In 2007, Starbucks did really worse on the NASDAQ exchange and its stock prices fell by 42%, that is also the reason why their CEO Howard Schultz came back replaces Jim Donald to dissolve the problem. They admitted that they are going to fast on the market so that ignored experiences of customers. Compare to the McDonald’s a decade ago, they are in the same situation—overexpansion.

Starbucks is a café which suppose to be involved with “romance and theatre”, but as expansion goes by, they regarded higher on the quantity but not quality. For instance, they start using automatic variety instead of hand-pull machine to speed up their service.

For Business part, it is quite important to do the market research including customers’ demand before expanding the store chain to avoid troubles like producer surplus and lower value proposition of a brand. Always put quality in the first place as well as keep them in the right track of theme would also be a better choice for producers. In conclusion, a firm may not gain much more profit if they over expand a brand in a saturated market.

Reference:
“Starbucks Ousts Its Boss and Brings Back Its Founder as a New Threat Emerges.” The Economist.com. N.p., 10th Jan. 2008. Web. 5th Oct. 2013.<http://www.economist.com/node/10498747?zid=293&ah=e50f636873b42369614615ba3c16df4a>.