Starbucks Case

People started onto the streets in Seattle to protest the Starbuck's that have run amook after talks of the WTO talks in 1999. To these people, free-market capitalism had gone crazy and they were their to protest Starbuck's which was a corporate symbol to them. They broke in windows and trashed the place, the whole Starbuck's smelling of tear-gas after the riots. Back in 1999, Starbucks had around 281 stores, and now currently expanded to over 5,000 globally as it's still "in the early stages of a plan to colonize the globe." Schultz teams is hard-pressed to grind out new profits in a home market that is quickly becoming saturated, with over 11,000 stores scattered across the U.S. and Canada, there are still eight states in the U.S. with no Starbucks stores. Part of the problem is that these cities are full to the brim with Starbuck's and perspective shops and or locations have been completely filled up with Starbucks. To give an idea of how saturated the market is, in Manhattan alone there are 124 Cafes within 24 square miles. That's one for every 12,000 people in Manhattan, a lot!!! Speiser, an analyst for Lehman brothers talks of how it's at a defining point in its growth, it's reaching a level that makes it harder to grow. Starbucks expects to double the number of stores worldwide in three years, opening stores in locations such as Vienna, Zurich, Madrid, Berlin, and even in Jakarta. The company is facing a hostile reception from its future consumers, the twenty- or thirty somethings of Generation X because of the poor taste in music and a cup of coffee at a staggering price of $3. Starbucks fuels its operations through internal cash flow, and they can maintain a tight grip on their image because stores are company-owned. Marketing is not a big part of Starbucks spending 1% of revenues, or $30 million annually on advertising. Their toughest challenge is attracting their next generation of customers in the home market. During market studies, twenty-somethings felt weird being at a place that served "yuppies." They are having trouble maintainng the place as special for employees to work at, with many employees just equating it to another fast-food gig. The model of having more stores and keeping a high level of customer service is something difficult to maintain, as Carrie Shay from California explained of the workload expected from the affadivit expecting 20 hours of overtime to be put in at the store. In 2005, they expanded their market to Japan and are testing many new models over there from broader menus for its stores, includding customized products and smaller sandwiches to less-sweet desserts. This is going to be interesting to see what happens with the Mcdonalds attacking the market too with their McCafe coffee shops. All in all, I believe they have reached their peak, and need to go back to the basics of customer service and expanding their customer base before trying to expand

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