Case Study #1 Starbucks 2
Courseand Section Number
CaseStudy #1 Starbucks
StarbucksCorporation FY2106 Q3 financials heightens an exemplary performancein the form of increased net revenues, net income and EPS. The netrevenues increased by 7% to a record $5.2 billion in FY2016 Q3compared to $4.88 billion in FY2015 Q3. The key reasons for theincrease were due to the opening of 1876 new stores over one year anda 4% increase in comparable sales for the global stores. The companyreported a profit increase of 9% to $1.02 billion in FY2016 Q3compared to $938.6 million reported in the previous period due to anincrease in the sale leverage and lower commodity cost. The EPS forQ3 was $0.51 compared to $0.41 reported in yesteryear whichtranslates to an increase by 24% due to gain on the sale of Germanyretail operations. Starbucks had a year to date revenue of $15.6billion as at FY2016 Q3, an increase of 9.5% compared to $14.2billion in the previous year. The operating income was $2.9B for theyear to date analysis for FY2016 Q3 representing an increase of 11.9%to the comparable period. The EPS was $1.35 for the FY2016 Q3 year todate analysis representing a decline of 2.9% on the comparableperiod1.
Themarkets in China and India are important to Starbucks because theconsumer markets are rapidly growing due to an increase in theaffluent middle and upper classes. The Chinese and Indian markets areexperiencing growth in the form of demand for international ideas.Moreover, the affluent middle and upper classes are looking forhigher quality life and global lifestyle which Starbucks offer. Thestruggle that Starbucks is facing in Europe is occasioned by the debtcrisis and an economy that is sluggish. The rents and labor cost arehigh hence impinge on the company profits compared to other region ofoperations. Starbucks in June 2014 partnered with Arizona StateUniversity by granting employees a chance to complete their fouryears in college using the online program from the University. In2015, Starbucks signed a deal with PepsiCo to market and distributethe company products in countries in Latin American. The partnershipwould help expand the business operations of the company.
HowardShultz became the Starbucks CEO in 1982 and would leave due toexhaustion in 2000. Shultz would return as CEO on January 8, 2008.Shultz return to Starbucks was because the company fortunes were on aslump. The slump was occasioned by a flat stock price, and lowersales and profit margins due to competition. Shultz is a proponentfor the company to ‘strike a balance between profits and socialconscience’ because a business cannot perform to shareholders’expectations if the impact to other stakeholders is inadequate.2The stand is achieved by treating everyone with respect and dignity.Starbucks is involved in CSR by contributing to the Global Fund forpeople living with HIV/AIDS in Africa and works with Mercy Corps tohelp improve health and provide clean water to regions that grow teaand coffee.
Theworking environment at Starbucks encourages the employees to engagewith each other hence making the company a place where employees lookforward to working each day. Starbucks is committed to the employeesin providing benefits such as the Starbucks College Achievement Plan,partners’ perks and Total Pay packages that are tailored toemployee’s needs. Starbucks has created careers that are appealingby ensuring that the employees are connected and are adequatelyrecognized. Starbucks considers the employees as partners because thecompany provides to them with an opportunity to be more than anemployee. The company gives the partners gigantic possibilities togrow as a person both in the career and the community.
Consumershave an emotional connection with the Starbucks brand. Theconnection is brought about by the fact that the company productshave offered something that satisfies the wants and desires of theconsumer. The connection has further made reassurances by creating adesire that is predictable hence comfort from consumption issatisfied. Starbucks is known for making a conscious effort thatencompasses an enterprise that is responsible and carries outactivities ethically. The consumers therefore pay for a Starbucksproduct with the knowledge that support is given to an entity that issocially responsible.
Michelli,Joseph. Leadingthe Starbucks way: 5 principles for connecting with your customers,your products and your people.McGraw Hill Professional, 2013.
Mahobia,Himanshu, and Trilok Kumar Jain. "Starbucks: Adapting in theIndian Market." IndianJournal of Marketing 45,no. 8 (2015): 37-47.
1. Starbucks Corporation FY16-Q3 Earnings Release for the period ending June 26, 2016. Filed July 6, 2016. Starbucks Corporation Website. http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=2187298, accessed September 5, 2016.
2. Hope Katz Gibbs. MAY 2011 ENTREPRENEUR OF THE MONTH. Inkandescent. May 2011. http://www.beinkandescent.com/entrepreneur-of-the-month/556/howard-schultz-moves-onward-