Mission, Strategy, and Ethics at Starbucks Presenters: McKeon, Mulzoff, Parisi, Singh January 17, 2007
History
Chief Executive Officers
Mission Statement
Starbucks Guiding Principles <ul><li>Provide a great work environment and treat each other with respect and dignity. </li>...
Corporate Social Responsibility Report (CSR)
Starbucks Awards <ul><li>Recognized as one of “Ten Most Admired Companies in </li></ul><ul><li>America”  -  FORTUNE: 2003 ...
<ul><li>Coffee and Farmer Equity Practices (C.A.F.E.) </li></ul><ul><li>Fair Trade Coffee (F.T.C.) </li></ul><ul><li>Suppl...
C.A.F.E <ul><li>Starbucks developed practices with suppliers  </li></ul><ul><li>Ensures farmers produce quality bean and p...
Fair Trade Coffee <ul><li>Fair Trade Certification similar to C.A.F.E </li></ul><ul><li>Starbucks purchased 11.5 million p...
Starbucks Supplier Code  of Conduct <ul><li>Ensure supply chain transparency </li></ul><ul><li>Support sound procurement d...
<ul><li>Certified by an independent third party to be at least 51% owned and operated by women, minorities, or individuals...
<ul><li>Global Exchange, Oxfam and the Organic Consumers Association </li></ul><ul><ul><li>Purchase MORE Fair Trade Coffee...
Community Well-Being <ul><li>Build relationships with local communities </li></ul><ul><li>Assist in educational programs <...
“ Starbucks Cup Runneth Over” <ul><li>Earvin “Magic” Johnson’s Development Corp. </li></ul><ul><li>The Starbucks Foundatio...
Keeping It Green
“ The Sky’s the Limit”
A Cup’s Story or “A Tale of the Cup”
The CUP Program
Daily Grind <ul><li>Care for partners well-being </li></ul><ul><li>Encourage our partners involvement </li></ul><ul><li>Bu...
We The People or “He Said, She Said” <ul><li>Starbucks versus Unionization </li></ul><ul><li>Employee Lawsuits </li></ul><...
A Tale Of Two Cups <ul><li>Noble   </li></ul><ul><li>Engaging our communities </li></ul><ul><li>Taking care of our partner...
Partnership Begins <ul><li>Partners with Host Marriott  </li></ul><ul><ul><li>Licensing Agreement </li></ul></ul><ul><ul><...
Partnership Becomes Part of Starbucks   <ul><li>Seattle’s Redhook Ale Brewery </li></ul><ul><ul><li>Double Black Stout </l...
Partnership In The Air <ul><li>Horizon Airlines </li></ul><ul><ul><li>First airline to recognize the added value that grea...
Partnership Expands <ul><li>PepsiCo  (North American Coffee Partnership) </li></ul><ul><ul><li>Had the best distribution s...
Something Still Missing….  ? <ul><li>There was still something lacking: </li></ul><ul><ul><li>Acquires Hear Music Channel ...
Its Never Going to End….. <ul><li>Other Strategic Partnerships </li></ul><ul><ul><li>Nordstrom Stores </li></ul></ul><ul><...
Partnership Success <ul><li>Starts with a One-Year Agreement </li></ul><ul><ul><ul><li>Profit </li></ul></ul></ul><ul><ul>...
Reason for Partnerships <ul><li>Enhances the brand equity and burnishes their image </li></ul><ul><li>Introduces new custo...
BUSSINESS STRATEGY <ul><li>Location, Location… Location </li></ul><ul><li>Manhattan is the quintessential example of the S...
<ul><li>Starbucks embraces self-cannibalization as the fastest way to expand business </li></ul><ul><li>Idea began when th...
BUSINESS STRATEGY <ul><li>Method to the Madness </li></ul><ul><li>Close by locations keep the flow moving within the store...
BUSINESS STRATEGY <ul><li>Method to the Madness </li></ul><ul><li>Close by locations create a sense of  Ubiquity </li></ul...
BUSINESS STRATEGY <ul><li>Method to the Madness </li></ul><ul><li>Starbucks is predicting a 20-25% growth per year for the...
