Starbucks – ‘The Third Place’

Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

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Establishing 'The Third Place'

In the 1980s, Schultz had toured Italy and been impressed with the Italian coffee houses and the experience they provided. He discovered the taste of Italian coffee culture, and that Italians lived balanced lives, enjoying the camaraderie and community of the country’s 200,000 coffee bars. From then on, Schultz wanted to bring the Italian coffee bars’ tradition and culture to the United States. The idea was to establish the café as the place for conversations which provided a sense to community. The majority of Americans spent their time at two places – the office and their homes. Schultz wanted to create a place, a coffee house, which customers would consider as their ‘third place’.

By 1988, after Schultz secured control over the whole business, he started the expansion program nationally. He took various steps and formulated many strategies to develop Starbucks into a ‘third place’ between work and home. This was reflected in the company’s mission. (Refer to Exhibit II for Starbucks Mission Statement). Aligned with its mission, the company tried to inspire and nurture the human spirit of one person, one cup, and one neighborhood at a time.

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Losing The Way

Though the company started expanding rapidly, beginning 2007, Starbucks saw a slowdown after years of growth. The company’s shares fell 20 percent by mid-2007, compared to their value in mid-2006. The slide was attributed to several factors, but the main one was the economic situation in the US, believed to be the worst in decades. The plummeting US housing market was at the epicenter of the crisis. The two “star” states – California and Florida – that accounted for one third of Starbuck’s domestic revenues, were among the worst hit by the housing slump. The gloomy economic environment made US consumers cut back on what they perceived as “frivolous spending” – and expensive coffee figured high on the list of items that they could cut back on........

Restoring 'The Third Place'

At the annual shareholders’ meeting on March 19, 2008, Starbucks announced fresh “customer-facing” initiatives to halt sliding sales. The “transformational agenda” included five main initiatives. The first was the introduction of the Mastrena, a semi-automatic espresso machine. According to the company, the new Swiss-made espresso machines performed much like a manual machine and delivered “the perfect shot” every time. And importantly, the machine’s design would allow baristas to make eye contact with customers while they prepared the coffee.......


Starbucks’ competitors were quick to come up with food and beverages similar to those offered by Starbucks. Intensifying the competition, McDonald’s also began offering free-Wi-Fi access like Starbucks. In November 2011, when Starbucks started selling the K-cups , it lagged behind Dunkin’ Donuts, which had started selling its own K-cups by early August 2011.......

A Spectacular Victory

The results for the general elections were declared on May 16, 2014, after the votes cast by 537 million voters across the country were counted. The BJP-led NDA coalition swept the polls by winning 329 seats. More importantly, BJP itself won 282 seats and crossed the half-way mark of 272 seats to form the next government. The party won 31 percent of the total votes polled across the country. The results marked a shift from the coalition governments that had been ruling India for three decades preceding the general elections of 2014. No single political party in India had been able to form a government on its own without support from allies since the general elections of 1984. For the BJP, the results marked its emergence as a viable alternative to the INC at the national level nearly 60 years after independence. .......

Looking Ahead

After the landslide victory in the Indian General Elections of 2014, the BJP cemented its role as a national level political party that could win a majority on its own. The party was gearing up to face elections in five key Indian states. Many analysts were expecting the BJP to deploy the same social media strategy for the elections in these states. It was felt that CAG, which had played such an important role in the campaign, might also play a crucial role in the state elections. However, some political observers were of the view that CAG might be disbanded after the general elections. The members of CAG were themselves unsure about the future of their group........


Exhibit I:Number of Internet Users in India
Exhibit II: Barack Obama’s 2008 Presidential Campaign
Exhibit III:Most Digitally Visible Indian Political Parties during the Campaign
Exhibit IV: Highlights of Narendra Modi’s Campaign
Exhibit V: Top Three Politicians by Facebook Likes
Exhibit VI: Final Results of 2014 General Elections