...Starbucks ECO/365 May 4, 2015 Christopher Rakovalis Starbucks Starbucks is the leading retailer in specialty coffee in the world, serving 50 million customers globally every day (Bussing-Burks, 2009). Starbucks is proposing a new delivery service to maximize profitability and increase its competitive advantage in the marketplace. There are different factors that affect demand, supply and equilibrium prices in the market. To be successful and have long-term profitability the strategic planning group must explore the price elasticity of demand, fixed cost and cost structure. History of Starbucks The name Starbucks was inspired by the first mate of the whaleship from the novel Moby Dick (Bussing-Burks, 2009). Starbucks started out with three friends, Gorgon Bowker, Jerry Baldwin and Zev Siegel (Bussing-Burks, 2009). Their goal was to serve the world’s finest fresh-roasted whole bean coffees in a warm and welcoming setting where friends and family can meet. They open their first store named Starbucks Coffee, Teas and Spices in 1971 (Bussing-Burks, 2009). The three friends invested $1350 each and borrowed $5000 from a bank. The rent only cost $137 a month, and overhead costs were fairly low (Bussing-Burks, 2009). The first store was located in a storefront at Pike Place Market in Seattle. Within ten years, Starbucks grew to four stores and owning a roasting plant. Howard Schultz, CEO of Starbucks, joined the company in 1982 (Bussing-Burks, 2009). Howard was...
Words: 1787 - Pages: 8
...Differentiating Between Market Structures ECO/212 Principles of Economics Monday, November 8, 2007 Dr. Rudolph Differentiating Between Market Structures Executive Summary Starbucks coffee has been around since 1971. With its objective to be the most recognized company for coffee in the world, the company faces a great task of expansion. “Starbucks mission is to inspire and nurture the human spirit one person, one cup and one neighborhood at a time” (Starbucks corporation, 2005). Starbucks plans are derived from their unending customer service that is influenced by the labor market and market structure of the company. They know the value of their employees so they continue to aid them in his or her everyday success and well being. Although the company has expanded its services oversees it has been challenged greatly in the categories of goods for North America. The natural monopolies have challenged the company to venture into new avenues that will allow them to continue earning money from their once leading specialty coffee. Categories of Goods All goods can be put into a certain category based on whether or not the good is “rival” and/or “excludable”. A good is considered to be rival when “one person’s consuming a unit of a good means no one else can consume it” ( Hubbard & O’Brien, 2010, p. 148). A good is considered to be excludable when “anyone who does not pay for a good cannot consume it” (Hubbard & O’Brien...
Words: 1475 - Pages: 6
...Managerial Accounting Project Assignment Starbucks Coffee Company Table of content 1. Introduction ………………………………………………………3 2. Management structure …………………………………………....4 3. Management of inventory ………………………………………..5 4. Ability to earn income ……………………………………………6 5. Reliance on debt financing ……………………………………….7 6. Types, volumes and prices of products sold …………………..8 7. Production processes …………………………………………….9 8. Management’s long term strategies ………………………………10 9. Efficiency of operation project …………………………………11 10. Conclusion ……………………………………………………….13 11. Appendix …………………………………………………………14 1. Introduction Starbucks Coffee Company stands as the biggest coffeehouse business in the world. Starbucks was established in 1971 by three local businessmen to sell high quality whole beans coffee. In 1981 when Howard Schultz visited the store he plan to build a strong company and expand high quality coffee business with the name of Starbucks. Starbucks air is to provide high quality of coffee to its consumer and aim to achieve product innovation, retail expansion and provide service quality for long term. Starbucks open its first coffee store in Seattle, Washington. In 1990 Starbucks expand its headquarters in Seattle and also build a new roasting plant. In 1990s Starbucks opens 60 retails shops in United Kingdom. At the end of 2000s Starbucks total branches was 3500. Coffee is one of the rapidly growing industry in this world due to its business strategy. According...
Words: 4582 - Pages: 19
...Coffee Supply and Demand It was always well known that there is very high demand of gas in United States! After gasoline the next product that is high in trade with other countries is coffee. It grows in more than 55 countries across the world and supports lives of around 23 million people in farming sector. More than 115 million people in the world have their involvement in business of coffee. Growth, process, trade, and retail of coffee are the different stages all these people are involved in. In 2002, people around the world bought 14 million lbs of coffee, while around 17 million lbs was grown. This over production isn’t usual and leads to variation of price in the entire coffee industry. A world wide known firm, Starbucks, is the most popular corporation in today’s market. It is known for controlling a major part of coffee that’s being produced. In fact, Starbucks is the lead corporation in retailing of this product. It offers people a special braded coffee. They start by purchasing, roasting and then finally selling whole coffee beans and rich brewed coffee, espresso drinks, cold-blended drinks, and a variety of fresh made items, equipments, and a wide variety of high-quality teas. They have more than 9000 retail locations worldwide. When people consider coffee, Starbucks has gained a worldwide name by leading with high success. It was mentioned in a news article that Latin America is where Starbucks has been producing huge amounts and quality of coffee for ensuring...
