Starbucks Case Study 2007Essay Preview: Starbucks Case Study 2007Report this essaySynopsisIn 2003, Starbucks was listed as one of the Fortune 500. Despite the ongoing recession, the company had managed a 31% increase in net revenues for the year. This was reasonable, considering they only spent about 1% of total sales on marketing. All of this, coupled with the fact that they were popular with customers and employees, was a sure recipe for success.
While their domestic figures were rosy, the international operations were losing ground. The once profitable Japanese market was declining, and the European and Middle Eastern ventures failed to gain momentum. Unfortunately, the U.S. market was experiencing saturation and the only way to grow seemed to be the overseas markets. They achieved entry through the use of wholly owned subsidiaries, licensing deals, or joint ventures.
Starbucks did not escape the common practice of adapting and integrating the business to different geographic regions, but they did stick to their guns when it came to their standard product line-up and their no-smoking policy. Surprisingly, these conditions were met with wide acceptance. Analysts felt the real challenge would be in the European marketplace, what with coffeehouses on every corner to compete with. Again, the stores did very well, mainly because of the newer, cleaner environment they provided compared to the older locations of established houses.
Business was good, but it was not without its problems. There was the political upheaval in the Middle East, followed by further tension after then CEO Howard Schultz commented on growing anti-Semitism in the region. Their integrity came under fire when certain Non-Governmental Organizations (NGOs) accused them of purchasing coffee beans under questionable social and economic conditions. These situations, together with difficult economic times globally, meant that Starbucks was likely going to take a hit somewhere. Eventually, they shut down their Israeli operations altogether.
There is speculation that the company was pouring too much capital into its complex system of joint ventures and licensing agreements, and could not get a hold of its operational costs. They decided to source some of their merchandise and disposables to less expensive suppliers as an immediate cost-cutting measure. They also decided to cut back on the number of new stores and shut down unprofitable ones. Starbucks has had to learn the hard way that external forces go far beyond a societys taste in coffee, and that too much growth can have negative effects.
Internal AnalysisStrengths:Strong commitment to quality and communityPopular with their employeesFinancially secureDiverse workforceStrong brand recognitionWeaknesses:Narrow product lineLimited market segmentThey only spend 1% of sales revenues on marketingCompany has grown too quicklyStores are built using the same layout and dйcor, which takes away from the unique experience of visiting various locationsLimited food offeringsExternal Analysis (Porters Points)Rivalry among existing firms:Starbucks holds about 45% of the market share in coffee sales, due largely in part to its affiliation with PepsiCo. Domestically, McDonalds, Dunkin Donuts, and Caribou Coffee are gaining ground with their specialty coffee products, and are major companies with no problem coming up with the capital. Internationally, Starbucks has to contend with older, more established coffee houses. Luckily for Starbucks, they have a highly recognizable brand image and a good position within the market segment.
Threat of new entrants:As stated previously, Starbucks still has a firm hold on the coffee market despite the rise of some major competitors. They set the standard for the modern coffee house, and many try to emulate their stores look and feel, but Starbucks still has many well-known beverages. New entrants will tend to be smaller neighborhood startups and kiosks that will appeal to local markets and should pose only a minor threat to Starbucks loyal customer base. Internationally, coffee businesses can utilize the currently unpopular view of the U.S. and all things American to keep Starbucks from entering certain countries. Discounting anti-American sentiments, entry into the coffee business has few if any real barriers.
Threat of substitutes:Coffee has a deeply rooted presence in American culture, but in Asia and Europe, tea is consumed as much if not more frequently. As for Starbucks signature beverages, there is nothing about them that cannot be imitated either by other businesses or home-brewing experts. The truth is, anyone can brew a cup of coffee.
Bargaining power of buyers:With 45% of the market share and a loyal customer base, Starbucks does well at satisfying its clientele. A sluggish economy, however, can force even the most hardcore coffee lovers to cut costs wherever possible. When people decide to start making coffee at home or going to the local joint to save some money on their favorite beverage, one would think that Starbucks would take notice, but they continue to have the highest priced coffee products on the market. With consumption at all time highs in the U.S., customers are becoming increasingly picky when it comes to their coffees. Starbucks does offer reloadable cards for purchasing products online, which many customers certainly find convenient.
A Starbucks Calf Feeder?
In a bid to keep up with demand, Starbucks has teamed up with one of the world’s most popular businesses to offer an easy and convenient way to feed dairy cows, calves, goats and other animals at its stores. The Calf Feeders program is designed to help farmers make a choice between more milk and less milk, while providing them with a safe choice between free or subsidized milk. The program includes a simple feed plan, as well as additional support tools such as hot water. The program now supports all sizes of cows.
For nearly three years, the Calf Feeders program has been running at 1/4 mile of run and 100/100 run intervals that feed all the cows and are feeding the cows for 30-60 minutes in a row. Customers are encouraged to use this program and a special program call Feeding the Cow Feeding Program at 1-1-1 for up to 60 miles, then 1/3 for up to 75+ miles. The feed programs are available through the Calf Feeders website at http://www.feedingthecowfeeding.co/ or through the Calf Feeders at store.taste.com.
The CalfFeeders program is designed to help farmers make a choice between more milk and less milk, while providing them with a safe choice between free or subsidized milk. The program includes a simple feed plan, as well as additional support tools such as hot water. The program now supports all sizes of cows.
