Starbucks Marketing and Profitability
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Propose specific actions to improve profitability at Starbucks. Discuss the pros and cons of each proposed action.
(Keep in mind this is a services marketing course).
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Solution Summary
This solution discusses marketing and profitability for Starbucks.
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Starbucks is currently using a multi faceted approach to increasing profitability. Howard's Shultz who is the C.E.O. recently stated in the annual share holder's services meeting that he intends to increase profitability by:
- Aligning the company's cost structure to its current business strategy with a planned $500 million structural expense reduction in fiscal 2009;
- Improving operational efficiencies and making technology investments;
- Meeting customers' needs for value and quality; and
- Investing in the tools and training store managers need.
One of the main ways Starbucks will be adding to their bottom line is that they have drastically cut back on their U.S. real estate expansion and exposure. Starbucks has made the decision to close up to 600 under performing stores. One of the largest items on Starbucks balance sheet is there exposure to Landlords in the form of rent payable. While there may be a large one time expense involved in the closing the stores over the long run they will be able to dramatically in crease their cash flow back to the corporation.
Starbucks has also made the decision to get back to its core product: coffee. Starbucks had in ...
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