BUSINESS STRATEGY <ul><li>It’s a Small World After All </li></ul><ul><li>37 Countries including…. </li></ul>
BUSINESS STRATEGY <ul><li>With 1.3Billion, Who Cares if They Drink Tea </li></ul><ul><li>China expects to be Starbucks lar...
BUSINESS STRATEGY <ul><li>One World Under Starbucks </li></ul><ul><li>Starbucks is counting on the youth </li></ul><ul><ul...
BUSINESS STRATEGY <ul><li>Where Everyone Knows Your Name </li></ul><ul><li>With all these big growth plans and ideas of en...
BUSINESS STRATEGY <ul><li>Starbucks Lingo </li></ul><ul><li>One of Starbucks critical success factors is their lingo </li>...
BUSINESS STRATEGY <ul><li>Liquid Dessert </li></ul><ul><li>Frappuccino is Starbucks signature beverage </li></ul><ul><li>C...
BUSINESS STRATEGY <ul><li>More than 18 times per month </li></ul><ul><li>To increase revenues Starbucks is seeking to attr...
BUSINESS STRATEGY <ul><li>Would You Like Egg With That? </li></ul><ul><li>60% of business happens before 10am </li></ul><u...
BUSINESS STRATEGY <ul><li>The ‘Third’ Place </li></ul><ul><li>Starbucks positions their cafes to be the ‘third place’ impr...
BUSINESS STRATEGY “ Starbucks unique culture, the intimacy of its brand, and the uniqueness of the customer experience wil...
BUSINESS STRATEGY <ul><li>Critical to Starbucks Success </li></ul><ul><li>Hire and train employees that act more as a part...
BUSINESS STRATEGY <ul><li>The value of the Starbucks strategy is that their products transcends class structure in our soc...
 
 
 
 
 
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Mission, strategy, and ethics at starbucks v2

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My colleagues and I presented this discussion on leadership, ethics, corporate repsonsibility, and corporate strategy to folks at The Hagan Schol of Business - Iona College.

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  • All of us should be familiar with ethics How many? Corporate scandals – all companies incorporating ethics Starbucks no exception Treat others with dignity, embrace diversity, positive impact on community Even has an Environmental Mission Statement… talk about later They also publish (CLICK)
  • They publish a Corporate Social Responsibility Report This encyclopedia Illustrates how ethical and socially responsible they are Pretty impressive even for the cynically inclined As a result, CLICK
  • They have received a large number of awards for various reasons from various organizations All notable achievments Starbucks says they back it up and love to tell everyone about it – go look on their website! Now you’ve seen the awards (CLICK)
  • Lets talk about how they earn them… These are just four of the major practices or programs they are involved with and Starbucks keeps a close watch over all of them Three of them were created by Starbucks – tell them Meant to provide guidelines for Starbucks and their suppliers to follow and I mean follow very closely or sell your beans to someone else I could discuss several more or the entire CSR – be up here for 2 hours but nobody wants that (CLICK)
  • As I mentioned there many coffee farmer programs out there – and I quote, “Starbucks admires the efforts of them all”… BUT CAFÉ is the one! this is the one Starbucks truly endorses and wants everyone else to follow – this is their baby Created as set of guidelines socially and environmentally correct behavior for everyone to follow First – ensure farmers produce a quality bean w/o harming the environment Secondly, set in place methods and ethics for everyone in supply chain to follow to help ensure economic growth in these rural regions Must be followed to be part of Starbucks Preferred Supplier Program Now as said earlier there are other programs out there (CLICK)
  • And Starbucks is involved with this one a great deal… Another set of benchmarks similiar to CAFE Starbucks does not entirely endorse this program but does do business And does help promote FTC branded coffee Did purchase 11.5 million pounds … only represents 4% of Starbucks imports They get some heat from other organizations… 11.5 million pounds sounds like a lot but go to a Starbucks and try to purchase some On the other hand.. Starbucks says not the only enterprise out there purchasing coffee, what about Nestle or Proctor and Gamble?? Not ignoring FTC but our standards are higher.. Just look at our (CLICK)
