Teaching strategy - Starbucks revisited

A great interview with the CEO of Starbucks in the Guardian this week highlights how useful Starbucks is for colleagues looking for relevant lesson-based case studies in business strategy.

We looked at Starbucks strategy in our AQA Business Unit 6 revision workshops last Spring and it was clear that the business is a popular case study with students. The Starbucks story in recent years is packed full of rich business studies material too. It is well worth taking a look at how Starbucks has developed in the last year, and the article in the Guardian is a great starting point.

Here is the link to the article - an interview with Howard Schultz - founder, former Chairman, and now CEO again of Starbucks.

Some key points from the article which students might pick up on:

- Schultz returned to Starbucks as CEO in early 2008 to attempt a turnaround strategy for the struggling chain
- Starbucks didn’t respond quickly enough when the US & global economy started to weaken
- But the bigger issue for Starbucks was the wrong strategy:

A great quote from Schultz:

“The big issue I think was that growth is not a strategy, it is a tactic, and if growth becomes a strategy I don’t think it is an enduring one. I think growth covers up mistakes.”

Schultz’s Actions in 2008/2009:
- Reduced operating costs by $600m pa
- Closed 1,000 worst-performing stores
- Retrained all the store employees
- Simplified the product range
- Started advertising
- Introduced Fairtrade coffee

Artlcle is also great for students to consider the issue of leadership and succession planning: here is another terrific quote from the interview which students could be asked to consider:

“The next CEO of Starbucks should come from within, and it is my intent to ensure that happens because it is very difficult to teach the imprint, the values and the culture and the complexity of what we do to an outsider. But I am not the only one who is capable of running Starbucks. I do think – as self-serving as it sounds – that I was the right person, given the very, very strong headwind we had from the economy and our own issues, to come back and rewrite the future of the company.”

Howard Schultz was in the UK to announce the latest Starbucks results - and he recorded this useful 3-minute radio interview on the BBC - which might also be worth playing to students