...Amanda Fevurly 19 January 2016 FINA 375 Jiri Tresl Integrative Case 1.1- Starbucks While coffee is a simple product, the “Starbucks Experience” that is mentioned several times throughout the case is exactly what creates value for their customers and makes their company successful. Their strategy includes creating a home away from home included as a part of their day-to-day routine that reflects the personalities of their consumers and community. Consumers are willing to pay more for Starbucks because they have a greater perceived value through experience. Regarding Porter’s Five Forces, Starbucks confronts a variety of challenges that has presented difficulties specifically from 2007 to 2010. Starting with the competitive rivalry and competition, Starbucks faces many direct and indirect competitors. Facing competitors such as fast food companies like McDonalds, Donut shops like Krispy Kreme or Dunkin’ Donuts, fast-casual restaurant like Panera, and the thousands of local coffee shops pose as rivals to Starbucks. As one of its most important concerns, Starbucks faces fierce competition in the global market place. Next, the threat of new entrants in the coffee market exists at a high level but does not necessarily propose a significant effect on Starbucks because of economies of scale. While there are not necessarily entry barriers, Starbucks has created a brand that would be very costly and difficult to develop from scratch giving them a strong sustainable competitive advantage...
Words: 681 - Pages: 3
...uncontrollable elements that Starbucks has encountered in entering global markets. In Japan Starbucks had to deal with uncontrollable elements such as competition among the rival shops, as well as an economic depression. Controllable element in Italy: Price (Italian coffee bars prosper by serving food as well as coffee, an area where starbucks still struggles. Also Italian coffee is cheaper than US coffee. Americans pay about 1.5 for an espresso, on the other hand northern Italy the price is 67 cents, in the south just 55 cents. [ (Starbucks Going Global Fast Case 1.1, 2013) ] 2. What are the major sources of risk facing the company? Discuss potential solutions. Starbucks grew from 17 coffee shops in Seattle 15 years ago to over 19,000 outlets in 58 countries. In Seattle there is outlet for every 9,400 people. And the company considers that the upper limit of coffee shop saturation. The company faces an ominously hostile reception from its future consumers, the twenty- or thirty-somethings. They don’t feel wanted in a place that sells designer coffee at $3 a cup. Potential Solutions: The Market saturation can be overcome by focusing on international or global marketing. Figure out a new strategy to market to the newer generations. Possibly focusing on the product that they are selling by improving the quality of the coffee so that the price of 3 dollars or more fits what they are serving. 3. Critique Starbucks’ overall corporate strategy. Starbucks believes that they...
Words: 473 - Pages: 2
...1 Introduction 1.1 Purpose of report The economic impact of Starbucks on the UK economy June 2013 The objective of this report is to investigate the economic contribution of Starbucks to the UK economy. This contribution is quantified in terms of impacts from: The operation of Starbucks in the UK; The supply chain effects created by Starbucks purchases of inputs from elsewhere in the UK economy. The consumer expenditure of Starbucks’ staff and those employed directly in its supply chain spending their wage income. The report also discusses aspects of Starbucks UK operations that are likely to play a more diffuse role in supporting the performance of the overall economy and the localities in which Starbucks has a presence. The report comprises six chapters as follows: Chapter 2 focuses on the economic contribution to value added and the number of people employed by Starbucks operations in the UK. Chapter 3 explores the impacts on the economy, again in terms of value added and employment that Starbucks purchases from its UK supply chain creates and its staffs’ spending their wage income. Chapter 4 aggregates these operational, supply chain and wage consumption effects to provide an overall quantification of the impact on the UK economy from Starbucks activities. Chapter 5 discusses the wider, ‘catalytic’ contributions that Starbucks makes to the UK economy. First, the report provides an overview of Starbucks operations in the UK and an introduction to...
