What is Starbucks?

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Serpil Serpil ÇÇobanoban

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GGöökkççe e ÖÖzkuyumcuzkuyumcu

Starbucks

Starbucks = 172.000 payrolls ?

Obviously Not !

What is real story ?

Internal Analysis

** Over 50% of coffee is grown on small farms

From Bush To CupInternal Analysis

Starbucks’ sources of coffee in the Coffee Belt

Farms , Coops, Exporters, Importers &Brokers

Internal Analysis

7 Fundemental principles for sustainable Coffee Environ.

With Fair price (Premium price, premium coffee)

With long term contracts

Purchasing shade grown, certified & organic coffees

Collaborating with coffee producers globally on coffee quality (Starbucks farmer support center in Costa Rica)

How Starbucks Purchase?

* In FY2005, Starbucks paid an average price of $1.28 per pound which was 23% higher than theaverage New York “C” price.)

Internal Analysis

How Starbucks Purchase?

Providing funds & affordable credit for farmers

Invest in Soc. Development Projects (VaccinationCampaign, Renovating homes, Building schools)

* In FY2005, Starbucks provided $9.5M in loans to Calvert Foundation, Verde Ventures Fund, Ecologic Finance

Internal Analysis

C.A.F.E. (Coffee And Farmers Equity Program

C.A.F.E. Practices areStarbucks buyingguidelines that rewardsuppliers.

Prerequisites:

High-quality coffee

Economic transparency

Internal Analysis

Facts About Value Chain

Inbound Logistics

Operations

Marketing and Sales

Service

Procurement

Technology/Development

Human Resource Management

Administration

R& D

Internal Analysis

Properties of StarbucksInternal Analysis

Intangible Assets

Several awards which improves reputation & brand

“The 100 Best Companies to Work For”

“Ten Most Admired Companies in America”

“100 Best Corporate Citizens”

“Most Admired Company”

“ Dow Jones Sustainability World Indexes”.

4th “World’s Most Influential Brands”

“Best Global Brands”

Internal Analysis

Core Competencies

Employee value

Lower turnover than the rest of the industry

Happy workers make happy customers

“The 100 Best Companies to Work For” — FORTUNE— 1998–2000, 2002–2008.”

“We realize our people are the cornerstone of our success...”Howard Schultz

Internal Analysis

Commitment to coffee quality and its sustainability

CAFE practises , social programs & farmers support

“third place” of customers make part of their daily lives

Core CompetenciesInternal Analysis

Continuous Innovation

Starbucks Hear Music™

“Now Playing” feature on the iTunes® in Stores

Frappuccino® since 1995

Starbucks Roast™

Core CompetenciesInternal Analysis

Operating Segments

United States

International

CPG (Global Consumer Products Group)

Performance Appraisal

Financial Performance of Starbucks Corp. (NASDAQ: SBUX)Performance Appraisal

Sales MixPerformance Appraisal

Revenue Comp. & B.D.Performance Appraisal

# of Stores ( Co Op)Performance Appraisal

# of Stores ( Lic)Performance Appraisal

# of Stores GrowthPerformance Appraisal

Shareholder Info SBUXPerformance Appraisal

•18,500 shareholders of record• Starbucks has never paid any dividends on its common stock

Shareholder Info SBUX cont.Performance Appraisal

Performance AppraisalEarnings comparision

Revenue GrowthPerformance Appraisal

Income & Op. MarginPerformance Appraisal

Earnings & EquityPerformance Appraisal

Consolidated Earnings (US+INT.+CPG)Performance Appraisal

Liquidity and Capital ResourcesPerformance Appraisal

Diedrich Coffee (Gloria jeans,Coffee World)

Mission: We sell Great Coffees

Founded in 1972, Diedrich Coffee, Inc. is a specialty coffee roaster, wholesaler and retailer

Brands include Diedrich Coffee, Gloria Jean's, and Coffee People

Have more than 110 retail locations, both company-operated and franchised, under these brands located in 25 states


Stock Price ComparisionPerformance Appraisal

Stock Price Comparision GraphicalPerformance Appraisal

Ratio Analysis

* TTM Trailing Twelve month **MRQ Most Recent Quarter

Earnings pershare growth

CR=CA/CLQR=(CA-Inv)/CLDE=TD/TE


Ratio Analysis

CR=CA/CLQR=(CA-Inv)/CLDE=TD/TE


Review Of The Mission And Goals

To inspire and nurture the human spirit— one person, one cup, and one neighbourhood at a time.

