Post on 16-Jan-2017
StarbucksCapule, Stella MarieCosico, Jean Michelle
Jacalne, Angelica Joyce Rabago, Mark Allen
Reyes, YzaBA 190 Strategic Management
University of the PhilippinesProf. Mita Angela M. Dimalanta
• Founders: Zev Siegl, Jerry Baldwin and Gordon Bowker• First store opened in 1971 in Seattle,
Washington• They named their store after the first
mate in Moby Dick• Recruited Howard Shultz to bringmarketing savvy to the company
HISTORY
Howard Shultz• Inspired by Italian coffee culture• He believed that Americans would pay
for a premium cup of coffee and a stylish, romantic place to enjoy it• Starbucks owners were less enthusiastic• April 1986 – opened II Giornale, first
coffee bar • 1987 – owners sold Starbucks to Shultz
for $4 million
HISTORY• Shultz was determined that
future profits would be well worth early loses• Starbucks lost money for three
operating years• He stuck to his conviction not to
“sacrifice long-term integrity and values for short-term profit”• 1991 – sales shot up to 84%• “Under promise and over
deliver”
Redefining “A Cup of Joe”
Old Cup of Joe:
Commodity-like coffee
Arabica Beans + less expensive Robusta filler
beans
Starbucks Coffee - special varietals of Arabica beans of highest quality
ProcurementProcessing
and Roasting
Location Strategy
CultureCustomer Connectio
nExperienc
eEmployee
s
QUALITY CONTROL• Exclusive supply of Narimo Supremo bean crop
Procurement
Processing and
Roasting
STRATEGIES WITH SUPPLIERS
• Beans are roasted in private roasting facilities located in California, Nevada, Pennsylvania, South Carolina, Washington and Netherlands
• Precision – 12 to 15 mins of roasting within a gas oven
• Color of beans – tested in Agtron blood-cell analyzer
LOCATION STRATEGY AS A PROMOTION STRATEGY• LOCATIONS: highly visible
locations
Location Strategy
Culture
BUILDING THE BRAND• Innovates menu, building iconic and
ubiquitous brand• Premium Italian style coffee to the American
Market• Evolution of the Starbucks logo
CUSTOMER EQUITY• Focus on long-term relationship
with customers• Educates customers on home-
brewing and information about varieties of coffee
Customer Connection
Experience
SERVICE QUALITY• “seductive atmosphere”• Italian terms like baristas, biscotti,
grande, venti • Well lighted stores with burnished
wood or brass
Employees
WORKFORCE MANAGEMENT• Empowering corporate
culture, employee benefits, employee stock ownership• Employees as “decision-
makers”• Extensive training programs
Employee Training• Each employee must have at least 24 hours of
training• Classes include coffee history to a workshop called
“Brewing the Perfect Cup at Home” • Starbucks holds bar classes where employees
practice taking orders and preparing beverages in a company training room.
• Responding to cranky customers: LATTE MethodListen to the customerAcknowledge their complaintTake action by solving the problemThank themExplain why the problem occurred
Employee BenefitsThe package includes:• Medical, dental, vision and short-term
disability insurance• Paid vacation and paid holidays• Mental health/chemical dependency
benefits, • A 401(k) savings plan and a stock option
plan• Career counseling programs• Product discounts
The Bean Stock Plan• August 1991• an equity reward that provides
employees the opportunity to share in the financial success of the company through Starbucks stock• It made Starbucks the first
company to offer stock options unilaterally to all employees, including part time workers• Stock Investment Plan (S.I.P) –
discounted stock purchase
Growth, diversification, and international
expansion • Slow-growth policy• Over time, loosened its licensing policy• A reputation for social responsibility • Expanding its menu selection to include
more food products and drink options• Partnered with Green Mountain to enter
coffee brew industry• Pursued extreme diversification
measures in hotels• In 2013, aggressively pursued an
international expansion scheme
THANK YOU!Reference : Hill, C. W., Jones, G. R., & Schilling, M. A. (2013). Strategic Management: an integrated approach (11th ed.). Canada: Cengage Learning.