Starbucks Strategy


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Starbucks Strategy

  1. 1. Starbucksstrategy<br />BOIN Anne-cécile<br />DOMAIN Marine<br />PIVA Benedetta<br />
  2. 2. Starbucks is one of the most important companies in the specialty coffee industry<br />This industry is the most rapidly growing segment of coffee industry<br />The competitive environment<br />its market share increased from 1% to 20% in the last 25 years<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  3. 3. Competitive rivalry. Companies of varying sizes and different exposures to specialty coffee such as:<br />two of the largest companies in the fast food industry who have recently entered the specialty coffee industry:<br />FiveForcesAnalysis<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  4. 4. Potentialentrants. There are manybarrierforthem:<br />even though the specialty coffee industry does not require a large capital, there are many barriers to entry so it is difficult for new companies to enter the market<br />however, the industry is not well-defined and incumbents have always to pay attention<br />FiveForcesAnalysis<br /><ul><li>economiesof scale;
  5. 5. new entrants have no access to the most important distribution channels;
  6. 6. incumbents have proprietary technology for the specialty coffee’s quality and production;
  7. 7. incumbents have develop customers’ loyalty </li></ul>14/01/2011<br />Strategic Management Boin Domain Piva<br />
  8. 8. Substitutes. The threat of substitutes is relatively low because coffee is an icon and an everyday good, so when people want coffee, that is what they consume<br />Suppliers. Starbucks has a good bargaining power on its suppliers due to its large size but it doesn’t abuse this power. Starbucks is completely dependent upon its suppliers and it always demands a very high quality of bean as well as environmental policies, e.g. energy conservation and farming methods, and employee benefits<br />The company treats its suppliers as partners<br />Dairy and paper product suppliers are not a threat. Starbucks sources from multiple suppliers and looks for vendors who have sustainability purposes<br />FiveForcesAnalysis<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  9. 9. Buyers. The principal buyers in the specialty coffee industry are individual consumers<br />Starbucks has over 40 million consumers a week<br />eighty percent of Starbucks’s revenue comes from customers who visit coffeehouses an average of 18 times per month: regular customers<br />the threat of customers is low for Starbucks: it is unlikely that a customer integrates backward making coffee at home to replace coffeehouse products and experience<br />FiveForcesAnalysis<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  10. 10. STRENGTHS<br />The SWOT Analysis<br />Brandimage<br />Goodworkplace<br />Goodrelationshipwith coffee suppliers<br />Coffeehouses’ locations<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  11. 11. WEAKNESSES<br />The SWOT Analysis<br />Corporate image<br />Overcrowding and cannibalism<br />Expensive price<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  12. 12. OPPORTUNITIES<br />THREATS<br />The SWOT Analysis<br />Expansion into European and Latin American markets<br />Brand extension<br />Distribution agreements<br />Growthofcostof coffee beans<br />Customers trend can change<br />New competitors and disrupting innovations<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  13. 13. The vision:<br />highqualitycoffee<br />ecofriendlyand responsiblecompany<br />Strategic direction:<br />a rapidstore expansion<br />large range of beverages<br />strongrelationshipwithsuppliers<br />Vision and strategic direction<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  14. 14. Buyout of competitors<br />Marketpenetration: eco-friendlyproducts<br />Marketdevelopment: responsible coffee shops<br />Diversification: mugs, CD’s, … <br />Outcomes<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  15. 15. The “thirdplace”<br />Starbucks wants its coffeehouses to become the third place between home and work for its customers<br />develop the quality of welcome and of service for the customers  employees’ training<br />Be unique for customers<br />welcoming events within the stores (degustation, groups playing soft music,…)<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  16. 16. Increaserevenues<br />revenues would be increased thanks to higher prices. Those higher prices would be justified by the quality of the coffee, of the service and of the places (the experience) <br />Remind about the quality<br />Starbucks must put emphasis on the high quality of its coffee and its products in general<br />refocus on the original idea that made this brand so famous<br />Revenues and quality<br />Customers are willingtopay high prices<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />
  17. 17. Expansionofcoffeehouses<br />Starbucks would have to expand even more internationally and implement in location where they can find the kind of customers it is looking for<br />It could for example open news shops in places of work, in airports, in students’ neighborhood or in cultural places such as cinemas or theatre<br />14/01/2011<br />Strategic Management Boin Domain Piva<br />