• 1971 - Starbucks Coffee opens is first store in the Pike Place

Market in Seattle, Washington.

• 1984 - Howard Schultz convinces the original founders of

Starbucks to test the coffee bar concept.

• 1988 - Starbucks comes out with their first mail-order

catalog, enabling mail-ordering of their coffee in all 50
states.

• Grew from 55 stores in 1989 to over 15,000 stores today

• Products sold include:

•- beverages - pastries
•- whole coffee beans - coffee-related retail items
Interior & Exterior of starbucks
Introduction to Starbucks

 Starbucks Corporation is an American global coffee company and

coffeehouse chain based in Seattle, Washington.

 Headquarters: Seattle, WA, United States of America

 Founded: 1971, Pike Place Market, Seattle, Washington, United

States

 CEO: Howard Schultz

 Founders: Gordon Bowker, Jerry Baldwin, Zev Siegl

Mission Statement
Guiding Principles of starbucks
• 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.

 Coffee: Some Facts

First consumed in East Africa during

the 11th century.
Quality of beans – Robusta & Arabica.
Produced in 70 countries.
Global coffee production – 134.2 mn
bags.
More than $70 bn retail sales
globally.
 Industry Definition

Specialty Eatery Industry

 Food and beverages

 Steady growth in the 90s leading to increased

competition

 Demand for specialty food services has increased in

recent years
Percentage Share of different countries in Number of
Starbucks Stores
UNITED STATES ASIA-PACIFIC EUROPE-AFRICA NORTH-SOUTH AMERICA

2% 1%
12%

85%
 Yearly Sales Data of Starbucks
NO OF STARBUCKS STORES OVER THE
12000.00
YEARS
8000
10000.00

7000

8000.00 6000

5000
6000.00
Years 4000
Years
3000
4000.00

2000

2000.00 1000

0
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008
Process Differentiation
(the value chain)
Financing, Legal Support, Accounting Firm Infrastructure

Recruiting, Training, Incentives, Feedback Human Resources

Equipments, Production, Packaging, Selling Technology & Development

Getting the coffee : Where & How Procurement

Delivering Customer
Inbound Billing and Promotions
satisfaction Primary activities
the and
and
Logistics collection Advertising
product feedback
Industry and Competitive Analysis

Market Structure
Monopolistic Competition

Competitive Activity
Many companies are in the market and competition is fierce
Competitors use location, product mix, and store atmosphere
differentiation to establish market niche

Industry Costs and Capital Structure

Low to moderate costs for each location
Major start-up expenditures are property and equipment
Major operating costs are labor and cost of sales
International Competitors

Dunkin Donuts
Sells coffee beans both online & at
physical outlets
Fresh brew coffee
Similar services & products as
Starbucks

Mc Donald’s
Offers number of specialty coffees
Huge penetration
Established fast-food retailer
VALUABLE RESOURCES:
Creating Competitive Edge

• Physical Resources
–Large number of outlets (Hub & Spoke Model)
–Operations in 40 countries with 9000 cafes
–Hi-tech coffee machines & equipments
• Intangible Resources
–Techniques to roast & brew coffee
–Large satisfied customer base
–Building employee relationship
–Reputation for having the finest products and services in the world

• High quality of products

• Quality of Workforce
• Strategic Store Location
• Tangible Resources
•Coffee beans (Ex. They have sole ownership of the Narino Supremo
beans, which is considered to be one of the highest quality coffee beans in
the world.)
• Intangible Resources
•Perception/Reputation of quality (beans, company name, etc)
•Largest and best known of coffee house chains
 Corporate Culture:
Company Values
• No compromise on Quality

• No Franchising

• Not selling artificially flavored coffee beans

• Employee freedom of expression

• Customer is of Prime Importance

•“Just Say Yes” to customer requests
•Modify Products as per customer’s preferences
•Satisfy customer at all costs
»Eg: Providing a free-drink coupon if the
customer is not satisfied
Industry PEST Analysis

Political Influences
State & Local government controls

Economic Influences
Changes in disposable income could influence purchase levels

Social Influences
Consumer preferences could shift from coffee to other
beverages

Technological Influences
Use of technology can improve operational efficiencies
SWOT Analysis
Strengths
 ever experienced a strike or work stoppage

 Good relationships with coffee suppliers

 Value employees

 Located in high traffic areas

 Employee turnover rate is 60%, compared to 140% in the

fast food business

 They don’t move into new markets until they dominate the
ones they expand into
SWOT Analysis
Weaknesses
 Excessive focus

 Employees report to two division heads

 Increasing shareholders dilutes their interest

 They have expanded too quickly, and have already

saturated the US market

 They do not allow smoking in their stores, alienating some

of their customers
 SWOT Analysis

Opportunities
 Expansion into European and Latin American markets

 Distribution agreements, such as hotels, airlines, and office coffee suppliers

 Reducing alcohol consumption in the US leads to bars being used less which
leads to people needing another place to go

 Use supermarkets as a way of expanding into international markets

 Numerous brand extension

 Improve on perception of instant and decaffeinated coffee to expand that

market share
SWOT Analysis

Threats
 The coffee market is saturated

 Cost of coffee beans is expected to rise in the near future

 Supermarkets threaten whole bean sales

 Farmers might switch from coffee to vegetable crops

 High competition from Japanese competitors

 Consumers trend toward more healthful fare

Customer Willingness to Pay

Why go to Starbucks?

A place to think and Imagine

A place to gather and talk
A Third Place beyond Work and Home

Leather Chairs Newspapers Couches

The Authentic Coffee Experience: the
artistry of espresso making
Fast Service and Quiet Moments
Stores Designed on 4 stages of coffee
making: growing, roasting, brewing and
aroma
Mails, Music, Work
 Conclusion
Starbucks has been increasing its debt every year, and at a pace that is
faster than their assets are growing (which is clearly unhealthy).

This is why we chose for the firm to slow down its expansion and to focus
more on marketing their products.

In such a saturated market as the one that they are in Starbucks needs to
focus on increasing consumer awareness and to decrease debt as much as
possible.

In closing we believe that Starbucks can become even more profitable if

they slow down their expansion and concentrate on the stores that they
already have open.