STARBUCKS STARBUCKS, One of the most well known and leading coffee supplier around the world. Starbucks began its business in 1971. Before that they are a roaster and retail seller of whole bean and ground coffee, tea. They have only one store at that moment which is located in Seattle's pike place market. At present starbucks serves millions of customers walking into their stores every day. The stores are presently in 17,000 locations in 50 countries (STARBUCKS 2013).
Starbucks has revolutionised after HOWARD SCHULTZ became the director of retail operations. (Strategic development of starbucks) MISSION STATEMENT: "TO INSPIRE AND NURTURE THE HUMAN SPIRIT- ONE PERSON, ONE CUP AND ONE NEIGHBOUR AT A TIME". (Our starbucks mission statement 2013) STARBUCKS mission statement clearly depicts that they are not only giving importance of coffee, also to bestow the customer with rich experience. To enact these principles, Starbucks does everything in order to accomplish their aims and objectives. Starbucks treats their employees in prominent manner and respects them in each and every aspect. Starbucks always believes that they serve the
customer with the best coffee possible. Starbucks does everything in a perfect and particular genre like buying coffee beans. They buy coffee beans by travelling personally to coffee farms in Latin America, Africa and Asia. After careful consideration and selecting the beans, the beans are then transported to Starbucks roasting plant. Once the beans reach the roasting plant, starbucks experts make out the balance and rich flavour of beans. On the other hand Starbucks also develops its loyalty toward towards customers with services. They make sure that customer gets satisfied in all aspects with their services. Having created a brand image in market, Starbucks achieves its aims and goals and also ways to achieve them.
SWOT ANALYSIS:
Considering, the SWOT analysis on Starbucks. The following figure details about the strengths, weakness, opportunities and threats for Starbucks. (Swot analysis of starbucks 2013)
WEAKNESS
STRENGTHS • •
• •
Good financial position leading position in coffee house segment. management of employees unique standard
• • •
Rising beans prices. product pricing Negative publicity
SWOT OPPORTUNITIES • • • •
Range of suppliers retail operations expansion promotions & discounts elucidate product offerings
THREATS • • •
coffee beans and dairy prices competition supply disruption
•
STRENGTHS:
Starbucks has its own unique qualities in its coffee house. All these qualities are assets for the starbucks to decree in coffee business. As they mentioned in their mission statement that they want to give their customers some rich experience other than only giving them just a coffee. They thrive for the customer satisfaction. Starbucks puts so much effort to get experience with the customers by providing them a warm atmosphere and friendly staff. WEAKNESS:
The price of coffee compared to others like Costa, Cafe Nero etc. also the coffee beans prices are being differed and likely to be hiking as the demand for them is increasing. Starbucks fails to maintain coffee price and profits. Both these depend on coffee beans price. OPPORTUNITIES:
Starbucks can improve its supplier range. Instead of own harvesting it can buy coffee beans from different traders around the world like Asia, Africa, and South America. Starbucks can also expand their business to countries like India and China. It can also provide their customers with promotions and coupons to develop their business. THREATS:
Coffee shops depend on prices of coffee beans and dairy. Therefore it is not possible to estimate profits. There are many other coffee shops offering a coffee for suitable prices. Also the competition is increasing a lot. There is threat to starbucks because of competition. Also supply disruption is a threat for Starbucks. External factors like political, economic add cost to the firm.
