Starbucks Global Quest in 2006:
Is the Best Yet to Come?
Danny Nugroho RP 13967/PS/MM/06
Retnowulan 19421/PS/MM/06
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
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
Presentation Outline
About Starbucks
Starbucks Strategy
Industry and Competitive Analysis
Conclusion
Recommendation
About Starbucks
Overview
Timeline
Corporate Values and
Business Principles
Mission Statements
Corporate Social
Responsibility
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
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 into
Starbucks Corporation.
1992 Starbucks decertified the union and made IPO.
1995 Starbucks Coffee International opens in Japan
Starbucks implemented ESOP.
Timeline
Timeline
1996 Starbucks began selling bottled Frappuccino.
1999 Starbucks acquired Tazo Tea.
2000 Acquired Hear Music, a San Francisco-based company
2003 Starbucks acquired Seattles Best Coffee
2005 Introduced Starbucks Coffee Liqueur; Acquires Ethos Wate
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
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.
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.
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
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
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
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
Starbucks Strategy
Store ambience
The concept of everything matters
Assessment of standards
Starbucks Strategy
Product Line
Wide range of products choices
Special product promotion
Selling music CDs
Joint ventures
PepsiCo
Dreyers Grand Ice Cream
Jim Beam Brands
Acquisitions
Hear Music
Ethos Water
Starbucks Cards
Partnership with Bank One
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
Industry and Competitive
Analysis
Coffee Industry
C
Corporate Values and
Business Principles
Mission Statements
Corporate Social
Responsibility
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
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.
Industry and Competitive
Analysis
Competitor analysis
2 Types of Competitor:
Coffee shops and restaurants
Nationwide coffee manufacturers (rival brands
of specialty coffee)
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
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
Industry and Competitive
Analysis
Generic Competitive Strategy
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
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
PEST Analysis
Social Influences
Trend
Consumer preferences
Changes in lifestyle and occupation
Education
Technological Influences
advances in manufacture
biotech and agricultural development
IT developments
Site 7S Model
Strategy
Rapid store expansion strategy
Product Line
Coffee purchasing strategy
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
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 Workshop,
Career Power and Career Power for Coaches Workshop.
Awards for partners, which range from frequent awards to high-
level cash awards.
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.
Site 7S Analysis
Skills
coffee making
customer service
sales techniques
Site 7S Model
Style
Increase motivation through reviews and raises.
Employees are allowed to make decisions and participate in
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
Conclusion
Focuser can defend against challengers via
superior ability to serve niche members
Recommendation
Focuser can defend against challengers via
superior ability to serve niche members
Starbucks Corporate Strategy
