This document provides an analysis of Starbucks' strategic planning, including their past decisions, current situation, and future options. It analyzes Starbucks' past using Porter's five forces model and their original generic strategy. It then discusses Starbucks' current success factors through SWOT, PEST, and Porter's five forces analyses. Finally, it provides recommendations for Starbucks' future, including organizing reward programs, becoming more environmentally friendly, offering CD burning and free WiFi, renting meeting space, strengthening customer connections, and continually improving their coffee.
Starbucks has evolved from a mere seller of coffee products to a full-fledged chain “restaurant”, offering not only coffee products but also other beverages, foods, and merchandise.
Starbucks is still a global leader in the coffee shop chain business
Introduced an online app making it more convenient for customers to locate stores and place orders
Starbucks slogan of “Uniquely Starbucks” continues to play a huge role in company’s success
Starbucks has evolved from a mere seller of coffee products to a full-fledged chain “restaurant”, offering not only coffee products but also other beverages, foods, and merchandise.
Starbucks is still a global leader in the coffee shop chain business
Introduced an online app making it more convenient for customers to locate stores and place orders
Starbucks slogan of “Uniquely Starbucks” continues to play a huge role in company’s success
Starbucks: Expanding Into India, Case StudyBCronin2
This is a case study conducted for a Strategic Management course.
This plan follows Starbucks Coffee Company's decision to expand into India. Examples of Environmental Scanning, Strategy Formulation, Strategy Implementation, and Evaluation & Control are included in this document, along with an ultimate recommendation to Starbucks.
by Patrícia Azevedo (Brazil) and Kyle Tsung (Taiwan)
August 2009 - UC Irvine - Grade: A+
This is my final project for ESL Marketing Program, at University of California Irvine. Our goal was present marketing concepts throught a real American Brand in a creative presentation.
An interesting analysis of Starbucks's SWOT, 4Ps, Strategy, Marketing, Finance etc. Hope you will enjoy this presentation. Go through the slides and don't forget to hit like and share buttons. All the best.
The ppt descibes the the Branding and marketing strategies of Starbucks Under 8 functional Bracket like Logo, Standardisation, expansion, Globalisation, Co-branding, Augmented Services, Facing Competition and Pricing Strategies.
Starbucks: Expanding Into India, Case StudyBCronin2
This is a case study conducted for a Strategic Management course.
This plan follows Starbucks Coffee Company's decision to expand into India. Examples of Environmental Scanning, Strategy Formulation, Strategy Implementation, and Evaluation & Control are included in this document, along with an ultimate recommendation to Starbucks.
by Patrícia Azevedo (Brazil) and Kyle Tsung (Taiwan)
August 2009 - UC Irvine - Grade: A+
This is my final project for ESL Marketing Program, at University of California Irvine. Our goal was present marketing concepts throught a real American Brand in a creative presentation.
An interesting analysis of Starbucks's SWOT, 4Ps, Strategy, Marketing, Finance etc. Hope you will enjoy this presentation. Go through the slides and don't forget to hit like and share buttons. All the best.
The ppt descibes the the Branding and marketing strategies of Starbucks Under 8 functional Bracket like Logo, Standardisation, expansion, Globalisation, Co-branding, Augmented Services, Facing Competition and Pricing Strategies.
SOCI 4395 Health & Illness in the US
Reaction Paper Guidelines (25 points each)
Write two reaction papers based on TWO of the documentaries listed below:
"The New Asylums" (based on Ch. 4) Due Sunday, February 16 before 11:59 p.m.
"The Weight of the Nation: Part 1" (based on
Ch. 6)
Due Sunday, March 15 before 11:59 p.m.
"Project VoiceScape: Musical Warrior" (2011)
(based on Ch. 7)
Due Sunday, March 22 before 11:59 p.m.
You must upload an electronic copy of your paper on the Blackboard on the day it is due.
Required Format:
Paper has to be 2-3 double-spaced pages. DO NOT exceed 3 pages.
11 or 12-point font size must be used, preferably Arial or Times New Roman.
Use 1” margins on the top and bottom and at least 1” margins on the left and right.
Style and Structure:
The purpose of this assignment is to demonstrate that you understand the documentary
you have watched—and the material/chapter you have read— and that you have thought
about are enough to be able to make an original response to it.
Please note that response papers are not exercises in simply summarizing the assigned
readings. Instead, you must critically respond to the ideas being presented by answering
the questions stated below.
Support your argument by drawing on the lecture PowerPoints and readings.
You do not need a bibliography, but acknowledge other sources directly in the
text (e.g., “As Dr. Amin described in the PowerPoint…”, “In the textbook…”,
“According to Durkheim…”)
I strongly recommend writing in the first person.
The layout of your paper should be like that of your average English essay with an
introduction, a thesis statement, body paragraphs, and a conclusion.
Remember that this is a formal paper. Keep your language formal and avoid contractions.
Below are some guidelines to help you in preparing a clear and thoughtful reaction paper:
First, give details of the documentary (Introduction)
What is the Title of the documentary?
Who are the Intended audience?
SOCI 4395 Health & Illness in the US
Second, summarize the documentary (1-2 paragraphs)
What is the subject of the documentary? / What is the documentary about?
