This document outlines the presentation for Starbucks' global strategy in 2006. It begins with an introduction to Starbucks, providing an overview of the company, its timeline and corporate values. It then discusses Starbucks' strategy of rapid store expansion, its product lines and coffee purchasing strategy. It analyzes the coffee industry and Starbucks' competitors. It also includes a PEST analysis and uses a 7S framework to analyze one of Starbucks' sites. It concludes that Starbucks' focused differentiation strategy targeting niche customers can defend against competitors. It recommends Starbucks continues serving niche customers better than rivals.

1. StarbuckS’ Global QueSt in
2006:
iS the beSt Yet to come?
Danny Nugroho RP – 13967/PS/MM/06
Retnowulan – 19421/PS/MM/06

2. Presentation Outline
 Introduction to Starbucks
 Industry Overview
 Company Overview
 Site Analysis
 Recommendations for Improvement
 Focused Recommendation for Improvement
 Final Action Plan
 Impact Analysis
 Wrap Up

3. Presentation Outline
 About Starbucks
 Overview
 Timeline
 Corporate Values and
Business Principles
 Mission Statements
 Corporate Social
Responsibility
 Starbucks’ Strategy
 Store expansion strategy
 Product line
 Coffee purchasing strategy
 Industry and Competitive
Analysis
● Coffee industry
● Competitor analysis
● Generic competitive strategy
● PEST analysis
● Site 7-S analysis
 Conclusion
 Recommendation

4. Presentation Outline
 About Starbucks
 Starbucks’ Strategy
 Industry and Competitive Analysis
 Conclusion
 Recommendation

5. About Starbucks
● Overview
● Timeline
● Corporate Values and
Business Principles
● Mission Statements
● Corporate Social
Responsibility

6.  Established in 1971 at Seattle, Washington
 Famous for its quality fresh-roasted coffee beans
and stylish atmosphere.
 Over 9,000 stores worldwide
 Product lines include :
− beverages (coffee, Tazo tea, soda, juices)
− pastries
− whole coffee beans
− coffee-related hardware and equipment
− merchandise (mug, CDs)
Overview

7. 1971 – Starbucks Coffee, Tea, and Spice store (coffee bean roasting)
opened in Seattle’s Pike Place Market.
1982 – Howard Schultz joined Starbucks.
1986 – Howard Schultz established Il Giornale Coffee Company.
1987 – Il Giornale acquired Starbucks and changed the name into
Starbucks Corporation.
1992 – Starbucks decertified the union and made IPO.
1995 – Starbucks Coffee International opens in Japan
− Starbucks implemented ESOP.
Timeline

8. Timeline
 1996 – Starbucks’ began selling bottled Frappuccino.
 1999 – Starbucks acquired Tazo Tea.
 2000 – Acquired Hear Music, a San Francisco-based company
 2003 – Starbucks acquired Seattle’s Best Coffee
 2005 – Introduced Starbucks Coffee Liqueur; Acquires Ethos Wate

9. Corporate Values and
Business Principles
 Building a Company with Soul
 Opposing Franchising because of Quality Control and
Culture
 Only selling coffee beans without artificial flavors.
 Satisfy customers by all means.
 Employees’ contribution and involvement in making
Starbucks a better company

10. About Starbucks
Mission Statements
 Company Mission Statement:
 “Establish Starbucks as the premier
purveyor of the finest coffee in the
world while maintaining our
uncompromising principles while we
grow.”
 Environmental Mission Statement:
 “Starbucks is committed to a role of
environmental leadership in all facets
of our business.”

11. Mission Statement
Six guiding principles:
• Provide a great work environment and treat each other with respect
and dignity.
• Embrace diversity as an essential component in the way we do
business.
• Apply the highest standards of excellence to the purchasing,
roasting, and fresh delivery of our coffee.
• Develop enthusiastically satisfied customers all of the time.
• Contribute positively to our communities and our environment.
• Recognize that profitability is essential to our future success.

12. Corporate Social Responsibility
 “Starbucks focuses its efforts on improving social and economic
conditions for coffee farmers; minimizing environmental impact;
making a positive contribution in the communities where they do
business; and providing a great work environment for their partners
(employees).”
 Establish the Starbucks Foundation in 1997
 A major contributor of CARE, worldwide relief and development
organization (Health, Education, and Humanitarian aid)
 Provides financial support to community literacy organizations
 Participate in local charitable projects.
 2004 EnviroStars Recognized Leader Award – for its community
service and environmental activities

13. Starbucks’ Strategy
 Rapid store expansion strategy
• Domestic store expansion
• International store expansion
• Employee Training and Recognition
• Real Estate, Store Design, Planning, and Construction
• Store ambience
 Product Line
 Coffee purchasing strategy

14. Starbucks’ Strategy
Rapid store expansion strategy
• Domestic store expansion
− A three-year expansion strategy
− “Starbucks everywhere” approach
• International store expansion
− Company-owned and company-operated stores or licensing
− Created a new subsidiary, Starbucks Coffee International
− Expanded its consumer products channel in South Pacific region

15. Starbucks’ Strategy
• Employee Training and Recognition
− Systems to recruit, hire and train baristas and store managers
 screening
 training programs
 awards for partners
• Real Estate, Store Design, Planning, and Construction
− A broad range of store formats (the right image and character)
− A “stores of the future” project team
− High-traffic, high-visibility store locations
− Control of average store opening costs
− Wi-Fi availability at stores

