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Transcript of 60914885 Starbucks Final
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Starbucks strategy in thespecialty coffee industry.
Mohammad Robiul Alim 300649435
Raja Pravu
Ashraful Kabir 300642403
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Presentation Outline
Introduction to Starbucks
Industry Overview
Company Overview Strategic Analysis
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About Starbucks
Overview
Timeline
Corporate Values andBusiness Principles
Mission Statements
Corporate SocialResponsibility
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Established in 1971 at Seattle, Washington
Famous for its quality fresh-roasted coffee beansand 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
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1971 Starbucks Coffee, Tea, and Spice store (coffee bean roasting)opened in Seattles 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 intoStarbucks Corporation.
1992 Starbucks decertified the union and made IPO.
1995Starbucks Coffee International opens in Japan Starbucks implemented ESOP.
Timeline
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Timeline
1996Starbucks began selling bottled Frappuccino.
1999 Starbucks acquired Tazo Tea.
2000 Acquired Hear Music, a San Francisco-based company
2003Starbucks acquired Seattles Best Coffee
2005 Introduced Starbucks Coffee Liqueur; Acquires Ethos Wate
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Corporate Values and
Business Principles
Building a Company with Soul
Opposing Franchising because of Quality Controland Culture
Only selling coffee beans without artificial flavors.
Satisfy customers by all means.
Employees contribution and involvement in making
Starbucks a better company
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About Starbucks
Mission Statements
Company Mission Statement:
Establish Starbucks as the premier
purveyor of the finest coffee in theworld 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.
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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.
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Corporate SocialResponsibility
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 dobusiness; 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
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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
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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
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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
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Starbucks Strategy
Store ambience
The concept of everything matters
Assessment of standards
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Starbucks Strategy
Product Line
Wide range of products choices
Special product promotion
Selling music CDs
Joint ventures
Pepsi CoDreyers Grand Ice Cream
Jim Beam BrandsAcquisitions
Hear Music Ethos Water
Starbucks Cards
Partnership with Bank One
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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 helpingenvironment conservation
Purchasing and marketing Fair Trade Certified coffee
Promoting coffee cultivation methods that protected biodiversity and
maintained a healthy environment
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Industry and CompetitiveAnalysis
Coffee Industry
C
Corporate Values andBusiness Principles
Mission Statements
Corporate SocialResponsibility
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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
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Industry and CompetitiveAnalysis
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 andspecialty.
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Industry and CompetitiveAnalysis
Competitor analysis
2 Types of Competitor:
Coffee shops and restaurants Nationwide coffee manufacturers (rival brands
of specialty coffee)
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Industry and CompetitiveAnalysis
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
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Industry and CompetitiveAnalysis
Competitor analysis
Capabilities (areas of competitors strengths and
weaknesses) Product Dealer/distribution Operations R & D Financial strength Organization & managerial ability Personnel turnover
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Industry and CompetitiveAnalysis
Generic Competitive Strategy
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Industry and CompetitiveAnalysis
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 competitorsto 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
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PEST Analysis
Political Influences
Relationships between U.S. and countries producing coffeebeans
Environmental regulations Industry-specific regulations
Economic Influences
Demand for food and beverages
Customers buying power Exchange rate & taxation
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PEST Analysis
Social Influences
Trend
Consumer preferences
Changes in lifestyle and occupation Education
Technological Influences
advances in manufacture biotech and agricultural development
IT developments
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Site 7S Model
Strategy
Rapid store expansion strategy
Product Line
Coffee purchasing strategy
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Site 7S Model
Structure
There are one store
manager, one assistant
manager, some shift
supervisors and 16
partners/baristas
Baristas Baristas Baristas
Shift Supervisors
Assistant Manager
Store Manager
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Site 7S Analysis
StaffingEmployee benefits package includes base salary, health carebenefits, 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 Workshop,
Career Power and Career Power for Coaches Workshop.
Awards for partners, which range from frequent awards to high-
level cash awards.
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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.
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Site 7S Analysis
Skills
coffee making customer service
sales techniques
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Site 7S Model
Style
Increase motivation through reviews and raises.
Employees are allowed to make decisions and participate in
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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
Does Starbucks strategy seem to be
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Does Starbuck s strategy seem to be
well- matched to industry andcompetitive conditions?
The first of these factors was their abilityto design a strategic approach to growththat quickly demonstrated the feasibilityof their business model and took
advantage of some key demographicgroups.
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Does Starbucks strategy seem to be well-matched to industry and competitive
conditions? Cont
Ability to attract the highest-qualityemployees through the implementation of asuperior healthcare plan while reducing
costs and giving equity ownership to allemployees.
Does Starbucks strategy seem to be well
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The strategic alliance they had withconservation international allowed themto create a sustainable supply chain of
high quality coffee.
Does Starbucks strategy seem to be well-matched to industry and competitive
conditions? Cont
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A community environment in which casualsocial interactions could take place.
Does Starbucks strategy seem to be well-matched to industry and competitive
conditions? Cont
D St b k t t t b ll
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Does Starbucks strategy seem to be well-matched to industry and competitive
conditions?
Ability to adapt to the changing dynamicsof their consumer demographics.
Does the strategy seem to be keyed to a cost advantages
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Does the strategy seem to be keyed to a cost advantages,
differentiating features serving the unique needs of a nicheor developing resource strengths and competitivecapabilities rivals cant imitate or trump?
The specialty coffee industry does not put a high premiumon economies of scale. Although, companies with nationaldistribution in the coffee industry at large experienced some
discounts through bulk purchases and superiorinfrastructures, their advantages were small.
Many cost advantages can be independent of scale and may
be gained by establishing one's position in an industry early.These can be referred to as first mover advantage. Some ofthese advantages come from proprietary product technology,favourable access to raw materials, favourable locations anda learning experience curve.
Does the strategy seem to be keyed to a cost advantages
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Does the strategy seem to be keyed to a cost advantages,
differentiating features serving the unique needs of a nicheor developing resource strengths and competitivecapabilities rivals cant imitate or trump?
There is also numerous cost disadvantages imposed on newentrants that are independent of the economies of scaleconsiderations. As the industry matures, the ability to access
distribution channels and select from the highest qualitycoffee beans has becoming increasingly difficult.
The strategy of differentiation is particularly attractive
because it offers insulation from the price competitioninherent in a cost leadership strategy. The goal should shiftaway from differentiating physical attributes and towardsdifferentiating the organizations systems and bureaucraticset up as well as their image within the industry.
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What is there about Starbucks strategy that canlead to sustainable competitive advantage?
Many efforts are being made at Starbucks to enhance theirimage as being environmentally friendly, as is true for allmodern corporations, they still have much room to improve,
thus, further differentiating themselves.
To encourage customers to use porcelain cups, Starbucks could offer in-house drinkers who choose to use the porcelain cups a discount. Otherexamples of ways in which Starbucks could enhance both its actual
green bona fides and its image as an environmentally friendly companywould include: selling to go mugs and re-usable sleeves at affordableprices; implementing recycling bins; seeking to compost or otherwiserecycle food waste; and encouraging customers, using financialincentives, to recharge plastic Starbucks cards as opposed to purchasinga new one.
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Thank You
All