Third, critically evaluate and extend the main theoretical arguments (1-2 paragraphs)
What is/are the purpose/ main ideas of the documentary?
What is the main message the director wants to get across to the audience?
Do you agree or disagree with these ideas?
What are the strengths and weaknesses of the documentary?
Fourth, state your prior knowledge of the subject (1-2 paragraphs)
In this step, you need to synthesize the assigned chapter with the documentary.
Was the documentary related to the assigned chapter?, How?
Try to synthesize the main purpose/s of the documentary with the main idea/s discussed
in the assigned chapter?
Finall.
How does your religion play a role in your everydayness Do .docxpooleavelina
How does your religion play a role in your
everydayness? Do you think it defines you
on a partial level or wholistic level?
Do you think religion, in general, creates any conflicts with your day-to-day life? Does it
pose negative performances or actions that are unregulated in your religion?
How has religion impacted your daily life? What do you love most about your
religion/faith?
What are the risks associated with
conducting interviews related to religion?
This week we had to determine one of our methods for our research. I am conducting
interviews with multiple folks and will need to compile some general statistical
information, including financial information (which should be readily accessible, but
could make my process more interesting if there is reluctance). All research contains
some level of risk, and interviews are no exception to that. My main concern is
participant bias, and the risk of folks not being entirely honest about some things,
particularly subjective questions ("how do you feel about...", "why did you/the church..."),
and maybe pandering to the research project in some capacity. What steps will you take
to safeguard your data and ensure it is as pure as possible? How will you "test" the
data? Are there other risks associated with data collection that I'm not considering?
I think this Barna study presents some interesting results that are worth considering as
we prepare to conduct our own research. There are some numbers here that are useful
on a global scale, although they may not speak to our congregations with any
specificity.
Create your own Question regarding Religion
Running head: STARBACKS’ MARKET ANALYSI 1
STARBUCKS’ MARKET ANALYSIS 4
Starbucks’ Market Analysis
Tabatha Hall-Politte
March 1, 2020
Introduction
The success of any organization is based on how well it will be able to align its internal and external operations. Various factors impact the process of the organizations, and thus, it's the role of the organization management to align these factors with organization key objectives (Shaburishvili, 2017). In this case, the study will analyze the market and industrial factors that affect the operation of the Starbucks operation. In this study, the main focus will be laid in the analysis of the emerging that that affects its operation; market and industrial factors and also its strength and weaknesses.
Critical environments factors that affect Starbucks operation
Numerous factors affect the business operation, and these factors play a significant role in determining the performance of the organization. In this case, the study will analyze two factors – technology and globalization. The research will focus on investigating how these two factors impacts Starbuck's operation and performance.
Globalization
The increase in globalization and International corporations affects how the business operates. Globalization affects Starbucks in two main ways ...
Running head: STARBUCKS 1
STARBUCKS 2
Starbucks Research
ASSIGNMENT #2
Starbucks is recognized as the world largest coffee house chain with more than 20,000 locations in the entire world. Since its establishment in 1971, this firm has been offering hot and cold beverages especially coffee and snacks. In recent times, this firm has increased its efforts towards selling branded goods like packaged coffee beans, mugs, and other gifts (3). This paper is therefore aimed at discussing the strengths and weaknesses of this firm, the tactic that this firm needs to choose to ensure that there is maximum use of its advantage as well as the tact it can use to fix the weakness. Other sections to be discussed in the paper include the tangible and the intangible resources, the core abilities, and the core competencies; two segments of the general environment that is likely to influence on Starbucks; the forces of competition; how to improve to address its ability in the near future to overcome the competition; the greatest external threat; and the greatest opportunity presented to Starbucks.
The strengths and weaknesses
The first strength is related to the quality, profitability, and ethicality. This firm has established itself as the premium coffee house chain despite the existence of the global presence especially firms producing fast food. The products produced by Starbuck are excellent in terms of quality, environmentally friendly, and consistent between regions. The next strength is related to the effectiveness and re-investment strategies used by the firm and this implies that the profit made by this firm is going straight to the expansion of the business and this is why this firm is increasing its chains all over the world. This organization is also treating its employee. It is among the top 100 firms according to the Fortunes Top 100 Places to work for due to the manner, in which it treats its employees.
With regard to its weaknesses, this firm is having a high price point and this means that many customers are being prevented from visiting this firm to make their purchase. Another weakness is related to the lack of over uniqueness of its products. This firm does not have a unique market and this, therefore, implies that it provides products, which are similar to the majority of those, which are being provided by other firms.
How to take maximum advantage of the strength and fixing of the weakness
One of the strengths of Starbucks is related to its quality, profitability, and ethicality. This, therefore, implies that the majority of the customers get attracted to the products being produced by this firm. Therefore Starbuck can take advantage of this strength to increase the prices since the majority of the customers will be willing to pay. ...
