Before the economic crisis in 2008, Starbucks returns projection were high as it was anticipating growth in sales from their newly opened stores. However, the expectations were cut short by the American financial crisis whose effects was felt by individuals, corporations and the entire economy. The impact led to a decline in Starbucks sales and thus affecting the profits. The company was forced to close approximately 100 shops and laying off about 6700 employees ( Thompson, 2012) . The management had to come up with a survival strategy that would see the corporation grow after the crisis. The strategy had to incorporate a growth strategy that would see the company expand to new levels. The management was supposed to develop and implement the following strategy.
Starbucks should focus on increasing the number of stores. Besides concentrating on expanding footprints, the company should also change its store mix. Instead of opening the traditional dine-in restaurants the company should focus on the specific store in different major cities such as Seattle, New York and Boston ( Mason, Cole, & Goza, 2017) . The strategy aims to increase the company’s store penetration. The management should be careful to avoid cannibalization of the new stores with the old stores. The new stores will increase the company’s sales. The coffee giants have been in the industry for a while now and understood the importance of growth strategy.
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The management should focus on growing the company through partnerships ( Mason, Cole, & Goza, 2017) . While the coffee business has been doing great over the years to avoid the company slowly declining and eventually dying, the company should partner with other organization to diversify its menu portfolio thus attracting a larger group of consumers. The company should work on establishing partnerships and making food products one of its primary drivers in the future. In other countries like Saudi Arabia it is hard to penetrate the market, and thus the company requires to partner with companies that are well known in the country. For the company to penetrate in countries like China and Saudi Arabia, it needs to partner with local food companies in these countries thus increasing its penetration in the new markets.
Extending digital engagement in ordering and paying of products. Currently, one-fourth of payments made to Starbucks is made through mobile payment. The company should work on a strategy of ensuring that customers can pay through digital means. Production order should also be made possible through digital means. The large part of the society is advancing technologically. Mobile payment is becoming a common activity among the people. Venturing in such technology will avoid long queues in the restaurants.
According to Mason, Cole, & Goza, (2017), the management may consider diversification of beverage products. Historically, Starbucks has been known for its exceptional coffee. What if the company extended to other hot beverage such as tea? The company is said to have a strategy in a place called Teavana where the company is planning to supply tea in its store. The policy has already been implemented in the U.S and has been well accepted making it successful. To make sure that the company diversifies its portfolio it should venture in tea business without fear. Not everybody takes coffee, and some cannot afford, but tea is cheaper thus appealing to a larger group of consumers. The company should go forward with the strategy and implement it in Europe and China. China is the largest tea consuming country making it a potential market for Starbucks. By diversifying the product portfolio, the company will increase the variety of products that the consumers can choose from.
According to ( Mason, Cole, & Goza (2017), the management should consider e xpanding the ready-to-drink segment. The company should ensure that it invests in the ready to drink part of the industry. By expanding the demand for at home coffee, the company will be providing the growth of the consumer product sector. Currently, the product consists of two major products including K-Cups and packaged coffee. Partnering with other companies in different countries the organization will be able to increase the consumption of ready to drink coffee and tea.
The management of Starbucks should focus on elevating the coffee experience in all the countries where it is offering its products. Research shows that coffee intake may increase by five folds in the next few years and the company needs to position itself better to attract more customers. The, therefore, should plan to increase the number of roasteries and offering different types of coffee products to the consumers ( Mason, Cole, & Goza, 2017) . Various examples of coffee that the company should plan to provide in these outlets should be siphon, clover, and pour-over. The company should increase reserve stores to ensure that the outlets do not run out of products.
The company should think of creating new consumer occasions ( Mason, Cole, & Goza, 2017) . For years now the company has experienced an increased flow of customers during the lunch hour because of improved food products such as sandwiches and tea. The company, therefore, should consider other food products at their stores. Although most people argue that the company will become more like other food restaurants, it is a good idea as these foods will increase consumption of Starbucks tea and coffee.
References
Mason, A., Cole, T., & Goza, N. (2017). STARBUCKS: A CASE STUDY OF EFFECTIVE MANAGEMENT IN THE COFFEE INDUSTRY. Journal of International Management Studies , 17 (1).
Thompson, A. A. (2012). Starbucks in 2012: Evolving into a Dynamic Global Organization.
