starbucks-hsgbdhfdanny-1217991083487419-9

Starbucks Global Quest in 2006: Is the Best Yet to Come?Danny Nugroho RP 13967/PS/MM/06Retnowulan 19421/PS/MM/06

Presentation OutlineIntroduction to StarbucksIndustry OverviewCompany OverviewSite AnalysisRecommendations for ImprovementFocused Recommendation for ImprovementFinal Action PlanImpact AnalysisWrap Up

Presentation Outline

About StarbucksOverviewTimelineCorporate Values and Business PrinciplesMission StatementsCorporate Social Responsibility

Starbucks StrategyStore expansion strategyProduct lineCoffee purchasing strategy

Industry and Competitive AnalysisCoffee industryCompetitor analysisGeneric competitive strategyPEST analysisSite 7-S analysis

ConclusionRecommendation

Presentation Outline

About Starbucks

Starbucks StrategyIndustry and Competitive AnalysisConclusionRecommendation

About Starbucks Overview

Timeline

Corporate Values and

Business Principles

Mission Statements

Corporate Social

Responsibility

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)Overview

1971 Starbucks Coffee, Tea, and Spice store (coffee bean roasting)

opened in Seattles Pike Place Market.

1982 Howard Schultz joined Starbucks.

1986 Howard Schultz established Il Giornale Coffee Company.

1987 Il Giornale acquired Starbucks and changed the name into

Starbucks Corporation.

1992 Starbucks decertified the union and made IPO.

1995 Starbucks Coffee International opens in Japan

Starbucks implemented ESOP.Timeline

*Open many new stores after acquisition

Timeline1996 Starbucks began selling bottled Frappuccino.

1999 Starbucks acquired Tazo Tea.

2000 Acquired Hear Music, a San Francisco-based company 2003 Starbucks acquired Seattles Best Coffee

2005 Introduced Starbucks Coffee Liqueur; Acquires Ethos Wate

Corporate Values and Business PrinciplesBuilding a Company with Soul

Opposing Franchising because of Quality Control and Culture

Only selling coffee beans without artificial flavors.

Satisfy customers by all means.

Employees contribution and involvement in making Starbucks a better company

*The company would never stop pursuing the perfect cup of coffee- continue buying the best beans and roasting them to perfection.

About StarbucksMission 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.

*6 commitments on page C-494

Mission StatementSix guiding principles:

Provide a great work environment and treat each other with respect and dignity.Embrace diversity as an essential component in the way we do business.Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee.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.

Corporate Social Responsibility

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 1997A major contributor of CARE, worldwide relief and development organization (Health, Education, and Humanitarian aid)Provides financial support to community literacy organizationsParticipate in local charitable projects.2004 EnviroStars Recognized Leader Award for its community service and environmental activities

Starbucks StrategyRapid store expansion strategyDomestic store expansionInternational store expansionEmployee Training and RecognitionReal Estate, Store Design, Planning, and ConstructionStore ambience

Product Line

Coffee purchasing strategy

*3 year : favorable demographic profile, could be serviced and supported by the companys operations infrastructureEverywhere : cut down on delivery & management costs, shortened customer lines at individual stores, increased foot traffic for all stores in an area.Expand: sell Frappucino in Japan, Taiwan and South Korea

Starbucks StrategyRapid 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

*3 year : favorable demographic profile, could be serviced and supported by the companys operations infrastructureEverywhere : cut down on delivery & management costs, shortened customer lines at individual stores, increased foot traffic for all stores in an area.Expand: sell Frappucino in Japan, Taiwan and South Korea

Starbucks StrategyEmployee 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

*3 year : favorable demographic profile, could be serviced and supported by the companys operations infrastructureEverywhere : cut down on delivery & management costs, shortened customer lines at individual stores, increased foot traffic for all stores in an area.Expand: sell Frappucino in Japan, Taiwan and South Korea

Starbucks StrategyStore ambience The concept of everything matters Assessment of standards

*3 year : favorable demographic profile, could be serviced and supported by the companys operations infrastructureEverywhere : cut down on delivery & management costs, shortened customer lines at individual stores, increased foot traffic for all stores in an area.Expand: sell Frappucino in Japan, Taiwan and South Korea

Starbucks Strategy

Product Line

Wide range of products choicesSpecial product promotionSelling music CDs Joint ventures

PepsiCoDreyers Grand Ice Cream Jim Beam BrandsAcquisitions

Hear Music Ethos WaterStarbucks CardsPartnership with Bank One

*3 year : favorable demographic profile, could be serviced and supported by the companys operations infrastructureEverywhere : cut down on delivery & management costs, shortened customer lines at individual stores, increased foot traffic for all stores in an area.Expand: sell Frappucino in Japan, Taiwan and South Korea

Starbucks StrategyCoffee 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 contractsContributing to the sustainability of coffee growers and helping environment conservationPurchasing and marketing Fair Trade Certified coffeePromoting coffee cultivation methods that protected biodiversity and maintained a healthy environment

*Sourcing from multi geographic areas to find wide ranges of coffee varieties.Fixed : limit exposure to price fluctuationFuture : provide price protectionSustainability : 3-5 years contracts, reward the farmers with financial incentives and preferred supplier status

Industry and Competitive Analysis Coffee Industry

C

Corporate Values and

Business Principles

Mission Statements

Corporate Social

Responsibility

Industry and Competitive AnalysisCoffee industry

Coffee drinking trendCoffee beans production

Competitor analysis

Future goalsCurrent strategyAssumptionsCapabilities

Generic competitive strategy

PEST analysisSite 7S analysis

*3 year : favorable demographic profile, could be serviced and supported by the companys operations infrastructureEverywhere : cut down on delivery & management costs, shortened customer lines at individual stores, increased foot traffic for all stores in an area.Expand: sell Frappucino in Japan, Taiwan and South Korea

Industry and Competitive Analysis

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

In 1994, coffee was the second most traded commodity after Oil. There are two types of Coffee, namely basic and specialty.

*3 year : favorable demographic profile, could be serviced and supported by the companys operations infrastructureEverywhere : cut down on delivery & management costs, shortened customer lines at individual stores, increased foot traffic for all stores in an area.Expand: sell Frappucino in Japan, Taiwan and South Korea

Industry and Competitiv