Words: 1910 - Pages: 8
...Economics & Institutions TReNDS Martin Pitek MGMT - 7730 March 20, 2009 Starbucks Coffee Table of Contents Introduction 3 Product Analysis 3 Product Overview 3 Market Structure 4 Competition 5 Dunkin Donuts 7 Krispy Kreme 3 McDonalds 8 Panera Bread 8 Elasticity Estimates Pricing Strategy 10 Forecast 12 Determants of Demand 13 Forecast Model 15 Forecast Error! Bookmark not defined. Summary 15 Works Cited Introduction With the economy in trouble, the stock market tanking it is important to start your day with a good cup of coffee to take on these challenges. Can Starbuck’s sustain it business model and place in the market? The paper examines Starbucks business and it respective practices. In 1971, the original Starbucks opened in Pike Place Market in Seattle, Washington by three partners named Jerry Baldwin, Zev Siegal, and Gordon Bowker. Their focus was to sell coffee beans and equipment. They purchased green coffee beans from Peet’s, a specialty coffee roaster and retailer, during their first year of operation. Later, they began buying coffee beans directly from the growers. In 1983, an entrepreneur by the name of Howard Schultz joined the company; Schultz felt that the company should sell coffee and espresso drinks as well as coffee beans. The partners felt that selling coffee and espresso...
Words: 7573 - Pages: 31
...business environments the author within task 1 will now go on to; identify the purposes of different types of businesses, describe how an organisation meets the objectives of different stakeholders and explain the responsibilities of an organisation and strategies employed to meet them. ‘’ In our lives we come into contact with a great assortment of organisations with many form types and usually with very different objectives.’’ (Business Essentials, 2007, p. 3) In order to understand the importance of diversity within a business it is important to first identify the varying purposes of different organisations. The purpose of an organisation can differentiate hugely depending on why they were set up. Examples of this would be that Starbucks operate to make a profit, whilst Help for Heroes on the other hand does not as it is a voluntary organisation. There are many different types of organisations serving different purposes to meet a variety of needs. There are three predominant classifications of industry in which organisations operate dependent on its purpose. These are the primary, secondary and tertiary sectors. The primary sector involves making direct use of natural resources and obtaining raw materials. In contrast the secondary sector produces manufactures goods. This is the process by which everything is put together. The tertiary sector of the economy is...
Words: 8083 - Pages: 33
...Economics & Institutions TReNDS Martin Pitek MGMT - 7730 March 20, 2009 Starbucks Coffee Table of Contents Introduction 3 Product Analysis 3 Product Overview 3 Market Structure 4 Competition 5 Dunkin Donuts 7 Krispy Kreme 3 McDonalds 8 Panera Bread 8 Elasticity Estimates Pricing Strategy 10 Forecast 12 Determants of Demand 13 Forecast Model 15 Forecast Error! Bookmark not defined. Summary 15 Works Cited Introduction With the economy in trouble, the stock market tanking it is important to start your day with a good cup of coffee to take on these challenges. Can Starbuck’s sustain it business model and place in the market? The paper examines Starbucks business and it respective practices. In 1971, the original Starbucks opened in Pike Place Market in Seattle, Washington by three partners named Jerry Baldwin, Zev Siegal, and Gordon Bowker. Their focus was to sell coffee beans and equipment. They purchased green coffee beans from Peet’s, a specialty coffee roaster and retailer, during their first year of operation. Later, they began buying coffee beans directly from the growers. In 1983, an entrepreneur by the name of Howard Schultz joined the company; Schultz felt that the company should sell coffee and espresso drinks as well as coffee beans. The partners felt that selling coffee and espresso...
