Starbucks Case AnalysisEssay Preview: Starbucks Case AnalysisReport this essayTable ContentStarbucks History and OverviewTwo teachers, Jerry Baldwin and Zev Siegel, and a writer, Gordon Bowker, believed they could form a strong client base in Seattle for the fine coffee market. They each invested $6,350 and opened the doors of Starbucks Coffee, Tea, and Spice in Pikes Place Market in Seattle servicing local restaurants and bars. With the desire to change marketing, they teamed up with Howard Schultz. Howard Schultz was hired for retail sales and marketing. Schultz geared the marketing towards appealing to patrons both culturally and socially. This concept derived from Howard Schultz European travels and seeing how coffee shops there were successful. With resistance, the trio went along with Schultz, but eventually the union split because Schultz had different views. He then opened his own line of fine coffee shops with much success. Soon after he paired with II Giornale they bought Starbucks for $3.84 million. The acquisition included the name, roasting plant, stores and more. This would the first of many.
The Starbuck Corporation had a goal of opening 125 stores in five years. By 1990 there were 84 Starbucks locations that included locations in Chicago, Portland, and Vancouver, as well as a mail order catalogs for roasted coffee and high quality equipment. Entering the California market in 1991 really boosted them into the big league. Also, at this time Starbucks becomes the first private company to offer a stock options program to employees. By 1992 Starbucks had 150 locations; 25 more than the original goal. In the next coming years, the marketing strategy changed again and geared toward Starbucks becoming a leading global company. There were 3,500 stores opened by 2003, making Starbucks as recognizable as companies like McDonalds and Coca-Cola. The success of the global marketing was enormous. Now visible in 22 countries ranging from England to Australia, Starbucks is one of the worlds leading specialty coffee retailers.
This is not quite the same as the original plan, which was to make more stores but, instead, expand into the entire world. This plan also included making Starbucks a destination for international travellers, helping grow the US economy in such a way that it could be used to grow the region as a “hot spot.” The initial plan had a five-year goal in mind and, for some employees, the plan would be too ambitious. However, the plan was not totally without costs. In a recent round of the Starbucks stock exchange, Citi analyst Robert Wojcicki had estimated that a fifth of the company’s core staff would move to California for work and for other benefits, and that these changes would add almost 2,000 jobs, in an average of only $1,350 per new employee. Even with all of the costs, the company’s stock price was climbing rapidly, which was causing problems for many employees and forcing them to make changes to their careers. They would have to make those changes because workers would be forced to change jobs altogether, and the amount of savings each day would drop even further. So the plan got so complicated that employees had to figure out ways to replace a single employee every year. By 1995, their salaries had ballooned to $25,800, with costs of $24,500 per worker. These changes would mean that every employee would still struggle to make ends meet, because the system didn’t work well enough to support their family.
This strategy will eventually be implemented in the US, but it’s very unlikely a Starbucks location in New York City would even be worth the expense. Since Starbucks is a private company with a common operating budget, if the company makes it to San Francisco and the rest of San Jose, it could provide a lot of support. There wouldn’t be so much of a need to add employees and create other benefits such as health care. Starbucks also doesn’t have a lot of financial incentives to make the change. Because many employees would need that particular job, it may not be an option for many employees. As recently as 2013, only 1 percent employee jobs were created or created directly by this strategy. The first company to try and make that happen, Starbucks, was made in the early 1990’s and started to sell a lot of its operations there, and that’s still the case.
As of 2007, Starbucks is selling about 1,500 locations. This is still small but that’s expected to continue. Many employees would want a better life experience by now if this strategy were adopted in California and other markets, as well as moving closer to the Pacific Northwest
That’s the long and short of it. It will take about two years to create the plan. That’s the time in which we will finally get around to making the plan happen in California. So I’m all for doing just one good
External EnvironmentStarbucks has been very successful so far with taking advantage of opportunities when they present themselves. There are still many opportunities on the horizon that Starbucks can take advantage of. There is the opportunity to push their global expansion in existing markets and venture out into newer markets. They can also develop new products and services to be sold at the cafes. By using the brand loyalty that they already created through their coffee, it would make it easier to launch a new product or service at the cafes.
Starbucks has done a good job in limiting its threats, but no matter what, threats will continue to exist. The threats of entry by new competitors, due to minimum barriers, the risks of entry are high. Substitutions pose another threat to Starbucks; consumers could switch to alternative drinks to consume in their leisure time. The potential of rising prices of coffee and dairy pose another threat. Due to Starbucks dedication to using the finest coffee beans, it limits its bargaining power with suppliers.
Internal Strengths and WeaknessesOver the years, Starbucks has develop many strengths. In the area of human resources, Starbucks has been a leader by offering benefits to both its full and part-time employees. They have also implemented programs like the Bean Stock program, which give employees that participate in the program a free pound of coffee each week. They are also offered them the opportunity to purchase Starbucks stocks below market price a couple of times throughout the year. By offering these benefits and fostering a good working environment, they have lowered their training time and cost. Another strength is the brand loyalty that Starbucks has built with its customers. They achieved this by supplying superior customer service and by providing a pleasant and comfortable environment. Lastly, the ability to expand nationally without franchising allows them to maintain control over the quality of their products and services.
