Starbucks strategic
management
MORIBA TOURAY
Presentation Outline
Introduction to Starbucks
Business Description
Industry Overview
Company Overview
Key Strategic Environment
Industry Analysis
Internal Analysis
SWOT Matrix Framework
Starbucks Strategies
Strategic Implementation of Action Plan
8. Implementation and control
Recommendation
s
About Starbucks
Overview
Mission
Vision
Long-term Objectives
Corporate Values and
Business Principles
Overview
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)
Starbucks Mission
“To inspire and nurture the human spirit -
one person, one cup and one neighborhood
at a time.”
Creating a culture of warmth and
belonging, where everyone is welcome.
Acting with courage, challenging the status
quo
Being present, connecting with
transparency, dignity and respect.
Delivering our very best in all we do,
holding ourselves accountable for results.
Starbucks Vision
“Toestablish Starbucks as the premier
purveyor of the finest coffee in the world
while maintaining our uncompromising
principles while we grow.”
Starbucks Value
Creating a culture of warmth and
belonging, where everyone is welcome.
Acting with courage, challenging the
status quo
Being present, connecting with
transparency, dignity and respect.
Delivering our very best in all we do,
holding ourselves accountable for results
Starbucks Objectives
Premier purveyor of the finest coffee in the
world
Maintain Uncompromising principles
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.
Starbucks is committed to a role of
Potential Issues
A number of problems at home and abroad
At home, Starbucks is facing market
saturation
Economic conditions in the US and certain
International markets
Market saturation comes store
cannibalization a situation where one
company store takes away business from
other stores
Starbucks needs to find a way to convince
more customers to visit stores more often.
Industry Analysis
Specialty coffee sales are increasing by
20% per year and account for nearly 8% of
the 18 billion dollar U.S. coffee market.
Coffee statistics show that among coffee
drinkers the average consumption in the
United States is 3.1 cups of coffee per
day.
Independent coffee shops equal $12
billion in annual sales
Industry Life Cycle
Market Share
Concentration
Starbucks PESTLE
Analysis
PoliticalInfluences
-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
Starbucks PESTLE Analysis
Social Influences
- Trend
- Consumer preferences
- Changes in lifestyle and occupation
- Education
Technological Influences
-Advances in manufacture
-Biotech and agricultural development
-IT developments
Starbucks PESTLE Analysis
Legal Factors
- Environmental rules and regulations
- Environmental disasters in countries which
produce coffee beans
- Global warming and other Environment
issues
Environmental Factors
- Introduction of stricter customs and trade
regulations
- Licensing regulations
SWOT Analysis
Porters Five Forces
Starbucks Competence
Common Size Financial
Analysis
Risen about 18% over the past 12 months
an impressive gain considering the S&P
500 is up just 2% during this same
timeframe.
In 2018, Starbucks' net earnings amounted
to 4.52 billion U.S. dollars, up from
approximately 2.88 billion U.S. dollars the
previous year.
Corporation reported earnings amounting
to approximately 4.52 billion U.S. dollars.
Financial Ratio
Internal Factors Evaluation
Matrix
Strong brand image.
Extensive global supply chain.
Moderate diversification through
subsidiaries
Strong culture
Attention to detail
Innovative and risk taking
External Factor Evaluation
Matrix
Rising mobile purchases (opportunity)
Technology transfers to coffee farmers
(opportunity)
Rising availability of specialty coffee
machines for home use (threat)
Saturation of the coffee industry
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
Product Line
•Wide range of products choices
•Special product promotion
•Selling music CDs
•Joint ventures
PepsiCo
Dreyer’s 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
Generic Competitive Strategy
Market Penetration Strategy
Starbucks Generic Value
Chain
Primary activities Inbound logistics:
Sourcing coffee from diverse coffee beans
producers.
Operations: They have operation in 75
countries
Outbound logistics: Most of its product
mix are sold in-store and some through
large box retailers.
Marketing and Sales: Investment in
marketing activities
Starbucks Generic Value
Chain
Service: Providing supreme level of
customer services
Human Resource Management: Great
benefits, and employee empowerment
Technology development: Investments in
innovative technologies
Procurement: Products from a diverse
group of suppliers and has fixed contracts
with some of the suppliers.
VRIO Analysis
Strategic Implementation Action
Plan
Evaluation & Control
Compare performance with desired
results and provides the feedback
Determine what to measure
Establish Standards of Performance
Measure Actual Performance
Compare Actual Performance with the
standard
Take Corrective Action
Recommendation
A re-invigoration of “Just Say Yes” and
“Exceed the expectations of your customers”
Slow down the rate of new licensed stores.
Marketing campaigns featuring the western,
high-quality, and “hip” image of Starbucks
Starbucks should capitalize on the growth
opportunities in the Asia Pacific region
END
QUESTION?