  • Delete? … Supplier Code of Conduct. Strict guidelines Discusses in detail ethical behavior, proper work treatment and conditions &amp; environmental resp. In short, screen out and ensure behvior is in line with Starbucks values. Another value (CLICK)
  • Near and dear to Starbucks is Supplier Diversity Ensures Starbucks shares the wealth Independent organization ensures supplier meets the criteria Ensures Starbucks provides equal opportunities to wide range of suppliers In 2005 Starbucks received prestigious award from NMBC for its work with diverse organizations With all of this said (CLICK)
  • Starbucks finds itself at the boiling point with some various non-profit organizations. Ask for Starbucks to do more! FTC, humane treatment of animals, more support of some African growers OCA’s big beef with Starbucks – stop purch milk from farmers who feed growth hormones However, the FDA has not banned these hormones OCA continues to push, Starbucks no comment Ethiopia revolves around the issue of coffee bean trademarking Oxfam pushing to approve – will help them economically and Starbucks being bully Others including the periodical the Economist argue in Starbucks favor Will only provide revenue stream for the gov’t Starbucks favors tradeark scheme similar to the one in France used to control trademark their wines Less legal issues and prevent roadblocks in the future While debate goes on Starbucks has met with offcials Ethiopia and even Kenya, Rwanda, Even so far to wrtite letter to local newspaper So you see, Starbucks cares. And their caring doesn’t stop there (CLICK)
  • Starbucks very socially concerned enterprise. Social programs and various charities to assist communities economically Consider themselves responsible neighbor and participate in local community affairs wherever… Monitor their progress and ensure they have positive impact… Starbucks involved with a great many (CLICK)
  • And here are some of them… Magic – commerical development in needy urban areas Starbucks Foundation – since 1997 donated more than $11 million to approx. 700 diff orgs to support literacy and youth education programs in US and Canada Make Your Mark – encourages employees involvement w/ local community projects $10 for every hour worked The employees or prefer partners have responded – nearly 2,200 of them donating more than 792,000 hours resulting in almost $1.5 million in donations Community-Word – over $45,000 Save the Children – very involved earmarked $1.5 AND ALSO NOTE THAT, Starbucks in sone of the largest contributors in North America Lastly, U.N Compact deciated to humans rights, fair labor laws, environmental safety Starbucks “and I quote, “considers these principle to be a natural extension of Starbucks guiding principles” end quote. Something else.. Another something that Starbucks feels strongly about is the environment (CLICK)
  • As I mentioned earlier, they even have a Mission statement Another area that Starbucks closely watches their programs and their impact Programs include grenhouse gas emissions, sore design and constructions recycling, and even develop environmental improvements to their cups Starbucks feels very strongly about the environmental impact and have determined that the Skys the limit (CLICK)
  • Each year Starbucks has studies done of its own facilities and their greenhouse gas emissions Limited in scope, has identified ways to lessen their emissions Work with EPA green Power Partnership, The Climate Group, and Global Green USA Very important to them.. Another area so important to them is recycling and their coffee cups (CLICK)
  • So important to them in fact they wrote a little story about them… From this little pictorial that Starbucks keeps close eye on recycling and waste reduction Discount coffee to people who use their commuter mugs Coffee grinds Programs go on and on including sponsoring Earth Day events and the Earthwatch institue Partners did not leave them behind after Hurricane Katrina (CLICK)
