STARBUCKS

INTRODUCTION

• Starbucks Corporation, doing business as Starbucks Coffee, is an American global coffee company and coffeehouse chain based in Seattle, Washington.

• Starbucks is the largest coffeehouse company in the world, with 23,305 stores in 65 countries and territories, including 13,049 in the United States, 1,909 in China, 1,555 in Canada, 1,089 in Japan and 927 in the United Kingdom.

WHAT THEY DO ?

• Starbucks locations serve hot and cold beverages, whole-bean coffee, micro ground instant coffee, full-leaf teas, pastries, and snacks.

• Most stores also sell pre-packaged food items, hot and cold sandwiches, and items such as mugs and tumblers. Starbucks Evenings locations also offer a variety of beers, wines, and appetizers after 4pm.

• Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores.

GROWTH OF STARBUCKS

PORTERS 5 FORCE ANALYSIS

ANALYSIS

• Threat of New Entrants (Low)

– Coffee chain market is saturated in the US and UK

– Significant capital requirements are needed mainly for renting and leasing buildings

• Threat of Substitute Products (High)

– Increasing ranges of energy drinks

– Increasing focus on negative affects of caffeine on the media and among consumer

ANALYSIS

• Bargaining Power of Buyers (High)

– The numbers and variety of offers in the industry exceeds the demand

– No or minimum switching costs to other companies

• Bargaining Power of Suppliers (Strong)

– Raw material (coffee beans) is available only from limited geographical areas such as Africa, Latin America, and some parts of Asia

– The level of competition amongst coffee chains is fierce

BUSINESS LEVEL STRATEGY

• All stores are company-owned and operated ensuring complete control over an unparalleled image of quality

• Follows “Hub” Strategy

• Flawless Execution : The company continues to focus on its original product bundle that includes good coffee, quality service, and a nice environment to hang around.

• Believes Employee Expectations should exceed customer expectation

ETHICAL SOURCING

• Not only ensures high quality but also the coffee beans are grown responsibly and ethically traded

• World’s largest buyer of fair-trade coffee and pays more than market price

• Works continuously with farmers on responsible methods such as planting trees to help preserve forests

COMMUNITY SERVICES

• Literacy programs for children and families of employees in US and Canada

• Volunteer community service hours

• Partner of Product RED

• Consistent donations for improvement of water

ENVIRONMENT

• Use of Recycled Cups

• Also emphasizes on Energy and Water

Conservation and building green, LEED-

certified buildings

RECOMMENDATIONS

• Engage : “Hear from Howard” employee webcasts with live Q&A

• Referral Bonuses: Increases recruiting pool and gives employees(trusted source) reason to spread image of ― “Best Place to Work”.

• Recognize: Employee of the Month pictured for each store location online.

• Happy Hours Introduction

RECOMMENDATIONS

• Starbucks has great growth opportunities in Tea and Fresh Juice products mix. They should build up these products along the same line of their core coffee products.

• Starbucks growth strategy in the saturated U.S. market should focus on getting additional penetration into untapped rural markets.

• Their mobile apps business drove 10% of the sales in the US, so it would be recommended for further building to stream lining ease of use and payment process which would help drive more customers, Decrease wait time in stores and increase efficiency. Integrating Starbucks loyalty program with the mobile application would also be recommended.

THANK YOU