StarbucksFirm Analysis

Compiled By:

Shelly LiaBraaten, Laura Keller, Stephanie Latimer, Steven Austed, Nate Tuenge, Aaron Lum

Outline

About Starbucks Overview Timeline Mission Statements Corporate Social

Responsibility

Four P’s Analysis Product Price Place (Location) Promotion

S.W.O.T Analysis Strengths Weaknesses Opportunities Threats

Current Events Ichiro Card Ethos Water Giving Voices

About Starbucks

Overview

Timeline

Mission Statements

Corporate Social Responsibility

About Starbucks Overview

Specialty Eatery in the Quick-Service Restaurant sector

Established in 1971 in Seattle, Washington

Named after the first mate in Moby Dick

Known for its quality coffee and stylish atmosphere

Over 9,000 locations in 35 countries

New CEO: Jim Donald (2005)

About Starbucks Timeline

1971 – First Starbucks coffee shop opens in Seattle’s Pike Place Market – coffee bean roasting company

1985 – Howard Schultz becomes CEO and founds Il Giornale Coffee Company – espresso beverages using Starbucks coffee beans

1987 – Changes name to Starbucks Corporation

1992 – IPO under the trading symbol “SBUX”

1995 – Starbucks Coffee International opens in Japan

1996 – Begins selling bottled Frappuccino drinks

1999 – Acquires Tazo Tea company and Hear Music company

2003 – Acquires Seattle’s Best Coffee

2005 – Introduces Starbucks Coffee Liqueur; Acquires Ethos Water

About Starbucks Mission Statements

Company Mission Statement: “Establish Starbucks as the

premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”

Environmental Mission Statement: “Starbucks is committed to a role

of environmental leadership in all facets of our business.”

About Starbucks Corporate Social Responsibility

“Starbucks focuses its efforts on improving social and economic conditions for coffee farmers; minimizing our environmental impact; making a positive contribution in the communities where we do business; and providing a great work environment for our partners (employees).”

Make Your Mark – matches cash contributions for volunteer work to designated nonprofits

2004 EnviroStars Recognized Leader Award – for environmental leadership in the Seattle community

C.A.F.E – Coffee and Farmer Equity – environmentally, socially, and economically guidelines for buying coffee from farmers – promotes mutually beneficial relationship

About Starbucks Target Market

Starbucks says that they do not target a specific market

Products are consumed by people who want to take a break from the daily work routine and those who want a caffeine stimulant

Distinguished from traditional ‘coffee shop’ because of the taste of the coffee and the ‘hip’ or ‘fashionable’ store environment

Four P’sAnalysis

Product

Price

Place (Location)

Promotion

Panini

Four P’s Analysis Products (in store)

Starbucks sells brewed coffees, espresso beverages, cold blended beverages, food items, teas, branded coffee drinks, a line of ice creams, and a line of compact discs through its retail stores

Also offers pastries, sodas, juices, games, seasonal novelty items, and coffee-related accessories and equipment

Four P’s Analysis Products

Starbucks also engages in purchasing, roasting, and selling whole bean coffees worldwide to grocery stores and large hotels

Four P’s Analysis Price

Prices range from $1.00-$4.20 for drinks

Surprisingly, this is lower than its rivals, although not by much

Starbucks regular coffee was 4% less expensive and its iced blended drinks were as much as 30% less expensive when compared with specialty competition

When compared to quick-service restaurants, however, Starbucks was more expensive. Dunkin’ Donuts’ 16-ounce latte is an average of 17% cheaper

Four P’s Analysis Prices on the Rise

Starbucks is planning to raise prices this year because of an increase in milk and green coffee bean prices

This could also be due to the fact that specialty competition has been charging more

Four P’s Analysis Locations

Operates in all 50 states plus the District of Columbia and Puerto Rico.

They also operates in 34 countries outside the United States such as Australia, Canada, China, Germany, Singapore, Thailand, and the United Kingdom to name a few.

Four P’s Analysis More on Locations

Starbucks retail stores are typically located in high-traffic, high-visibility locations.

Because the Company can vary the size and format, its stores are located in or near a variety of settings, including downtown and suburban retail centers, office buildings and university campuses.

The Company can also locate retail stores in select rural and off-highway locations to serve a broader array of customers outside major metropolitan markets and further expand brand awareness.

Four P’s Analysis More on Locations

While the Company selectively locates stores in shopping malls, it focuses on locations that provide convenient access for pedestrians and drivers.

To provide a greater degree of access and convenience for non-pedestrian customers, the Company has increased focus on drive-thru retail stores.

At the end of fiscal 2004, the Company had approximately 700 Company-operated drive-thru locations

Four P’s Analysis Promotions

Starbucks has been able to use a standardized advertisement theme around the world in order to incorporate different cultures.

Currently they are promoting their new Tazo green tea Frappuccino Blended crème. (Inspired by Japanese tradition)

S.W.O.T Analysis

Strengths

Weaknesses

Opportunities

Threats

S.W.O.T Analysis Strengths

Starbucks Corporation is a very profitable organization, earning $600 million and generating revenue of $5 billion in 2004.

