Starbucks is considered a success story of a global brand turning around its business by returning to its roots and reconnecting with its customers through business model innovation. Founded in 1971 with the objective of selling coffee beans and coffee making equipment, Starbucks grew to become one of the fastest growing coffee chains in the US. Despite being a coffee chain giant, Starbucks experienced soaring growth with many innovations around its core food offerings, firmly establishing it a top player. The case shows how Starbucks has brewed success through its business model innovation. The company had taken many decisions to develop its business model that radically deviated from industry dogmas and locked out the competitors in the coffee industry. After a gloomy period of a slowdown in Starbucks’ business, Howard Schultz brought in changes to its business model that drove innovation with sustainable value creation strategy. The presence of its visionary CEO at the helm, along with the company’s track record of innovation, has been Starbucks’ driving force for growth over the years.
However, the new CEO Kevin Johnson had his task cut out for him in turning the coffee giant’s fortunes around at home as Starbucks struggled with some new challenges, particularly with respect to the congestion in its stores caused by the coffee chain’s mobile platform. Will the new CEO be able to maintain Starbucks’ growth trend and address those challenges going forward?
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The case is structured to achieve the following teaching objectives:
Understand the growth strategy of Starbucks under Howard Schultz.
Evaluate the business model innovation of Starbucks and understand the factors leading to its success.
Examine the competitive advantage of Starbucks by following the business model innovation.
Understand the challenges faced by Starbucks with its mobile ordering technology.
Explore future strategies that the company may follow to continue with the digital drive and ensure increasing customer footfalls to its stores.
Innovation; Digital ecosystem; Mobile ordering system; Starbucks experience; Customer retention strategy; Global strategy; Business model; Business model canvas; Business model innovation; Four-box model framework; Business model innovation framework; Competitive advantage; Blue ocean strategy