Ppt on Starbucks Case Study

CASE STUDY 

STARBUCKS CORPORATION

Group members Darpan Goswami  Durlov Protim Borua  Tanvi Hussain  Pranami Borah  Dimpal Bharali 

Overview

 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

Timeline 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

Timeline 

1996 – Starbucks’ began selling bottled Frappuccino.

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1998 – Acquired Seatle Coffee company.

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1999 – Starbucks acquired Tazo Tea company. 1999 – Acquired Hear Music, a San Francisco-based company 1999 – Starbucks opened in China(Beijing) 2002 – Starbucks opened in Mexico ( first store in an origin country)

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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.”

SWOT Strengths        

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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 Ambience of Starbuck stores

Weakness Profit generation slowed down  Product pricing(expensive)  Size  Promotion strategy  Self cannibalization 

Opportunities Emerging International markets  Good relations with suppliers and partners  Satisfied customers  High visibility locations  Local themed food items  Alliance and acquisitions  Exclusive purveyor of Narino Supremo 

Threats US market saturation  Antiglobalization  Fierce competition  Media  Cultural and political issues in Foreign countries 

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  Suppliers

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. They receive push-backs in new markets

Analysis using porters five forces model

Threat of substitution     

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.

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.

Bargaining power of suppliers  

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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

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 − Expanded its consumer products channel in Asia Pacific region

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

Starbucks’ Strategy • Store ambience − The concept of “everything matters” − Assessment of standards

Starbucks’ Strategy Product Line •Wide range of products choices •Selling music CDs •Joint ventures PepsiCo Dreyer’s Grand Ice Cream •Acquisitions  Hear Music  Seatle coffee company

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

Recommendations  

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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 They should come up with more food products

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  Try to develop good relations with NGOs 

Thank you