1. How well is Starbucks performing?

Starbucks went from a venture started by two college graduates Gerald Baldwin and Gordon Bowker to becoming a Fortune 500 company, all of this while changing the American perception of good coffee and defining the coffee experience. This success of Starbucks within American capitalism is widely attributed to Howard Schultz, the CEO of the company, who answered the question: What can one man do to create value for an international corporation? He can develop a strategy. Starbucks is operating in the food services industry, having as main competitors McDonalds and Dunkin` Donuts. The average return on equity for the industry in the last 10 years was of 19.9% while Starbucks had 29.92%. Although this is by no means the highest value an investor can hope in this industry (Dunkin Brands Group ROE is 30.36% and McDonald's is 37.48%) Starbucks managed to recover from a disastrous period in 2008 and has been in the process of sustainable growth ever since. Maybe Starbucks main asset in the market is the relationship it establishes with its customers. The average Starbucks customer visits the store 6 times per month while a loyal 20% of customers go to the stores 16 times per month. This fidelity allowed Starbucks to price above the market and also enter other industries such as retail trading with instant coffee. 2. What is Starbucks strategy? We arent in the coffee business, serving people. We are in the people business, serving coffee--- Howard Schultz (Serwer, 2004) This quote represents Starbucks strategy in a nut shell. The goal is to create a connection with the customers and they established that through the concept of Starbucks experience, transforming the coffee stores into a sort of comfort zone outside of work and home where people would socialize and drink quality coffee. The emphasis on customers experience and attention to details is what made Starbucks the largest coffeehouse chain in the world. They managed to achieve this high level of customer satisfaction by: serving quality coffee, having qualified employees (partners), a unique design that fits every location and a strong community relation all of this while being very social active. 3. Assess Starbucks strategy in terms of its fit (with its business environment and its internal resources/capabilities) and its internal coherence. Because Starbucks has been through both good and bad times we can observe the way it has stuck to its strategy. In response to the ever-changing business environment Starbucks has responded with a broad strategy, implementing the Starbucks experience in every store and activity without an overly detailed step by step plan. The implementation of the strategy made use of the resources that were developed over time like: well qualified employees for good service and good relationships with the suppliers for good coffee. Many fear that after bringing back Starbucks to its main values in 2008, Schultz is losing internal coherence through the initiatives he is now taking. One of the biggest complaints is the decrease of coffee quality through the introduction of instant coffee. I can make some observations about the newly opened chain in Romania where, apart from the unique design that fits every location, no other element in the Starbucks experience fits the pattern. They are not socially active, the employees are badly treated, unprepared and rude, and the coffee is not what it should be every single time. Name:Ghita Razvan, Group 3