Avoiding the Caffeine Crash: A Strategic Analysis and Recommendations for Starbucks

On a mission to caffeinate the world, Starbucks set out to establish itself as the “most recognized and respected brand ” (Starbucks, “About Us”). Starbucks appears to be well on its way to achieving this goal having seen astonishing success in recent years and becoming an international symbol for not only coffee, but for growth. Starbucks had what it believed to be a recession-proof product as during the post-9/11 recession, while other retailers were being hit hard, Starbucks was experiencing its 11th consecutive year of 5 % or higher comparable store sales growth (Moon and Quelch). However, with collapse of the housing bubble in the United States, the economy is once again on the downswing and consumers are pinching pennies. The coffee giant will not be able to walk away from this battle unscathed as Starbucks began to show signs of weakness for the first time, in January 2009 when the company announced that it would close 900 stores worldwide (Flynn). The following report is an evaluation of the key issues facing Starbucks and the specialty coffee shop industry as a whole. Recommendations are then provided for the strategic direction Starbucks should follow in order to face these challenges head-on and stay on top. Key Issues The year 2010 will pose a variety of obstacles for this caffeine giant