External and Internal Analysis 8Extern.docxgitagrimston
External and Internal Analysis 8
External and Internal Environmental Analysis
STR/581
Professor Alfonso Rodriguez
July 30, 2014
Sheila Medina
Introduction
Coffee has become an integral part of the lives of numerous people. In 1971, Starbucks coffee opened its first coffee shop in the Pike Place Market in Seattle, Washington. Now, according to research “Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world, with more than 6,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim” (www.investor.starbucks.com). Starbucks aims to be the consumer’s favorite coffee shop and to achieve this the company focused on customer satisfaction as well as company advancement. Therefore, it is important to act based on what is written in Starbucks mission, value and vision statement, “To inspire and nurture the human spirit-one person, one cup, and one neighborhood at a time” (www.starbucks.com).
A review of Starbucks financial reports has identified an increase in revenue over the past few years. However, this increase in revenue doesn’t account for the increase in profits. The profit increase is not as high as it could be due to external factors such as other coffee shops and the increase in amount of competition. This report aims to identify the different internal and external environment factors attributing to the changes in Starbucks external environment by utilizing several different analyses.
SWOT Analysis
Strengths
Starbucks possesses several main strengths including their high visibility being located in high traffic areas, quality of service and products and their established brand loyalty. Starbucks remains an established leader being the number one known coffee house in the world while possessing a competent workforce, providing quality service, and continuing financial soundness. They also are known for their strong internal and external relationships with their suppliers.
Weakness
Weaknesses that Starbucks must address include: Product affordability and pricing, coffee beans price is the major influence over the firms profits, maintaining the positive public opinion of their products, avoiding any negative publicity, and remaining connected to their customers. Starbucks must also consider the fact they have expanded domestically and internationally resulting in saturation of the markets. They are also a non-smoking facility alienating some customers from purchasing coffee or other products from their store.
Opportunities
Opportunities include the ability for Starbucks to enter into different and new markets,
partnership opportunities with businesses, growing acceptance and customer satisfaction, and increase different product offerings. Starbucks must strive to continue expanding their products and food service to remain competitive and reach other consumers. Another option would be for Starbucks to allow consumers to order t ...
This slide is the solution to the Starbucks Case. The case is available in Google Docs. the solutions are well discussed , in case you have doubts check in the footnotes.
12Innovation and Competitive Advantage Changing Env.docxmoggdede
1
2
Innovation and Competitive Advantage: Changing Environments
MGT/411
July 26, 2017
Innovation and Competitive Advantage: Changing Environments
In 1971 at Seattle’s Pike Place Markets, it is when Starbucks started operations with the future objective of supplying coffee to various surrounding bars and restaurants. Following the hiring of Howard Schultz in 1982, Starbucks changed Schultz opinions taking a different turn in the company. The present international condition for Starbucks looks like an emerging business part as well as the reorganization of this is confirmed through their endeavor to be the leading worldwide company by making difference in lives of people all over the world. This seems to be working in the company’s favor, and is assisting Starbucks to catch the attention of several main companies who wish to share partnership. This is entirely positive news since it gives a strong foundation for future growth of global markets, which strengthens more the mission to be one of the principal specialty coffee retailers worldwide (Kembell, Hawks, Perry, Olsen, April 2002).
The Organizational Leadership Philosophy on Innovation
Starbucks got several leadership characteristics on how they view innovation. Openness is one characteristic that Starbucks coffee adheres to. At first, workers had a fear culture whereby they feared talking to their superiors. In order to tackle this problem, the former president of Starbucks Behar, initiated open forums to encourage staffs to query as well as communicate with their superiors. Through this, openness culture was developed which empowers Starbucks employees and smooth the progress of innovation (Ferguson, January 31, 2017).
Additionally, there is collaboration and communication within the company. The Starbucks organizational culture endorses collaborative attempts by use of effective communication. In the cafes, baristas evidently communicate with one another to meet orders. In addition, they cooperate with each other to make the order completion process efficient. Therefore, leadership at Starbucks encourages business process efficiency, which leads to top quality service, business cost-effectiveness, and customer experience (Ferguson, January 31, 2017).
Finally, Starbucks got an anti-discrimination procedure which shapes the company’s culture. The policy forbids any kind of discrimination based on race, gender, ethnicity, religion, sexual orientation, cultural backgrounds, thoughts and ideas, and life experiences. By the observation of this aspect, Starbucks assists rapport and sharing among its workers, and innovation based on different ideas. This feature of the company also makes Starbucks customers feel welcome at the cafes (Ferguson, January 31, 2017).
Activities the Organization is Actively Engaged in to Sustain Competitive Advantage Within Its Industry
One of the activities that Starbucks engage in to ensure they remain competitive in this industry is product innovation. At all ...
Porter's Five Forces Analysis: Starbucks vs. Costa Coffeeakshayytanwar123
Porter's Five Forces analysis is a strategic framework used to evaluate the competitive intensity and attractiveness of an industry. This analysis provides insights into the factors that shape competition within an industry, helping businesses make informed strategic decisions. In this presentation, we will apply Porter's Five Forces framework to compare Starbucks and Costa Coffee, two prominent players in the global coffeehouse industry.
Porter's Five Forces analysis highlights the dynamic and competitive nature of the coffeehouse industry, with both Starbucks and Costa Coffee navigating various challenges and opportunities to maintain their market positions and drive growth. Understanding these forces is essential for formulating effective strategies and staying ahead in the ever-evolving market landscape.