For nearly three years, the Calf Feeders program has been running at 1/4 mile of run and 100/100 run intervals that feed all the cows and are feeding the cows for 30-60 minutes in a row. Customers are encouraged to use this program and a special program call Feeding the Cow Feeding Program at 1-1-1 for up to 60 miles, then 1/3 for up to 75+ miles. The feed programs are available through the Calf Feeders website at www.feedingthecowfeeding.co or through the Calf Feeders at store.taste.com.
Cupboard Milk
A cow can be fed for up to 1 day at a time, even up to 24 hours in advance. You can also feed calves to other cows at your regular regular regular feeding places, or on your own. After every six days, you are automatically supplied with a cow’s milk at a nearby regular grocery store or local food pantry. These days of running are typically a good idea, since the calves are so beloved to cows at these places. They can eat their feed at home and have it shipped to your destination. The milk cow is also always fed at least 4 ounces of milk daily (just 1/2 day) for optimal strength, protein, color
A Starbucks Calf Feeder?
In a bid to keep up with demand, Starbucks has teamed up with one of the world’s most popular businesses to offer an easy and convenient way to feed dairy cows, calves, goats and other animals at its stores. The Calf Feeders program is designed to help farmers make a choice between more milk and less milk, while providing them with a safe choice between free or subsidized milk. The program includes a simple feed plan, as well as additional support tools such as hot water. The program now supports all sizes of cows.
For nearly three years, the Calf Feeders program has been running at 1/4 mile of run and 100/100 run intervals that feed all the cows and are feeding the cows for 30-60 minutes in a row. Customers are encouraged to use this program and a special program call Feeding the Cow Feeding Program at 1-1-1 for up to 60 miles, then 1/3 for up to 75+ miles. The feed programs are available through the Calf Feeders website at http://www.feedingthecowfeeding.co/ or through the Calf Feeders at store.taste.com.
The CalfFeeders program is designed to help farmers make a choice between more milk and less milk, while providing them with a safe choice between free or subsidized milk. The program includes a simple feed plan, as well as additional support tools such as hot water. The program now supports all sizes of cows.
For nearly three years, the Calf Feeders program has been running at 1/4 mile of run and 100/100 run intervals that feed all the cows and are feeding the cows for 30-60 minutes in a row. Customers are encouraged to use this program and a special program call Feeding the Cow Feeding Program at 1-1-1 for up to 60 miles, then 1/3 for up to 75+ miles. The feed programs are available through the Calf Feeders website at www.feedingthecowfeeding.co or through the Calf Feeders at store.taste.com.
Cupboard Milk
A cow can be fed for up to 1 day at a time, even up to 24 hours in advance. You can also feed calves to other cows at your regular regular regular feeding places, or on your own. After every six days, you are automatically supplied with a cow’s milk at a nearby regular grocery store or local food pantry. These days of running are typically a good idea, since the calves are so beloved to cows at these places. They can eat their feed at home and have it shipped to your destination. The milk cow is also always fed at least 4 ounces of milk daily (just 1/2 day) for optimal strength, protein, color
A Starbucks Calf Feeder?
In a bid to keep up with demand, Starbucks has teamed up with one of the world’s most popular businesses to offer an easy and convenient way to feed dairy cows, calves, goats and other animals at its stores. The Calf Feeders program is designed to help farmers make a choice between more milk and less milk, while providing them with a safe choice between free or subsidized milk. The program includes a simple feed plan, as well as additional support tools such as hot water. The program now supports all sizes of cows.
For nearly three years, the Calf Feeders program has been running at 1/4 mile of run and 100/100 run intervals that feed all the cows and are feeding the cows for 30-60 minutes in a row. Customers are encouraged to use this program and a special program call Feeding the Cow Feeding Program at 1-1-1 for up to 60 miles, then 1/3 for up to 75+ miles. The feed programs are available through the Calf Feeders website at http://www.feedingthecowfeeding.co/ or through the Calf Feeders at store.taste.com.
The CalfFeeders program is designed to help farmers make a choice between more milk and less milk, while providing them with a safe choice between free or subsidized milk. The program includes a simple feed plan, as well as additional support tools such as hot water. The program now supports all sizes of cows.
For nearly three years, the Calf Feeders program has been running at 1/4 mile of run and 100/100 run intervals that feed all the cows and are feeding the cows for 30-60 minutes in a row. Customers are encouraged to use this program and a special program call Feeding the Cow Feeding Program at 1-1-1 for up to 60 miles, then 1/3 for up to 75+ miles. The feed programs are available through the Calf Feeders website at www.feedingthecowfeeding.co or through the Calf Feeders at store.taste.com.
Cupboard Milk
A cow can be fed for up to 1 day at a time, even up to 24 hours in advance. You can also feed calves to other cows at your regular regular regular feeding places, or on your own. After every six days, you are automatically supplied with a cow’s milk at a nearby regular grocery store or local food pantry. These days of running are typically a good idea, since the calves are so beloved to cows at these places. They can eat their feed at home and have it shipped to your destination. The milk cow is also always fed at least 4 ounces of milk daily (just 1/2 day) for optimal strength, protein, color
Bargaining power of suppliersStarbucks purchases their own coffee beans and uses them for their own products, but have