Words: 7573 - Pages: 31
...Starbucks Corporation, an American company founded in 1971 in Seattle, WA, is a premier roaster, marketer and retailer of specialty coffee around world. Starbucks has about 182,000 employees across 19,767 company operated & licensed stores in 62 countries. Their product mix includes roasted and handcrafted high quality with premium priced coffees, tea, a variety of fresh food items and other beverages. They also sell a variety of coffee and tea products and license their trademarks through other channels such as licensed stores, grocery and national foodservice accounts. Starbucks also markets its products mix with other brand names within its portfolio of companies, which include Teavana, Tazo, Seattle’s Best Coffee, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, La Boulange and Verismo. Starbucks had total revenue of $14.89 billion as of September 29th, 2013 The factors that existed in the environment that provided the opportunity for Starbucks to develop a new, successful retail chain begin with the insight that Howard Schultz had that the other players in the coffee market did not have. He realized that Americans lacked the opportunity to savor a good cup of coffee while engaging good conversation in a relaxed atmosphere. In 1987 he purchased Starbucks, because he was convinced after a trip to Italy that Americans would be enticed by Italian coffee house culture. Prior to that time, coffee consumption in the U.S. was steadily falling as the three major coffee manufacturers...
Words: 428 - Pages: 2
...economic conditions that contribute to improve profitability, business growth and market size. Starbucks strategy is also expanding market in globally to provide high quality coffee in convenient and visibility locations. They are continuing to innovate and extend the business with imaginative new ready-to-drink beverages and expanded packaged coffee offerings (Starbucks Financial release, 2007). Starbucks Corporation has established by purchasing high quality coffee beans and sells the customers along with a variety a specialty drinks and food that has met with an ever-increasing amount of success. Starbucks have succeeded several economic factors as well as price elasticity of demand. Price elasticity of demand can be determined by the percentage change in the quantity demanded with the percentage change in price. They should consider household income that people are willing to spend more on food and beverages when household income increases. Starbucks innovation in joint ventures has opened new markets and opportunities increasing product use among different demographics. Starbucks has proven to be highly innovative in business culture that offers prepaid cards, priced from $5 to $500. Joint ventures with Pepsi Company, Dreyer's Grand Ice Cream Inc and inspiring entertainment with the launch of "Hear Music" have developed Starbucks with great success. Starbucks has shown their values, leveraging market power, resources, and capabilities to achieve returns higher than their competition...
Words: 3030 - Pages: 13
...September 26, 2011 Introduction: Porter’s model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment, especially competitive strategy should be based on the understanding of an industry’s structure and the way they change. Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porter’s model supports the analysis of the driving forces in an industry. Based on the information derived from the five forces analysis, management can decide how to influence or to exploit particular characteristics of their industry. The five competitive forces are typically described as follows: bargaining power of suppliers, the term 'suppliers' comprises of all sources for inputs that are needed in order to provide goods or services, supplier bargaining power is likely to be high when the market is dominated by a few large suppliers rather than a fragmented source of supply, there are no substitutes for the particular input, the suppliers, customers are fragmented so their bargaining power is low, the switching costs from one supplier to another are high there is the possibility of the supplier integrating forwards in order to obtain higher...
Words: 3691 - Pages: 15
...Entry into the Coffee Shop Market – Starbucks establishes in Gothenburg The demand and supply of the domestic coffee shop market Ylva Bruzelius & Hanna Johansson 2012-01-25 Fall semester of 2011 Supervisor: Lennart Hjalmarsson Master Thesis in Economics – Industrial Economics (15 hp) The Department of Economics at the School of Business, Economics and Law Table of contents Acknowledgements ................................................................................................................................. 2 Summary ................................................................................................................................................. 3 1.0 Introduction ....................................................................................................................................... 4 1.1 Method and demarcation ............................................................................................................... 5 2.0 Starbucks‟ history .............................................................................................................................. 7 2.1 Starbucks‟ growth and expansion.................................................................................................. 9 2.2 Corporate social responsibility (CSR) ......................................................................................... 11 2.3 Starbucks‟ vision .......................................................................
Words: 15381 - Pages: 62
...Lentz, and Paul Breen Re: Roasted Delivery – A New Starbucks SBU Product Line INDUSTRY OVERVIEW The coffee industry is one of the fastest growing industries in the world with an annual growth rate of 7% (Griffin, 1999). As of 2011 Americans consumed approximately 400 million cups of coffee per day, which is equal to about 146 billion cup of coffee per year. When put into the perspective of caffeine coffee represents 75% of all the caffeine consumed in the United States. While there are several different species of different coffee plants the two main species of coffee that are cultivated today are Arabica and Robusta coffee beans. Coffea Arabica also known as Arabica coffee accounts for approx. 75-80% of the current world’s production coffee. Coffea canephora also know as Robusta coffee currently accounts for 20% of all production in the world (Coffee Statistics, 2011). The specific café that Roasted Delivery chooses around the coffee industry was Starbuck. MISSION AND STRATEGY OVERVIEW Starbucks was first opened in 1971 as a single store in the Seattle’s historic Pike Place Market. In 1981 Howard Schultz (Starbucks chairman, CEO) joined Starbucks after first tasting a cup of their coffee. Starbucks with their current mission to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time has now found themselves with 15,000 stores existing in over 50 countries (Starbucks, 2011). Starbucks strategy has been broken down in the following parts...
