Ppt on Starbucks Case Study

(1)

CASE STUDY

(2)

Group members



Darpan Goswami



Durlov Protim Borua



Tanvi Hussain



Pranami Borah

(3)



Established in 1971 at Seattle, Washington



Famous for its quality fresh-roasted coffee beans

and stylish atmosphere.



Over 16000 stores worldwide



Product lines include :

− beverages (coffee, Tazo tea, ice creams)

− pastries

− whole coffee beans

− music CDs

(4)

1971 – Starbucks opened in Seattle’s Pike Place Market. 1982 – Howard Schultz joined Starbucks .

1983 – Schultz travelled to Italy

1985– Howard Schultz established Il Giornale Coffee bar.

1987 – Il Giornale acquired Starbucks and changed the name into Starbucks Corporation.

1992 – Starbucks went public at $17 a share

1996 – Starbucks Coffee International opens its first non-North American store in Japan at Tokyo

(5)

Timeline

 1996 – Starbucks’ began selling bottled Frappuccino.  1998 – Acquired Seatle Coffee company.

 1999 – Starbucks acquired Tazo Tea company.

 1999 – Acquired Hear Music, a San Francisco-based company  1999 – Starbucks opened in China(Beijing)

(6)

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.”

(7)

SWOT

Strengths

 Efficient Management

 Sound financial position

 Valued and motivated employees

 Effective distribution channel

 Increase in Product line

 Good corporate image

 Well trained staff

 Industry market leader

(8)

Weakness



Profit generation slowed down



Product pricing(expensive)



Size



Promotion strategy

(9)

Opportunities



Emerging International markets



Good relations with suppliers and

partners



Satisfied customers



High visibility locations



Local themed food items



Alliance and acquisitions

(10)

Threats



US market saturation



Antiglobalization



Fierce competition



Media



Cultural and political issues in Foreign

countries

(11)

Core Competencies

Starbucks branding



High quality



Good reputation

Ability to innovate, adapt to the culture



Product: adapt to the taste



Service: maintain the customer loyalty

Value creation



Customers



Employees

(12)

Issues :



The problem is anti-globalization which makes

more difficult for Starbucks to enter in new

markets

Symptoms:

• Protests from anti-globalization activists

• Those activists have enough media power it leads to international scandals.

(13)

Analysis using porters five forces

model

 Other beverages apart from star bucks coffee and tea –include soda fruit juice, water, beer and other alcoholic drinks

 Lower end or “less luxurious” coffee places

 Places that offer people a place to hang out, chat, relax or even work e.g. tea houses, fast food places, bars..

 Entry barrier for coffee industry is relatively low, even for premium brands like star bucks

 Threat of new entrants include fast food chains such as McDonalds, Burger King etc.

(14)

Competitive rivalry



Other coffee chains. examples include Café Nero, Coffee

Republic & Costa Coffee.



Smaller privately owned coffee houses



Secondary coffee houses like McDonalds, Burger King

etc.

(15)

Bargaining power of suppliers



Low bargaining power of suppliers due to importance of

star bucks business to any individual suppliers



Suppliers of plastic products like cups,napkins,lids etc

have little amount of bargaining power as large amount

of alternatives are available



With new entrants like McDonalds who claim to offer

premium roast coffee of reasonable quality for lower

price which increases the bargaining power of buyers

(16)

Starbucks’ Strategy

Rapid store expansion strategy

• Domestic store expansion

− “Starbucks everywhere” approach • International store expansion

− Company-owned and company-operated stores or licensing − Created a new subsidiary, Starbucks Coffee International

(17)

Starbucks’ Strategy

• Employee Training and Recognition

− Systems to recruit, hire and train baristas and store managers  training programs

 awards for partners

• Store Design, Planning, and Construction − High-traffic, high-visibility store locations − Control of average store opening costs

(18)

Starbucks’ Strategy

• Store ambience

−

The concept of “everything matters” − Assessment of standards

(19)

Starbucks’ Strategy

Product Line

•Wide range of products choices •Selling music CDs

•Joint ventures

PepsiCo

Dreyer’s Grand Ice Cream •Acquisitions

 Hear Music

(20)

Financial Analysis



Proprietory ratio or equity ratio= Shareholders

fund/ Total assets= 0.75



Gross profit ratio= 73%



_{Operating ratio= Cost of goods sold+ operating}

**expenses/net sales *100 = 57.45%**



Debt-equity ratio= outsiders fund/shareholders

fund=0.003

(21)

Recommendations



Increase spending on advertisement



_{Create a specific brand for European expansion,}

or acquire an already well established brand

with still growth potential left



Expand and enhance the existing network by

targeting new markets



Rethink their blanket strategy



Involvement in more social responsibility

campaign

(22)



Starbucks should come up with more

vending machines in places of high

footfall



They should establish coffee lounge with

sections dedicated to movies, music,

books in big cities



They should also increase its presence in

developing countries

(23)