  • thru the CUP Program has gotten involved to help the Victims of Hurricane Katrina Through the Starbucks foundation $1.4 million so far to over 1000 employees Another $5 million earmarked over the next years for the rebuilding effort Not only here that Starbucks works for its employees (CLICK)
  • From the beginning Howard Schultz thought of his employees as greatest asset From the beginning committed – more than fair wage and find a way to provide healthcare Fought with board – in 1988 he won and got benefits for all including the part-time workers In 1991, stock option program called Bean Stock In 1995, employee stock purchase plan Mission Review Program – comment on company&apos;s guiding principles or environmental issues Strict Business Code of Conduct Corp Compliance Program with Hotline Execs must participate in Exec Diversity Learning series each year With all this said, all may not be so wonderful in Starbuck land (CLICK)
  • Unionization or the anti-unionization efforts of the company gets its share of press Company pushed out or had it de-certified Stories pushed Starbucks to write formal statement Some employees say Starbucks unfair – other operations have had union decertified themselves Some employees filed formal complaints National Labor Relations Board agreed – settled out of court fired employees re-employed with back wages post public notice not to harm union Employee lawsuits – labor matters Lawsuits by mom and pop shops – cluster-bombing: i.e. Starbucks on every corner He said/she said; small number of unhappy people in large world over 115,000 employees and over 8,000 locations So its in some ways a Tale of Two Cups (CLICK)
  • See there is some conflicting information out there More than one opinion certainly more one instance their integrity can be questioned Noble efforts yes  but is it all about the bottom line? All about helping the coffee farmer but also long term effort to help coffee bean harvests Certainly involved in community efforts  are they a bully Engage quite a bit of charitable efforts  same time harming the little guy Certainly offer their employees a bit even benevolent  but is it only if its done “their way” Going to be some unhappy employees in such a large org. Maybe Starbucks vales and Union values don’t match Certainly there may be a lot of reasons to go after Starbucks and their behavior. But are all those arguments really fair? It’s easy to go after the big target and or point a finger at and say “you need to do more”. It certainly looks like Starbucks is thinking about their environment, they are also thinking about the impact it will have to the business. But is that unethical? Is Starbucks an an unethical business? It’s tough to say. But, its Starbucks a smart, tough business? Now that’s an easy question to answer. I know our favorite barista can answer that question.
  • Mission, strategy, and ethics at starbucks v2

    1. 1. Mission, Strategy, and Ethics at Starbucks Presenters: McKeon, Mulzoff, Parisi, Singh January 17, 2007
    2. 2. History
    3. 3. Chief Executive Officers
    4. 4. Mission Statement
    5. 5. Starbucks Guiding Principles <ul><li>Provide a great work environment and treat each other with respect and dignity. </li></ul><ul><li>Embrace diversity as an essential component in the way we do business. </li></ul><ul><li>Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. </li></ul><ul><li>Develop enthusiastically satisfied customers all of the time. </li></ul><ul><li>Contribute positively to our communities and our environment. </li></ul><ul><li>Recognize that profitability is essential to our future success. </li></ul>
    6. 6. Corporate Social Responsibility Report (CSR)
    7. 7. Starbucks Awards <ul><li>Recognized as one of “Ten Most Admired Companies in </li></ul><ul><li>America” - FORTUNE: 2003 – 2006 </li></ul><ul><li>One of “100 Best Corporate Citizens” - Business Ethics Magazine </li></ul><ul><li>One of “The 100 Best Companies to Work For” </li></ul><ul><li>“ Most Admired Company” in the Food Service Category </li></ul><ul><li> - Fortune 2001 – 2005 </li></ul><ul><li>Ranked Sixth on the US Environmental Protection Agency’s Green </li></ul><ul><li>Power </li></ul><ul><li>Partnership list of “Top 25 Green Power Partners” for its significant </li></ul><ul><li>purchase of Green Power </li></ul><ul><li>Starbucks is recognized in Diversity Inc.’s “Top 50 For Diversity” </li></ul><ul><li>and “Top 10 Companies for Latinos” </li></ul><ul><li>Starbucks is recognized as “Model Company for Sustainable </li></ul><ul><li>Economic” by the Luoho Government in Shenzhen, China </li></ul>
