Wednesday, October 28, 2009

Starbucks over Recession



In recession, like many businesses, Starbucks hasn't avoided its negative effects. For a top band in world Retail, it has had reasonable strategies to confront difficulties and is now in the process of deep introspection on the fundamentals of reinventing itself. To the extent of my analysis, we would concentrate on how it run on in this recession climate.
To deal with the complain of quality service, especially speed service, its' CEOs proposed to serve more space in its restaurant as table sets instead of couch in the past. Also, to avoid from reduction in net income, they cut salary expense down by laying 1000 employees off and operating costs by closing 600 stores on over American. In the past, Starbucks was house of Premium Retail where customers found solace. The reason they came to it is more than coffee. So, in the recession, instead of reducing the price, they have increased the coffee quantities in each cup of coffee to attract traditional customers.
Along with what Starbucks had achieved in this period, other issues has been raised. Food Chains such as McDonald's are waking up to the rich aroma of coffee- and are all out to serve coffee. From a fast food outlet, customers are getting fast coffee at a fraction of what they could expect from Starbucks. And its' recession time folk, one in ten American are under the pressure of unemployment, perhaps, they wouldn't want to sit in their couches and keep sipping coffee. Obviously, Starbucks has a double-edged problem - one from its competitors and other from its own customers.
The recession isn't going to last for ever, so for now, Starbucks has to figure out how to handle emerged issues.

1 comment:

  1. Starbucks has had to do a lot of adjustments recently and they will need to continue to do so in order to stay competitive.

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