Words: 3108 - Pages: 13
...Starbucks – Strategy of a global brand * Table of Contents 1 Preface 2 2 The McKinsey-7S-Model 2 2.1 Strategy 3 2.2 Structure 3 2.3 System 3 2.4 Skills 4 2.5 Shared Values 4 2.6 Staff 5 2.7 Style 5 3 The Five Forces Model 5 3.1 Bargaining power of buyers 6 3.2 Bargaining power of suppliers 6 3.3 Threat of new entrants 7 3.4 Threat of Substitute products 7 3.5 Rivalry among competing firms 7 4 PEST Analysis 8 4.1 Political Influences 8 4.2 Economic Influences 8 4.3 Social Influences 8 4.4 Technological Influences 9 5 SWOT Analysis 9 5.1 Strengths 9 5.2 Weaknesses 10 5.3 Opportunities 10 5.4 Threats 10 6 Entry Strategies for new markets 11 6.1 Establishing a subsidiary 11 6.2 Arrange joint ventures 11 6.3 Licensing 11 7 Conclusion 12 8 Reference List 13 Preface The following analysis of Starbucks will focus on how internal as well as external factors influence this company. Internal factors will be highlighted by the McKinsey-7S-Model. External analysis will conclude Porter’s Five Forces model to outline the threats Starbucks faces in its industry. The SWOT Analysis will show Strengths, Weaknesses, Opportunities, and Threats to Starbucks business model. Furthermore the PEST Analysis will give explanation how external factors influence the company. Finally this paper will outline what strategies Starbucks uses to penetrate markets in new countries. The McKinsey-7S-Model Because...
Words: 2900 - Pages: 12
...Risk of Climate Change: The case of Starbucks Starbucks was founded in 1971 and is based in Seattle, Washington. It operates as a roaster, marketer, and retailer of specialty coffee worldwide. Starbucks purchases and roasts high-quality whole bean coffee grown under the highest standards of quality, using ethical sourcing practices on coffee farms in Latin America, Africa and Asia. Their mission is “to inspire and nurture the human spirit-one person, one cup and one neighborhood at a time.” As of December 2014 it operates 21,878 stores in 66 countries. Their stores not only offer coffee, but they offer tea beverages, packaged roasted whole bean and ground coffees, single serve products, fresh food offerings, and various food products, as well as beverage-making equipment and accessories. Starbucks also licenses the rights to produce and distribute branded products to The North American Coffee Partnership with the Pepsi-Cola Company. Starbucks went public on June 26,1992 at a price of $17 per share and they closed trading on that day at $21.50 per share. Today it is currently trading at $92.21 per share. Their market cap is 69.13 billion. According to their 2014 annual Fiscal report their net revenue was $16.4 billion. In the first quarter of 2015 they delivered record revenue and Earning Per Shares (EPS). Revenues rose by 13% to a record of $4.8 billion. Their EPS of $1.30 includes a gain on the acquisition of Starbucks in Japan. Starbucks first quarter fiscal report for 2015...
Words: 1215 - Pages: 5
...STARBUCKS AS AN INTERNATIONAL BUSINESS 3 Abstract The researcher examines a detailed synopsis of the specialty coffee industry and the role that Starbucks plays in it. Starbucks is in a growth market, and it has a good relative overall position. The researcher will examine the business structure of Starbucks and the future implications of its current business strategies. By examining the strategic imperatives such as how to expand abroad and understanding the international context, the researcher will determine strong and weak business strategies of the company. Starbucks has overcome organizational and managerial implications that will serve as a strong model for international businesses. The researcher will then give strategy and implementation recommendations on how Starbucks can grow as an international business. STARBUCKS AS AN INTERNATIONAL BUSINESS 4 An Analysis of Starbucks as a Company and an International Business Introduction Millions of people all over the world walk into Starbucks every day for their cup of coffee, but it is more than the overpriced coffee that brings people in day after day to the Starbucks stores across the world. Starbucks offers an upbeat environment and friendly and helpful staff to assist customers in any question or problem they might have with the coffee or service. People buy Starbucks for what it represents and the status symbol that comes along with it. Although various business...
Words: 751 - Pages: 4
