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

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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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
CASE 2 Starbucks Mission: Social Responsibility and Brand Strength*
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.
In 1985 the company tested the first downtown Seattle coffeehouse, served the first Starbucks café latté, 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.
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.
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 brewing machines attracted to the Starbucks name.
This partnership between Green Mountain and Starbucks did not stop Starbucks from launching its own line of single-serve machines. In 2012
Starbucks introduced its Verismo 580 Brewer that allows consumers to brew a cup of Starbucks coffee in their own homes (later versions include
the Verismo 583 and 600). The coffee has the strong, bold flavor of a cup purchased in any Starbucks retail location. Starbucks offers a limited
assortment of coffees to emphasize quality rather than quantity. Not to be outdone, Green Mountain released another type of single-serve coffee
brewer called the Rivo. Unlike the Verismo that uses powdered milk pods, the Rivo uses fresh milk. The race to conquer the single-serve coffee
market is intensifying between the two companies.
A common criticism of Starbucks is the company's strategy for location and expansion. Its "clustering" strategy, placing a Starbucks literally on
every corner in some cases, forced many smaller coffee shops out of business. This strategy dominated for most of the 1990s and 2000s and
Starbucks became the butt of jokes. Many people began to wonder whether two Starbucks directly across the street from each other were really
needed. The last recession brought a change in policy, however. Starbucks pulled back on expansion, closed hundreds of stores around the
United States, and focused more on international markets. Now Starbucks is beginning to focus on U.S. expansion once more.
At the end of 2014, Starbucks opened a 15,000 square foot Starbucks Reserve Roastery and Tasting Room in Seattle, a place where coffee is
roasted, bagged, sold, and shipped internationally. Equipped with a Coffee Library and Coffee Experience Bar, the roastery is intended to
redefine the coffee retail experience for customers. The roastery sells 28 to 30 different coffees and gets 1,000 to 2,000 customers daily. CEO
Howard Schultz believes the roastery has the potential to redefine the Starbucks retail experience.
396
397
Transcribed Image Text:CASE 2 Starbucks Mission: Social Responsibility and Brand Strength* 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. In 1985 the company tested the first downtown Seattle coffeehouse, served the first Starbucks café latté, 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. 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. 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 brewing machines attracted to the Starbucks name. This partnership between Green Mountain and Starbucks did not stop Starbucks from launching its own line of single-serve machines. In 2012 Starbucks introduced its Verismo 580 Brewer that allows consumers to brew a cup of Starbucks coffee in their own homes (later versions include the Verismo 583 and 600). The coffee has the strong, bold flavor of a cup purchased in any Starbucks retail location. Starbucks offers a limited assortment of coffees to emphasize quality rather than quantity. Not to be outdone, Green Mountain released another type of single-serve coffee brewer called the Rivo. Unlike the Verismo that uses powdered milk pods, the Rivo uses fresh milk. The race to conquer the single-serve coffee market is intensifying between the two companies. A common criticism of Starbucks is the company's strategy for location and expansion. Its "clustering" strategy, placing a Starbucks literally on every corner in some cases, forced many smaller coffee shops out of business. This strategy dominated for most of the 1990s and 2000s and Starbucks became the butt of jokes. Many people began to wonder whether two Starbucks directly across the street from each other were really needed. The last recession brought a change in policy, however. Starbucks pulled back on expansion, closed hundreds of stores around the United States, and focused more on international markets. Now Starbucks is beginning to focus on U.S. expansion once more. At the end of 2014, Starbucks opened a 15,000 square foot Starbucks Reserve Roastery and Tasting Room in Seattle, a place where coffee is roasted, bagged, sold, and shipped internationally. Equipped with a Coffee Library and Coffee Experience Bar, the roastery is intended to redefine the coffee retail experience for customers. The roastery sells 28 to 30 different coffees and gets 1,000 to 2,000 customers daily. CEO Howard Schultz believes the roastery has the potential to redefine the Starbucks retail experience. 396 397
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