starbucks

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Presentation Transcript

Starbucks : 

Starbucks

Summary : 

Summary General Information Products Brand Value Fiscal Numbers PESTILE Analysis

General information : 

General information Branch: roaster & retailer of specialty coffee Type: Public Headquarters: Seattle, Washington U.S. Chairman, President and CEO: Howard Schultz Employees: 176,000 (2008) Net revenue: $ 10.4 bn (2008, +10%) income: $ 504 m (2008, -50%) Fiscal year: ends September 28th

General information : 

General information Stores: worldwide 16,680 U.K. U.S. Point between home and office

Products : 

Products Sale of self purchased & roasted high-quality coffee fresh, rich-brewed coffees cold blended coffee beverages a variety of complementary food items a selection of premium teas coffee-related accessories “hear music” music brand of Starbucks Starbucks Feeling

Brand value : 

Brand value Interbrand ranking 2009: rank 90 2008: rank 85 2007: rank 88 2006: rank 91 2005: rank 99 2004: rank 98

Fiscal numbers : 

Fiscal numbers

Vision, Mission and the Objective : 

Vision, Mission and the Objective Before 2007

Vision, Mission and the Objective : 

Vision, Mission and the Objective Challenged by the new economic situation Schultz had to regain the company competitive advantages. New strategy needed new mission statement.

Strategic problem facing STARBUCKS : 

Strategic problem facing STARBUCKS Starbucks is redefining them too broadly meaning “Much more than a coffee shop – ‘we are an alternative distribution ‘” thus falling into the trap of trying to do all things to all people and, this results in consumer no longer being able to relate to what made the company remarkable in the first place Strategically Starbucks should stick with defining themselves as a “ Third place” “Coffee experience” provider There was a steady brand diminishing in the following activities: Conversion of hand extracted espresso machines to automatic removing control from the barista and sacrificing quality for speed. Conversion of stores from 3rd places into retail spaces Pre-bagging beans for efficiency but losing the smells and theater of real coffee shop Brand extensions abundance – are they a coffee house or just another shop Starbucks need to reinvent

PESTILE Analysis : 

PESTILE Analysis Political Starbucks operates in developed and political stable countries

PESTILE Analysis : 

PESTILE Analysis Economic World in a depression  Problem for Starbucks – coffee and the Starbucks concept is a luxury product Financial crisis is one of the main reasons More closures than openings in U.S. in 2009 (121 to 595)

PESTILE Analysis : 

PESTILE Analysis Socio-cultural Offers the same products all over the world but as well regional products Adapt the name at the respective culture

PESTILE Analysis : 

PESTILE Analysis Not accepted everywhere

PESTILE Analysis : 

PESTILE Analysis Technological Connection between coffee and the internet (Starbucks Card) No technological equipment necessary

PESTILE Analysis : 

PESTILE Analysis International Product international suitable Strong expansion during the last year (weakness in the U.S. market) Operating in 40 countries worldwide

PESTILE Analysis : 

PESTILE Analysis Legal and Regulatory Prosecution with Ethiopian coffee farmers ( about licences for some coffees) Lost court proceeding against employees due to restrained tips (payback of $100m)

PESTILE Analysis : 

PESTILE Analysis Ecological and Environmental Environmental pollution through coffee cups

Michael Porter’s 5 Forces Model Industry rivalry : 

Michael Porter’s 5 Forces Model Industry rivalry Small specialty coffee shop chains and independent coffee shops - Costa, Nero in Europe; Caribou Coffee, Van Houtte, Peet’s Coffee and Tea Company in Canada and USA McDonalds - McCoffee Dunkin Donuts Nestle?

Michael Porter’s 5 Forces ModelPotential for New Entrants : 

Michael Porter’s 5 Forces ModelPotential for New Entrants Economies of scale- high economise of scale are required to compete with the already established companies. Distribution channels – the top retailers have establlished powerful global distribution cannels Well known brand names and difficult differentiation

Michael Porter’s 5 Forces Model Substitute products : 

Michael Porter’s 5 Forces Model Substitute products choosing less expensive alternatives than the luxury coffee that Starbucks offers Other substitutes of the coffee are the caffeinated soft drinks.

Michael Porter’s 5 Forces Model Suppliers’ power : 

Michael Porter’s 5 Forces Model Suppliers’ power Fair Trade. It ensures that the coffee farmers would be paid fairly for their crops Increasing number of specialty coffee buyers Supply and price can be affected by multiple factors in the producing countries, including weather, political and economic conditions The Company buys coffee using fixed-price and price-to-be-fixed purchase commitments, depending on market conditions, to secure an adequate supply of quality green coffee

Michael Porter’s 5 Forces Model Bargaining Power of Buyers : 

Michael Porter’s 5 Forces Model Bargaining Power of Buyers Buyers are the individual consumers who do not buy large quantities and do not have any influence over the price Presence of substitutes No switching costs High risk of backwards integration

Slide 24: 

The slides are good. However, can you please clarify / add / amend the following: Define the STARBUCKS Vision, Mission and the Objective Define the strategic problem facing STARBUCKS Define the strategic group Elaborate on the substitutes What about the consumer taste and the demographics Is Starbucks a lifestyle product and why? The ethical dimension and the CSR PORTER’s five force model appears too superficial. It will require a lot of work.

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