PESTEL ANALYSIS OF STARBUCKS: POLITICAL:
Starbucks has to know about the taxation policies in different countries. Farmers are imposed with high taxations. Any fluctuations in taxes affect the consumer buying behaviour. Therefore starbucks has to carefully consider about the taxation policies before buying coffee beans. Starbucks will also be affected with trading issues like exports and imports costs. Also some of the countries political stability is not that much strong. Change in political government affects the rise in tax rates. In Hong Kong starbucks is named as "BING SUTT" which means ice room. In Thailand the average coffee sold is equal to salary of average person living in Thailand. (Starbucks in Bangkok, Thailand Vs Thai coffee shops- which is the best Choice? 2009) ECONOMICAL:
Starbucks will suffer if the interest rates are raised. These result in non expansion of business. Therefore consumers take coffee as a luxury and sales drops because of high interest rates. Low economic growth in country leads to drop in sale. In the mean time competitors are offering coffee in a competitive price. Rise in interest rates affects the buying power of consumers. SOCIAL:
Coffee is a luxury product, so it is brought by people whose income is enough to spend for the coffee. Starbucks can locate to areas where the people in local markets have good attitude to work. Transport facilities for both the customers and staff can access easily. Starbucks can target young generation to develop its business. In the same way it shouldn't loose its valuable customers as it may risk the business if it targets only young generation. TECHNOLOGICAL:
Technology has its roots in all most all the business around the world making the work easier to do in efficient manner. Using the advanced technology coffee machines makes coffee fast and efficient. Also using the cash machine with advanced software and will ease the process and time. This makes the staff to work quick and efficiently. LEGAL:
Starbucks has to be aware of all trade laws and has to follow them. Also starbucks need to know about different employee laws in different countries. When buying a place or location for shop, Starbucks can undergo with local planning regulations so that it cannot avoid future obligations.
ENVIRONMENT:
Starbucks needs to be aware of disposal cups they are using as they need to be recycled. Also starbucks need to be aware of groups such as green peace and friends of earth as they create problems in the name of environment. (Environmental analysis in starbucks 2007) PORTERS FIVE FORCES:
To interpret Starbucks in a better way Porter's five forces method is used. The five forces that detail in porters five forces are as follows: (Starbucks porter's five forces analysis 2012) 1. Rivalry among competitors 2. Bargaining power of buyers 3. of substitutes 4. Threats Bargaining power of suppliers 5. Threats of new entrants Starbucks has competitors like Costa, Mc Donald's, caribou coffee and other local coffee shops. As the competition between them is high, rivalry among the competitors increase due to competition. Bargaining power of buyers is high due to large competition prices offered by the competitors. There are various discounts and offers provided by different competitors. Threat of substitutes includes substitutes of coffee such as tea, water, juices, soft drinks etc. Also pubs and bars serve people with soft drinks and liquor. So there is a chance of replacing coffee shop with a bar. Threat of new entrants is unsubstantial, as imbibitions levels in coffee market is more and hope for new entry is less. CRITICAL SUCCESS FACTORS OF STARBUCKS:
There are various success factors for starbucks to get into an esteemed position for its development. They are as follows:
A. B. C. D.
Market research Employee motivations and rewards First movers advantage Catalogue Retailing
A. Market Research:
Starbucks has planned their business ahead by following a developmental strategy. If we compare starbucks from past to present, starbucks has changed a lot in terms of all aspects. Based on this development, starbucks thought of extending its business around the world by following a systematic procedure using the development strategy. Starbucks carried out a lot of market research and finally came up with the decision of moving to California in the year 1991. B. EMPLOYEE MOTIVATIONS AND REWARDS:
The main advantage of starbucks is their employees. Starbucks employees are sincere and dedicated towards their work. Starbucks motivate their employees by providing them with incentives for the excellent performers. Starbucks also cares for their employees in terms of health and safety. Starbucks are loyal towards their employees and treat them with utmost honour. C. FIRST MOVERS ADVANTAGE:
HOWARD SCHULTZ, The director of starbucks has coffee cafes before buying the starbucks. After buying starbucks in 1987 he gave starbucks a trend setting life in coffee house. He took in charge as CEO and president for Starbucks Company at the age of 34 years. He made a target of opening 150 shops around the world within the start of first five years and he succeeded in his goal by putting all his efforts. Later slowly starbucks has established globally as it is becoming popular day by day. Starbucks got a tremendous response in the market. Starbucks takes important decisions in designing the store and also in improving architecture of the store. (Starbucks strategy 2005) D. CATALOGUE RETAILING:
Catalogue retailing is prominent factor that played an important role in the starbucks company operations. Starbucks has launched catalogue where consumer can select coffee beans packed in given quotations. Starbucks sold its products online successfully.
