...BRANDING How Starbucks’ Growth Destroyed Brand Value by John Quelch JULY 2, 2008 WHAT TO READ NEXT 10 Charts from 2013 That Changed the Way We Think Make Your Emotions Work for You in Negotiations The Real Problem with Pensions Starbucks announcement that it will close 600 stores in the US is a long-overdue admission that there are limits to growth. In February 2007, a leaked internal memo written by founder Howard Schultz showed that he recognized the problem that his own growth strategy had created: “Stores no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store.” Starbucks tried to add value through innovation, offering wi-fi service, creating and selling its own music. More recently, Starbucks attempted to put the focus back on coffee, revitalizing the quality of its standard beverages. But none of these moves addressed the fundamental problem: Starbucks is a mass brand attempting to command a premium price for an experience that is no longer special. Either you have to cut price (and that implies a commensurate cut in the cost structure) or you have to cut distribution to restore the exclusivity of the brand. Expect the 600 store closings to be the first of a series of downsizing announcements. Sometimes, in the world of marketing, less is more. Schultz sought, admirably, to bring good coffee and the Italian coffee house experience to the American mass market. Wall Street bought into the How Starbucks’ Growth Destroyed...
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...Harvard University Extension School Management E-5475 – Strategic Management of Growth Companies Course Syllabus – Spring 2012 November 25, 2011 Course Logistics Day and Time: Tuesday, 7:35-9:35pm Location: Byerly Hall 013 Course iSite: http://isites.harvard.edu/course/ext-23550/2012/spring Instructor: Dave Power 617.694.2472 President, Power Strategy dave@powerstrategy.com Office Hours: Before class and by appointment ------------------------------------------------- About the Course Course Description and Overview Growth companies are the engines of product innovation, market expansion and value creation. But sustaining the growth of these dynamic private companies -- typically with revenues of $10 to $100 million -- requires a unique set of skills, different from those required in either startups or large public companies. Many promising growth companies stall as their business models mature and they outgrow the processes and teams responsible for their early success. Using a mix of case studies, group discussions, interactive exercises and written assignments, this course provides a general management perspective of growth companies: strategy, execution, team, and capital. You first learn different growth strategies, including market disruption, “white space” discovery, and business model innovation. You then connect strategy with execution through market selection and positioning...
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...264 Academic Building A Tel. (607) 777 6059 Email: eiankova@binghamton.edu IBUS 480A & IBUS 581A. GLOBAL BUSINESS RISK MANAGEMENT Spring 2015 MW 4:45-6:10 pm Room: AA 370 4 credits Office Hours: Wednesday 1:00 – 2:00 pm or by appointment Office: AA-264 Secretary: Bernie Cencetti Office: AA-361 Telephone: (607) 777-2674 Email: bbobal@binghamton.edu Course Objectives In an increasingly globalizing world, more and more companies are going abroad to pursue their major business objectives. What are the risks encountered by MNCs in their international business operations? How to evaluate, approach and manage these risks? This course aims to provide a general understanding of the field of global risk analysis and management. More specifically, you will learn about the development of the risk assessment industry and the major approaches to risk assessment. You will also get acquainted with the various types of risk that international businesses face in their operations abroad, and the major strategies for risk mitigation and management. We will pay special attention to political risks (asset expropriation, contract repudiation, legal and regulatory risks), 1 societal risks (activism of international non-governmental organizations, reputation and public image issues), and everyday risks (corruption). Through a combination of readings, lectures, guest speakers, case discussions and risk assessment projects you will develop practical skills in evaluating and assessing risk...
