Starbucks
• Presented By Nimra Nasar
70’s• 1971-
Starbucks opens first store in Seattle’s Pike Place Market.`
80’s• 1982-Howard Schultz joins
Starbucks as director of retail operations and marketing. Starbucks begins providing coffee to fine restaurants and espresso bars
• 1983-Developed coffeehouse in Seattle based on Cafes in Italy.
• 1984- First Starbucks café late served
• 1987- expanded to 17 stores
90’s• 1995- Beginning of the
Frappes- total stores 677• 1997- Starbucks
Foundation starts• 1998- Tazo tea company
is aquired• 1999- China, Kuwait,
Lebanon and South Korea
History
2000’s2000- Howard Schultz transitions to chairman and chief global strategist2001- Introduces the Starbucks Card, an innovative stored‐value card for customers to use and reload. 2002- Starts selling Fairtrade certified coffee in the countries where Starbucks does business.2002- Establishes Starbucks Coffee Trading Company (SCTC)
2000’s cont.2003- Seattle’s Best Coffee and Torrefazione Italia coffee brands are aquired2004- 8,569 Stores2005- Orin Smith retires as Starbucks president and chief executive officer. Jim Donald promoted to president and chief executive officer2008- Eliminates all artificial trans fat and makes 2 percent milk the new standard for espresso beverages in all U.S. stores
Present Day2010- Expands digital offerings for customers with free unlimited Wi Fi, ‐Starbucks Digital Network in U.S. stores16,858 Stores2012- Becomes the world’s largest buyer of Fair Trade coffee
Mission Statement1990 – October 2008
• Establish Starbucks as the premier purveyor of the
finest coffee in the world while maintaining our
uncompromising principles as we grow.
EthicsStarbucks™ Shared Planet™ is committed to doing business
responsibly. A better way to help each other and the planet.
Competition
McDonalds Dunkin Donuts
Second Cup New World Coffee
Caribou Coffee
SWOT ANALYSIS
STRENGTHS Brand Name
Recognition Quality Products Well Developed
Corporate Strategy Location Distribution Manufacturing
competencies
WEAKNESSES Narrow Product Line Complicated Products
OPPORTUNITIES Expand into foreign
markets Widen product range Diversify into new
growth businesses Apply brand name
capital in new areas
THREATS Change in consumer
tastes Regulations Increase in domestic
competition Changes in
economic factors Downturn in
economy
INTERNAL ANALYSISInternal Strategic Forces Weights Rating Weighted Score Comments
S1- Brand Identity 20% 4 0.8 S1. The company consistently maintains its brand, even without heavy marketing.
S2- Quality 10% 3 0.3 S2. They search for quality beans worldwide.S3- Variety 10% 3 0.3 S3. They offer drink variety and customizationS4. Locations 10% 5 0.5 S4. Location are everywhere as one of the
company’s main goals
S5- Convenience 20% 4 0.8 S5. The new products drive through windows , instore locations convenience is important
S6- Store ambiance 5% 3 0.15 S6. Ambiance was a foundation of the Starbucks’ brand and continuous in its locations.
S7- Ethics 5% 3 0.15 S7. By using fair trade ingredients they are leader in ethics.
Internal Strategic Forces Weights Rating Weighted Score Comments
W1- Overexposure 10% 4 0.025 W1. Starbucks’ goal to have 30,000 locations stalled in the recent recession. By becoming over exposed their risk losing the unique quality they were founded on.
W2- Too many Products 5% 4 0.125 W2. By constantly adding products, some products have lost value, Seattles’ Best for example, and they are risky endeavors.
W3- Risky investment in more locations
5% 4 0.125 W3. Expanding locations in the US, is a high risk and costly investment in comparison to international expansions.
TOTAL SCORE 1.00 3.05
EXTERNAL ANALYSISOPPORTUNITEIS
Internal Strategic Forces
Weights Rating Weighted Score Comments
O1- Customization 10% 4 0.4 O1. Starbucks’ introduce a completely custom Frappacinou in Canada.
O2- Intl Market 15% 5 0.75 O2. Increasing efforts internationally, to increase stability
O3- ON the GO Lifestyle 20% 5 1 O3. Via Instant coffee and other products to be in groceries and convenience stores
O4. Partnerships 10% 3 0.3 O4. Partnering with more locations including Pepsi
THREATS
Internal Strategic Forces Weights Rating Weighted Score Comments
T1- Direct Competition 15% 3 0.45 T1. Direct competition from Peets and Coffee Beans increasing. Lack of Marketing.
T2- Cheaper Alternatives
15% 2 0.3 T2. Cheaper alternatives from McDonalds and Dunkin Donuts.
T3- Recession 15% 4 0.6 T3. Recession has affected customers’ willingness to send greater risk in investments.
TOTAL SCORE 1.00 3.8
Michael Porter’s 5 forces
Rivalry Among Competing Firm
There is intense competition in the coffee market amongst established coffee shops that are fighting to get customers. There are local coffee shops offering specials to lure potential customers in. Restaurants are opening earlier and closing later to accommodate customers on the go. With the 85% North American customers taking their coffee to go, convenience is a major factor.
Potential of new competitors
There is a great deal of risk of entry by potential competitors due to the low start up costs. McDonalds is able to add specialty coffee to their existing services to tap into the specialty coffee market. There is potential f $125,000 per year in revenue to be made by each store if they are able to successfully enter the specialty coffee market.
Potential Development of Substitute Products
Water is a substitute which is healthy for us and it is free. The option to buy bottled water is also inexpensive compared to coffee. With the focus on healthier living, water is the ultimate choice.
Bargaining power of suppliers
There is more bargaining power for suppliers of technological innovations such as automated coffee machines, latte and espresso machines, etc. because there are not as many suppliers for such equipment as there are for coffee beans.
Bargaining power of Consumers
Customers did not really have bargaining power when it came to premium coffee such as Starbucks. The sheer scale of Starbucks’ business reduces the bargaining power of any single group of buyers.
Porters’ Forces
VALUE CHAIN
Product Development
Bean and Ingredient Selection
Product Distribution Store Front Take Home
Products
New Value Chain
Product Development
International Development
Bean and Ingredient Selection
Product Distribution
Online Storefront
CustomizationStorefront Mobile Apps
FacilityTake home Products
Mission StatementOctober 2008 - Present
Need to expand Internationally instead of opening outlets in US
Action Plan & Recommendations
• Product Development & Market Development• Rewards Programs ( introducing loyalty cards )• Rent out meeting space with more official facilities
available.• CD burning• Continually Improve Quality of Coffee.• Increase marketing• Sales promotions• Increase connection with Customers• Promote healthy products
Starbucks’ Billboards
• In 2008, Starbucks had put up a number of billboards in Seattle
STARBUCKS’ ADVERTISMENTS• On May 3rd, 2009 Starbucks had launched a long term, multi channel
campaign. It’s goal was to emphasize the unique experience, exceptional coffee, and the brand’s quality value
Another Ad Campaign
• Another ad campaign for Starbucks was for the Frappuccino beverage. Starbucks had launched two campaigns at the same time in 2010
• Via Instant Coffee• Frappuccino drinks Frappuccino campaign had emphasized Customization for the drink
Oh, wait.“Starbucks is testing letting its customers
pour their own coffee at some stores. Customers can pay before or after getting their own drip coffee from a brewer near the condiment bar, the company said on
its new customer-feedback website.”
Q & A ??
Thank You