    8. 8. <ul><li>Coffee and Farmer Equity Practices (C.A.F.E.) </li></ul><ul><li>Fair Trade Coffee (F.T.C.) </li></ul><ul><li>Supplier Code of Conduct </li></ul><ul><li>Supplier Diversity Program </li></ul>Business Practices Around The Globe
    9. 9. C.A.F.E <ul><li>Starbucks developed practices with suppliers </li></ul><ul><li>Ensures farmers produce quality bean and protect </li></ul><ul><li>environment </li></ul><ul><li>Assists in farmer economic development </li></ul><ul><li>Deliver quality bean in line with Starbucks standards </li></ul>
    10. 10. Fair Trade Coffee <ul><li>Fair Trade Certification similar to C.A.F.E </li></ul><ul><li>Starbucks purchased 11.5 million pounds </li></ul><ul><li>Work with Global Exchange to promote </li></ul>
    11. 11. Starbucks Supplier Code of Conduct <ul><li>Ensure supply chain transparency </li></ul><ul><li>Support sound procurement decisions through supplier screening and development </li></ul><ul><li>Focus on supplier performance improvement in alignment with Starbucks values </li></ul>
    12. 12. <ul><li>Certified by an independent third party to be at least 51% owned and operated by women, minorities, or individuals who are socially or economically disadvantaged. </li></ul>Supplier Diversity * Received Regional Company of the Year award from National Minority Business Council
    13. 13. <ul><li>Global Exchange, Oxfam and the Organic Consumers Association </li></ul><ul><ul><li>Purchase MORE Fair Trade Coffee </li></ul></ul><ul><ul><li>Discontinue purchase of genetically engineered dairy products </li></ul></ul><ul><ul><li>More support of coffee farmers in economically depressed areas </li></ul></ul><ul><li>Oxfam's, Starbucks and Ethiopia </li></ul><ul><ul><li>more government support versus less legal complexity </li></ul></ul><ul><li>“… involvement, it will be interesting to see how the battle develops. Starbucks has loyal customers who may well be prepared to hear its side of the story. Is it too much to hope that this battle might mark a turning-point in the war over corporate ethics, and that it will cease to be enough merely for a pressure group to throw mud at a company to make that mud stick? The Economist will drink a grande extra-wet triple-latte to that .” </li></ul><ul><li>The Economist Dec. 2005 </li></ul><ul><ul><li>…” Does Starbucks care? Ask any coffee farmer.” </li></ul></ul><ul><ul><li>Starbucks Letter to the Editor: Seattle Post Intelligencer – Dec. 22, 2006 </li></ul></ul><ul><ul><ul><li>Dub Hay - Senior vice president, Coffee and Global Procurement </li></ul></ul></ul>Percolating Issues of the Day
    14. 14. Community Well-Being <ul><li>Build relationships with local communities </li></ul><ul><li>Assist in educational programs </li></ul><ul><li>Assist in the needs of our society </li></ul><ul><li>Monitor our Impact </li></ul>
    15. 15. “ Starbucks Cup Runneth Over” <ul><li>Earvin “Magic” Johnson’s Development Corp. </li></ul><ul><li>The Starbucks Foundation </li></ul><ul><li>Make Your Mark Fund </li></ul><ul><li>Community – Word Projects </li></ul><ul><li>Save The Children </li></ul><ul><li>CA.R.E. </li></ul><ul><li>U.N. Global Compact </li></ul>
    16. 16. Keeping It Green
    17. 17. “ The Sky’s the Limit”
    18. 18. A Cup’s Story or “A Tale of the Cup”
    19. 19. The CUP Program
    20. 20. Daily Grind <ul><li>Care for partners well-being </li></ul><ul><li>Encourage our partners involvement </li></ul><ul><li>Business Code Of Conduct </li></ul><ul><li>Foster diversity and inclusion </li></ul>
    21. 21. We The People or “He Said, She Said” <ul><li>Starbucks versus Unionization </li></ul><ul><li>Employee Lawsuits </li></ul><ul><li>“ Cluster-Bombing” </li></ul>
