retailer, with over 1,700 coffee shops in 55
countries. For years, Starbucks grew throughout
the United States and internationally, opening
franchises at an impressive rate. From 2002 to 2007
alone, the company tripled the number of stores it
operated worldwide. Starbucks offers a unique experience:
high-end specialty coffees and beverages,
friendly and knowledgeable servers, and customerfriendly
coffee shops. This was a winning formula
for many years and enabled Starbucks to charge
premium prices.
During the economic downturn beginning in 2008,
profits plunged. Customers complained that the company
had lost its hip, local feel and had become more
like a fast-foodchain. Many coffee drinkers went in
search of cheaper alternatives from McDonald's and
Dunkin' Donuts for their coffee fixes. Starbucks stock
lost over 50 percent of its value by the end of 2008.
Major changes were in order.
Starbucks seized the opportunity to overhaul
its business by using severaldifferent strategies
simultaneously. First, the company has revamped
its in-store technology and sought to integrate its
business processes with wireless technology and the
mobile digital platform. Also, rather than copy the
practices of competitors, Starbucks pursued a more
aggressive product differentiation strategy, intended
to emphasize the high quality of their drinks and
efficient and helpful customer service. At the same
time, however, Starbucks also focused on becoming
'lean', like many of their competitors, eliminating
inefficiency wherever possible.