the specialty coffee market from large players such as McDonald’s and Dunkin’ Donuts had driven this decline, resulting in the closings of hundreds of domestic stores already, with many more planned. Founder Howard Schultz, who had recently returned as CEO, and his executive team were convinced that Starbucks’s growth opportunities lay overseas, where the firm already had a strong foothold in markets like Japan and the United Kingdom and was preparing to open hundreds of new stores in a variety of locations. But recent international challenges, including the closing of most Australian stores due to sluggish sales, made clear that Starbucks had more to learn about bringing its value proposition—a combination of premium coffee, superior service, and a “coffeehouse experience”—to foreign soil. The key question was not whether Starbucks could transport its value proposition overseas, but how the value proposition’s three elements would play in recently entered and new markets. And the stakes of making the right international moves rose with each U.S. store closure. Schultz and his team also faced a broader question, one that applied to both their U.S. and foreign stores: Could they “grow big and stay small,” remaining a huge retailer that delivered both high-quality products and a consistently intimate and enjoyable experience to consumers worldwide? This case presents this challenge in the context of Starbucks’s history, well-established value proposition, and domestic and international growth and vision.

Field of Interest

Business & Economics

Author

Richard Honack, fl. 2009

Copyright Message

Copyright © 2009 by the Kellogg School of Management at Northwestern University

Content Type

Case study

Duration

0 sec

Format

Text

Original Publication Date

2009

Page Count

22

Publication Year

2009

Publisher

Northwestern University. Kellogg School of Management

Place Published / Released

Evanston, IL

Subject

Business & Economics, Social Sciences, International Business, Work environment, Customer relations, Coffee, International trade, Organizational change, Management of Companies and Enterprises, Negócios Internacionais, Negocios Internacionales, Starbucks, Transferring FSAs and CSAs across Borders

Keywords and Translated Subjects

Negócios Internacionais, Negocios Internacionales