Strategies For The Growth Of Starbucks

Strategies for the growth of businesses are diverse, ranging from internally focused organic growth to externally centered inorganic growth. Companies may resort to any of the two avenues or a combination of the two as their approach for growth. The key to successful growth and expansion is formulating a strategy appropriate to the specific nature of the business and the market environment.

Strategies to stimulate internal growth include enlarging the customer base, developing new products through internal research and development, widening the employee strength, and opening up new outlets. Organic growth retains the focus on the core business. Inorganic growth involves expansion outside the scope of the current operations to tap new products and markets. Mergers, acquisitions and strategic alliances are major forms of external growth.

Starbucks – Growth over the years

Starbucks Corporation is an American global coffee company and a coffeehouse chain with its headquarters in Seattle, Washington. Starbucks has been following a well-rounded growth strategy over the years, incorporating a mix of both types of growth.

This is evident from the analysis of the Starbucks company timeline extracted from the company website, and attached in the appendix. Analysis of the company timeline shows two basic periods of growth classified according to the type of growth. The period from 1971 to 1994 is characterized by purely organic growth followed by a mix of organic and inorganic growth from 1995 till present. The table below gives a brief overview of the type of strategies used for both avenues of growth:

The Search for Healthy Growth – 2007

Starbucks saw a slowdown after years of growth as share prices fell 20 percent by mid-2007. The fina...

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...y preserving the integrity of the core business is a prerequisite for sustainable growth when expanding into other products, channels, brands and markets (Starbucks Financial Statements 2013, 5). The year 2013 has seen a combination of growth strategies - serving iconic beverages as well as new menu choices, expanding in existing markets as well as venturing new markets. In 2011, Starbucks unveiled a new logo which it says indicates its intention to move beyond its core product.

Growth Constraints

Howard Schultz, the CEO of Starbucks, in an interview with Allen Webb pointed out human capital as its biggest growth constraint. Starbucks has around $2 billion in cash, making it well-positioned for any future acquisitions in terms of financing, but growth might be constrained by the lack of human capital and people who are well-aligned with the culture of the company.