STARBUCKS ANALASYS

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Please Note:  Initially Starbucks operated their own stores and later LICENSED the Starbucks concept and engaged in joint ventures in international markets with suitable experienced retail partners. More recently Starbucks have started to Franchise the business.

Therefore the majority of outlets are company owned or licensed operators. Internationally it is difficult to grow with this strategy. Perhaps a move to recruiting local entrepreneurs in international markets via a franchise arrangement might be considered. Starbucks are now franchising. Is this the best strategy for growth in France??

Perhaps franchising (rather than licensing) might be a good way for Starbucks to enter and grow the French market quickly.

Introduction –Lots of extra information in the case study –Read the case study carefully and use the information in your answers

Starbucks Corporation, an American company, is a premier roaster, marketer and retailer of specialty coffee around world.

• Initial Public Offering in 1992 developed into a public company and benefitted from access to shareholders funds to boost expansion plans.
• Very competitive marketplace with many similar competitors.
• Starbucks developed a 3 year GEOGRAPHIC expansion plan.
• Carefully targeted strategic regions to expand and selected large cities as a ‘hub’ backed by teams of professionals to support the operation in each city. So lots of hand on management. This is a difficult thing to do if Starbucks want to grow the business internationally. Franchising might be a better option…as against fully owned stores or licensed stores.
• Starbucks carefully selected the top sites for their earlier stores.
• Such a plan needs to be fully SUPPORTED LOGISTICALLY by the company’s infrastructure AND OPERATIONS.
• Good management is essential to manage the day to day operations.
• Servicing hundreds of stores on a daily basis requires a big behind the scene operation in terms of managing the purchasing of stock and delivering goods to each location.
• Experienced retail managers essential for such operations
• International expansion will require additional cross cultural management skills.
• In addition the Starbucks Business Model VARIES FROM STORE TO STORE with each store having an ambience ASSOCIATED WITH THE Starbuck concept….and the MARKETING MIX may have to be adapted for each country on a case by case basis etc.
• Good market research is essential.
• Blend of ethnocentric and polycentric management style necessary for international success.
• Adapting each store to suit each location whilst retaining the Starbucks ambience and experience ensures adaptability is embraced when opening International Stores.

Internal Environment Analysis of Starbucks Corporation

USE THE DATA IN THE CASE STUDY TO DISCUSS KEY INTERNAL ENVIRONMENT STRENGTHS WITHIN STARBUCKS,

Starbucks SWOT Analysis

Strengths:

Strong Market Position and Global Brand Recognition:

• Starbucks has a significant geographical presence across the globe and has operations in over 60 countries.
• Starbucks is also the most recognized brand in the coffeehouse segment.
•  Starbucks effectively leverages its rich brand equity by merchandizing products, licensing its brand logo out.
• Such strong market position and brand recognition allows the company to gain significant competitive advantage in further expanding into international markets and also help register higher growth in both domestic and international markets.
• Over the years, they have achieved significant economies of scale with superior distribution channels and supplier relationships.
• Top Management Team Built
• Excellent logistics in terms of supply of raw materials
• Excellent management in terms of choosing a good location, store planning and construction, team selection and training and assisting new stores via support.
• Excellent range of coffee products
• Excellent range of add on products and services
• Excellent company in terms of building brand loyalty
• Excellent Management and an ability to choose top retailing sites and locations for their stores.
• Only 2 stores closed out of 1500 in the USA indicating excellence of operations and also partnering with good local entrepreneurs.
• Bonds with customers

Products of the Highest Quality:

• They give the highest importance to the quality of their products and avoid standardization of their quality even for higher production output.
• LOTS OF EXAMPLES OF PRODUCTS TO DISCUSS!
• Coffee of the day
• Italian style espresso drinks
• Fresh whole bean coffees roasted on the premises
• Barista Home Coffee Making Machine and Supplies

Location and Aesthetic appeal and AMBIENCE of its Stores

• Starbucks has stores in some of the most prime and strategic location across the globe. They target premium, high-traffic, high-visibility locations near a variety of settings, including downtown and suburban retail centers, office buildings, university campuses, and in select rural and off-highway locations across the world.

• This has earned them a significant competence and advantage to be able to penetrate prime markets and tap into customers convince factor. Their stores are visually appealing and have a ‘cool’ factor attached to it with being designed to reflect the unique character of the neighborhood they serve in and environmentally friendly.
• They provide free wifi, great music, great service, warm atmosphere and provide an environment of community meeting spot, which forms a wider part of the ‘Starbucks’. The main aim for the firm is to make their stores a ‘third place’ besides home and work.
• Starbucks constantly focus on a variety of store designs and layouts.
• To include the ‘Store of the future concept’.
• Starbucks have used computer software to design new store layout and to deliver a new store in approximately 20 weeks.
• Innovative Team in terms of designing 4 different store designs. Internal expertise skills need to be harnessed in order to develop the business internationally.
•  Starbucks CD to provide nice background music

Strong Human Resource Management and Employee Training Programmes

• Starbucks is known for it’s highly knowledge base employees. They are the main assets of the company and they are provided with great benefits like stock option, retirement accounts and a healthy culture. This effective human capital management translates into great customer services.

Strategy to build strong management teams

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