RECOMMENDATIONS:
Starbucks is a globally known company which has branches all over the world. It has developed a lot in terms of sales and success growth keeps on uplifting. The name starbucks and its fame, brand image has created a trend in the coffee house industry. In order to sustain with the competition and to remain in the top notch position starbucks has following recommendations. Starbucks has a weak marketing strategy and also publicity of starbucks depends upon word of mouth. All the other competitors such as Costa, Mc. Donald's are openly challenging the marketing strategies of starbucks is loath to reciprocate in the same terms. Starbucks need to take this as a consideration and this aspect has to be critically evaluated and launch their marketing campaign of their own. Starbucks need not to criticise its competitors but can find a new and advanced way of increasing its brand image and its popularity. Starbucks need to market there brand more aggressively to clarify consumers that starbucks coffee is superior to all the other coffees and drinks. There are lot of ways to promote is marketing for starbucks. Starbucks has ascendant presence in the developed countries. They can develop apps related to their products and services for smart phones. They can develop apps and create campaigns to reach the customers the best of their services and products. Starbucks need to work extensively in its research and development to make new flavours and blends to increase their profits. Customers can be offered with highest quality of coffee possible. In underdeveloped countries starbucks can use television as source of media to promote their marketing strategies. This helps starbucks to build up its brand and emerge into the underdeveloped countries. It makes easier to kick start starbucks business once if the brand attracts consumers with its marketing strategies. Also the currency exchange is a constant change which makes it difficult to maintain the prices of the products and services. Starbucks can relocate its nonprofitable coffee houses to profitable places. Starbucks Director of retail operations stated that "we're not in the coffee business serving people.... we're in the people business serving coffee". This shows starbucks employee's contributions towards their organisation.
REFERENCES:
1. Starbucks company profile (2013)available http://www.starbucks.co.uk/about-us/company-information [accessed:
at: 08
January 2014] 2. Environmental Analysis Paper in Starbucks (2007) available at: http://www.studymode.com/essays/Environmental-Analysis-Paper-InStarbucks-128877.html [accessed : 08 January 2014] 3. Starbucks mission statement (2013) available at: http://www.starbucks.com/about-us/company-information/mission-statement [accessed: 08 January 2014] 4. Starbuckspestle analysis (2011) available at: http://www.slideshare.net/phongv/starbucks-pestle-analysis [accessed: 08 January 2014] 5. Starbucks in Bangkok, Thailand Vs Thai coffee shops- which is the best Choice? (2009) available at: http://voices.yahoo.com/starbucks-bangkokthailand-vs-thai-coffee-shops-4068851.html [accessed: 08 January 2014] 6. Starbucks porter's five forces analysis (2012) available at: http://researchmethodology.net/starbucks-porters-five-forces-analysis/ [ accessed at: 08 January 2014] 7. Swot analysis of Starbucks (2013) available at: http://www.strategicmanagementinsight.com/swot-analyses/starbucks-swotanalysis.html [accessed: 08January 2014] 8. Starbucks swot analysis available at: http://g.virbcdn.com/_f/files/24/FileItem248845-BusinessAnalysisFinal.pdf [ accessed on:08 January 2014] 9. Starbucks strategy (2005) available http://www.studymode.com/essays/Starbucks%27-Strategy-64535.html [accessed: 08 January 2014]
at:
10. Strategic development of starbucks available at: http://www.ukessays.com/essays/marketing/the-strategic-development-of-thestarbucks-marketing-essay.php [accessed: 07 January 2014] 11. Our Starbucks mission statement (2013) available at: http://www.starbucks.co.uk/about-us/company-information/mission-statement [accessed at: 07 January 2014]
