Starbucksbusiness Plan Final 090223123940 Phpapp01

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Starbucksbusiness Plan Final 090223123940 Phpapp01

  1. 1. Starbucks Presented By: Brandie Whitmire Lukas Jones Richard Whitehouse David Alex Selby Erika Hartvickson Bryan Kelly Justin Young Pete Leiweke
  2. 2. Executive Summary <ul><li>Vision Statement: </li></ul><ul><li>“ 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.” </li></ul><ul><li>Mission Statement: </li></ul><ul><li>“ Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow” </li></ul>
  3. 3. Executive Summary <ul><li>Company Overview </li></ul><ul><ul><li>1971 in Seattle’s Pike Place Market </li></ul></ul><ul><ul><li>Went public 1992 </li></ul></ul><ul><ul><li>1999 Hear Music </li></ul></ul><ul><ul><li>2006 Starbucks Entertainment </li></ul></ul><ul><ul><li>Competing Internationally </li></ul></ul>
  4. 4. Company Background <ul><li>Founding Shareholders </li></ul><ul><ul><li>Jerry Baldwin, Zev Siegel, and Gordon Bowker, Howard Schultz </li></ul></ul><ul><li>Company Management </li></ul><ul><ul><li>Howard Schultz with other investors </li></ul></ul>
  5. 5. Executive Summary <ul><li>Strategy Tactics </li></ul><ul><ul><li>Customer Orientation, Employees, and Customization </li></ul></ul><ul><li>Market Analysis </li></ul><ul><ul><li>Domestic is saturated and mature </li></ul></ul><ul><ul><li>Intense Competition </li></ul></ul><ul><ul><ul><li>Low Capital Requirements </li></ul></ul></ul>
  6. 6. Executive Summary <ul><li>Market Plan </li></ul><ul><ul><li>Ambiance and Personal Experience </li></ul></ul><ul><ul><li>Customers prefer known brand names, have high disposable income </li></ul></ul><ul><li>Financial Plan </li></ul><ul><ul><li>Growth in Revenues </li></ul></ul><ul><ul><li>Profit Margins 3-5% </li></ul></ul>
  7. 7. Industry Analysis <ul><li>Principle Products </li></ul><ul><li>Unique Features </li></ul><ul><li>Sales Growth / Profit Margins </li></ul><ul><li>Industry Data and Prospects </li></ul><ul><li>Maturity of Line </li></ul><ul><li>Trends </li></ul>
  8. 8. Product’s Unique Features <ul><ul><ul><ul><li>Variety of products </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Customer’s experience </li></ul></ul></ul></ul>
  9. 9. Sales Growth and Profit Margins <ul><ul><ul><ul><li>Profit margin 3-5% </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Sales increased 20% in 2006 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Sales predicted to increase 14% </li></ul></ul></ul></ul>
  10. 10. Pretax Profits <ul><ul><ul><ul><li>Retail operations 2006: $6,583,098 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Retail operations 2005: $5,391,927 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Foodservice operations 2006: $343,168 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Foodservice operations 2005: $304,358 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Licensing operations 2006: $860,676 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Licensing operations 2005: $673,015 </li></ul></ul></ul></ul>
  11. 11. Industry Data <ul><ul><ul><ul><li>Franchises, coffeehouse chains, and independently owned coffee houses </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Supplier Power </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Buyer Power </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Threat of Substitution </li></ul></ul></ul></ul>
  12. 12. Product Maturity and Trends <ul><ul><ul><ul><li>Domestic Market Saturation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>International Market Growing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Leader in trend of young coffee drinkers </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Brand and culture to coffee drinking </li></ul></ul></ul></ul>
  13. 13. Opportunities <ul><ul><ul><ul><li>Ease of entry </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Industry growth </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Buyer power </li></ul></ul></ul></ul>
  14. 14. Threats <ul><ul><ul><ul><li>Brand identity </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Economies of scale </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Substitutes </li></ul></ul></ul></ul>
  15. 15. Marketing and Sales <ul><li>Customer Profile </li></ul><ul><li>Distribution Systems </li></ul><ul><li>Pricing </li></ul><ul><li>Stage in Product Life-Cycle </li></ul><ul><li>Advertising/Promotion compared to competitors </li></ul>
  16. 16. Customer-End user Profile <ul><ul><ul><ul><li>Age 18-34 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Internet users </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Men and women </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Majority of ethnicities </li></ul></ul></ul></ul><ul><ul><ul><ul><li>High disposable income </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Prefer brand names and vulnerable to societal/cultural influences </li></ul></ul></ul></ul>
