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MKT 600 Chapter Notes -Financial Analysis, Starbucks

Course Code
MKT 600
Asif Salam

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MKT600 Weekly Critique Notes
A Crack in the Mug: Can Starbucks Mend It?
Case Highlights
- The last six months of 2007 saw a decline in share price by 50% and a decrease in customer
visits in North America
- January 2008 closed 100 stores
- July 2008 number rose to 600 stores
- Late 2007 there was a $0.09 cent a cup increase
- 2008 change of CEO
- Should the company have continued to expand or was it time to reassess its goals and strategies?
o Overexposure?
o Were people still getting value for money?
o Reduction in discretionary spending?
o Competition was cheaper?
o Only after North America? Just over 70% of outlets
- In January 2008, the company had more than 15,700 outlets in 37 countries and was aiming at
having 40,000 in the future. Should it have pursued this expansionary aim or was it the time to
pause and consider more immediate concerns?
Company background
- Went public in 1992
Starbucks goes international
- 1996 was first international expansion to Japan besides Canada
- January 2008 4,588 overseas stores
- Dominant position in specialty coffee-drink retailing
The products
- Extended beyond coffee baked goods breakfast music branded mugs and tumblers etc.
- Sense of connection instilled customer loyalty
- Environmentally sensitive, communitarian, and socially responsible
- Spent only $10 million on its advertising in the first 13 years
Financial analysis
- Refer to exhibits
“We started to lose sight of our focus on the customer and our commitment to continually and creatively
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