Contemporary Strategy Analysis, 10th Edition

Case 9Starbucks Corporation, March 2018*

Starbucks Corporation's annual shareholders' meeting on March 22, 2017 marked Starbucks' 25th anniversary as a public company. It also marked a changing of the guard: Howard Schultz, Starbucks founder, CEO, and chairman announced his retirement as CEO and handed over the key of the first Starbucks store to his successor, Starbucks' president and chief operating officer, Kevin Johnson. Johnson was a 16‐year Microsoft veteran who had been CEO of Juniper Networks before joining Starbucks.

Stepping in Schulz's “venti‐sized” shoes presented a massive challenge to Johnson and for his first year as CEO, he kept a low profile. When Starbucks hit turbulence—as in April when two African‐American men were arrested at a Starbucks in Philadelphia—it was Schultz who was the public face of the company. However, in June 2018, Schulz also announced his retirement as executive chairman of Starbucks—fueling speculation that he was planning to run for president of the United States of America as a Democratic candidate.

Johnson was now the official and de facto leader of Starbucks Corporation. As he acknowledged: “The most difficult transition any company will ever go through is from founder‐led to founder‐inspired.”¹ Moreover, Starbucks was facing significant strategic and operational challenges. Some of Starbucks' diversification—into tea shops for example—had been unsuccessful, and in the United States, same‐store sales growth had declined, causing the ...