Francesca Gottschalk - How can education support child empowerment.pptxEduSkills OECD
Francesca Gottschalk from the OECD’s Centre for Educational Research and Innovation presents at the Ask an Expert Webinar: How can education support child empowerment?
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
1. Strategic Planning of Starbucks
(Past Decisions, Current situation and Future Options)
Student ID number: F1005899
Full name: Namrataben Govindbhai Panchasara
Intake and group number: 8
Module Name: Strategic Planning
Assignment Type: Individual Assignment
Date: 04/11/2011
1
Namrataben Panchasara (Student ID:F1005899)
2. Executive Summery
This report aims to strategically based evaluate Starbucks past and current
situation and future position of this largely successful company. The analysis uses
Michael five forces analysis, Starbucks’ Original Generic Strategy, Company success
factor, SWOT, PEST and recommendation for future that Starbucks can organised
Reward program Organised, Becoming more Environment Friendly, CD Burning,
Install free wireless internet and Rent out meeting space, Increase connection with
customers, Continually improve the coffee. At last conclusion and i use book of
Michal Porter and some others and electronic articles and websites.
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Namrataben Panchasara (Student ID:F1005899)
3. Index
No. Index Page No.
1. Executive Summery 2
2. Introduction of the company 4
3. Porters five force analysis (Past) 5
4. Starbucks’ Original Generic Strategy (Past) 8
5. Starbucks’ Success Factors 9
6. Michael Porter’s 5 Force analyses (current) 11
7. SWOT Analysis 12
8. PEST Analysis 13
9. Recommendation for Future Action 14
10. Conclusion 16
11. References 17
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Namrataben Panchasara (Student ID:F1005899)
4. Introduction of company
Starbucks is the largest coffeehouse company in the world. [1]Starbucks Corporation
was founded by English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon
Bowker in March 1971. Starbucks Corporation is the most successful coffee shop chain in
the past few decades. Using their aggressive growth most of its competition.
The current countries in which Starbucks are located world-wide more than 17018 (as of
July 3, 2011) retail stores in 50 countries[2] The first Starbucks first coffee shop opened in
Washington, America in 1971 and The first Starbucks location outside North America
opened in Tokyo, Japan in 1996. Starbucks entered the U.K. market in 1998 with the
$83 million (more than 60 stores). [3] Starbucks customers enjoy quality service, an inviting
atmosphere and an exceptional cup of coffee.
Starbucks selling Coffee (drip brewed coffee), Coffee beans, other hot and cold
drinks, cold and hot Sandwiches, Panini, Snacks, Pastries and item like Mug. Customers are
able to study read and enjoy music while the drinking coffee. Starbucks strategically position
of each stores with hopes of matching the specific location, helping to create a unique
atmosphere.
4
Namrataben Panchasara (Student ID:F1005899)
5. Michael Porter’s 5 Force analyses (past)
My analysis being with a through breakdown of the competitive environment which
Starbucks corporation in last fifteen years. When Starbucks was first acquired by Haward
Schultz. Michal Porter author of competitive strategy to analyze in industrial environment and
develop an optimum strategy for success. The five variables responsible for the five forces
analyze using the model are buyers, industry suppliers, potential new entrants, competitive
among existing firms and substitute products. I will concentrate on the competitive
environment in which Starbucks created and I will also considerate social and
microenvironment force.
Industry rivalry
Potential for new entrance
Substitute products
Supplier bargaining power
Bargaining power of buyers
Industry Rivalry
Define an industry can described as drawing a line between the substitute products
which offered by competitors and the established competitors.[4] (Porter,1998 page no.17)
The assumption is that the relevant industry is confine to the competitors within the speciality
of coffee segments. Those get any reference to competitors from outside of the speciality of
coffee segments. By definition should be considered competitors from substitute products.
However, given the difficulty in defending the boundary of the speciality coffee industries.
The general competitors created by rivalry between established competitors I analyze drives
down the rate of return on invested capital toward what economist refer to as “the industry
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Namrataben Panchasara (Student ID:F1005899)
6. floor rate of return” which occurs when the market is really competitive[5] (Grant, 2008 page
no.69).
Some of the largest basic coffee companies who sales coffee in grocery chains could
have responded to swift growth in the speciality coffee industry by introducing by they own
versions of popular supermarket brands [6] (Koehn 2005). Some established companies
would have needed to achieve high volume of sales then small companies to achieve profit
target.
Potential for new entrants
The second force in Porter’s model which will be applied to the analysis of the
industry environment. The potential for new entrants which was Starbucks incubated. The
primary prevention to new entrants into industry is the barriers to enter. The higher barriers
to entry are within any given industry the threats of new entrants to that industry [7] (Porter,
1998 page no.7). The especially coffee industry does not pot a high premium on economies
of level. We can tell in other words companies with national distribution in the coffee industry
at large experienced some discount thought bulk purchases and suppliers and greater
infrastructure their advantages was small. This only would involve low barriers to entry in the
speciality in the coffee industry.
