Starbucks

Business AnalysisCompiled By;

Qamarudheen Thayyilkhamarudheent@gmail.com

+919-6259-234-12

STARBUCKSCOFFEE

www.starbucks.com

IntrductionOverviewHistroryMission

Key People

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Overview

Starbucks is a world renowned specialty coffeemaker.

It roasts, markets and retails specialty coffee.

It offers blends of coffee, handcrafted beverages,merchandise, and food items, ready-made drinks,and Starbucks ice cream.

It markets all of its products under the flagshipStarbucks brand.

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It also market some products under brands suchas Tazo Tea, Seattle’s Best Coffee, Starbucks VIA,Torrefazione, Italia Coffee, and Evolution Fresh.

The company-owned and licensed storesoperates across Asia-Pacific, the Middle East,Africa, Europe and the Americas.

Total stores: 19767 (as of September 29, 2013) Company-operated - 10194. Licensed stores - 9573.

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The first Starbucks store opened in Seattle’sPike Place Market in 1971.

The company grew to be the largest roaster inWashington with multiple locations until theearly 1980’s.

In 1981,Howard Schultz, recognized a greatopportunity and began working with the founderJerry Baldwin.

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Schultz wanted to bring the Italian café cultureto the United States. Selling espresso by the cupwas the first test.

Schultz left Baldwin to open his own and raisedmoney from investors to purchase the Italian Coffee House Giornale.

The company experienced rapid growth goingpublic in 1992, and growing tenfold by 1997,with locations around the United States, Japanand Singapore.

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Starbucks coffee on United Airlines flights. Selling premium teas via Tazo Tea Company. Offering order Starbucks coffee online.

Introduced new products and operations.

Today, Starbucks has millions of customersevery day, in about 19,000 locations in over62 countries which have employed approximately 1,82,000 partners worldwide.

Starbucks also began expanding its brand by;

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

It ethically sources the finest coffee beans.

It embraces diversity.

It provides a human connection with employees.

It creates stores where customers feel comfortable.

It takes responsibility in each community.

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Mission

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Key People

Howard SchultzChairmanPresident Chief Executive Officer

Troy AlsteadChief Financial Officer and Group President, Global Business Services

Adam BrotmanExecutive Vice President, Chief Digital Officer

Curtis GarnerExecutive Vice President, Chief Information Officer

Sharon RothsteinExecutive Vice President, Global Chief Marketing Officer

Arthur RubinfeldChief Creative Officer, President, Global Innovation And

Matthew RyanExecutive Vice President, Global Chief Strategy Officer

PRODUCTSDrinksFood

Merchandise

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SEspresso

®FrappussinoNon-Coffee

Cappuccino

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Drinks

Pastry/ Cakes

CookiesMuffins

Sandwitch

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Food

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Merchandise

Blends

Coffe MakersMugs

Tumblers

SWOT AnalysisStrengths

WeaknessesOpportunities

Threats

Innovation

Global presence

Strong financials

Brand identity

Store ambience

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StrengthsS

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High employee turnover

Over dependence on US market

Small product mix

Higher prices

Too many products

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WeaknessesS

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International markets

Customization

Inorganic growth

New product mix

Localization

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Opportunities

Intense competition

Govt. Regulations

Uncertain suppliers

Target of terrorism

Saturated US market

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Threats

StrategySuccess FormulaInternalization

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Motivated employees & superior customerservice is the key success factor of Starbucks.

Starbucks focuses on recruiting anddeveloping rightpeople.

Starbucks partner serving coffee with a smile :)

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Success Formula

Attractivecompensationpolicies.

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Market Entry

Local joint-venture is the preferredentry strategy of Starbucks.