Words: 706 - Pages: 3
...A case study on Starbucks Coffee Managerial Economics KPA1113 Hani Norhidayah Ismail KBA 15022 Faculty of Industrial Management, UMP Prepared for, Mr. Mohd Hanafiah Ahmad Semester I 2015/2016 Table of content Company Summary: Starbucks Coffee 2 Elasticity 2 Price elasticity of demand 3 Cross-price elasticity of demand 5 Income elasticity of demand 6 References 7 Company Summary: Starbucks Coffee Their story began in 1971 where they were a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle’s Pike Place Market. Today, they connect with millions of customers every day with brilliant products and more than 21,000 retail stores in 66 countries. Starbucks is named after the first mate in Herman Melville’s Moby Dick. Their logo is also inspired by the sea –featuring a twin-tailed siren from Greek mythology. Their mission is to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time. They believed in serving the best coffee possible. It's their goal for all of the coffee to be grown under the highest standards of quality, using ethical sourcing practices. Their coffee buyers personally travel to coffee farms in Latin America, Africa and Asia to select the highest quality beans (Starbucks, 2015). Elasticity Elasticity is defined as how much consumers and producers will respond to a change in market conditions. The concept can be applied to supply or demand, and...
Words: 1746 - Pages: 7
...MG Case 1.1 Starbucks – Going Global Fast Starbuck Corporation is an American coffee company and coffeehouse-chain founded in 1971 in Seattle, Washington. In 1987, the three owners sold the Starbucks chain to Howard Schultz, a former employee, and quickly began to expand, going from 17 coffee shops in Seattle to over 20,891 shops in 62 countries: United States, Canada, Japan, China, United Kingdom, South Korea, Mexico… Since 1987, Starbucks has opened on average two now stores every day. However Starbucks is now facing some challenges. The sales have dropped from $10.4 billion in 2008 to $9.8 billion in 2009. The corporation had to close 475 stores in the United States in 2009 to reduce costs. The market is saturated across the United States and Canada, and Starbucks is now facing employee’s dissatisfaction. 1. The controllable elements are about the firm characteristics and research and development. The firm’s characteristics are: the products (Hot and cold beverages, snacks, pastries…), the price (premium prices for their products), promotion (the firm has saved a lot of marketing cost by relying on word of mouth), channel of distribution (20,891 outlets in 62 countries which shows that Starbucks has good controlled over its channel of distribution). Research and development has an important part of the firm. It has controlled over its R&D process, it has installed automatic espresso machines to increase the speed of service and also offered the prepaid card so...
Words: 614 - Pages: 3
...Table of Contents Introduction 3 1.1 Brief Company Overview 3 1.2 Speciality Coffee Industry and Starbucks Coffee Supply Chain 3 1.4 Problem Definition 4 Literature Review 4 2.1 Current Situation of Starbucks and Older Supply Chain Method 4 2.2 Supply Chain Visibility 5 2.5 C.A.F.E (Coffee and Farmer Equity Practices) Practices 6 Findings 7 3.1 Starbucks’ Operations 7 3.1.1. Material Flow 7 3.1.2 Purchasing System 9 Discussion and Analysis 10 4.1 Starbucks’ 3PLs Strategy 10 4.2 Value Change Analysis 10 Conclusion 11 Appendix A 15 Appendix B 16 Appendix C 17 Appendix D 18 Appendix E 19 Appendix F 20 Appendix G 21 Appendix H 22 Appendix I 23 Introduction 1.1 Brief Company Overview Starbucks is the world’s #1 speciality coffee retailer with more than 20,000 stores n 65 countries (See Appendix G). It operates an estimate of 8,800 of its shops, while licensing and franchises operate the remainder of the stores. The company also owns Seattle’s Best Coffee, Torrefazione Italia coffee brands, Teavana, Tazo, Evolution Fresh, and La Boulange (SCC 2014). Starbucks offers consumers various products including: coffee, handcrafted beverages, merchandise, fresh food, and consumer products of coffee and tea and ready-to-drink (RTD) goods (SCC). 1.2 Speciality Coffee Industry and Starbucks Coffee Supply Chain The speciality coffee industry has seen drastic growth with increase in sales between the 1980s and 1990s. A great number of coffee specialists...