Starbucks entered in coffee industry in 1971 but Starbucks’ stores launched grew
more successful in 1996, new stores generated an average of $700000 revenue in their first
year that more than average of $427000in 1990. In this way partly due to growing reputation
of Starbucks brands. Starbucks was entered in Japan’s market in 1996. Before 1996
Starbucks has business in United States only. In 1998 Starbucks entered in United Kingdom
market. That is new entry in UK coffee industry. In 2002 Starbucks opened first store in
Latin America (in Mexico City). In August 2003 opened new store and first store in South
America (in Lima). In end of 2010, Starbucks opened in EI Salvador (Center America)[5] In
the early days, Starbucks so busy with selling coffee, one cup at a time, opening store and
educating people about dark-roasted coffee that they never thought much about branding
strategy.
In 1996 Starbucks began selling bottled Frappuccino. In 1999 Starbucks acquired
Tazo Tea. In 2000 Acquired hear music, a San Francisco based company. In 2003
Starbucks acquired Seattle’s Best coffee. In 2005 introduce Starbucks coffee liqueur;
acquires Ethos Wate.
Substitute Products
Another force which up to an organization and its include in Porter’s five force and it
is also threat of substitute products. The Pepsi and Coca-cola is the primary substitute
products posing a potential threat to specially were the caffeinated soft drink. Competitors
like Coca cola and Pepsi offered drink, which had the caffeine inherent in especially of
coffee, at significantly lower prices [8] (Quelch 2006). However, this is the large different in
the test and demographic makeup of customers between the two products. That is only true
direct substitute for especially coffee available was basic coffee. Basic coffee was
considered to be of significantly lower quality then speciality coffee. As an analysis, it
actually presented the industry with little threat of substitution.
Bargaining Power of Buyers
The bargaining power of buyer also plays an important role determining the standpoint from
an investor’s point of view of the environmental which the speciality of coffee industry existed
in inception. The force of the buyer’s bargaining power is relative to the ability of buyers to
force down prices, bargain for higher-quality products or more services, and pit rival
6
Namrataben Panchasara (Student ID:F1005899)
7. organizations against one another.[9] (Porter, 1998, p. 24) In the specialty coffee industry,
individual consumers constituted the majority little bit of all buyers; so, they didn’t typically
buy in large volumes and did not act in concert. Both of these factors reduced the relative
bargaining power of buyers in this industry. In addition, the cost of buying a cup of specialty
coffee did not represent a significant small part of any individual buyer’s cost of living,
reducing the propensity for price shopping and increasing the importance on quality and
customer service.
One of the primary differences between the basic coffee industry and the specialty coffee
industry is the amount of differentiation involved in the specialty coffee industry and the lack
of differentiation in the basic coffee industry. At last, the buyer or consumer in the 14
specialty coffee industry does not have full information. The consumer does not know the
actual demand, market prices or supplier costs which seriously reduces their bargaining
power. Overall, then, the bargaining power of the buyers or customers of the specialty coffee
industry, which consisted basically of individual consumers, was not considerable.
Bargaining power of buyers
The bargaining power of suppliers to the specialty coffee industry would be exerted
by also threatening to move up the price of the Arabica beans which are used in the
production of dark roasted coffee, or by a threat of drop in the quality or quantity of the
coffee beans themselves. The suppliers of Arabica beans were mostly small to medium-
sized family owned farms and typically sold their crops to processors through local markets.
(Lee, 2007)[10] Primarily, these farms were located in Latin America, the Pacific Rim and East
Africa. (Lee, 2007) These farms were numerous and unrelated to one another, with no
unionization, giving them very little collective bargaining power.
While there was no direct alternative for the Arabica beans used in the production of
specialty coffee, the huge range of farms which supplied the crop made it easy for buyers to
avoid obligations to any particular farmer, which all over again eroded the bargaining power
of suppliers. The farmers who produced the Arabica beans sold exclusively to specialty
coffee retailers and as such were dependent upon their continued business. In spite of all of
the stated reasons which suggest the specialty coffee industry is one where the bargaining
power of suppliers is severely hindered, the most important 15 Ingredient within specialty
coffee is quality Arabica beans. This allows for differentiation to arise between the many
suppliers farms based upon the quality of beans they produce. This, in turn, should
considerably raise their bargaining power as suppliers.
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Namrataben Panchasara (Student ID:F1005899)
8. Starbucks’ Original Generic Strategy
Michael porter defines three potentially successful generic strategy; overall cost
leadership, differentiation and focus.
Overall cost leadership 20 implies the pursuit of cost reductions in all areas of a firm through
strongly controlling overhead, avoiding marginal, not as much of profitable consumers and
sacrificing explore and development, customer service, advertising and other areas not
relevant to the direct manufacturing of a product. The generic strategy of differentiation
involves the creation of something that is supposed by the industry as being unique. This
can take on many different forms including but not limited to brand image, technology,
features, dealer networks and customer service [11]. The last generic strategy mentioned is
focus, which targets an exacting group, geographic market, or segment of a given product
line. (Michael Porter, 1998, p. 38)[12] The Starbucks seen today would seem to fit the generic
strategy of differentiation; though, the original strategy used by Starbucks was closer to the
generic strategy of focus with an importance on differentiation within the particular target
consumer segment. At the requirements for a generic strategy of differentiation, as defined
by Michael Porter, sheds light on why this could not have been Starbucks’ original generic
strategy.
