Analyze Starbucks' Growth Strategies Via Creating New Occasions Case Analysis. Analyze of Starbucks' growth strategy, and some of the areas to consider should include a Problem Analysis, SWOT Analysis, Porters' five forces and their pricing strategy. In doing so, identify and evaluate alternatives and provide a recommendation for a course of action and how the recommendations should be implemented.

Below is the case study on Starbucks.

Case Study: STARBUCKS

By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks then just a handful of coffeeshops in Seattle into a chain of European-style coffeehouses. His vision wasn't based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with whathe called a "third place" a place away from home and work. As CEO of Starbucks, Schultzdeveloped what became known as theStarbucks Experience, built around great coffee,personal service, and an inviting ambiance.

WHAT GOES UP

It wasn't long before Starbucks became a household word a powerhouse premium brand in a

category that previously consisted of only cheaper commodity products. In 20 years' time,

Schultz grew the company to almost 17,000 stores in dozens of countries. From 1995 to2005, Starbucks added U.S. stores at an annual rate of 27 percent, far faster than the 17percent annual growth of McDonald's in its heyday. At one point, Starbucks opened over3,300 locations in a single year?an average of 9 per day. In one stretch of crowdedManhattan, a person could get their caffeine fix at any of five Starbucks outlets in less than ablock and a half. In fact, cramming so many stores so close together caused one satiricalpublication to run this headline: "A New Starbucks Opens in the Restroom of ExistingStarbucks." For many years, new store growth was what kept Starbucks percolating. As itgrew, company sales and profits rose like steam from a mug of hot java. Growth routinelyaveraged 20 percent or more each year. And Starbucks made investors happy with a 25percent annual increase in the value of its stock for more than a decade. Schultz confidentlypredicted that there was no end in sight for the Starbucks boom. Just a few years ago, he announced his intentions to open 10,000 new stores in just four years and then pushStarbucks to 40,000 stores. But not long after Schultz shocked Wall Street and the industry with his projections, Starbucks' steam engine of growth started to slow. Then it started running in reverse. By the end of 2008, the 20 percent annual growth haddropped to 10 percent, with existing store salesdecreasing by 3 percent.

Total companyprofits dropped by a scalding 53 percent for the year. And for a second year in a row, Starbucks' stock valuedropped by 50 percent to around $10 a share. The weakened economy certainly played a role. But for years, many industry observers had worried that the company was growing too fast. Revenue and traffic at Starbucks began slowing more than a year before anyone uttered thewordrecession. In a sign of recognizing a problem, Schultz cut back on the number of newstore openings. Then he did what had previously seemed unthinkable. In 2008, he announcedstore closures?first 600, then 300 more. In fact, as Starbucks trimmed its 2009 forecast fornew store openings to 310, it projected adecreasein its number of outlets for the first timeever.

THE EVOLUTION OF THE STARBUCKS CUSTOMER

There was no shortage of armchair CEOs willing to give their opinions as to what had gone

wrong that led to Starbucks' fall from perpetual growth. One issue often mentioned was that

Starbucks had developed an identity crisis with respect to its target customer. In its earlyyears, the Starbucks customer profile was clearly defined. The typical customer waswealthier, better educated, and more professional than the average American. The customer

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