This document provides an overview of Starbucks' past, present, and future strategies. It discusses how Starbucks grew from 55 stores in 1989 to over 15,000 stores today. It analyzes Starbucks' competitive environment, products/services, financial performance, strategies for differentiation, and plans to address issues like high prices and maintaining quality control. The document aims to assess Starbucks' business model and identify opportunities for continued growth and strengthening its brand reputation.

1. Case Study: Starbuck’s Past
Present & Future
PRESENTED BY:
NAHID HOSSEN
ID: UGO1-37-14-083
Prepared for: Fabiha Enam
Assistant professor
State University of Bangladesh

2. Introduction of Starbucks
 Company started in 1971 in Seattle, Washington
 Grew from 55 stores in 1989 to over 15,000 stores today
 Products sold include:
- beverages - pastries
- whole coffee beans - coffee related retail items

3. Mission Statement
To inspire and nurture the human spirit – one person, one cup and one
neighborhood at a time.

4. Starbuck’s Competitive Analysis
 Market Structure
 Monopolistic Competition
 Competitive Activity
 Many companies are in the market and competition is fierce
 Competitors use location, product mix, and store atmosphere differentiation to
establish market niche
 Industry Costs and Capital Structure
 Low to moderate costs for each location
 Major start-up expenditures are property and equipment
 Major operating costs are labor and cost of sales

5. PEST Analysis for Starbuck’s
 Political Influences
 State & Local government controls
 Economic Influences
 Changes in disposable income could influence purchase levels
 Social Influences
 Consumer preferences could shift from coffee to other beverages
 Technological Influences
 Use of technology can improve operational efficiencies

6. CSR strategy for Starbucks
 Major contributor to CARE since ’91’
 Financial support to community literacy
organizations
 Green Store Task Force
 10 cent discount to customers bringing their own mugs
 Coffee grounds given as soil amendments

7. Products Diversification StrategiesProducts Diversification Strategies
 Coffee Beans & coffee equipment
 Fresh brewed coffee, espresso & cappuccino
 Lattes
 Wi-Fi
 Music CDs
 Food Items

8. Financial Analysis
Solvency
• Not extremely liquid but
capability in Financing short-
term debt will not be a problem
Profitability
• Profitable
•Below industry standards
•Declining in 2008 due to higher
operating costs
Financial
Leverage
•Initially the company was
financed majorly by equity
capital later over the years it
accepted debt majorly long
term
•Has ability to cover debt

9. LIQUIDITY RATIOS
YEAR 2008 2007 2006 2005 2004
CURRENT
ASSESTS
1,748.0 1,696.49 1,529.79 1,209.33 1,350.9
CURRENT
LIABILITY
2,189.7 2,155.57 1,935.62 1,227.0 746.26
CURRENT
RATIO
0 .8 0.79 0.79 0.99 1.81
LEVERAGE
YEAR 2008 2007 2006 2005 2004
DEBTS
3181.7 3,059.76 2,200.44 1,423.43 916.33
EQUITY
CAPITAL
2490.9 2,284.12 2,228.51 2,090.26 2,470.21
DEBT –
EQUITY
RATIO
1.28 1.34 0.99 0.68 0.37

10. Net Profit Margin (%)
YEAR 2008 2007 2006 2005 2004 2003 2002 2001 2000
% 3 7.1 7.5 7.8 7.3 6.5 6.4 6.8 4.3
RETURN ON EQUITY
YEAR 2008 2007 2006 2005 2004 2003 2002 2001 2000
% 12.7 29.4 26.1 23.7 15.7 12.8 12.3 13.1 8.2
RETURN ON ASSESTS
YEAR 2008 2007 2006 2005 2004 2003 2002 2001 2000
% 5.6 12.6 13.1 14.1 11.5 9.6 9.5 9.8 6.3

11. GROWTH RATES %
STARBUCKS INDUSTRY S&P 500
Sales (5-Year
Annual Avg.)
20.57 18.96 12.90
Net Income (5-
Year Annual
Avg.)
3.52 9.23 15.13
Dividends (5-
Year Annual
Avg.)
NA NA 11.79
Company Industry S&P 500
5Yr Gross
Margin (5-Year
Avg.)
23.0 29.6 39.4
5Yr Net Profit
Margin (5-Year
Avg.)
6.3 8.9 11.5
Profit Margins %

12. STRATEGIES FOR NEXT FISCAL
Better operational excellence at the store level
 More meaningful innovation to continue to differentiate the store
experience
Increased efficiencies and effectiveness in the general and administrative
infrastructure, to become more capable of navigating through the fluctuations
in the external environment.

15. Product Differentiation
 Products: Coffee, beans, pastries, equipment, mugs,
containers, accessories, music CDs
 “Everything matters” store ambience
 Retention of coffee aroma
 City specific mugs and t-shirts
 Season special coffees, rare exotic coffees,
handcrafted beverages etc
 Custom drinks and customer attention

16. Customer Willingness to PayCustomer Willingness to Pay
 Starbucks charged coffee
at slightly higher rates
 Location
 Ambience (Everything
matters), seating, comfort
and convenience
 COFFEE centered theme
 Wi-Fi … more value, more
time, more business

17. New Products and Places
 Music CDs
 The Starbucks card
 The Duet to Visa card
 Wi-Fi internet
 Starbucks coffee in supermarkets (in Flavor lock packaging)
 Airports, Universities, airlines, equipment in hotel rooms,
business offices
 Mail order sales
 Amazon.com and other websites

18. Causes of the Problem
 High Prices – Low Quality
 Starbucks has always tried to maintain it’s price-point , with only a
minimal improvement in product quality.
 Negative Image
 Starbucks has a large number of negatives in my mind these days. We
also find out the customer of Starbucks has dissatisfaction on the size
of cup what they are serving for their beverage.
 Poor Quality Control
 Starbucks core coffee quality has also suffered, in a number of obvious
ways.

19. Potential solution for the problems
 Solution for the High Price and Low Quality
 In this condition if the Starbucks want to keep their Brand image good
they have to maintain product price on the basis of the product quality.
 Solution for the Negative Image
 The Starbucks should do an analysis on their loyal customer and the
potential customers about their beverage CUP size.
 Solution for Poor Quality Control
 Starbucks is a very renound in coffee Brand, so if the Starbuck do not
maintain their products taste for every time, that is not reputable for a
giant coffee Brad like Starbuck.

20. Thank You….!!!
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FAQ