Starbucks Business Plan (Final)

Starbucks Presented By: Brandie Whitmire Lukas Jones Richard Whitehouse David Alex Selby Erika Hartvickson Bryan Kelly Justin Young Pete Leiweke

Executive Summary
Vision Statement:
“ The bottom line is we always figured that putting people before products just made good common sense. So far, it’s been working out for us. Our relationships with farmers yield the highest quality coffees. The connections we make in communities create a loyal following. And the support we provide our baristas pays off everyday.”
Mission Statement:
“ Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow”

Executive Summary
Company Overview
1971 in Seattle’s Pike Place Market
Went public 1992
1999 Hear Music
2006 Starbucks Entertainment
Competing Internationally

Company Background
Founding Shareholders
Jerry Baldwin, Zev Siegel, and Gordon Bowker, Howard Schultz
Company Management
Howard Schultz with other investors

Executive Summary
Strategy Tactics
Customer Orientation, Employees, and Customization
Market Analysis
Domestic is saturated and mature
Intense Competition
Low Capital Requirements

Executive Summary
Market Plan
Ambiance and Personal Experience
Customers prefer known brand names, have high disposable income
Financial Plan
Growth in Revenues
Profit Margins 3-5%

Industry Analysis
Principle Products
Unique Features
Sales Growth / Profit Margins
Industry Data and Prospects
Maturity of Line
Trends

Product’s Unique Features
Variety of products
Customer’s experience

Sales Growth and Profit Margins
Profit margin 3-5%
Sales increased 20% in 2006
Sales predicted to increase 14%

Pretax Profits
Retail operations 2006: $6,583,098
Retail operations 2005: $5,391,927
Foodservice operations 2006: $343,168
Foodservice operations 2005: $304,358
Licensing operations 2006: $860,676
Licensing operations 2005: $673,015

Industry Data
Franchises, coffeehouse chains, and independently owned coffee houses
Supplier Power
Buyer Power
Threat of Substitution

Product Maturity and Trends
Domestic Market Saturation
International Market Growing
Leader in trend of young coffee drinkers
Brand and culture to coffee drinking

Opportunities
Ease of entry
Industry growth
Buyer power

Threats
Brand identity
Economies of scale
Substitutes

Marketing and Sales
Customer Profile
Distribution Systems
Pricing
Stage in Product Life-Cycle
Advertising/Promotion compared to competitors

Customer-End user Profile
Age 18-34
Internet users
Men and women
Majority of ethnicities
High disposable income
Prefer brand names and vulnerable to societal/cultural influences

Distribution
Directly to customers through own retail stores
Partnerships with grocery and retail outlets

Marketing and Pricing
A way of life
Coffee house environment
Charges a premium price
Maturity stage of life cycle

Competition
Major Competitors:
Peet’s Coffee and Tea
Caribou Coffee Company

Competition
Revenue Growth Over Last Year
Starbucks: 22%
Peet’s: 20.1%
Caribou: 19.3%
Starbuck’s accounts for $5,485 Million in sales annually
MORE THAN TRIPLING ANNUAL SALES OF PEET’S AND CARIBOU COMBINED!

Competition
Net Earnings as % of Revenues
Starbucks: .06% to 7.2% of revenues
Peet’s: to 3.8% of revenues
Caribou: worse than previous year to (3.8%) of revenue

Competition
Intensity of Rivalry
Rivalry is mostly determined by:
geographical location
brand identity.
Highly saturated areas = more intense rivalry
Competitors with established brand identity = Bigger threat.
Starbucks competitors pose little threat and rivalry is low – Maintains monopolistic stance.

Competition
Competitive Advantages
3 Unique Competencies:
Employees – Unique Culture
Customer Orientation – Brand Intimacy
Customization – Unique Experience
“ Third Place” Philosophy

Competition
Entry and Exit Barriers
Relatively Low
Low technological requirements
Low capital requirements
Easy to enter and exit this industry

Competition
Pricing
Prices slightly higher than competition
Starbucks: $1.70 for a 16 oz. cup of coffee
Competitors: Between $1.50 - $1.75 for same cup of coffee

Competition
Advertising and Promotional Effort
Amount of Selling, Administrative, and General Expenses as a % of Revenues:
Starbucks = 6%
Peet’s Coffee = 9%
Caribou = 52%

Structure
Sense of Empowerment
Regionalized Leadership
Team Work
Constant Differentiation

Strategy
Differentiate
Constant Internal R&D
Tactics
Focus on Growth
New Product Categories and Channels
Maintain Core Values

Management Team
Baristas
Standardization of Skills
Employee Empowerment as a Tactic
40 Vice Presidents
One Store Manager
Two Assistant Managers

Control
Ground Level
Reduced Bureaucracy
Standardization of Skills
Upper Management
Team Work
Regionalized Leadership
40 Vice Presidents

Compensation
Sense of Empowerment
20 hrs + Receive Stock and Health Care
Other Compensation Includes
Retirement Savings Plan, Discount Stock, Management Bonus, Life Insurance, Discount Merchandise

Recommendations
Multi Domestic Approach
Allows for Regionalized Customization
In Line With Current Goals of Customization and Customer satisfaction
Locally
Market Saturation and 3rd Place Mentality

Conclusion
Differentiation Strategy
Empowerment and Sense of Community
Highly Regionalized Leadership and Localized Customization
Constant Innovation

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Starbucks Business Plan (Final)

by elektroskop on Feb 23, 2009

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