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Reasons for recent loss crisis; future prosects & recommendation

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I am doing a research paper on Starbuck's operations and have the following questions:

1. What are the reasons for Starbuck's recent crisis/loss in USA. Explain in detail.

2. What are the future prospects and recommendations for Starbucks?

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Solution Summary

The solution examines Starbucks operations. The reasons for Starbucks recent crisis/loss in the USA is explained. The future prospects and recommendations for Starbucks is determined.

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Question 1

Reasons for Starbuck's recent crisis

These are the some of the reasons which I think are responsible for coffee shop's recent crisis:

Overwhelmed by success:

Starbuck reached its peak of success. Like many business I think Starbuck is also carried away by its success. It felt that it had captured the market and making any change in the way of doing the business will not affect its share in the market. At one point in 2006 profits climbed 18% at this time they expanded rapidly assuming they can succeed always but unfortunately in May2008 it fell by 18%.

Expansion:

The company concentrated on expansion more than maintaining its current stores. Rapid expansion of stores put the management to forget about other important aspects of the business. In many locations we could see 2 shops very close by which creates unnecessary pressure on both the stores. They start to compete with each other which do not help the business. At one point of time they opened more than 8 new stores a day.

Forgetting their customer need:

Star bucks customers are unique. They go the stores not only to have a great tasting coffee but also to enjoy ...

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