Words: 3399 - Pages: 14
...Assignment 05 Assignment Compulsory? Unique Number Chapters Due date 05 Yes 504511 1-7 29 July 2015 Written (or typed) assignments - NB: Please ONLY submit on myUNISA and ONLY submit in PDF format. In order to convert your Word documents into PDF; please search the Internet for free PDF converters, for example http://www.dopdf.com/ (if this is still available) can be downloaded from the Internet. ASSIGNMENT 05: (100 Marks) Chapter 1 Essay Type Questions: (15 Marks) 1.1 Answer the following questions relating to “IT at Work 1.1 - Asia-Pacific Region is PayPal‟s „Engine for Growth‟” on page 5 (8th ed). (6) 1.1.1 What factors have contributed to, or enabled, the fast growth in m-commerce?(4) 1.1.2 What might deter people from buying from their mobiles? 1.2 Answer the following questions relating to “IT at Work 1.3 - Dashboards Give Operators and Managers Access in Accurate Data” on page 11 (8th ed). (9) 1.2.1 How did feedback at the operators‟ level lead to improved performance at the organizational level? (6) 1.2.2 Why have the dashboards created a beneficial competitive environment for the operators? (3) Chapter 2 Essay Type Questions: (2) (17 Marks) 2.1 Answer the following questions relating to “IT at Work 2.1 - Integrated Trade Management System for the Energy Sector” on page 39 (8th ed). (17) 2.1.1 Which processes are being automated and why? (6) 2.1.2 Why is controlling risk important? (1) 2.1.3 Does PetroMan provide Western Petro with...
Words: 855 - Pages: 4
...CASE STUDIES Starbucks case study Utilizing brand assets and capturing consumer trends in the Japanese RTD coffee market Reference Code: CSCM0242 Publication Date: March 2009 DATAMONITOR VIEW CATALYST Starbucks has established itself not only as a coffee shop chain, but also as a provider of ready-to-drink coffee drinks. Its partnership with Suntory in Japan has seen the success of the chilled cup coffee drink Discoveries, and the experience could provide insights on how the company can succeed in expanding into the growing global RTD coffee market. SUMMARY • Starbucks has been offering the “Starbucks experience” beyond coffee based drinks. Its brand image has helped the launch of its first bottled ready to drink coffee drink, Frappuccinos, in the US through the partnership with PepsiCo. During the economic downturn, offering Starbucks-branded drinks and products via multiple retail channels could help the company capture more consumption occasions and increase its revenue. • Starbucks teamed up with Suntory to launch the Discoveries series in the cut-throat RTD coffee market in Japan. First launched in 2005 and positioned as a premium chilled cup coffee drink, the series is ranked second in the sector, holding an 18% market share after three years. • Right positioning and product design that effectively reflect the positioning are key factors contributing to the achievement of the Discoveries series. Suntory’s know-how of the market, plus its marketing and distribution...
Words: 5652 - Pages: 23
...Case Report 1: Starbucks Customer Service What factors accounted for the extraordinary success of Starbucks in the early 1990s? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period? There were several factors that contributed to the extraordinary success of Starbucks in the early 1990’s. First, the long-term vision was to create a coffee chain that would become America’s “third place”. People needed a third place outside of home and work where they could sit, relax, and enjoy their time alone or with others. Second, as soon as Howard Schultz took over as the Starbucks Owner, he began opening several new stores in key locations throughout Chicago and the northwest. Soon after, Shultz decided to take the company public. Doing so boosted the company tremendously in the right direction by raising $25 million and allowing even more stores to be opened. Lastly, despite great success, Starbucks spent nothing on advertising freeing up even more money towards other company resources at the time. These factors were of key importance in boosting Starbucks success in the 1990’s. Most importantly, Starbucks had a compelling value proposition for the company that created and developed the brand image of Starbucks. It was best explained by its “live coffee” theme that expressed the importance of keeping the coffee culture alive and creating an attractive experience that people could inject into their busy everyday lives. The...