    22. 22. A Tale Of Two Cups <ul><li>Noble </li></ul><ul><li>Engaging our communities </li></ul><ul><li>Taking care of our partners </li></ul><ul><li>Profitable </li></ul><ul><li>Small coffee shop owner lawsuits </li></ul><ul><li>NLRB ruling, Employee lawsuits </li></ul>
    23. 23. Partnership Begins <ul><li>Partners with Host Marriott </li></ul><ul><ul><li>Licensing Agreement </li></ul></ul><ul><ul><li>Attracted customers from all over the world. </li></ul></ul><ul><ul><li>Turned out to be successful in the long run </li></ul></ul><ul><ul><ul><li>Training </li></ul></ul></ul><ul><ul><ul><li>Increased staffing </li></ul></ul></ul><ul><ul><ul><li>Management support </li></ul></ul></ul>
    24. 24. Partnership Becomes Part of Starbucks <ul><li>Seattle’s Redhook Ale Brewery </li></ul><ul><ul><li>Double Black Stout </li></ul></ul><ul><ul><li>Products focused on adult customers </li></ul></ul><ul><li>Dreyer’s Grand Ice Cream </li></ul><ul><ul><li>Java Chip, Biscotti Bliss, Vanilla Mocha Chip….and many more product names. </li></ul></ul><ul><ul><li>Had the best distribution system in selling </li></ul></ul><ul><ul><li>ice cream </li></ul></ul><ul><ul><li>Enhanced the brand equity of Starbucks </li></ul></ul>
    25. 25. Partnership In The Air <ul><li>Horizon Airlines </li></ul><ul><ul><li>First airline to recognize the added value that great coffee gives to its passengers. </li></ul></ul><ul><ul><li>Easy to serve on short flights throughout Seattle </li></ul></ul><ul><li>United Airlines </li></ul><ul><ul><li>Risky partnership </li></ul></ul><ul><ul><li>Came up with a way to handle quality control on planes with varying equipments </li></ul></ul>
    26. 26. Partnership Expands <ul><li>PepsiCo (North American Coffee Partnership) </li></ul><ul><ul><li>Had the best distribution system of beverages among competitors </li></ul></ul><ul><ul><li>Created new beverage lines (ready-to-drink cold coffee) </li></ul></ul><ul><ul><ul><li>Frappuccinos, Double Shot </li></ul></ul></ul><ul><li>Ethos Water </li></ul><ul><ul><li>Partners with PepsiCo to distribute its bottled water </li></ul></ul><ul><li>Kraft Food </li></ul><ul><ul><li>Manages all Starbucks whole beans and ground coffee products. </li></ul></ul>
    27. 27. Something Still Missing…. ? <ul><li>There was still something lacking: </li></ul><ul><ul><li>Acquires Hear Music Channel (1999) </li></ul></ul><ul><ul><li>Partners with T-Mobile </li></ul></ul><ul><ul><li>Partners with Hewlett Packard </li></ul></ul><ul><ul><li>Partners with XM Satellite Radio </li></ul></ul><ul><ul><li>“ This service is a natural extension of the Starbucks </li></ul></ul><ul><ul><li>coffeehouse experience, which has always been about </li></ul></ul><ul><ul><li>making connections with the people and information that </li></ul></ul><ul><ul><li>are important to us over a cup of coffee” </li></ul></ul><ul><ul><li>- Howard Schultz </li></ul></ul>
    28. 28. Its Never Going to End….. <ul><li>Other Strategic Partnerships </li></ul><ul><ul><li>Nordstrom Stores </li></ul></ul><ul><ul><li>Sheraton and Westin Hotels </li></ul></ul><ul><ul><li>Hyatt Hotels </li></ul></ul><ul><ul><li>Barnes & Noble Bookstore </li></ul></ul><ul><ul><li>Chapter’s Inc Bookstore </li></ul></ul><ul><ul><li>Albertson’s </li></ul></ul><ul><ul><li>U.S Office Products </li></ul></ul><ul><ul><li>College Campuses </li></ul></ul>
    29. 29. Partnership Success <ul><li>Starts with a One-Year Agreement </li></ul><ul><ul><ul><li>Profit </li></ul></ul></ul><ul><ul><ul><li>Performance </li></ul></ul></ul><ul><ul><ul><li>Training </li></ul></ul></ul>Successful? Deal Extends Unsuccessful? Deal Expires
    30. 30. Reason for Partnerships <ul><li>Enhances the brand equity and burnishes their image </li></ul><ul><li>Introduces new customers to the Starbucks experience </li></ul><ul><li>Strategic Partners </li></ul><ul><ul><li>Understands value of Starbucks </li></ul></ul><ul><ul><li>Has brand name recognitions and a good reputation in its field. </li></ul></ul><ul><ul><li>Promises to protect Starbucks brand and quality of coffee </li></ul></ul><ul><ul><li>“ If we weren’t so obsessed with control, our business would </li></ul></ul><ul><ul><li>be a a lot easier. But the coffee wouldn’t be as good.” </li></ul></ul><ul><ul><li>-Howard Schultz </li></ul></ul>