Despite all of Starbucks success, the company does possess some weaknesses. The weakness that draws the greatest concerns is its dependency on the retail of its coffee. Focusing too heavily on the main competitive advantage of retailing coffee can adversely affect the development of new products. Starbucks need to move into the direction of developing a diversified product line. Also the reliance on the U.S. market is another concern, because 75 percent of Starbucks cafes are located in the United States. Lastly, the failure to maintain expansion in existing international markets, coupled with the inability to establish itself in new international markets pose another weakness. Starbucks has not been able to generate the same type of success internationally as it did in the U.S.
We believe that Starbucks can increase its own success in the U.S. and will continue to invest in our competitors. We believe that our commitment to excellence in a highly competitive market and robust retailing practices will help drive Starbucks to become the best coffee company in the world by the end of 2014, whether we succeed or not.
Our goal after we launch Starbucks in December 2013 is to increase our domestic sales. We expect that we will have the best retail presence in a country where Starbucks is headquartered, but in the same store as local competitors (e.g., Starbucks, Home Depot) and also to create a more competitive, more flexible and cost-effective U.S. and European market. We expect that our European location will give us the best competition in a region where we have little or no distribution network, so we plan to continue to expand and develop our domestic market from one location to other in the U.S., as well as the new Asian markets in South China Sea, Korea, the Philippines and other locations. As we add stores across a broad range of categories, we expect that Starbucks will also be able to provide retail and distribution services to a wide variety of consumers worldwide.
Starbucks’ new U.S. headquarters are located at 1625 E. Washington Street in Washington, D.C. Our new Starbucks store features a wide selection of high-quality Starbucks-branded beverages and beverages from around the world, including the original Frappuccino. There are Starbucks-branded coffee machines with built-in espresso dispensers and an assortment of built-in standbys that are convenient for customers. We will also be adding more outlets in the U.S., including locations in Chicago, Las Vegas and New York. The new Starbucks store serves as the home of our brand brand-new, non-trending coffee shop, and the home base for Starbucks’ non-trending brand-new product lines, including our new coffee products. Additionally, for our new Starbucks and coffee shops, we will be introducing a new coffee bar and tap as well as the new Starbucks bar and service. All our other brands and styles will be available to our new consumers.
The new Starbucks, while more comfortable compared to the original Starbucks, features a wider range of coffees and more flavorful coffees as well as more flavorful drinks to choose from; in all cases, we can bring what has to be said around our business for the rest of our lives to our customers. Additionally, our cafe and espresso bars and teas have high levels of coffee and tea, with a higher level of caffeine and/or caffeine content. Moreover, our new Starbucks will bring more premium coffees, with higher tasting coffees. All the brands and styles will be available to our new consumers.
Our new Starbucks will also include one of the strongest coffee bars in the entire world, including the new coffee machines and standbys you can buy from our store. We would like to create and create more than 250,000 people’s first and 10,000,000+ people’s second orders in a matter of months. I’m confident I do in fact do!
I am excited to announce our new “One of A Kind CafĂ©” in the coming weeks & months. This cafĂ© will give all our customers the opportunity to visit with friends and family from all walks of life, so they may be able to discover the quality coffee they seek from our coffee bars, cafes, and cafes. We’re going to continue expanding our brands and brands at $29 a cup at Starbucks on the day after they open, and $29 a cup this week. We will also be adding more outlets in the U.S., including locations in Chicago, Las Vegas and New York. The new Starbucks will serve as the home of our brand-new, non-trending coffee shop, and the home base for Starbucks’ non-trending brand-new product lines, including our new coffee products. Additionally, for our new Starbucks and coffee shops, we will be introducing a new coffee bar and tap as well as the new Starbucks bar and service. All our other brands and styles will be available to our new customers.
We offer 4-8 different coffee styles — including our old favorite — at this new Starbucks in the way of coffee from various countries all across the world. All of these espresso coffee styles are fully accessible & easy to navigate. It is also possible to order as many different types of coffees as you would like to consume on your way in! This coffee bar is available to the public to serve on any weekday from 11 AM-4 PM for $29.99 ($29.99 + tax) and available for the purchase of any one (1) month. All coffees are available at every coffee bar in our new Starbucks & coffee shops since 2012.
As always, we have always focused on making our brands and brands on par with our coffee, and I hope we are bringing in even more quality coffee products from around the world. For example, coffee that is brewed with premium teas and other sweeteners, is now available at all our coffee bars and stores with a full price list along with complimentary “Taste of the Day” products. I have been on record for the past several months saying that we believe we have the best prices we’ve ever had in our shop. We’re now offering all of our brands and brands to all our customers.
We are investing $40 million in Starbucks. We have worked tirelessly and consistently to bring more than 12 million Starbucks customers to the U.S., including over 12 million consumers from all over the world. This investment may provide Starbucks with new headquarters and an effective digital service presence.
We continue to work to bring our brand-new products to the broader American market. We are committed to partnering with businesses, consumers, and retailers to increase our U.S. exposure; our brands are continually evolving, and we expect to continue to develop each new one into something better. We continue to work closely with our international partners to enhance our local brand exposure. We will continue to take an active role in supporting those who want to learn more about Starbucks and to contribute to the growth of national and international businesses by investing in new products or services.
I am so thrilled that the Starbucks
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