16. Starbucks’ Strategy
• Store ambience
− The concept of “everything matters”
− Assessment of standards

17. Starbucks’ Strategy
Product Line
•Wide range of products choices
•Special product promotion
•Selling music CDs
•Joint ventures
PepsiCo
Dreyer’s Grand Ice Cream
 Jim Beam Brands
•Acquisitions
 Hear Music
 Ethos Water
•Starbucks Cards
•Partnership with Bank One

18. Starbucks’ Strategy
Coffee purchasing strategy
• Building relationship with growers and exporters, checking on
agricultural conditions and crop yields, and searching out varieties
and sources that would meet Starbucks’ standards.
• Using fixed-price purchase commitment and purchasing coffee
future contracts
• Contributing to the sustainability of coffee growers and helping
environment conservation
• Purchasing and marketing Fair Trade Certified coffee
• Promoting coffee cultivation methods that protected biodiversity and
maintained a healthy environment

19. Industry and Competitive
Analysis
● Coffee Industry
● C
● Corporate Values and
Business Principles
● Mission Statements
● Corporate Social
Responsibility

20. Industry and Competitive Analysis
 Coffee industry
• Coffee drinking trend
• Coffee beans production
 Competitor analysis
• Future goals
• Current strategy
• Assumptions
• Capabilities
 Generic competitive strategy
 PEST analysis
 Site 7S analysis

21. Industry and Competitive
Analysis
Coffee industry
Coffee drinking trend
− Coffee is the second most consumed drink after water.
− Americans substitute specialty coffee for alcohol.
− Coffee shops are a great place to meet people.
− Coffee is an affordable luxury.
− Consumers are more knowledgeable about coffee.
Coffee beans production
− In 1994, coffee was the second most traded commodity after
Oil.
− There are two types of Coffee, namely “basic” and
“specialty”.

22. Industry and Competitive
Analysis
Competitor analysis
2 Types of Competitor:
 Coffee shops and restaurants
 Nationwide coffee manufacturers (rival brands
of specialty coffee)

23. Industry and Competitive
Analysis
Competitor analysis
Future goals
 To grow bigger
 To better position themselves as an alternative to Starbucks
 Current strategy
Merger of local and regional chains of coffee shops etc.
 Assumptions
− Competitors’ assumptions about themselves
− Competitors’ assumptions about the industry and other companies in it

24. Industry and Competitive
Analysis
Competitor analysis
 Capabilities (areas of competitors’ strengths and
weaknesses)
− Product
− Dealer/distribution
− Operations
− R & D
− Financial strength
− Organization & managerial ability
− Personnel turnover

25. Industry and Competitive
Analysis
Generic Competitive Strategy

26. Industry and Competitive
Analysis
Focused differentiation
Serve niche buyers better than rivals
Buyers have distinctive preferences, special requirements, or unique
needs
Have unique capabilities to serve needs of target buyer segment
Big enough to be profitable and offers good growth potential
Costly or difficult for multi-segment competitors
to meet specialized needs of niche members
Starbucks has resources and capabilities
to effectively serve an attractive niche
Few other rivals are specializing in same niche

27. PEST Analysis
Political Influences
− Relationships between U.S. and countries producing coffee
beans
− Environmental regulations
− Industry-specific regulations
Economic Influences
− Demand for food and beverages
− Customers’ buying power
− Exchange rate & taxation

28. PEST Analysis
Social Influences
− Trend
− Consumer preferences
− Changes in lifestyle and occupation
− Education
Technological Influences
− advances in manufacture
− biotech and agricultural development
− IT developments

29. Site 7S Model
Strategy
Rapid store expansion strategy
Product Line
Coffee purchasing strategy

30. Site 7S Model
Structure
There are one store
manager, one assistant
manager, some shift
supervisors and 16
partners/baristas
B a ris ta s B a ris ta s B a ris ta s
S h ift S u p e rv is o rs
A s s is ta n t M a n a g e r
S to re M a n a g e r

31. Site 7S Analysis
Staffing
●Employee benefits package includes base salary, health care
benefits, stock option plan, and
− Health care benefits include preventive care, crisis counseling,
dental care, eye care, mental health, chemical dependency, and
medical costs for terminal illness up for 29 months.
− Employees trainings that include basic 24 hour-training, Star Skills,
Coffee Master Program, Servant Leadership W
orkshop, Career
Power and Career Power for Coaches W
orkshop.
− Awards for partners, which range from frequent awards to high-
level cash awards.

32. Site 7S Analysis
Systems
− Centralized control over individual stores by
headquarters
− Total Quality Management (i.e. Just-In-Time)
− Information system to support business operations.
−

33. Site 7S Analysis
Skills
− coffee making
− customer service
− sales techniques

34. Site 7S Model
Style
● Increase motivation through reviews and raises.
● Employees are allowed to make decisions and participate in

35. Site 7S Model
Shared Values
− Fun working environment
− Treat each other with respect and care
− Diversity is encouraged.
− Maintain highest quality standards for products
− Satisfy customers and compensate the unsatisfied
ones.
− CSR.
− Respect employees by calling them partner.
− The importance of profitability for future success

36. Conclusion
 Focuser can defend against challengers via
superior ability to serve niche members

37. Recommendation
 Focuser can defend against challengers via
superior ability to serve niche members

38. Starbucks Corporate Strategy