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...Table of Contents Introduction 3 1.1 Brief Company Overview 3 1.2 Speciality Coffee Industry and Starbucks Coffee Supply Chain 3 1.4 Problem Definition 4 Literature Review 4 2.1 Current Situation of Starbucks and Older Supply Chain Method 4 2.2 Supply Chain Visibility 5 2.5 C.A.F.E (Coffee and Farmer Equity Practices) Practices 6 Findings 7 3.1 Starbucks’ Operations 7 3.1.1. Material Flow 7 3.1.2 Purchasing System 9 Discussion and Analysis 10 4.1 Starbucks’ 3PLs Strategy 10 4.2 Value Change Analysis 10 Conclusion 11 Appendix A 15 Appendix B 16 Appendix C 17 Appendix D 18 Appendix E 19 Appendix F 20 Appendix G 21 Appendix H 22 Appendix I 23 Introduction 1.1 Brief Company Overview Starbucks is the world’s #1 speciality coffee retailer with more than 20,000 stores n 65 countries (See Appendix G). It operates an estimate of 8,800 of its shops, while licensing and franchises operate the remainder of the stores. The company also owns Seattle’s Best Coffee, Torrefazione Italia coffee brands, Teavana, Tazo, Evolution Fresh, and La Boulange (SCC 2014). Starbucks offers consumers various products including: coffee, handcrafted beverages, merchandise, fresh food, and consumer products of coffee and tea and ready-to-drink (RTD) goods (SCC). 1.2 Speciality Coffee Industry and Starbucks Coffee Supply Chain The speciality coffee industry has seen drastic growth with increase in sales between the 1980s and 1990s. A great number of coffee specialists...
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...Starbucks a Strategic Analysis Past Decisions and Future Options 1 Contents Introduction ......................................................................................................................... 4 Michael Porter’s 5 Forces Analysis (Past) .......................................................................... 7 Industry Rivalry ............................................................................................................................ 8 Potential for new entrants ........................................................................................................ 10 Substitute Products ................................................................................................................... 12 Bargaining Power of Buyers ...................................................................................................... 13 Bargaining Power of Suppliers................................................................................................... 14 Summary: The Five Market Forces in Specialty Coffee in 1987 ..................................... 15 Specialty Coffee Industry Attractiveness.......................................................................... 16 Starbucks’ Original Generic Strategy ............................................................................... 19 Starbucks’ Success Factors ............................................................................................... 22 First-mover...
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...Introduction: Before we begin to show our analysis and delve into the depths of the work, which we researched for Starbucks. We first need to have a clear understanding as to what the purpose of the assignment is, and also what is being asked of us. The title of the group project reads: “International issues and evaluation of strategic options.” Therefore we needed to focus particularly on the international issues surrounding Starbucks and also the strategic options, with which it has at its disposal. For us to successfully analyse the Starbucks case, thorough research was carried out in these areas. A number of sources were offered for us to explore in relation to the case. We chose the following, as we believed they possessed the most relevant information. The Financial Times, Harvard Business Review, Mc Kinsey Quarterly and we also referred to our core textbook: Exploring Corporate Strategy. With regards to the international context surrounding Starbucks we looked at different areas, which we believed, were of the most importance e.g. what issues Starbucks faces on an international scale and also what Starbucks can do strategically to change for the benefit of the company. We looked at the work of one theorist in particular Michael Porter and ways in which his concepts and theories could be applied to this particular case study. We chose to adopt the infamous Porter’s Diamond as a theoretical framework for our analysis. If this model is applied to a company in...
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...SPOTLIGHT RADICALLY REINVENT YOUR SUPPLY CHAIN Spotlight ARTWORK Michael Johansson, Self Contained, 2010 containers, caravan, tractor, Volvo, pallets, refrigerators, etc. 8.2 x 10.8 x 2.4 m HBR.ORG Hau L. Lee (haulee@ stanford.edu) is the Thoma Professor of Operations, Information, and Technology at Stanford Graduate School of Business and the director of the Stanford Global Supply Chain Management Forum. He is on the board at Esquel, one of the companies discussed in this article. Don’t Tweak Your Supply Chain— Rethink It End to End October 2010 Harvard Business Review 63 by Hau L. Lee H SPOTLIGHT RADICALLY REINVENT YOUR SUPPLY CHAIN Hong Kong–based Esquel, one of the world’s leading producers of premium cotton shirts, faced a quandary in the early 2000s. Apparel and retail customers such as Nike and Marks & Spencer had begun asking the company about its environmental and social performance. Its leaders anticipated scrutiny from other customers as well, since more of them were demanding that a greater portion of the cotton in their shirts be grown organically. But the crop required a lot of water and pesticides, especially in poor and rapidly developing countries, where Esquel’s cotton was grown and processed. Though Esquel’s executives wanted to strengthen the company’s already serious commitment to social and environmental sustainability, they realized they couldn’t simply demand that the farmers who supplied extra-long-staple cotton just reduce...
