Answered: Refer to Case 2: Starbucks’ Mission:…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Refer to Case 2: Starbucks’ Mission: Social Responsibility and Brand Strength You have been asked by Starbucks to advise them on ways that they can increase their sustainability. Several options are being discussed, such as looking into more eco-friendly cups to deducting an additional ten cents for everyone who brings in a personalized cup. Provide some recommendations on ways you think would be most beneficial to Starbucks in increasing its sustainability. Be sure to address: Starbucks’ social responsibility Starbucks’ overall corporate strategy Identify Starbucks’ competitive advantage and how it relates to sustainability

Transcribed Image Text:### CASE 2 Starbucks Mission: Social Responsibility and Brand Strength **Introduction** Howard Schultz joined Starbucks in 1982 as director of retail operations and marketing. Returning from a trip to Milan, Italy, with its 1,500 coffee bars, Schultz recognized an opportunity to develop a similar retail coffee bar culture in Seattle. **Expansion of Starbucks** In 1985 the company tested the first downtown Seattle coffeehouse, served the first Starbucks café latte, and introduced its Christmas Blend. Since then, Starbucks expanded across the United States and around the world, now operating over 21,000 stores in 65 countries. Historically, Starbucks grew at a rate of about three stores a day, although the company cut back on expansion in recent years. The company serves 70 million customers per week and has revenues of approximately $16.4 billion a year. It is the largest coffeehouse company in the world. **Strategic Locations** Starbucks locates its retail stores in high-traffic, high-visibility locations. The stores are designed to provide an inviting coffee bar environment that is an important part of the Starbucks product and experience. It was the intention of Howard Schulz to make Starbucks into “the third place” for consumers to frequent, after home and work. Because the company is flexible regarding size and format, it locates stores in or near a variety of settings, including office buildings, bookstores, and university campuses. It can situate retail stores in select rural and off-highway locations to serve a broader array of customers outside major metropolitan markets and further expand brand awareness. **Product Expansion** In addition to selling products through retail outlets, Starbucks sells coffee and tea products and licenses its trademark through other channels and partners. For instance, its Frappuccino coffee drinks, Starbucks Doubleshot espresso drinks, super-premium ice creams, and VIA coffees can be purchased in grocery stores and through retailers like Walmart and Target. Starbucks partnered with Courtesy Products to create single-cup Starbucks packets marketed toward hotel rooms. Starbucks also partnered with Green Mountain Coffee Roasters to introduce Starbucks-branded coffee and tea pods to the market. These pods target consumers who own Keurig single-cup brewing machines. Although the two businesses would normally be rivals, this partnership is beneficial for both Green Mountain and Starbucks. Since Green Mountain owns Keurig’s single-serve machines, the partnership enables Starbucks to access this technology to market a new product. Green Mountain benefits because the partnership generates new users of Keurig single-cup

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