STARBUCKS : BACK TO BASICS

PRESENTED BY:
Aarzoo chopra
 ABOUT STARBUCKS….
 MISSION : The Company's objective is to establish Starbucks as
the most recognized and respected brand in the world

 VISION : To find some of the world's best coffee and share their
passion and knowledge with their customers.

 STRATEGIES : Starbucks had three main aspects on which it

focused;
• People
• Place
• Product
 MAIN PRODUCTS

 Whole bean coffee

 Boxed tea

 Made-to-order beverages

 Bottled beverages

 Baked goods

 Merchandise

 Frappuccino beverages

 Smoothies
 STARBUCKS TIMELINE
Schultz founded Il  Bought
676 Starbucks
Giornale offering Tazo Tea Co
Howard locations
brewed coffee &
Schultz joins espresso beverages 165  Entered  Also
Starbucks as w/ Starbucks coffee Starbucks acquired Hear
International
Dir. of Retail beans locations music
market
1982 1985 1990 1996 1999

1971 1984 1987 1993 1998 2003

1st Schultz Il Giornale 272 1,886 Starbucks 6,604
Starbucks tests new acquires Starbucks locations Starbucks
location in coffee bar Starbucks locations locations
 Acquired Seattle
Seattle concept assets
Coffee Co.
Changes
name to
Starbucks
Corp.
 Sell digital Lawsuit
downloads of payments
10,000 albums through
stores iTunes; partnered Healthy
worldwide with Apple on products;
selling music new style
2005 2007 2009

2004 2006 2008

Acquired Starbuc 900 store
Torefazzore ks closures in
Italia Entertain the US
ment
900 new
stores
outside
INDUSTRY OVERVIEW
 Industry Definition
 Specialty Eatery Industry
– Fits within the largest segment of disposable
income spending -- food and beverages
– Steady growth in this segment in the 1990’s
has led to an abundant number of new
companies
– As demand for convenience has made eating
out a normal routine, the demand for specialty
food services has increased in recent years
 Industry 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
 Industry PESTEL
Analysis
 Political Influences
– Relationships between coffee producing nations and US
– State & Local government controls
 Economic Influences
– Constant demand for food and beverages
– 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
 Environmental Influences
- ‘Grounds for your Garden’
- Recycling
 Legal Influences
- Federal Laws – Labor Laws
- State Laws
STORM IN THE COFFEE CUP
 EXTERNAL FACTORS

 The gloomy economic environment made consumers cut back on coffee-which

was perceived as “frivolous spending”
 Cost of operating new stores, distribution expenses as well as material cost were
touching a new high

 INTERNAL FACTORS

 Started as an up-market and elegant coffee shop projecting itself as a exclusive

and expensive coffee brand.
 Rapid expansion during the 1990s and 2000s reduced the exclusivity
 Installation of new machines reduced the eye contact
between the baristas and the customers limiting interaction
between baristas and customers
 Schultz stepping down from the post of CEO
 Motivation levels of the employees was going down.
 Faced stiff competition from Mc Donald’s and Dunkin
Donuts.
Recommendations
 RECOMMENDATIONS

1. Introduction of Mastrena
2. Complete reinvention of brewed coffee in store
3. Loyalty Programs
4. Launch of mystarbucksidea.com
5. Strengthening relationship with CI
educating coffee growers
protect standing forests
restore degraded landscapes
 Cont……

 Training Program for employees

 to relearn the art of coffee making
 to improve the quality of coffee the
baristas prepared
 to increase the motivational level of the
employees
 Starbucks SWOT Analysis
 Strengths
 Largest market share in industry.
 Very profitable organization, earning in excess of $600
million in 2004.
 A revenue of more than $5000 million in the same year.
 Global coffee brand built upon a reputation for fine
products and services.
 Has almost 9000 cafes in almost 40 countries.
 One of the Fortune Top 100 Companies to Work For. Respected
employer that values its workforce.

 Weaknesses
 Starbucks has a reputation for new product development and
creativity. However, they remain vulnerable to the possibility
that their innovation may falter over time.
 They need to look for a portfolio of countries, in order to spread
business risk
 The organization is dependant on a main competitive advantage, the
retail of coffee.

 Opportunities
 New products and services that can be retailed in their cafes, such as
Fair Trade products.
 Expand its global operations in India and the Pacific Rim nations.
 Co-branding with other manufacturers of food and drink, and brand
franchising to manufacturers of other goods and services.
 Threats
 Lack of ownership of coffee farms can lead to price
fluctuations.
 Replacement or substitute of coffee in the future.
 Exposed to rises in the cost of coffee and dairy products.
 Since its conception in Pike Place Market, Seattle in 1971,
Starbucks' success has lead to the market entry of many
competitors and copy cat brands that pose potential threats
Future Outlook
 In July 2008,Starbucks announced the launch of Vivanno Nourishing
Blends,new “health and wellness” beverages in US and Canada.

 Company planned to bring about drastic changes in its menu by the year
end.Also it would experiment with new store designs and layouts.

 Starbucks announced the launch of five new breakfast items in September 2008
which didn’t contain artificial preservatives,colors,or sweetness.

 The items included oatmeal,a chewy fruit and nut bar,apple bran muffin,a
multigrain pastry called Berry Stella,a multigrain roll and a protein plate
featuring a hardboiled egg,whole wheat bagel,peanut butter,cheese and fruit.