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...the level of product innovation maximizes both revenues and profits. Innovation Versus Complexity What Is Too Much of a Good Thing? COPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. by Mark Gottfredson and Keith Aspinall Walk into the In-N-Out Burger restaurant on Fisherman’s Wharf in San Francisco, and one of the first things that may strike you is the number four. Four colors: red, white, yellow, and gray; four cash registers with four friendly faces behind them; and just four items on the menu. You can buy burgers, fries, shakes, and sodas. All the ingredients are delivered fresh to the store, where they’re prepared in the open kitchen behind the cashiers. You’ll see a few folks eating at the restaurant’s tables or tucking into their food outdoors on patio benches, but most customers come in with a handful of cash—no credit or debit cards, thank you—and head back out with their meals. Four is In-N-Out Burger’s innovation fulcrum—the point at which the number of products strikes the right balance between customer satisfaction and operating complexity. Four means simple purchasing, simple production, and simple service. And, it turns out, in a world where fast-food restaurants are forever adding formats and menu items, simple means harvard business review • november 2005 profitable growth. With its chain of about 200 restaurants...
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...Analysis Company: Starbucks Corporation Critical Thinking Question: Can Starbucks meet its projected ultimate growth? Bruce Harris BMGT 327-01 Organizational Theory and Behavior Dr. Susan Eisner Winter 2005 Semester Tuesday January 25, 2005 To: Professor S. Eisner From: Bruce Harris Date: Tuesday, January 25, 2005 Re: Final Project (Option 2) – Company Analysis – Starbucks Corp. Introduction: Starbucks Corp. has had a substantial impact on the way Americans socialize, relax, reward themselves, and meet to conduct business. This effect and the efficiency with which it was accomplished reflect the high performance of the company. With annual revenue growth consistently topping 20%, it is quite clear that the company is doing something right. This memo will examine 3 concepts that have impacted the company’s high performance. It will then evaluate and discuss a critical question about the future performance of Starbucks. Relationship of topic to this course – 3 course terms relevant to company’s performance: 1. Employee involvement is characterized by decision-making power delegated to employees at all levels within a company. A high level of employee involvement is termed “empowerment,” and is present when employees are given the latitude to make decisions that affect them and their work. Studies have found that empowerment has a substantial positive impact on productivity and worker satisfaction. 2. Social Responsibility refers to the obligation of a business to operate in...
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...Analysis Company: Starbucks Corporation Critical Thinking Question: Can Starbucks meet its projected ultimate growth? Bruce Harris BMGT 327-01 Organizational Theory and Behavior Dr. Susan Eisner Winter 2005 Semester Tuesday January 25, 2005 To: Professor S. Eisner From: Bruce Harris Date: Tuesday, January 25, 2005 Re: Final Project (Option 2) – Company Analysis – Starbucks Corp. Introduction: Starbucks Corp. has had a substantial impact on the way Americans socialize, relax, reward themselves, and meet to conduct business. This effect and the efficiency with which it was accomplished reflect the high performance of the company. With annual revenue growth consistently topping 20%, it is quite clear that the company is doing something right. This memo will examine 3 concepts that have impacted the company’s high performance. It will then evaluate and discuss a critical question about the future performance of Starbucks. Relationship of topic to this course – 3 course terms relevant to company’s performance: 1. Employee involvement is characterized by decision-making power delegated to employees at all levels within a company. A high level of employee involvement is termed “empowerment,” and is present when employees are given the latitude to make decisions that affect them and their work. Studies have found that empowerment has a substantial positive impact on productivity and worker satisfaction. 2. Social Responsibility refers to the obligation of a business to operate in...
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...A Caffeine Giant: The Growth of Starbucks Abstract This paper examines Starbucks’ plan for rapid and thoroughly aggressive expansion in order to become the premier coffee ship in the United States and further, the World. Building upon a brand name that is recognizable worldwide, Starbucks continues to defy expectations, as it claims the title of the fastest growing fast-food company in the world (Horovitz, 2015). This paper provides a comprehensive analysis of Starbucks 7-year plan for growth (Tobey, 2014), and compares it to Quelch’s periodical on the demise of Starbucks (2008); suggesting that Quelch’s assessment that Starbucks growth destroyed its brand is misguided and inaccurate, while the opposite is then true. A Caffeine Giant: The Growth of Starbucks As the premier marketer of coffee and coffee products in the United States, Starbucks, an American corporation founded in 1971, is reaching new peaks as a global powerhouse, a seemingly unprecedented achievement following a slump in sales from 2008 to 2009. What makes this climb more magnificent is that it does so while competing against fast food giants such as McDonalds, Subway, and Burger King (Horovitz, 2014), dominating its competitors within its respective industry. John Quelch surmised that the slump Starbucks faced in 2008 was due to over expansion and a turn away from those consumers who wanted premium coffee with a personal experience (2008), when in reality...
