INTRODUCTION• Starbucks Corporation is an international coffeehouse chain based in Seattle, Washington,United States.• CEO: Howard Schultz (Founder of Starbucks coffeehouse)• Starbucks is the largest coffeehouse company in the world, with 16,120 stores in 49countries, including around 11,000 in the United States, followed by nearly 1,000 in Canadaand more than 800 in Japan.• Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks,snacks, and items such as mugs and coffee beans. Many of the companys products areseasonal or specific to the locality of the store.• Starbucks-brand ice cream and coffee arealso offered at grocery stores. Starbucks’ Italian style coffee, espressobeverages, teas, pastries and confections had made Starbucks one of the greatest retailingstories of recent history and world’s biggest specialty coffee chain.• In 2003, Starbucks made the fortune 500.
COFFEE INDUSTRY• Coffee is an important commodity and a popular beverage.• Over 2.25 billion cups of coffee are consumed in the world every day.• Over 90% of coffee production takes place in developing countries, while consumptionhappens mainly in the industrialized economies.• Worldwide, 25 million small producers rely on coffee for a living.• Coffee is also bought and sold as a commodity on the New York Board of Trade.• The worlds largest transfer point for coffee is the port of Hamburg, Germany.
Porter’s five forcesBargaining power of supplier: (high)1.Farmers have less land to produce(3/4 coffee farms in world areless than 3 acres.2.Farmers don’t have desire, the volume, the expertise, connectionsto export themselves, because most of the countries regulatedcoffee sales . they are having a long negotiation with exportersabout price.3.Very few exporters are there to exportIndustry rivalry: (Low)1.Low barriers to enter intoretail specialty coffee market .2.Less regulations.3.High profit margins.4.Huge competitionThreat of substitutes:(high)1.Speciality coffee is facingtough challenges fromsubstitutes like basiccoffee , tea, juice, softdrinks, alcoholBargaining power of consumer: (high)1.Due to presence of large specialty coffee makers,consumers have high bargaining power.(3485 competitorsare present in specialty coffee market)2.Adoptation of healthier life style and replacing of alcoholwith coffee .3.Low switching cost.Threat of new entrants : (high)1.Facing high competition fromflavored coffee makers.2.A Few players with multipleoutlets becoming toughcompetition to star bucks ,around 5500 coffee bars, cafésare there in USA and Canada by1999.
• It shows the cash cows as the regular Starbucks line of Coffee’s, Latte’s and Frappuccinosfound at nearly every location. These are stable products that account for the bulk of sales.• A potential star is the International locations, which hold less financial risk and open doorsfor innovation and stability.• Question marks are the recently added VIA instant coffee to be expanding to grocery storesand convenient stores. Another question mark is the oft forgotten sub-brand Seattle’s Best.The company will be revamping this brand and it’s future is unknown.• Current products like this such as the dog, pre-bottle Frappuccinos account for a tiny fractionof sales.
SUPPLY CHAIN MANAGEMENTSOURCINGSourced approximately50% of its beans fromLatin AmericaSAMPLINGExtracts 3 differentsamples from everyshipment of 250 bags1. Offer sample sent byexporter2. Before the shipment3. At coffee roastingplantROASTING &BLENDINGComputerized roastersroast the coffee beansunder appropriatetemperature and timeAir coolingPACKAGINGVacuum -sealing