Memo to Howard Schultz...

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Call it the espresso shot heard roung the world: on Valentine's Day, as you may now know, Starbucks founder and chairman Howard Schultz wrote a memo to his top managers describing in detail how the chain's unprecedented expansion had led to many little compromises that, combined have led, in his words, "to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand."

Among Schultz's complaints: sterile "cookie cutter" store layouts; automatic espresso machines that rob stores of the barista theater of coffee roasting and brewing; and flavor locked packaging that locks out Starbucks' once distinctive coffee aroma. (To read the memo, click here.)

Yesterday, Reuters reported that since the memo was leaked on February 23, Starbucks' stock has fallen by 8 percent.

A few questions pop to mind: First, was Schultz smart or stupid to put his misgivings about Starbucks growth in a memo? How damaging do you think the contents of the memo is to the Starbucks brand? Or do you think that the first step toward recovery is frank self-assessment? Second, do you agree with him that Starbucks brand has become commoditized? If so, how would you fix it? Finally, do you think there is any way that a company could grow as large as Starbucks has without making these compromises? If so, how?

Last updated: Mar 7, 2007




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