Financial AnalysisShare PriceSales Mix

Income StatementEarnings

Balance Sheet

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$46.50

$56.55$62.00

$54.28 $54.90$58.97

$67.48

$77.84

$35.12

$45.28

$51.03

$43.04 $44.27

$52.39$56.65

$65.82

12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4

High Low

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Share Price

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74% 75% 75%

20% 19% 19%

3% 4% 4%3% 2% 2%

2013 2012 2011

Beverages Food Packaged and single serve coffees Coffee-making equipment and other merchandise

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Sale Mix

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14892.2

13299.5

11700.4

15469

11512.8

10175.8

-325.4

1197.41728.5

8.3

1384.7 1248

2013 2012 2011

Net Revenue Operating Expense

Operating Income Earnings After Interest & Tax

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Income Statement

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S$0.01

$1.83$1.66

$0.89$0.72

$0.56

2013 2012 2011

EPS Cash Dividends

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Earnings

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$5,471.40

$4,199.60

$6,045.30

$4,019.60

$5,377.30

$2,209.80

$1,657.10

$894.90

$4,482.30

$5,114.50

2013 2012

Current Assets Fixed Assets Current Liabilities

Long Term Liabilities Equity

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Balance Sheet

MARKETINGSegmentTargeting

PositioningProduct

PricePlace

Promotion

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Every age group.

Tech savvy individuals.

Men and women.

High disposable income.

Brand focused.

Savvy and avid coffee lovers who enjoythe “Starbucks Experience”.

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Segment

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Starbucks targets commuters and captiveconsumers.

Commuters consist of people heading to or fromwork or people on their lunch break.

Captive consumers consist of those who arestuck in a campus environment. Eg: high school & college students, corporatecampuses.

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Target Customer

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Starbucks has positioned itself as an upscalebrand which provide rich experience.

It is obvious from the mission statement thatthey are trying to make it the best for socializing.

Starbucks is trying to reposition itself as a “third place” for its customers.

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Positioning

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Coffee: More than 30 blends and premium coffees.

Handcrafted Beverages: Fresh-brewed coffee, ®hot and iced espresso beverages, Frappuccino

coffee and non-coffee blended beverages, ®smoothies and Tazo teas.

Fresh Food: Baked pastries, sandwiches, salads, oatmeal, yogurt parfaits and fruit cups.

Merchandise: Coffee- and tea-brewing equipment,mugs and accessories, packaged goods, music,books and gifts.

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Product

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Startbucks offers all of its products at a premiumprice.

Prices range from $1.00-$4.20 for drinks which ishigher than any other retailers.

In case of foods, Starbucks is more expensivewhen compared to quick-service restaurants,

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Price

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Distributed directly to customers through ownretail stores and retail partners.

Located in high-traffic, high-visibility locations,focusing on pedestrian consumers.

Company also focus on drive-thru retail stores forthe convenience of non-pedestrian consumers.

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Place

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AdvertisingStarbucks spends under 3% of revenue on ads.But spends more on ensuring customersatisfaction to increase word of mouth.

PersonalSelling

PublicRelations

SalesPromotions

Passionate employees, customer satisfaction.

Events, public performances, green initiatives philanthropic endeavors.

Store decoration, viral videos, sample vans,billboards, newspaper, magazines andsocial media.

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Promotion

FACTSFive Facts

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Five Facts

Starbucks has added an average 15 stores on a dailybasis since 1987.

The average Starbucks customer visits the store 6 timesper month while loyal 20% of customers visit 16 times.

There are over 87000 drink combinations at Starbucks.

The Starbucks cinnamon chip scone has more caloriesthan a McDonald’s quarter pounder with 480 calories.

Starbucks uses 93 million gallons of milk and 2.3 billion paper cups per year.

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RecognitionsAwards

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“No. 1 Best Coffee,” Fast Food and QuickRefreshment categories Zagat’s Survey ofNational Chain Restaurants – 2009-2010 “No. 1 Most Popular Quick Refreshment Chain” Zagat’s Survey of National Chain Restaurants– 2009-2010 One of the “World’s Most Ethical Companies” Ethisphere – 2007-2010

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Awards

One of “The 100 Best Companies to Work For” FORTUNE – 1998–2000, 2002–2010 One of the “Most Admired Companies in America” FORTUNE – 2003–2010

One of the “Global 100 Most Sustainable Corporations in the World” Corporate Knights– 2010

Compiled By;Qamarudheen Thayyil

khamarudheent@gmail.com+919-6259-234-12

THANKS

www.starbucks.com