STRATEGIC MANAGEMENTPRESENTED BY:

•RIFAT HUMAYUN•QURAT UL AIN•AMARA SABIR

PREPARED BY: RIFAT HUMAYUN

CASE STUDY ON STARBUCKS COFFEE RESTURANT

MISSION STATEMENT

“To inspire and nurture the human spirit— one person, one cup, and one neighborhood at a

time.”

PRESIDENT Howard Schultz•Chairman, president and chief executive officer of Starbucks, first walked into Starbucks in Seattle’s Pike Place Market in 1981.• Howard was invited into conversation with these experts who took great care in not only finding and roasting the highest quality coffee, but also sharing their passion with others. •Howard has been recognized for his passion, his leadership, and his efforts to strengthen communities. •Howard was named Fortune’s 2011 Businessperson of the year for delivering record financial returns for the company while leading an effort to spur job creation in the U.S.

OUR VALUES

• Company elaborates six guiding principles:• Our Coffee• Our Partners• Our Customers• Our Stores • Our Neighborhood• Our Shareholders

HISTORY• The first Starbucks opened in Seattle, Washington,

on March 30, 1971,• By three partners who met while they were

students at the University of San Francisco•  English teacher Jerry Baldwin• History teacher Zev Siegl, and• Writer Gordon Bowker• The three were inspired to sell high-quality coffee

beans and equipment by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans.

• Originally the company was to be called Pequod, after a whaling ship from Moby-Dick, but this name was rejected by some of the co-founders. The company was instead named after the chief mate on the Pequod, Starbuck.

• A popular book “Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time” authored by Starbucks Coffee Chairman and CEO Howard Schultz (2012) is one of the most comprehensive sources about the business strategy of the company.

• In the next 10 years, the business expanded to five stores and hired Howard Schultz to manage retail sales and marketing.

• By 1993 the company ventured into the East Coast market in Washington, D.C., and entered into a venture with Barnes & Noble to sell its coffee at the bookseller’s stores.

• At this point, the company had licensed 12 stores and was operating 260 company-owned facilities with revenues reaching $176.5 million and net earnings at $8.3 million.

• Starbucks opened 200 new stores outside of the United States during 2000, 150 of which were in the Asia-Pacific region, and opened its first stores in Dubai and Hong Kong.

• And its 100th stores in both Japan and the United Kingdom.• The following year, Starbucks opened a store in Zurich,

Switzerland, marking its first venture into continental Europe.

FINANCIAL CRISIS• Starbucks experienced its first setback in 2002 when its

Japanese operation posted a $3.9 million loss, despite a 15 percent increase in revenues and 108 new store openings,

• And the first low performance locations were closed. But not discouraged by this, international expansion continued as Starbucks opened its first store in Turkey.

• Acquired 129 Seattle’s Best Coffee coffeehouses, as well as certain wholesale distribution rights.

• In the following two years, its long-term U.S. expansion goal was set at 50 percent and Starbucks announced it will eventually open 15,000 domestic outlets.

LICENSED STORE•Create a community-gathering place for Starbucks core customers while on the road, at work and at play•Offer the handcrafted espresso and blended beverages consumers love and crave•Offer high-quality, great-tasting food items that create perfect pairings and can increase ticket averages•Take advantage of continuous product and operational innovation

GRAPH SHOWING THE GROWTH IN THE NUMBER OF STARBUCKS STORES BETWEEN 1971 AND 2011

FINANCIAL POSITION

MARKETING SEGMENTS

• Starbucks has three reportable operating segments:• United States• International• Global Consumer Products (CPG).

PRODUCT LINECoffee: More than 30 blends and single-origin premium Arabica coffees.

Handcrafted beverages: Fresh-brewed coffee, hot and iced espresso beverages, coffee and non-coffee blended beverages, Vivanno smoothies and Tazo teas.

Merchandise: Coffee and tea brewing equipment, mugs and accessories, packaged goods, music, books and gift items.

Fresh Food: Baked-pastries, sandwiches, salad, oatmeal, fruit-cups.

CURRENT POSITION

•  American global coffee company and coffeehouse chain based in Seattle, Washington.

• Now it has 20,737 stores in 65 countries and territories, including 11,910 in the United States

• 1,496 in China • 1,442 in Canada • 1,052 in Japan• 772 in United Kingdom

LOCATION• Egypt Oman Austria• Qatar South Korea Norway• Morocco Brazil Turkey• New Zealand Indonesia Ireland• Australia Japan UAE• Canada Jordan UK• Dubai Germany• Oman France• Denmark Cyprus• Finland Hong Kong • Greece India• Saudi Arabia Indonesia

COMPANY FACILITIES• Starbucks also provides electrical outlets and, in some stores,

wireless access, for customers who might need to use their MP3 players or laptop computers. Additionally, they have introduced the Starbucks’ card with the hope of strengthening customer loyalty by improving service

• Starbucks’ products can be found in convenience stores, grocery stores, department stores, movie theaters, businesses, schools, and even airports.