A firm that focuses on the generic strategy of differentiation would reveal strong marketing
abilities; so far, Starbucks did not even run a television advertisement until 1998. In fact,
their advertising budget only constituted 4% of their total incurred costs. [9] (U.S. Securities
and Exchange Commission, 1998)[13] A second characteristic universal in a company
pursuing the generic strategy of differentiation is a strong and established capability in basic
research and development, with individual as different to quantitative measurement goals.
The primary means by which Starbucks conducted its research and development in past
was through trial and error within company stores. A third characteristic of companies
pursuing a generic strategy of differentiation is an extensive belief in the industry of having
unique skills or unique products. Starbucks had this reputation within the distribution
segment of the specialty coffee industry. Their original store was founded in 1971 and they
were known for their luxury standards and knowledgeable staff.
With this information in give, an understanding of why Starbucks has continued such
high profit margins while at the same time increasing market share exponentially can be
ascertained.
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Namrataben Panchasara (Student ID:F1005899)
9. Starbucks’ Success Factors
First-mover advantage
Maintaining quality of Arabica beans
Employee Satisfaction
First factor was their ability to design a strategic approach to growth that quickly
established the possibility of their business model and took advantage of some key
demographic groups.
The second factor was their ability to attract the highest-quality employees through
the execution of advanced healthcare plan while reducing costs and giving equity
rights to all employees. The strategic alliance they had with preservation international
allowed them to create a sustainable supply chain of high quality coffee.
The three previous factors helped enable them to advance
The fourth factor in their success, a centre of population environment in which
casual community interactions could take place.
The fifth factor to their success was their ability to adjust to the changing dynamics
of their consumer demographics. All of these factors have allowed them to stay at the
forefront of the specialty coffee industry.
Success...
The strength of the company, together with promising market forecast has lead Starbucks to
one of the most victorious IPO (Initial Public Offering) in 1992.
By going public, Starbucks would get funding to fuel its expansion strategy over the years to
come. From $5.50 in 1992, Starbucks common stock price went up to $25 in 2001, and is
today at $58.
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Namrataben Panchasara (Student ID:F1005899)
10. In order to maintain the balanced equity among shareholders, Starbucks stock was split four
times (1993, 1996, 1999 and 2001). As the share value greater than before, these split also
prevented high prices from deterring small investors .Starbucks stock growth (in blue on the
chart) has always been above the average beverage industry stock growth.
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Namrataben Panchasara (Student ID:F1005899)
11. Michael Porter’s 5 Force analyses (current)
Industry rivalry
The industry rivalry within the specialty coffee industry has changed dramatically
since 1990. Nothing like the early days of the specialty coffee industry when Starbucks
competed mainly against other small-scale specialty coffee retailers they now compete
against companies of changing sizes and different exposures to specialty coffee. Starbucks
competes by a variety of smaller scale specialty coffee shops, mostly well-built in different
regions of the country. All of these specialty coffee chains are differentiated from Starbucks
in one way or any more.
10 years ago Starbucks and McDonald's were at complete opposed ends of the
range in the restaurant industry. yet, McDonald's, encouraged by the success of its
upgraded drip coffee, began testing many drinks sold under the name McCafe. Starbucks
meanwhile, with its rapid development, was adding drive-through windows and many
breakfast sandwiches, similar to the Egg McMuffin's served at McDonald's. These measures
have drawn the two companies closer together as competitors due to an advance into the
demographic consumer base made by each company. [14]
The McCafe, first conceptualized in Australia in 1993, was bringing to the United
States in 2001. The concept took an area of the typical McDonald's restaurant and added
leather couches and an attractive counter on which cappuccinos and sweets were sold. The
McCafes did not take hold originally, not making it past their first trial stage, mainly due to
the unfortunate conditions of the stores in which they were placed. Now, seven years later,
McDonald's has invested $700 million in its "plan to win" strategy, initiated during 2003,
which has led to modify of thousands of US locations.
Substitute Products
The force of substitute products in the specialty coffee industry has decreased. Many
companies that presented the specialty coffee industry with a threat in the form of substitute
products have actually entered the industry and now struggle directly by offering their own
quality coffee selections. The primary substitute products still affectation a threat to the
specialty coffee industry are the caffeinated soft drinks offered by Pepsi and Coca-Cola. Still,
even these substitute products front little threat to the quality coffee industry. In the past five
years, studies done on the percentage of meals or snacks that included a fizzy soft drink as
different to coffee have shown a problem in consumer favourite. Coffee has regularly gained
preference over carbonated soft drinks.
SWOT Analysis
Strength
Motivated staff
The cafe industry is to some level dependent on front house staff, their manner and their skill
to make customers come back. Starbucks promotes a situation that encourages team
working and collaboration. As such it encourages managers to follow its motto of their
personality, train the skill·. Hence through outstanding service, customers keep coming back.
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Namrataben Panchasara (Student ID:F1005899)
12. possibly, Starbucks has one of the lowest staff revenue rate in the industry
(workforce.com).The strengths offer a favourable impact.
Weaknesses
Over-reliance on home market:
Although the American coffee market is value over $18 Billion (e-importz.com)., over-
reliance on this market leaves Starbucks vulnerable to unexpected changes that may occur
in such market. E.g. recession affects disposable income for customers and then, income.
