Sarah FitzgeraldLauren Norris Matt Mariella

Towson UniversityMNGT 481

I. Industry – Sarah Fitzgerald Products & Service Size of the Industry Financials Type of Competition Main Competitors Market Share Strategies Used by the Industry Porter’s Five Forces Forces Impacting

Environment

Products & Services The Foodservice Industry

Encompasses those places, institutions, and companies responsible for any meal eaten away from home

Includes restaurants catering operations and any other format

The Restaurant Industry Encompasses those places that serve

food and beverage QSR → Quick Service Restaurant FSR → Full Service Restaurant

Size of Industry

That is 9% of today’s workforce

Second largest employer after the government

Financials $1.5 Billion spent a day

in the Restaurant Industry

The annual revenue per employee is $35,000

A typical QSR makes around $800,000 with around 25 employees

A typical FSR makes around $1.5 million with around 50 employees

Type of Competition This Industry is involved in multi-national

competition

This industry is all over world, both the food service and restaurant industries

Main Competitors McDonald’s

Yum! Brands

Darden Restaurants

Starbucks

Brinker International

Market Share

Strategies Used by Industry Considering the size of the Industry, it

seems that all strategies are used No one specific strategy stand out Depending on the restaurant, depends on the

strategy McDonalds uses the Hybrid Strategy Olive Garden uses the Global

Porter’s Five Forces Model Threats of New Entrants

High Power of Buyers

Very High Power of Suppliers

High Intensity of Competition

Very High Threat of Substitutes

Very High

Forces Impacting the Environment Consumer Income

Restaurant Food Costs More Than Home Cooked Meals

Quality of Food

Quality of Service

II. Firm - Lauren Norris Relative Position of Starbucks History of the company Products & Services Strategy Competitive Advantage Market Financials S.W.O.T. Analysis

Relative Position of Starbucks #1 specialty coffee retailer in the world

Suffering financially

Causes Consumers are becoming more health conscious Economy Rising fuel costs Reached the saturation point in some U.S. markets Consumer awareness has peaked

Plan Plan on closing 500 locations in the U.S. Cut 7 % of workforce or 12,000 jobs Open less U.S. stores and focus on international markets

Founded in 1971 in Seattle, Washington Originally called Starbucks Coffee, Tea & Spices Founders - Jerry Baldwin, Zev Siegel, and Gordon

Bowker Got idea from friend who had a specialty coffee shop in

California

Howard Schultz joined the company in 1982 Inspired by a trip to Italy Started selling espresso drinks in restaurants Schultz purchased company in 1987

Starbucks Story

Products & ServicesIn stores

Coffee and Beverages Fresh, rich-brewed coffees - 30 blends Hot & iced Italian-style espresso

beverages Premium teas Water (Ethos)

Food Pasties Sandwiches Salads

Merchandise Home espresso machines Coffee brewers and grinders Premium chocolates Coffee mugs and accessories Gift items

Entertainment Music Books Films

Online

Coffee Tea Equipment Gifts

Mass Retailers

Coffee Frappuccino DoubleShot espresso Iced coffee Coffee Liqueurs Chocolate Tazo Tea

Strategy Differentiation strategy Expansion

Competitive Advantage Unique, quality product Atmosphere Employees

Brand recognition Economies of scale

World-wide 43 countries outside the U.S. 7,087 company-operated stores 4,081 licensed stores

Market

Primary Operations

U.S.

International Canada U.K. Thailand Australia Germany China Singapore Puerto Rico Chile Ireland

Stock PriceJuly 2006 High $38.33 Low $32.93

July 2008 (as of 7/13)

High $16.05 Low $13.63

June 1992 (16 years ago)

Public offering $17. a share

Quarterly Statements December 2007Revenue $2,767.6Gross Profit $1,581.6Operating Income $333.1Total Net Income $208.1

March 2008Revenue $2,526.0Gross Profit $1,419.3Operating Income $178.2Total Net Income $108.7

S.W.O.T. AnalysisStrengths Brand recognition Quality product Extensive product list Atmosphere Strong human resources Good supplier relationships Large retail distribution

system Strong financial history

Weaknesses Dependent on a single source

of income Prices high relative to

competition Dependent on suppliers Merchandise in stores

Opportunities Oversees markets Untapped U.S. markets Use brand name to start a

new product line or business (related diversification)

Threats Changing consumer tastes

and preferences Economy – people may be

unwilling to pay high prices Political conditions abroad

may hinder expansion Reaching the saturation point

in some U.S. markets

III. Matt Mariella Mission Core Competencies Value Chain

IV. Matt Mariella

Analysis & Recommendations

Mission To establish the company as the premier

purveyor of the finest coffee in the world, while maintaining its principles as the company grows

Principles1. Provide a great work environment2. Embrace diversity3. Apply high standards of excellence4. Satisfy customers5. Contribute to the community and the

environment6. Recognize that profitability is essential to future

success

Core Competences High quality, roasted, whole bean coffee

products

Pastries, Ice cream, Liquor, and chocolate Coffee accessories (mugs, not espresso

machines) Employees Atmosphere

Value Chain – Suppliers Raw Materials - Milk, Syrup, Coffee beans,

Pastries, drinks

Operational - manufacturing equipments, IT hardware/software, paper products, books, CDs, and coffee accessories, etc.

Tiva Supplier Accreditation Program 5 categories to qualify Discounts to qualified suppliers

Value Chain – Distribution Channels In store distribution Drive thru Online

Value Chain Strengths

Economies of scale

Supplier accreditation program

Employees as a core competency

Company strategy is for all employees to know the core competencies inside and out

Related diversification helps core competencies /competitive advantage

Weaknesses

Dependant on suppliers

Not very vertically integrated

Losing sight of core competencies

Analysis - Problems Economy is slowing business Competitors offering lower priced drinks Rising fuel costs Locations Reaching saturation point in some U.S. markets Consumer awareness has peaked Criticized for using coffee beans not on the fair trade

market Have a lot of inventory that is not being sold

Analysis - Starbucks Solution Closing 500 stores Firing 12,000 employees

Horizontal integration Music, CD, Book

Start Using pre-ground coffee beans $1 refillable coffee short cups Start purchasing fair trade coffee beans

Opening 600 Wi-Fi stores in New York and Seattle

Recommendation Refocus on core competencies

– premium coffee (not $1) Stop using pre-ground coffee

beans because of loss of aroma

Coffee making process Follow 4 principles1. Use the right proportion of

coffee to water2. Use fresh boiled water3. Use fresh ground coffee (can’t

sit more than 20 mins.)4. Brew the coffee for the right

amount of time

Continue blending new coffee beans together to make new products

Offer free entertainment

Expanding sales of liquor, chocolate, or ice cream

Continue purchasing fair trade coffee beans

Choose smarter locations for stores

Seek talented employees to support growth

The End