StarbucksCapule, Stella MarieCosico, Jean Michelle

Jacalne, Angelica Joyce Rabago, Mark Allen

Reyes, YzaBA 190 Strategic Management

University of the PhilippinesProf. Mita Angela M. Dimalanta

THE HISTORY

• 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”

COMPETITION IN THE SPECIALTY

COFFEE SEGMENT

http://pptmag.com/

http://pptmag.com/

http://pptmag.com/

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

Pampering Employees

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

http://pptmag.com/

http://pptmag.com/

THANK YOU!Reference : Hill, C. W., Jones, G. R., & Schilling, M. A. (2013). Strategic Management: an integrated approach (11th ed.). Canada: Cengage Learning.