Starbucks' Risks

Paper Summary:

The paper identifies some of the most critical risks that Howard Schultz has taken with Starbucks. These include attempting to duplicate the Italian coffee bar model, a very ambitious store-opening schedule in the initial years of the company, retaining ownership of all stores rather than franchising, losing money as a strategy and consideration for employees in pay, stock plans and insurance. The paper discusses how each risk was well thought out, taking into account the various possible outcomes and identifiable costs, and therefore turned out well for the company.

Outline:
Introduction
The Coffee Bar Model
Store Openings
Decision Not to Franchise
Losing Money as Strategy
Employee Consideration
Social Responsibility
International Expansion
Licensing Smaller Locations
Conclusion

From the Paper:

"Duplicating the friendly, gathering-place atmosphere of the Italian coffee bar was a risk for Starbucks. Schultz could be relatively certain that his stores would be well received in certain specific neighborhoods or an office park, but would those same characteristics be endearing to thousands of communities across the nation, and then the world? If so, it would require that Starbucks be able to transcend local habits and tastes."

Sample of Sources Used:

• Thompson, Arthur A., Amit J. Shah and Thomas F. Hawk (2004). Starbucks in 2004: Driving for Global Dominance. In Crafting And Executing Strategy: The Quest For Competitive Advantage: Concepts And Cases, Arthur A. Thompson, A. J. Strickland and John Gamble, eds. (New York: Irwin/McGraw Hill).
• Thompson, Arthur A., A. J. Strickland and John Gamble (2004). Chapter 10-4, Crafting And Executing Strategy: The Quest For Competitive Advantage: Concepts And Cases, 14th ed. (New York: Irwin/McGraw Hill).

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