Custom «A Crack in the Mug» Essay Paper Sample
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This is an essay on the topic; A Crack in the Mug: Can Starbucks Mend It? This essay will summarize the above case. The essay will also discuss Starbuck, its strengths and weaknesses in the business arena.
This was about how the Starbucks will respond to its strategy of expanding its business globally and tackling the new threat of its newer, cheaper competitors despite its dominance in the market. This has come after 20 years of significant expansion where in the recent 6 months, Starbucks has suffered a 50 percent decline in share price and a consequent decline in customer visits to its outlets in North America. This was followed by lower profits and closure of 600 US stores by July 1, 2008. In addition, the increase in price of $0.09 cents per cup was not well received by the customers. The managerial change of the company's CEO with the chain founder, Howard Schultz was a challenge and a setback which put the going concern of the company into question. Hence the doubt as the whether Starbuck will overcome all these to reclaim its glory in market dominance, provision of tasty and strong coffee made in Italian-style, and expansion of business.
The strength and weakness of the company
Starbuck is a corporation founded in Washington, in 1971 by Howard Schultz, Gordon Bowker, Jerry Baldwin and Zev Siegel. It was initially a coffee bean marketer but later expanded to restaurant and coffee bars. Until 1995, Starbucks operated locally-North America, and in Canada with its outlets in airports and departmental stores where citizens and tourists valued relaxation. It went international from 1996, venturing its business in Japan, U.K, Germany and other areas (Michael et al., 2008). Its main product was coffee drink and its financial returns grew considerably with these expansions as well as its market dominance. Starbuck Corporation has unique strength that contributes to its success in this business compared to other competitors in the market. The company had, up to 2007, achieved 15 consecutive years of a same-store growth rate which has led to substantial increase in its share price and customer confidence. The company has maintained the quality standards after its rapid expansion hence accumulating huge numbers of customers. The predictability of the company ensures that the customers can easily locate the stores and are assured of high quality products. The Starbucks experience which guarantees relaxation adds value to its products. The company values its workforce by paying attractive wages, overtime and health benefits which adds to the goodwill of the company. It provides a quick service which is consistent and assured of in supply-this maintains the customers. Unlike its competitors, Starbuck offers a uniform bled of coffee which is reliably available all its stores In 2005, Starbucks received the Gold Medal Award for good leadership and development an award which built strong goodwill and improved customer satisfaction on the management. Lastly, its logo and brand recognition are part of its customers pride (Michael et al., 2008)
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Despite the massive strong points, Starbuck accrue a number of weaknesses. Market saturation, high prices, long waits in its shops due to large number of customers, and confusingly-named sizes has dented the image of the company. Compared to European roasts which are smoother and less strong, Starbuck's coffee is regarded as bitter (Michael et al., 2008) a description that melts down customer base to its competitors. The uniformity of its products limits the customers need for diversity and fails to accommodate other cultures into its products-this denies the customers a sense of ownership. The huge number of customers in the company shops generates a delayed service and potential customers may even lack seats hence losing their confidence with the company.
It is clear that Starbucks has a strong presence in its market. However, in the recent past it has faced some formidable challenges which it needs to take care of. It will be easy for the company to deal with the challenges. Since the company has a strong presence in all the regions where its branches are located it is possible that the company can change the trend.
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