Case Study: Analyzing Starbucks' Location Strategies and Decisions

This case study examines Starbucks' location strategy, focusing on how the company utilizes geographic information systems (GIS) to make informed decisions about store placement. It explores the importance of selecting optimal locations, emphasizing the need to understand potential customer patterns based on demographics. The analysis delves into Starbucks' use of GIS for market analysis, including the assessment of venue density, foot traffic, and local behavior. The case study also highlights the role of technology, organizational changes, and management strategies in Starbucks' decision-making process, particularly in response to past challenges such as the 2007-2008 store closures. Furthermore, it discusses the crucial aspects considered before finalizing a location, such as potential popularity, competition, economic levels, future opportunities, and resource availability. The case study incorporates references to academic research to support the analysis.

Question 1:
Selecting an optimal location, plays a vital role in every business especially for the
retailers as they need to know where the potential customer are and make the investment for
10 to 25 years in a physical space. Starbucks mainly utilizes the geographic Information
System for understanding the potential buy pattern based on demographic and select the
appropriate site. Organization and their associates leverage location data and intuitions to
investigate venue density as well as foot traffic along with the local behaviour activity. This
type of insights assist the company to analyse the possible gains and development regionally,
globally, nationally and locally as well.
Question 2:
Starbucks uses several analysis to gather insights about their overseas market. They
provides useful information about the customers and the buying patterns for coffee and other
beverages (Takaki & Matsubayashi, 2013). This information assist the key decision makers to
take optimal decision for selecting the appropriate technology and strategies in different
location. For instance, they could decide where to install the clover brewing machine which is
capable of brewing one cup of coffee with a precise temperature at a time.
Starbucks executives also can use such insights, provided by GIS in their system through
internet. This approach assist them to focus of individual different stores in locations that are
more convenient for customers.
Question 3:
Technology: From 1990, Starbucks is using GIS and relied upon the information for taking
key decisions over the years. In 2007-2008 decisions they were also highly dependable on the
information provided by the GIS (Chua & Banerjee, 2013). According to the analyse report,

they had all information which was needed for taking proper decision. However, they did not
have appropriate tools and experts to analyse and utilize the data properly.
Organization: In 2077-2008, majority of the Starbucks shops were closed which were
opened since 18 months. That time Starbucks were more focused on the growth of their
business in U.S. Later, it is has been found that, they opened huge number of shops just for
the sake of count without evaluating the opportunity of profit at all.
Management: Management of Starbucks are now more thoughtful about opening a new
store as they evaluate the opportunities and measure potential probability to each newly
opened store (Beugelsdijk & Mudambi, 2014). They no longer assume that the Starbucks
brand name will be enough to successes anywhere. Management surely does not want to
repeat the 2007-2008 decisions when several stores were closed which should not be opened
at first place.
Question 4:
Before finalizing the location there are certain aspects needs to consider as the potential
popularity, competition and other factors. The region’s economic level also needs to be
measured in order to gain the optimal profit. Before investing huge amount of money, they
also needs to analyse the future opportunities before installing high end technologies
(Vicentin, 2013). One of the other important aspect will be the resource availability.
Starbucks imported raw materials from several sources, before opening new centre, they also
need to focus on the resources and the availability in such regions.

References
Beugelsdijk, S., & Mudambi, R. (2014). MNEs as border-crossing multi-location enterprises:
The role of discontinuities in geographic space. In Location of International Business
Activities (pp. 8-34). Palgrave Macmillan, London.
Chua, A. Y., & Banerjee, S. (2013). Customer knowledge management via social media: the
case of Starbucks. Journal of Knowledge Management, 17(2), 237-249.
Takaki, M., & Matsubayashi, N. (2013). Sequential multi-store location in a duopoly.
Regional Science and Urban Economics, 43(3), 491-506.
Vicentini, G. (2013). Location strategy of chain retailers: The case of supermarkets and drug
stores in an urban market. manuscript (Northeastern University, Boston, Massachusetts,
USA).