    31. 31. BUSSINESS STRATEGY <ul><li>Location, Location… Location </li></ul><ul><li>Manhattan is the quintessential example of the Starbucks location strategy </li></ul><ul><li>Starbucks objective is to “establish themselves as the most recognized and respected brand in the world” (SB annual report 2005) </li></ul><ul><li>Aggressive store tactics that are unconventional because they place one location in very close proximity to the next. </li></ul><ul><ul><li>“ We self-cannibalize at least a third of our stores every day” (Schultz, Starbucks’ Growth Strategy, St. Pete Times online) </li></ul></ul>
    32. 32. <ul><li>Starbucks embraces self-cannibalization as the fastest way to expand business </li></ul><ul><li>Idea began when they acquired a competitor in British Columbia </li></ul>Zip Code 10019 Zip Code 10016 BUSINESS STRATEGY
    33. 33. BUSINESS STRATEGY <ul><li>Method to the Madness </li></ul><ul><li>Close by locations keep the flow moving within the stores </li></ul><ul><ul><li>Most of business done at retail locations are before 10am, they aim to serve your drink in under 3 minutes </li></ul></ul><ul><ul><li>Long lines will have people leaving the store. Another Starbucks close by will hedge them from going to a competitor </li></ul></ul><ul><ul><li>It was the popularity of their seasonal cold Frappuccion flavors in Summer 2006 that cost them to have weaker than expected sales </li></ul></ul>
    34. 34. BUSINESS STRATEGY <ul><li>Method to the Madness </li></ul><ul><li>Close by locations create a sense of Ubiquity </li></ul><ul><ul><li>Starbucks uses its storefronts as billboards and clusters them close together building brand awareness and creating demand </li></ul></ul><ul><ul><li>Collaborating with their multitude of locations, the Starbucks licensed products in supermarkets, iTunes, restaurants etc., contribute to the sense of being ‘everywhere’ </li></ul></ul><ul><ul><li>Their Ubiquity gives Starbucks the luxury of having small advertising budgets </li></ul></ul>
    35. 35. BUSINESS STRATEGY <ul><li>Method to the Madness </li></ul><ul><li>Starbucks is predicting a 20-25% growth per year for the next several years </li></ul><ul><li>“ The primary driver of the company’s revenue growth continues to be the opening of new retail stores” (SB Annual Report 2005) </li></ul><ul><li>International growth is where there is a large opportunity for growth </li></ul><ul><ul><li>They are looking to expand the 3,500 locations in 37 countries to 15,000 outside the United States </li></ul></ul>
    36. 36. BUSINESS STRATEGY <ul><li>It’s a Small World After All </li></ul><ul><li>37 Countries including…. </li></ul>
    37. 37. BUSINESS STRATEGY <ul><li>With 1.3Billion, Who Cares if They Drink Tea </li></ul><ul><li>China expects to be Starbucks largest markets outside the United States </li></ul><ul><li>Starbucks has been in China since 1999. Currently they have approximately 400 locations including Beijing and The Forbidden City </li></ul><ul><li>China poses Starbucks biggest challenge yet the greatest financial potential </li></ul><ul><ul><li>Local officials considered revoking Starbucks one-year business license after two months </li></ul></ul>
    38. 38. BUSINESS STRATEGY <ul><li>One World Under Starbucks </li></ul><ul><li>Starbucks is counting on the youth </li></ul><ul><ul><li>“ a new generation of Chinese with growing spending power and an appetite for high-status brands” (Starbucks conquers tea-drinking China, CBS news online) </li></ul></ul><ul><li>Bought out a local competitor </li></ul><ul><ul><li>“ Starbucks is homogenizing the world, you’re taking culture out of places like China and Japan and Americanizing them” (Howard Schultz: The Star of Starbucks, CBS News Online) </li></ul></ul>
    39. 39. BUSINESS STRATEGY <ul><li>Where Everyone Knows Your Name </li></ul><ul><li>With all these big growth plans and ideas of entering new markets, Starbucks still strives to be the coffee shop where everyone knows your name </li></ul><ul><ul><li>“ The battle within the company is making sure growth doesn’t dilute our cultures. Starbucks executives tenaciously hold on to the idea that every store is like an independent coffee house” (Howard Schultz , The Big Gulp, Time Magazine) </li></ul></ul><ul><li>Still room for growth </li></ul>
