Sample Essay

The figures are listed in millions of dollars (MSN Money, 2009). Net income of the organization was great in 2004 and after that the firm was growing and in 2007 they experienced staggering growth and their net income were 672.64. But due to inappropriate policies and procedures the organization changes its strategy and they focused more an expansion and as a result of that their net income falls down to 315.5 million. This figure was even less than the figure of 2004. Strategists suggest that Starbucks are unable to control their overheads and their variable costs are increasing. They were planning to expand in 2009 but they have decided to close down retail stores and franchises because this expansion policy is proving to be fatal for the company.

The company is facing troubles from different corners and the strategies of McDonald’s and Dunkin Donuts is hurting them badly. Moreover, they are only implementing the philosophy of expansion and they are not focusing on their costs. That is the reason why their net income is experiencing a down fall. The organization was initially expanding but they ended up in despair when they opted for a divestiture strategy and Starbucks closed more than 600 coffee shops in the United States. More than 12000 workers lost their jobs and this strategy of Starbucks affected the US economy and the coffee industry (Allison, 2008). The decline of 1% in the sales transactions were also troubling for the organization and thus it can be said quite clearly that the performance of the organization is declining quite rapidly and with different competitors entering the coffee arena they have to transform their organization in order to face the challenges of this competitive industry (Pressman, 2008).

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