  17. 17. Distribution <ul><ul><ul><ul><li>Directly to customers through own retail stores </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Partnerships with grocery and retail outlets </li></ul></ul></ul></ul>
  18. 18. Marketing and Pricing <ul><ul><ul><ul><li>A way of life </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Coffee house environment </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Charges a premium price </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Maturity stage of life cycle </li></ul></ul></ul></ul>
  19. 19. Competition <ul><li>Major Competitors: </li></ul><ul><ul><li>Peet’s Coffee and Tea </li></ul></ul><ul><ul><li>Caribou Coffee Company </li></ul></ul>
  20. 20. Competition <ul><li>Revenue Growth Over Last Year </li></ul><ul><ul><li>Starbucks: 22% </li></ul></ul><ul><ul><li>Peet’s: 20.1% </li></ul></ul><ul><ul><li>Caribou: 19.3% </li></ul></ul><ul><ul><li>Starbuck’s accounts for $5,485 Million in sales annually </li></ul></ul><ul><ul><li>MORE THAN TRIPLING ANNUAL SALES OF PEET’S AND CARIBOU COMBINED! </li></ul></ul>
  21. 21. Competition <ul><li>Net Earnings as % of Revenues </li></ul><ul><ul><li>Starbucks: .06% to 7.2% of revenues </li></ul></ul><ul><ul><li>Peet’s: to 3.8% of revenues </li></ul></ul><ul><ul><li>Caribou: worse than previous year to (3.8%) of revenue </li></ul></ul>
  22. 22. Competition <ul><li>Intensity of Rivalry </li></ul><ul><ul><li>Rivalry is mostly determined by: </li></ul></ul><ul><ul><ul><li>geographical location </li></ul></ul></ul><ul><ul><ul><li>brand identity. </li></ul></ul></ul><ul><ul><li>Highly saturated areas = more intense rivalry </li></ul></ul><ul><ul><li>Competitors with established brand identity = Bigger threat. </li></ul></ul><ul><ul><li>Starbucks competitors pose little threat and rivalry is low – Maintains monopolistic stance. </li></ul></ul>
  23. 23. Competition <ul><li>Competitive Advantages </li></ul><ul><ul><li>3 Unique Competencies: </li></ul></ul><ul><ul><ul><li>Employees – Unique Culture </li></ul></ul></ul><ul><ul><ul><li>Customer Orientation – Brand Intimacy </li></ul></ul></ul><ul><ul><ul><li>Customization – Unique Experience </li></ul></ul></ul><ul><li>“ Third Place” Philosophy </li></ul>
  24. 24. Competition <ul><li>Entry and Exit Barriers </li></ul><ul><ul><li>Relatively Low </li></ul></ul><ul><ul><ul><li>Low technological requirements </li></ul></ul></ul><ul><ul><ul><li>Low capital requirements </li></ul></ul></ul><ul><ul><li>Easy to enter and exit this industry </li></ul></ul>
  25. 25. Competition <ul><li>Pricing </li></ul><ul><ul><li>Prices slightly higher than competition </li></ul></ul><ul><ul><ul><li>Starbucks: $1.70 for a 16 oz. cup of coffee </li></ul></ul></ul><ul><ul><ul><li>Competitors: Between $1.50 - $1.75 for same cup of coffee </li></ul></ul></ul>
  26. 26. Competition <ul><li>Advertising and Promotional Effort </li></ul><ul><ul><li>Amount of Selling, Administrative, and General Expenses as a % of Revenues: </li></ul></ul><ul><ul><ul><li>Starbucks = 6% </li></ul></ul></ul><ul><ul><ul><li>Peet’s Coffee = 9% </li></ul></ul></ul><ul><ul><ul><li>Caribou = 52% </li></ul></ul></ul>
  27. 27. Structure <ul><li>Sense of Empowerment </li></ul><ul><li>Regionalized Leadership </li></ul><ul><li>Team Work </li></ul><ul><li>Constant Differentiation </li></ul>
  28. 28. Strategy <ul><li>Differentiate </li></ul><ul><ul><li>Constant Internal R&D </li></ul></ul><ul><li>Tactics </li></ul><ul><ul><li>Focus on Growth </li></ul></ul><ul><ul><li>New Product Categories and Channels </li></ul></ul><ul><ul><li>Maintain Core Values </li></ul></ul>
  29. 29. Management Team <ul><li>Baristas </li></ul><ul><ul><li>Standardization of Skills </li></ul></ul><ul><li>Employee Empowerment as a Tactic </li></ul><ul><ul><li>40 Vice Presidents </li></ul></ul><ul><ul><li>One Store Manager </li></ul></ul><ul><ul><li>Two Assistant Managers </li></ul></ul>
  30. 30. Control <ul><li>Ground Level </li></ul><ul><ul><li>Reduced Bureaucracy </li></ul></ul><ul><ul><li>Standardization of Skills </li></ul></ul><ul><li>Upper Management </li></ul><ul><ul><li>Team Work </li></ul></ul><ul><ul><li>Regionalized Leadership </li></ul></ul><ul><ul><li>40 Vice Presidents </li></ul></ul>
  31. 31. Compensation <ul><li>Sense of Empowerment </li></ul><ul><ul><li>20 hrs + Receive Stock and Health Care </li></ul></ul><ul><li>Other Compensation Includes </li></ul><ul><ul><li>Retirement Savings Plan, Discount Stock, Management Bonus, Life Insurance, Discount Merchandise </li></ul></ul>
  32. 32. Recommendations <ul><li>Multi Domestic Approach </li></ul><ul><ul><li>Allows for Regionalized Customization </li></ul></ul><ul><ul><li>In Line With Current Goals of Customization and Customer satisfaction </li></ul></ul><ul><li>Locally </li></ul><ul><ul><li>Market Saturation and 3rd Place Mentality </li></ul></ul>
  33. 33. Conclusion <ul><li>Differentiation Strategy </li></ul><ul><li>Empowerment and Sense of Community </li></ul><ul><li>Highly Regionalized Leadership and Localized Customization </li></ul><ul><li>Constant Innovation </li></ul>
  34. 34. Q&A

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