Shultz took advantage of the opportunity to expand the company into new areas and markets. Entering new markets brought forward the idea of creating new product lines. They started by selling bakery goods at the espresso bars and along with selling their beans, they began to sell their Starbucks Barista home espresso machine. Opening the Espresso bar also enabled them to sell the CD’s that the company played while customers sat and drank. Partnering with Dreyer’s and Pepsi enabled Starbucks to put their name on ice cream products and the cold beverage market by creating Frappuccino. This all enables the company to earn an additional profit.Expanding too fast is one of the most important threats that Starbucks may encounter. Opening all these new stores at such a drastic rate can cause the company to endure major debt. Debt can cause a series of chain reactions leading to lower wages, cutting benefits, closing stores and laying off workers. These are not major threats now, but at an uncontrollable rate, this is one of the main threats that can really affect the future of Starbucks Coffee.-Financial Ratio AnalysisComparing Starbucks financial ratios to that of the Industry can give us a general perspective of Starbucks financial strength. This could also give some indication of stock price performance. Most of Starbucks ratios are in line with the industry average, but there are a few that could explain the poor stock performance recently experienced. Starbucks price to earnings ratio is well above the industry average, but this could be due to its relative high growth it has experienced. Return on equity is well below the average for the industry, and this could be an area of concern. This suggests that the investment made by shareholders in the firm has not produced a decent return when compared to the industry average. Starbucks gross margin is also below the average for the industry, suggesting that it is not ab...