• Starbucks also encourages the use of its Web site where customers are able to register their Starbucks’ cards, receive nutritional information about Starbucks’ products, shop online, search for careers, and much more.

ADVERTISING

• Starbucks relies more on its image advertising than traditional advertising.

• Part of that image is how the customer not only views the retail outlet but how responsible the company is to their communities and employees.

COMPETITORS OF STARBUCKS COFFEE• Dunkin’ Donuts

• Caribou Coffee

• Peet’s Coffee and Tea

• McDonald’s (MCD)

• Krispy Kreme Doughnuts (KKD)

PEST ANALYSIS

POLITICAL

• Industry-specific rules and regulations• The level of relationships between USA

and countries that produce coffee beans• The level of political stability within a

country

ECONOMIC

• Buying power of consumers• Local currency exchange rates• Local economic environment within

each market Starbucks operates• Taxation level

Political

Environmental

Technological

Economical

Social

Legal

SOCIAL

• Changing family patterns in USA and Europe• Consumer preferences• Changing work patterns• Changes in lifestyles of population• The level of education of population in local

markets• Changing values among population• Ethical Sourcing

TECHNOLOGICAL

• Emergence of innovative technology• Biotechnological developments• Developments in agriculture

Political

Environmental

Technological

EconomicalSocial

Legal

ENVIRONMENTAL

Recycling

Energy

Water

LEGAL

Employment law

Health and safety regulations

Consumer protection

SWOT ANALYSIS

STRENGTHS • Strong Market Position and Global Brand Recognition•Products of the Highest Quality•Location and Aesthetic appeal of its Store•Human Resource Management• Goodwill among consumers due to Social Responsibly Initiatives•Diverse Product Mix•Use of Technology and Mobile Outlets•Customer base loyalty

WEAKNESS

• Expensive Products

• Self-Cannibalization through overcrowding

• Overdependence in the United States market

• Negative large corporation image

• American/European coffee culture clash with that of other countries.

OPPORTUNITIES• Expansion into Emerging Markets• Expanding Product mix and offerings• Expansion of retail operations• Technological advances• New distribution channels• Brand extension

THREATS• Increased Competition• Price Volatility in the Global Coffee Market• Developed Countries Market Saturation• Developed Countries Economy• Changing Consumer tastes and lifestyle choices

CORPORATE SOCIAL RESPONSIBILITIES

• To develop strong, long-term relationships with farmers to ensure that we buy the high-quality coffee our customers expect.

• By 2015, our coffee will be grown using ethical trading and responsible growing practices.

• By 2015, 100% cups will be reusable or recyclable and reduce environmental footprint through energy and water conservation, recycling and green conservation.

• Believe in being involved in the communities, part of-bringing people together, inspiring change and making a difference in peoples’ lives.

• By 2015, plan to contribute one million volunteers hours each year to our communities.

• Starbucks focuses its efforts on improving social and economic conditions for coffee farmers; minimizing environmental impact; making a positive contribution in the communities where they do business; and providing a great work environment for their partners (employees).

• Establish the Starbucks Foundation in 1997.

• A major contributor of CARE, worldwide relief and development organization (Health, Education, and Humanitarian aid)

• Provides financial support to community literacy organizations.

• Participate in local charitable projects.

• 2004 Enviro Stars Recognized Leader Award – for its community service and environmental activities

STARBUCKS STRATEGIES

• Rapid store expansion • Product line• Coffee purchasing strategy• Employee training and recognition• Real Estate, store design, Planning and

Construction• Maximize market penetration• Offer high quality products• Provide relaxing attractive social atmosphere.

LOGO

• Original brown logo, used from 1971–1987.• Green logo used from 1992–2011, still being used as a

secondary logo.• Redesigned logo used from 2011–present.

logo is an image of a twin-tailed mermaid, or siren as she's known in Greek mythology

RECOMMENDATIONS• Starbucks biggest growth is in its International segment.• The emerging markets of Brazil, India, China, South Africa and

Mexico with a growing middle-class population continue to offer significant opportunities to add new stores and serve more customers.

• Starbucks has great growth opportunities in Tea and Fresh Juice products mix. They should build up these products along the same line of their core coffee products.

• Consumer tastes and lifestyle shift towards more snacks and beverages options, Starbucks should tailor its menu’s and expand to give more healthy product offerings in its mix.

• Starbucks make significant investments in advertising and marketing initiatives in the face of increased competition in the market.

• Integrating Starbucks loyalty program with the mobile application.