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Danny Nugroho RP - 13967/PS/MM/06
RetnowuIan - 19421/PS/MM/06
Presentation OutIine
Introduction to Starbucks
Industry Overview
Company Overview
Site AnaIysis
Recommendations for Improvement
Focused Recommendation for Improvement
FinaI Action PIan
Impact AnaIysis
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
AnaIysis
Coffee industry
Competitor analysis
Generic competitive strategy
PEST analysis
Site 7-S analysis
ConcIusion
Recommendation
Presentation Outline
About Starbucks
Starbucks' Strategy
Industry and Competitive AnaIysis
ConcIusion
Recommendation
About Starbucks
Overview
TimeIine
Corporate VaIues and
Business PrincipIes
Mission Statements
Corporate SociaI
ResponsibiIity
stabIished in 1971 at SeattIe, Washington
Famous for its quaIity fresh-roasted coffee beans
and styIish atmosphere.
Over 9,000 stores worIdwide
Product Iines incIude :
~ beverages (coffee, Tazo tea, soda, juices)
~ pastries
~ whoIe coffee beans
~ coffee-reIated hardware and equipment
~ merchandise (mug, CDs)
Overview
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 l Giornale Coffee Company.
1987 l Giornale acquired Starbucks and changed the name into
Starbucks Corporation.
1992 Starbucks decertified the union and made PO.
1995 Starbucks Coffee InternationaI opens in Japan
~ Starbucks implemented ESOP.
TimeIine
TimeIine
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 ntroduced Starbucks Coffee Liqueur; Acquires Ethos Wate
Corporote Vo|ues ond
8us|ness Fr|nc|p|es
BuiIding a Company with SouI
Opposing Franchising because of QuaIity ControI
and CuIture
OnIy seIIing coffee beans without artificiaI fIavors.
Satisfy customers by aII means.
mpIoyees' contribution and invoIvement in making
Starbucks a better company
-4:9$9,7-:.8
|ss|on Stotements
Company Mission Statement:
Establish Starbucks as the premier
purveyor of the finest coffee in the
world while maintaining our
uncompromising principles while we
grow.
nvironmentaI Mission Statement:
Starbucks is committed to a role of
environmental leadership in all facets
of our business.
Mission Statement
Six guiding principIes:
W Provide a great work environment and treat each other with respect
and dignity.
W Embrace diversity as an essential component in the way we do
business.
W Apply the highest standards of excellence to the purchasing,
roasting, and fresh delivery of our coffee.
W evelop enthusiastically satisfied customers all of the time.
W Contribute positively to our communities and our environment.
W Recognize that profitability is essential to our future success.
Corporate SociaI
ResponsibiIity
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
W omestic store expansion
W nternational store expansion
W Employee Training and Recognition
W Real Estate, Store esign, Planning, and Construction
W Store ambience
Product Line
Coffee purchasing strategy
Starbucks' Strategy
Rapid store expansion strategy
W Domestic store expansion
~ A three-year expansion strategy
~ Starbucks everywhere approach
W InternationaI store expansion
~ Company-owned and company-operated stores or licensing
~ Created a new subsidiary, Starbucks Coffee nternational
~ Expanded its consumer products channel in South Pacific region
Starbucks' Strategy
W mpIoyee Training and Recognition
~ Systems to recruit, hire and train baristas and store managers
screening
training programs
awards for partners
W ReaI state, Store Design, PIanning, 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
W Store ambience
~ The concept of everything matters
~ Assessment of standards
Starbucks' Strategy
Product Line
WWide range of products choices
WSpecial product promotion
WSelling music Cs
WJoint ventures
PepsiCo
reyer's Grand ce Cream
Jim Beam Brands
WAcquisitions
Hear Music
Ethos Water
WStarbucks Cards
WPartnership with Bank One
Starbucks' Strategy
Coffee purchasing strategy
W Building relationship with growers and exporters, checking on
agricultural conditions and crop yields, and searching out varieties
and sources that would meet Starbucks' standards.
W &sing fixed-price purchase commitment and purchasing coffee future
contracts
W Contributing to the sustainability of coffee growers and helping
environment conservation
W Purchasing and marketing Fair Trade Certified coffee
W Promoting coffee cultivation methods that protected biodiversity and
maintained a healthy environment
Industry and Competitive
AnaIysis
Coffee Industry
C
Corporate VaIues and
Business PrincipIes
Mission Statements
Corporate SociaI
ResponsibiIity
Industry and Competitive AnaIysis
Coffee industry
W Coffee drinking trend
W Coffee beans production
Competitor anaIysis
W Future goals
W Current strategy
W Assumptions
W Capabilities
eneric competitive strategy
PST anaIysis
Site 7S anaIysis
Industry and Competitive
AnaIysis
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
~ n 1994, coffee was the second most traded commodity after
Oil.
~ There are two types of Coffee, namely basic and
specialty.
Industry and Competitive
AnaIysis
Competitor anaIysis
2 Types of Competitor:
Coffee shops and restaurants
Nationwide coffee manufacturers (rivaI brands
of speciaIty coffee)
Industry and Competitive
AnaIysis
Competitor anaIysis
Future goaIs
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
AnaIysis
Competitor anaIysis
CapabiIities (areas of competitors' strengths and
weaknesses)
~ Product
~ DeaIer/distribution
~ Operations
~ R & D
~ FinanciaI strength
~ Organization & manageriaI abiIity
~ PersonneI turnover
Industry and Competitive
AnaIysis
eneric Competitive Strategy
Industry and Competitive
AnaIysis
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
PST AnaIysis
PoIiticaI InfIuences
~ Relationships between &.S. and countries producing coffee
beans
~ Environmental regulations
~ ndustry-specific regulations
conomic InfIuences
~ emand for food and beverages
~ Customers' buying power
~ Exchange rate & taxation
PST AnaIysis
SociaI InfIuences
~ Trend
~ Consumer preferences
~ Changes in lifestyle and occupation
~ Education
TechnoIogicaI InfIuences
~ advances in manufacture
~ biotech and agricultural development
~ T developments
Site 7S ModeI
Strategy
Rapid store expansion strategy
Product Line
Coffee purchasing strategy
Site 7S ModeI
Structure
There are one store
manager, one assistant
manager, some shiIt
supervisors and 16
partners/baristas
Baristas Baristas Baristas
Shift Supervisors
Assistant Manager
Store Manager
Site 7S AnaIysis
Staffing
mployee beneIits package includes base salary, health care
beneIits, stock option plan, and
Health care beneIits include preventive care, crisis counseling,
dental care, eye care, mental health, chemical dependency, and
medical costs Ior terminal illness up Ior 29 months.
mployees trainings that include basic 24 hour-training, Star
Skills, CoIIee Master Program, Servant Leadership Workshop,
Career Power and Career Power Ior Coaches Workshop.
Awards Ior partners, which range Irom Irequent awards to high-
level cash awards.
Site 7S AnaIysis
Systems
~ Centralized control over individual stores by
headquarters
~ Total Quality Management (i.e. Just-n-Time)
~ nformation system to support business operations.
~
Site 7S AnaIysis
SkiIIs
~ coffee making
~ customer service
~ sales techniques
Site 7S ModeI
StyIe
ncrease motivation through reviews and raises.
mployees are allowed to make decisions and participate in
Site 7S ModeI
Shared Values
Fun working environment
~ Treat each other with respect and care
~ iversity 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
ConcIusion
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