Starbucks

Company Background

• First store opened in Seattle on March 30, 1971

• Largest coffeehouse company in the world with 17,000 locations and 137,000 employees world wide

• Market Capitalization: Approximately $32 Billion

• Serves more than 33 million customers each week

• Offers new user experience

History

• Starbucks was created in Seattle, Washington in 1981 by 3 businessmen Gorden Bowker, Jerry Baldwin, and Zev Sigel• In 1981 Howard Schultz, working in a Swedish appliance

company, was curious as to why Starbucks was purchasing the same drip coffee maker in vast quantities• Howard Schultz was then introduced to Starbucks and

instantly drawn to the company• In 1987 Starbucks was sold to Howard Schultz• Schultz brought his ideas and vision into action, creating

an entirely new culture

Starbucks Mission

“To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”

Mission Breakdown• Starbuck’s mission statement is broken down into six

primary factors

• Coffee: Starbucks will always sustain the high quality and standards of their coffee

• Partners: Starbucks references their staff members as Partners in order to ensure an equal and open work environment. Starbucks also believes that it is important that their employees understand their value and importance to the company

• Customers: Starbucks hopes to create an entirely new experience. In the Starbucks culture it’s more then just a cup of coffee, it is about the user experience as a whole.

Mission Breakdown• Stores: Known as the 3rd place, Starbucks values creating

another living room atmosphere to create a sense of belonging. Starbucks strives to create a safe haven from the outside world, where you can meet your friends, enjoy, and relax.

• Neighborhood: Starbucks understands that every store that is established becomes a part of a different community. Thus, Starbucks understands the social responsibilities that they need to maintain in order to be a good neighbor.

• Shareholders: Starbucks highly values the thought and ideas that each shareholder carries. More importantly, Shareholders work with Starbucks to ensure the core values of their mission statement is properly implemented.

Successful Factors• Coffee• The best, highest quality coffee in the world

• Service• “Customer Intimacy”• Values customer satisfaction

• Atmosphere• The “third place”• Comfortable & Cozy

• Strategically placing their Starbucks locations• Understands local audience to adjust interior

• Source beans directly• Good relations with farmers; strong supply chain

• Joint Ventures and Partnerships

Coffee Industry• The Coffee and Snack Shops industry will continue its

growth trend in the beginning of 2012 with a 4.9% revenue jump to $27.8 billion

• Over the next five years to 2016, consumer spending is expected to increase at an average annual rate of 2.3%

• Revenue is projected to increase at an average annual rate of 4.1% to $32.5 billion over the period

• International expansion is anticipated to be the largest source of revenue and profit growth for major players over the next five years

• Asia and the Middle East are regions where domestic snack-food brands have not saturated the market yet

Differentiating Factors • Better quality service compared to competitors• Each customer have different preferences and tastes• Unique resources to meet the needs of customers• Able to control market trends due to their size• Creates a peaceful and relaxing atmosphere• Stresses efficiencies and maximizing resources

Factors that makes Starbucks Unique

Marketing Initiatives:• No major marketing initiatives• Values hard work, attention to details,

customer experiences, and ethical decision making and employee training

• Word of Mouth method stressing integrity of brand and customer

• Partnerships with Nonprofit Organizations • National Association for the Advance of

Colored People (NAACP)• HandsON Network • Conservation International

Additional Unique Methods• Partners to Reach Consumers• Barns and Nobles Bookstore• Pepsi Cola (bottling of the Frappuccino)• United Airlines • Kraft Foods (distribute bottled products to

consumers)

• Apple iTunes• Created a peaceful ambience and atmosphere • New outlet for new artists to reach audiences• “Song of the Week” promotion

Porters Five Forces

Medium

Low

Strong

Strong

Strong

SWOT Analysis

Strength

•Financial capability•Key locations•Customer loyalty•Established logo•Company operated retail stores•Strong brand identity•Valued and motivated workers•Loyalty Program

Opportunities

•New markets•New product•Social•Corporations•Global Name

Weakness

•Pace of expansion•Too much dependence on coffee alone•Product pricing (expensive)•Large overhead costs

Threats

•Competition•Taste•Countries respect for foreign

Competitive Advantage• Premium, quality product brewed by highly trained

employees• Various partnerships that increases brand exposure and

brand value• Constantly expanding to new markets, while sustaining the

quality of the brand• Since they were the first to introduce the concept of coffee

shops in North America, they have a strong first mover advantage

Starbucks Global Expansion

• Taking Advantage of Western Influences

• Creating a strong Starbucks Trend and Culture

• Understanding and emphasising brand Image

Recommendation #1

Recommendation #2• Listen to the advice of the local country heads and

employees• Hire knowledgeable executives who know the culture• Trust the local executives with their decisions • Don’t assume what works in one country will work in

another

Recommendation #3• Research and Development• Starbucks cannot just enter in China using the same strategy

as they did in the U.S.• Can solve the problem of difference in culture• Will help accommodate the Chinese consumers more• More profitable in the long run• Introduce new product lines that are accommodating to

Chinese taste pallets

Questions?