Thus the management decision to focus mainly on the US market it a weakness
Opportunity
Growth coffee market
The universal taste of coffee drinkers in America is shifting near the more expensive organic
coffee which accounted for $1.3 billion in imports (Restaurant hospitality). This links to the
Social factors recognized in the External analysis and relates to changing tastes this is
favourable because it provides an opportunity for Starbucks to increase its customer support
with the possibility of high profit margins as a result.
Threats
Competition
Coffee industry is very competitive. McDonalds is the main competitor of Starbucks
coffee. McDonalds which was recently found to sell good coffee for better value is damaging
for Starbucks (digitaljournal.com). In other words this is a u critical influence. (Look at page
no.11 Industry rivalry)
PEST Analysis
Political
Government stability
Political stability of countries is a main issue that firms need to consider becaus either
indicator may aim to a country as being investor friendly, however that could rapidly change
when there is elections or political instability (e.g. Egypt). This could lead to huge trouble in a
firms operations and strategy or in a worst case situation where Starbucks was forced to
totally pull out of Israel because of such issues therefore harmfully affecting its strategy for
expansion. Political control is unfavourable in this case and presents a risk to Starbucks
Economical
Exchange Rates
The falling dollar rates compared to other currencies (Bloomberg.com) which was caused in
part by weaker economic policy will affect imports. Most of Starbucks· vital supplies such as
coffee beans, sugar and milk will be affected because they are imported, so incurring higher
cost due to weak dollar. This raises a question as to whether the company will pass the extra
cost to consumer and risk creation its coffee even more costly.
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Namrataben Panchasara (Student ID:F1005899)
13. Technical
Technological Influence
Technological advancements have never been so fast, hence firms need to consistently
follow the trends and exploit any opportunities that may result and implement any change
required. For example, Starbucks have embraced the new phone payments system that was
introduced recently which helps cut long queues at peak time
Recommendation for Future Action
Reward program Organised
Increase International Expansion
Becoming more Environment Friendly
CD Burning
Install free wireless internet and Rent out meeting space
Increase connection with customers
Continually improve the coffee
Rewards Program
Recently, Howard Shultz has referred to a strategy he calls “segmentation,” as being
one of the initiatives he will use to reach new consumer segments. A recommendation not to
pursue this strategy is supported by the analysis done in this paper. As previously stated, a
couple of Starbucks’ primary recent competitors are McDonalds and Dunkin' Donuts. Both of
these companies have given many market signals which can be interpreted as their strong
commitments to selling value specialty coffee. The strategy of “segmentation” would seem to
be Starbucks’ counter to both McDonalds’ and Dunkin' Donuts’ intentions. However, if
Starbucks pursues their “segmentation” strategy they risk degrading the most significant
competitive advantage they possess: their brand image. By selling a discounted specialty
coffee at Starbucks’ locations, the overall brand's image could be degraded and an un-
winnable price war with McDonalds and Dunkin' Donuts becomes more likely.
Instead of selling discounted coffee under their “segmentation” strategy, which seems aimed
at appealing to the price sensitive lower end of the market which is likely destined for
McDonalds and Dunkin’ Donuts, Starbucks should concentrate on creating more elaborate
discounting techniques to employ with their most frequent customers. This both eliminates
the potential degradation of the Starbucks’ brand and increases the bond customers will
experience with Starbucks. Additionally, a rewards program will encourage customers to visit
Starbucks more often and will dissuade them from visiting competitor stores, such as
McDonald's and Dunkin' Donuts, which seem unlikely to offer reward programs.
Increase International Expansion
The first and most great action which Starbucks should take is to decrease their US
expansion efforts. Continued aggressive attempts at growing in the United States by adding
as many new store locations as in the past will inevitably act to cannibalize existing locations
same store sales. The primary reason why this is true and why Starbucks should reduce
their U.S. expansion plan is the conclusion reached earlier in this analysis: one of the
qualities natural to the mature stage of the industry lifecycle is excess numbers. By dropping
their expansion efforts in the United States, Starbucks can convey the capital saved into
their international expansion efforts. The international market provides an ideal target for
increase for three important reasons. First is the lack of penetration of specialty coffee in
many nations and the potential market share which one these nations represent. For
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Namrataben Panchasara (Student ID:F1005899)
14. example, Starbucks currently operates around 16,000 stores with 10,000 in the United
States and 6000 internationally. so far, the United States has not ranked in the top 10 for
total coffee expenditure per person in the last 25 years. This suggests that internationally,
there is an vast coffee drinking population to be tapped into. For example, originally,
Starbucks introduced their Tazo tea brand into the Japanese market. After a successful
examination run in Japan then Tazo was brought into the US market. More such modern
products should be tested first in international markets 70 because there, Starbucks does
not put its brand reputation at as great a risk. This is true since those markets have not been
exposed to Starbucks for as general a period of time and, thus, the brand is more flexible in
those markets.