Ad Week Magazine recognized the Company as one of the “Most Trusted Brands” in 2003. “The Starbucks logo is recognized by most, which also helps to retain customers that travel internationally, allowing them to get the same Starbucks coffee in the same Starbucks cup that they enjoy back home.”

S.W.O.T Analysis Strengths (continued)

It is a global coffee brand built upon a reputation for fine products and services. It has about 8500 stores in over 30 countries.

Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a respected employer that values its workforce.

They have strong ethical values and an ethical mission statement as follows, “Starbucks is committed to a role of environmental leadership in all facets of our business.”

S.W.O.T Analysis Weaknesses

Starbucks has a reputation for new product development and creativity. However, they are dependant on a main competitive advantage, the retail of coffee.

Overcrowding the Market: If Starbucks has two stores close to each other, they potentially take business away from each other.

They have a strong presence in the United States with more than three quarters of their cafes located in the home market. Many have said that they need to look for a portfolio of countries, in order to spread business risk.

S.W.O.T Analysis Weaknesses (continued)

They have been facing certain difficulties in some of its international operations. In 2003 Starbucks ended its joint venture in Shalom in Israel and closed six stores in Tel Aviv.

There was the infamous situation after September 11, when the Starbucks in Manhattan charged firefighters outrageous prices for water, $130 for three cases.

S.W.O.T Analysis Threats

Suppliers

Weather?

Fuel costs?

Re-adjustments to licensing contracts?

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Year

Pri

ce (

Cen

ts /

KG

.)

Coffe (othermills)

Coffee(robusta)

Tea,auctions (3)avg.

Distribution Marketing Advertising Promotions

S.W.O.T Analysis Threats (continued)

Gov. Regulation Minimum Wage?

New Entrants Krispy Kreme?

S.W.O.T Analysis Opportunities

Joint Venture Krispy Kreme?

Innovation RTD’s & Ice-Cream

Breakfast Snack Bar?

S.W.O.T Analysis Opportunities (continued)

Market Expansion China & Europe

Menu Expansion? Full Service Breakfast &

Lunch Eatery?

Current Locations 2003

Suria KLCC- Mall at the base of the Petronas Twin Towers; KL, Malaysia

Current Events

Starbuck hear music Starbuck’s card Wireless Internet Brewing equipment Ichiro Card Ethos Water Giving Voices

Current Events Ichiro Card

Starlight Starbright Children's Foundation

Current Events Ethos Water

Five cents from the sale of each bottle of Ethos(TM) Water will support Starbucks goal of donating $10 million over the next five years to non-profit organizations that are helping to alleviate the world water crisis.

Current Events Giving Voices

The grant program -- called "Giving Voice" -- will primarily fund educational initiatives for youth, aged between six and 18 years old, in the arts, literacy, and environmental education.

The grants will range from $5,000 to $20,000 and will be awarded twice a year.

Sources

Brewing Equipment; http://www.starbucks.com/retail/brewing.asp Card; https://www.starbucks.com/card/default.asp Datamonitor - Starbucks Corporation;

http://www.investor.reuters.com/data/files/Company%20Profile%20Sample%20for%20Reuters.pdf

Ethos Water; http://www.fortune.com/fortune/investing/articles/0,15114,1089995,00.html?promoid=yahoo

Giving Voice; http://biz.yahoo.com/bw/050802/25224.html?.v=1 Hear Music—Norah Jones;

http://www.starbucks.com/hearmusic/product.asp?category%5Fname=Our+Compilations&product%5Fid=795016

Ichiro Card; https://www.starbucks.com/card/exclusives.asp?category%5Fname=Exclusives&product%5Fid=Ichiro

Jim Donald brings new energy to Starbucks CEO post; 31 March 2005; http://seattlepi.nwsource.com/business/218261_starbucks31.html.

Sources (continued)

Marketing Teacher; http://www.marketingteacher.com/ SBUX: Profile for STARBUCKS CP - Yahoo! Finance Shareowner: Starbucks corporation Starbucks Apologizes for Water Flap;

http://www.foxnews.com/story/0,2933,35198,00.html Starbucks Company Fact Sheet; August 2005;

http://www.starbucks.com/aboutus/Company%20Fact%20Sheet%20Apr05.pdf. Starbucks Company Profile; August 2005;

http://www.starbucks.com/aboutus/CompanyProfileFeb05.pdf. Starbucks Company Timeline; August 2005;

http://www.starbucks.com/aboutus/CompanyTimelineFeb05.pdf. Starbucks Corporation; http://www.starbucks.com/default.asp Starbucks Everywhere; http://www.starbuckseverywhere.net The Insider: Starbucks' prices won't be cheaper for much longer Wireless Internet; http://www.starbucks.com/retail/wireless.asp Yahoo! Finance; http://finance.yahoo.com