    40. 40. BUSINESS STRATEGY <ul><li>Starbucks Lingo </li></ul><ul><li>One of Starbucks critical success factors is their lingo </li></ul><ul><li>Initially intimidating, yet creates a sense of belonging that intrigues customers and creates community </li></ul><ul><li>“ Part of the richness of the personalized Starbucks experience…producing the emotional bond that loyal Starbucks customers feel” – author, Joseph Michelli </li></ul>
    41. 41. BUSINESS STRATEGY <ul><li>Liquid Dessert </li></ul><ul><li>Frappuccino is Starbucks signature beverage </li></ul><ul><li>Created in 1995 </li></ul><ul><li>Variety of different Frappuccino </li></ul><ul><li>Explosive popularity might have been reason for weak sales in Summer 2006 </li></ul>
    42. 42. BUSINESS STRATEGY <ul><li>More than 18 times per month </li></ul><ul><li>To increase revenues Starbucks is seeking to attract new customers and increase the frequency of visit of their current customers </li></ul><ul><li>New Product innovation & Popularity of core products </li></ul><ul><ul><li>87,000 possible drink combinations, </li></ul></ul><ul><ul><li>22 new beverages in 2 years </li></ul></ul><ul><li>Offering more than just coffee </li></ul>
    43. 43. BUSINESS STRATEGY <ul><li>Would You Like Egg With That? </li></ul><ul><li>60% of business happens before 10am </li></ul><ul><li>Breakfast restaurants are stepping up their coffee </li></ul><ul><li>Breakfast sandwiches were big step for Starbucks; combating fast-food image </li></ul><ul><ul><li>Rolled out in test cities in Fall 2006 </li></ul></ul><ul><ul><li>Adding 600 more drive through </li></ul></ul>
    44. 44. BUSINESS STRATEGY <ul><li>The ‘Third’ Place </li></ul><ul><li>Starbucks positions their cafes to be the ‘third place’ impression to their customers </li></ul><ul><ul><li>They have created a place other than work or home where people will feel comfortable spending time alone or with friends </li></ul></ul><ul><li>“ We’re in the business of human connection and humanity, creating communities in a third place between work and home” (Howard Schultz, Star of Starbucks) </li></ul><ul><li>The delivery people as well as the CFO’s of the world are both enjoying the same rituals, the same coffees, the same experience. They have made coffee connoisseurs out of everyday people. </li></ul>
    45. 45. BUSINESS STRATEGY “ Starbucks unique culture, the intimacy of its brand, and the uniqueness of the customer experience will keep people coming back. The company went to great lengths to make sure the store fixtures, the merchandise displays, the colors, the artwork, the banners the music and the aromas all blended to create a consistent, inviting, stimulating environment that evoke the romance of coffee that signaled the company’s passion for coffee, and that rewarded customers with ceremony, stories and surprise.” Quality of the Starbucks Brand
    46. 46. BUSINESS STRATEGY <ul><li>Critical to Starbucks Success </li></ul><ul><li>Hire and train employees that act more as a partner to the customer than a cashier </li></ul><ul><li>Not employees, but partners </li></ul><ul><li>Instill passion, respect and dignity that they can pass on to the customers </li></ul><ul><li>82% job satisfaction rate (Hewitt Associates Starbucks Partner View Survey) </li></ul><ul><li>Partners ensure the consistency and inviting environment that embodies the quality and secret to Starbucks success </li></ul>
    47. 47. BUSINESS STRATEGY <ul><li>The value of the Starbucks strategy is that their products transcends class structure in our society </li></ul><ul><li>They differentiate from the competition because their luxury coffee is enjoyed by all types of people </li></ul><ul><ul><li>Same rituals </li></ul></ul><ul><ul><li>Same coffees </li></ul></ul><ul><ul><li>Same experience </li></ul></ul><ul><ul><li>Same community </li></ul></ul><ul><li>The luxury of “Fourbucks” and their high quality product keeps their customers returning 18 times per month </li></ul>Money is No Object
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