Title: Product and Brand Strategy, New Product Planning and Development
(Case Study: Starbucks: Early 2008)
Starbucks was started in 1971 and grew to become a leader in the specialty coffee industry. Howard Schultz, chairman and CEO of Starbucks Corporation, attributes the company’s success to the experience created within the stores and the unsurpassed quality of its coffee. Schultz also attributes the success to the 172,000 employees working worldwide. The Starbucks employee training program churns out “baristas” by educating 300 to 400 hires per month in courses such as “Brewing the Perfect Cup at Home” and “Coffee Knowledge.”
The purpose of this case is to expand understanding of the positioning of a “product” defined as the sum of the benefits the buyer derives from purchase, ownership and consumption. Starbucks coffee isn’t necessarily much different than that sold at other coffeehouses and its success depends on providing a quality coffee-drinking experience. If you have the DVD that accompanies the text you can also watch the 11-minute video.
1. What is Starbucks’ product?
2. What advantages does McDonald’s have in competing with Starbucks for coffee sales?
3. What changes in society have helped Starbucks be successful?
4. What strategic factors account for Starbucks’ long-term success in developing brand equity?
5. What opportunities and threats face Starbucks?
6. What recommendations do you have to improve Starbucks’ competitive position?
(Case Study: Dell Inc. in 2008)
In 1984, at the age of 19, Michael Dell invested $1,000 of his own money and founded Dell Computer with a simple vision and business concept—that personal computers (PCs) could be built to order and sold directly to customers.
During 2004-2005, Dell overtook Hewlett-Packard (HP) to become the global market leader in PCs. But Dell’s global leadership proved short-lived; Hewlett-Packard, energized by a new CEO who engineered a revitalized strategy, dramatically closed the gap on Dell in 2006 and regained the global market share lead by a fairly wide margin in 2007—winning an 18.8 percent global share versus Dell’s 14.9 percent.
In 2008, it was unclear whether Dell’s strategy, while powerful enough to make Dell a major player in the global IT market, would be up to the task of overtaking Hewlett-Packard.30
The case contains two big lessons. One is “how to do it right”, how to build competencies and capabilities that translate into sustainable competitive advantage, and how to conduct a battle for global market leadership. The second is that even a very successful company with a very successful strategy doesn’t always have smooth sailing—Dell has suffered some setbacks, has lost its cost advantage in laptop PCs (now the most popular type of PC), and is all of a sudden facing an energized and well-known competitor which has gotten its act together under a new CEO.
1. What is your evaluation of Michael Dell’s performance in his roles as Dell’s CEO and Chairman? How well has he performed the tasks of crafting and executing strategy?
2. What are the elements of Dell’s strategy? Which one of the generic competitive strategies is Dell employing? How well do the different pieces of Dell’s strategy fit together? In what ways is Dell’s strategy evolving?
3. Does Dell’s expansion into other IT products and services make good strategic sense? Why or why not?