Provide a great work environment and treat each other with respect and dignity.

Embrace diversity as an essential component in the way we do business.

Apply the highest standards of excellence to the purchasing, roasting andfresh delivery of our coffee.

Develop enthusiastically satisfied customers all of the time.

Contribute positively to our communities and our environment.

Recognize that profitability is essential to our future success.

Strategy Formulation

Concentrating on core customers without increasing number of stores (Pause- Proceed with Caution)

Shifting focus from Store growth to driving traffic by identifying, listening and responding to their Core customers

Repositioning and upgrading portfolio by investing in targeted initiatives

Continuing to invest major and minor renovations( upgrading store design/adding new platforms)

Increasing the amount of products sold to loyal customersadvertising to core customers

Corporate Level Strategies

Reduces the effects of global financial crisis

Entering to new & developing markets (Horizontal Growth-Corporate Franchising)

Reaching to a higher population

Taking the advantage of increasing income per capita and peoples desire of spending with the help of brand reputation

Strategy FormulationCorporate Level Strategies

Competitive Strategy -Introduce new products that create differentiation and desire

Narrowing down the customers targeted

Covering special expectations of core customers -Introduce state of the art espresso technology / Launch a new platform of best inclassbrewed coffee, handcrafted by the cup

Decrease the volume suppliers and began to concentrate the business with national vendors

New/diversified products would cover their needs and increase loyalty (Ex, Over 90% drink both coffee and tea but portion of the purchasing tea volume is low, app.12%. They can Focus on TEA Builds on Corecustomers to sustain loyalty.

Strategy FormulationBusiness Level Strategies

More focus on currently new products which get good feedbacks. (EX. “healthy breakfast”). It can be diversified and became a classic for Starbucks. Here is the increasing demand graphic of it


Improve faster line speed and improve consistent quality

Reduce the partner turnover

Decrease the operating cost

Push Strategy -Developing new products which are new to core customersSupply chain optimization

Strategy FormulationFunctional (Operational) Strategies

Provide cards to make core customers ; it helps to create communication channels

Provide value, Brand Ownable

Provide membership systems that make customers feel more attached to the company or reward their loyalty


Aligned product innovation to achieve improved customer interaction

Ergonomic Store design to achieve faster line speed

Effective equipment deployments to achieve customer and partner satisfaction

Core training & Efficient use of labor to reduce partner turnover

Decentralization into profit or investment centers

Strategic Choice ImplementationMaking the Structure to Match With The Strategies

Developing new products would be done in R&D department in cooperation wit marketing department.

Stating most frequented day part and leverage the opportunity atlowest part

leverage the opportunity in afternoon and evening

Strategic Choice ImplementationMaking the Structure to Match With The Strategies

Checking each quarters numbers to if they match with objectives

to increase core customers visits 20% over 2008

to reduce advertising costs by 10% over 2008

to increase profitability by %30 over 2008

Strategic ControlFeedback Control

Checking that actions are correctly taken

do the core customers have their cards?

do core customers know what each card is for?

do core customers think the cards worth having & using

are core customers happy with new products

do core customers feel more attached to the company?

Strategic ControlConcurrent Control

Checking if the situation is appropriate for applying strategies

is the budget enough for operations?

is any more advertising is needed?

are distribution channels effective?

are employees educated enough?

Strategic ControlFeedforward Control

What is Starbucks?

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