Words: 1775 - Pages: 8
...Starbucks – Delivering Customer Service 1) What factors accounted for the extraordinary success of Starbucks in the early 1990s? What brand image did Starbucks develop during this period? A: One of the most important sources for Starbucks success was its brand strategy and the elements that composed it. The brand strategy of Starbucks was best captured by its “live coffee” mantra. This phrase reflected the importance of the company attached to keeping the national coffee culture alive. They wanted to create an “experience” around coffee consumption. The three main components of this brand strategy were: * The coffee itself.- Starbucks was proud of offering what it believed to be the highest-quality coffee in the world. In fact, Starbucks controlled as much of the supply chain as possible. * Service (“customer intimacy”).- This element consists in the intentions of the company to make of the experience and customer attention something memorable, from recognizing the customers and knowing their drinks to drink customization. * Atmosphere.- According to Christine Day, Starbuck’s senior vice president of administration in North America, the ambience is what makes people want to stay. Founder and chairman Howard Schultz says that Starbucks has built something that has “universal appeal”, based on a sense of community and the need of people of gathering and being together. Also, an important driver of the company is product innovation. The company’s...
Words: 1375 - Pages: 6
...Assignment 2/2 | An analysis on the external environment and its impact on Starbucks | | 5/25/2014 | While planning for the future direction of the business, Starbucks has to consider many factors. One of these is the external environment in which it does so, something which Starbucks has a limited extent of control over. The impact of the external environment is divided into three major categories: Economical, Socio-cultural and Technological. Through the study of their impacts, opportunities and threats are then identified and recommendations presented which best prepare Starbucks to meet them. | Table of Contents 1 Introduction 1 1.1 Starbucks 1 1.2 Core operations 1 2 Impact of external environments 2 2.1 Economical and Globalization Impact 2 2.2 Socio-cultural Impact 2 2.3 Technological Impact 3 3 Opportunities and Threats 4 3.1 Economic and Globalisation 4 3.2 Socio-cultural 6 3.3 Technological 8 4 Recommendations 10 4.1 Increased Range of Product Offering 10 4.2 Latte Art 10 4.3 Business Diversification 10 Bibliography 12 1 2 Introduction In order to determine their future plans, companies must first be able to understand not only their internal position, but also their external environment and how it affects their potential growth. This paper seeks to discuss the impacts that the external environment has on Starbucks, a world renowned coffeehouse chain, and provide holistic recommendations to...
Words: 3661 - Pages: 15
...1. The Company Costa Coffee is a specialist coffee shop concept that is part of Whitbread, a FTSE-listed British leisure company operating in UK. Costa Coffee has been growing in sales, profits and number of outlets in the past 4 years with 75%, 86% and 39% growth respectively. Table 1.1 Key Financial Ratios 2011-2015 (in GBP Millions) Ratio 2014/15 2013/14 2012/13 2011/12 Turnover 952 805 670 542 Profit (Loss) before Taxation 125 93 87 67 Profit Margin 0.13 0.12 0.13 0.12 Return on Capital Employed 44 35 34 32 Number of Stores 1931 1755 1578 1392 Employees 12645 11432 10031 8196 (Whitbread Annual Reports, 2011-2015) Graph 1.1 (Whitbread Annual Reports, 2011-2015) Competitive Environment UK coffee shop market will exceed 30,000 outlets and £15 billion turnover by 2025, driven by branded coffee chain expansion and non-specialist operator growth. Current market is valued at £7.9 billion (Allegra World Coffee Portal, 2015). Harris + Hoole has been ranked number one for coffee quality. Other players like Starbucks and Caffe’ Nero, food service chains like McDonalds, Subway, Pret a Manger and Paul all compete for the market share. Costa’s customers are mainly mature adults, students and professionals segmented to upper middle and the privileged class. The key challenges will be to retain the leading market share by changing the unique selling proposition of Costa. (Euromonitor International...