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...times. Smart local companies have used the benefits of globalization to close gaps in technology capital and talent with their rivals from the developed world.” - Arindam K Bhattacharya, David C Michael, Harvard Business Review, March 2008. Introduction Global companies operate across the world. In different markets, customer requirements may vary. The temptation to customise for each market, has to be tempered by the need to keep costs down through standardisation. As discussed before, the logical approach would be to identify and analyse the various value chain activities that make up the marketing function and decide which of these must be performed on a global basis and which localised. This chapter covers product management, pricing, sales and distribution and customer relationship management. Global branding, which merits a separate treatment is covered in Chapter 8. Product management Should the same product be offered across overseas markets? Or should it be customized according to the specific needs of different markets? A globally standardised product can be made efficiently and priced low but may end up pleasing few customers. On the other hand, excessive customisation for different markets across the world may be too expensive. The trick, as in the case of other value chain activities, is to identify those elements of the product which can be standardised across markets and those which need to be customised. Thus, a standard core can be developed, around...
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...MARKETING COURSE Articles Books & Chapters Cases Course Modules Online Courses Simulations 2012 MATERIALS Harvard Business Publishing serves the finest learning institutions worldwide with a comprehensive catalog of case studies, journal articles, books, and eLearning programs, including online courses and simulations. In addition to material from Harvard Business School and Harvard Business Review, we also offer course material from these renowned institutions and publications: Babson College Business Enterprise Trust Business Expert Press Business Horizons Magazine California Management Review Darden School of Business Design Management Institute HEC Montréal Centre for Case Studies Ivey School of Business International Institute for Management Development (IMD) IESE Business School INSEAD John F. Kennedy School of Government Kellogg School of Management Perseus Books Princeton University Press Rotman Magazine Stanford Graduate School of Business Sloan Management Review Social Enterprise Knowledge Network Thunderbird School of Global Management Tsinghua University University of Hong Kong Customer service is available 8 am to 6 pm ET, Monday through Friday. Phone: 1-800-545-7685 (1-617-783-7600 outside the U.S. and Canada) Tech support is available 8 am to 8 pm ET, Monday through Thursday, 8 am to 7 pm ET Friday. Phone: 1-800-810-8858 (1-617-783-7700 outside the U.S...
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...the contemporary economy. The work of Rasmussen and Nielsen (2011) reveal that intangible resource is regarded as a typical feature of knowledge, which can build capabilities for both organisations and individuals, consequently, in this new economy, also can be called knowledge-based economy made knowledge become strategically important to provide sustain competitive advantage for enterprises, especially in high technology and bioengineering sectors (Niu, 2010). Knowledge therefore has emerged as a main source of power as well as core competency in today’s emerging economies. However, new possibilities and threads are constantly taken place to challenge the power of knowledge when organisations are under pressure to operate their business globally. As the result, with rapid and constant changed environment, it is important to developing “dynamic capabilities” (Teece et al., 1997), which means to active and conscious use of knowledge for organisations as they need to survive and succeed (Gao et al., 2008; Gold et al., 2001). It can infer...
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...the contemporary economy. The work of Rasmussen and Nielsen (2011) reveal that intangible resource is regarded as a typical feature of knowledge, which can build capabilities for both organisations and individuals, consequently, in this new economy, also can be called knowledge-based economy made knowledge become strategically important to provide sustain competitive advantage for enterprises, especially in high technology and bioengineering sectors (Niu, 2010). Knowledge therefore has emerged as a main source of power as well as core competency in today’s emerging economies. However, new possibilities and threads are constantly taken place to challenge the power of knowledge when organisations are under pressure to operate their business globally. As the result, with rapid and constant changed environment, it is important to developing “dynamic capabilities” (Teece et al., 1997), which means to active and conscious use of knowledge for organisations as they need to survive and succeed (Gao et al., 2008; Gold et al., 2001). It can infer...
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