CD Burning
In addition to free wireless Internet access, Starbucks could equip stores with a CD
burning device to allow customers to burn copies of the online albums they purchase within
Starbucks at a low charge. Not only would this increase the customer’s options when
purchasing an online album but would also encourage customers to buy online albums
within Starbucks’ locations. so, customers could not only get the electronic version of their
selected music for their Ipods but could also have a hard copy CD for use in other devices
such as the vehicles which transported them to the Starbucks store. Having this extra
motivation could well increase foot traffic in Starbucks’ locations. As well Starbucks could
promote their brand and music label on the blank CDs. The labels of the CDs could use or
include Starbucks logo and the interactive experience the customer will have watching their
CD being burned and the label being placed onto it will give them a better sense of
ownership.
Install Free Wireless Internet and Rent out Meeting Space
Next, Starbucks should create a more business and technology friendly atmosphere
in its stores. With the advent of the Internet and the ever increasing array of electronic
products capable of accessing it, there has been an increasing shift in consumer's work
locations from office buildings to home offices. With this shift and natural human
psychological needs, Starbucks is allotted an opportunity to cater to these consumers
working out of the home by providing meeting space for rent. These meeting spaces should
be accompanied with the addition of free wireless Internet access throughout every
Starbucks store and printers accessible to the customers, which are color capable and
reasonably priced. The meeting space should be offered at a per hour rate while the printers
should charge per copy. The availability of meeting space and printers, coupled with free
wireless Internet access would encourage those consumers working from their homes to
engage in business activities at local Starbucks. Some of Starbucks’ competitors, such as
Caribou coffee, have already taken advantage of this trend in consumer preference but do
not currently have the market share to use it as a defendable competitive advantage.
Increase Connection with Customer
One way in which Starbucks has for all time differentiated itself from its competition
has been through the emotional relationship formed with its customers. This connection is
formed in important part by creating a store impression that fits the local settings and by
training baristas to increase the personal relation between themselves and their customers.
Specifically, Starbucks encourages feedback from their customers to induce a family like
feeling and instructs all baristas to welcome every customer with the question “how are you
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Namrataben Panchasara (Student ID:F1005899)
15. doing today?” To extra increase this expressive connection with their customers, Starbucks
could implement digital photo frames in all store locations and upload local customer photos
and probably even customer supplied family photos, which are appropriate in nature, upon
request. This would be a new, classier version of that time worn image, the local pub with
innumerable photos of the regulars festooning the walls. At present, the majority of
Starbucks stores have latte machines that are placed in such a way as to block the baristas
from presentation the customers and vice versa when the barista is in the act of creation the
latte. These latte machines pose a serious physical blockage to the barista’s ability to
establish a lasting impression on the customer.
Continually Improve the Coffee
Given the specialty coffee market’s transition into the mature stage of the industry
lifecycle, it is important to maintain a reputation for the highest quality coffee in the industry.
In February of 2008 the magazine Consumer Reports rated McDonald's drip coffee as
tasting better than that of Starbucks. To ensure the quality of their coffee, Starbucks should
continually analyze their brewing systems and practices and consider renovations. The
brewing process should at all times be judged based upon its ability to bring out the
complexities and distinctive flavours of the world’s different exotic specialty coffees.
Starbucks should also be intent upon protecting whatever brewing process they deem to be
the best through patents or acquisition of patents, which would, in turn, provide a defendable
competitive advantage.
Conclusion
Starbucks strategy is fairly simple increase the perception of high quality of a product,
become accustomed stores to the consumers’ lifestyle, and blanket areas totally, one after
the other, even if the stores cannibalize one another business. Starbucks is very successful
coffee chain.The company’s move on cuts down on delivery and organization costs,
shortens customer lines at individual stores, and increases base traffic for all the stores in an
area.
Reference
[1] http://www.hoovers.com/company/Starbucks_Corporation/rhkchi-1.html
[2] http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-infoReq
th
[3] McDonalds Corp Betting That Coffee Is Britains Cup of Tea". New York Times. 28 March 1999. Retrieved
August 6, 2009
[4] Porter, M. E. (1998). Competitive Strategy page no.17) Techniques for Analyzing Industries and
Competitors. New York: The Free Press.
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Namrataben Panchasara (Student ID:F1005899)
16. [5] Robert M. Grant : Strategy Analysis august 2008 (Page no.69),London
http://news.starbucks.com/news/starbucks+celebrates+first+store+opening+in+el+salvador.htm
News.starbucks.com. Retrieved July 7, 2011.
[6]Phillip Kohen 2005
[7] Porter, M. E. (1998). Competitive Strategy page no.7) Techniques for Analyzing Industries and Competitors.
st
[8]John Quelch Globle market Strategy include in 21 century (2006)
[9] Porter, M. E. (1998). Competitive Strategy page no.24) Techniques for Analyzing Industries and
Competitors.
[10]Lee broen,John Joseph Garners Books 2007.
[11] http://www.slideshare.net/TL327/starbucksa-strategic-analysis-rlarson-honors-2008-2607618
[12] Porter, M. E. (1998). Competitive Strategy: Page no.38 Techniques for Analyzing Industries and
Competitors. New York: The Free Press.
[13] U.S. Securities and Exchange Commission, 1998
[14] Review, Is Starbucks a Broken Brand? , 2008
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Namrataben Panchasara (Student ID:F1005899)