Words: 2572 - Pages: 11
...Starbucks Case Analysis September 13, 2012 Mike Behrns, Jessica Niese, Jennifer Dadlow, Scott Ryan, Ketan Patel Part 1. Annual Value and Customer Lifetime Value The annual value of each type of customer (exhibit 1) has been calculated by multiplying the number of visits to Starbucks per month times twelve (months/year) times the average customer life in years – thus yielding the annual values of unsatisfied customers, satisfied customers, and highly satisfied customers of $181.58, $209.50 and $381.89, respectively. In determining cost of capital (exhibit 2), we first considered the cost of debt, which was 7.47% in 2001 and 5.97% in 2002. The historical rate of inflation may be used, which is 3.3%, to assign a risk premium to the cost of debt, therefore the assumption may be made that cost of capital is 10% (actual WACC for Starbucks in 2002 was 13.57%). Net Profit Margin (exhibit 3) can be calculated by taking Net Income over Net Total Revenue for the year 2002. The 2002 Net Profit Margin is used to understand how the revenues from the sale of goods contributed to Net Income (incremental income). The NPV calculations for Revenue and incremental income are discounted back to 2002. In calculating the NPV of Revenue and incremental income (exhibit 4), the assumption may be made that Starbucks’ annual discount rate is 10% (the assumed cost of capital). The average customer life values are presented in tenths of years (i.e. 4.4 years), therefore a periodic discount rate needed...
Words: 2348 - Pages: 10
...Starbucks is a leading company and a niche in the coffee business, especially popular in the United States, Canada and Japan. Since inception in 1985, its growth has been attributed to its national and global expansion strategies, innovative product development and increasing sales in current markets (Starbucks Corporation, 2009, p.1). According to the 2009 annual report (Starbucks Corporation, 2009, p.2), the company’s 16,635 stores in over 50 countries generated $9.8 billion in revenue, a figure indicating a negative growth in sales. As a result, current restructuring efforts by CEO Howard Shultz aimed at increasing revenue to $23 billion by 2012 (Helm, 2007, para.4) have necessitated an evaluation of the business model and growth strategy. In this report, we will perform a SWOT analysis on Starbucks, followed by recommendations that can be implemented to improve the sales and strategies of the firm. 1.1 S.W.O.T Analysis Strengths * Starbucks has developed to outshine other coffee retailers in the market through its outstanding financial performance, and the ability to maintain its high end standards of offering premium and exotic coffee beverages. * They have managed to develop a “Starbucks culture” amongst customers by creating an atmosphere that makes the customers feel sophisticated, welcomed and more knowledgeable of their product information. When the customers feel that they are of top priority, it also helps to create a strong sense of loyalty...
Words: 1753 - Pages: 8
...business Starbucks Corporation, based on Seattle, is the world’s largest coffeehouse with 20891 stores in 62 countries. (Starbucks- Annual report, 2012). From the very beginning, till 1971, Starbucks has been relentlessly trying to satiate customers thirst for high quality coffee with the touch of friendliness in its environment. Starbucks mission statement “To inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time” also shows its commitment towards total customer experience rather than only a material taste of the coffee (Starbucks 2013). Throughout this whole report I tried to find out influence of consumers behavior over the activities of Starbucks. As the normal process of expansion Starbucks has expanded towards the South Asian region. On the basis of this initiative I assumed Starbucks would go further and invest in Bangladesh. And tried to analyze consumers’ behavior of Bangladesh and show its macro and micro factors’ influences over Starbucks present marketing practices. Starbucks SWOT analysis “SWOT analysis pursues and integrated approach that includes key variables from company and environment. The objective is the confrontation of the company’s internal strengths and its weaknesses, as well as, company-external business opportunities and threats in order to generate possible strategic options.” (Bohm, 2009, p.1) The SWOT analysis of Starbucks can be illustrated...
Words: 3571 - Pages: 15
