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Problems and challenges facing Starbucks
Problems and challenges facing Starbucks
Economic factors affecting Starbucks
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ORGANIZATIONAL ENVIRONMENT
Starbucks vs. Competition
Organizational environment is defined as all elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization (Daft, 2009). One organization that has faced environmental factors which required them to change their current organizational strategy, is the Starbucks Corporation.
Starbucks Corporation is considered the top provider of premier coffee products in the world (St. Johns, 2007). Their coffee buyers travel to coffee farms in Latin America, Africa and Asia to select the highest quality Arabica beans (Starbucks Coffee Company, 2011).
Circumstances that brought changes in Starbucks
Starbucks have been struggling amidst a faltering economy, its own rapid growth (international expansion and growing presence in other countries) and increased competition from rivals, both inside and outside, of the coffee market sector.
For many years, Starbucks’ most challenging competition came from other coffee house companies such as Caribou Coffee, Tim Hortons, Panera Bread and smaller single proprietary establishments. However, recently fast food chains have latched on to the consumer trend in premium coffee products, and are aiming to gain market share in the market for coffee and coffee-products such as espresso and cappuccino, and with substantial financial, marketing and management resources, they could be very successful (Dockett, 2007).
The two main rivals to Starbucks right now are undoubtedly McDonalds and Dunkin Donuts. McDonalds currently announced that it would be implementing cappuccino and espresso machines in its stores. McDonald’s also offers a new Premium Roast coffee, which it claims, i...
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Sebastian Alvarado Starbucks Corporation (SBUX) Recommendation: BUY
Michael Docket
http://www.stjohns.edu/media/3/1777fbd1bc794c54adc4265a33eea786.pdf
Daft. Richard. Organization Theory and Design, 10th Edition. South Western Educational Publishing, 5/24/09.
Confronting Reality: Doing What Matters to Get Things Right, by Lawrence A. Bossidy and Ram Charan, is published by Crown Business Publishing Daft, Richard. Organization Theory and Design, 10th Edition. South Western Educational Publishing, 5/24/09.
25. Joseph E. McCann and John Selsky, “Hyper-turbulence and the Emergence of Type 5 Environments,” Academy of Management Review 9 (1984), 460–470. (Daft, Richard. Organization Theory and Design, 10th Edition. South Western Educational Publishing, 5/24/09.
Starbucks By: Christine Smithhttp://www.article-buzz.com/Article/Starbucks/533473.
Seattle-based Starbucks recently announced another price increase for all milk-based beverages at the largest coffeehouse/coffee bar chain in the world. With its trendy appeal and shop on every block personality, Starbucks built itself into one of the premiere brands in the world alongside Google, McDonalds, and Coke. With growth comes competition from all directions. Along with longtime Starbucks enemy Dunkin Doughnuts, a new contender for the java king title has emerged as new java joint, High Point Coffee pushes its way into the fray. Based in Mississippi, the newbie java spot has only been in business for less than five years. However, with its surge in revenues and customer retention, executives recently decided to push the brand nationally, going into direct competition with what they call
The local cafes are indirect competitors as they do not offer as wide range of beverages, as high quality of products as Second Cup. Considering these differences, the local cafes are not considered to be a threat to Second Cup. The specialty coffee retailer, Starbucks, on the other hand, is a direct competitor because it offers a similar selection of products. The strength of Starbucks is that it is acknowledged all over the world. But the weakness is that Starbucks is always overcrowded. Consequently, Starbucks is a close substitute to Second Cup and pose a significant threat of rivalry. However, Second Cup has a better quality of products, wide range of beverages and offers a friendly and pleasant atmosphere, that may work to the advantage of Second Cup in attracting and retaining consumers. Moreover, the prices of Second Cup products are cheaper. Although Second Cup has a number of competitors including Starbucks and local coffee houses, Second Cup has a competitive advantage in terms of differentiations and brand
It’s a series of excellent products, positive experiences, consistency, great service, affordable prices, location accessibility and more that help Dunkin’ Donuts provide 40 countries with coffee and its side-kick of donuts (Dunkin' Donuts, 2014). As a low-cost consumer good, coffee providers have some strong competition like Starbucks, McDonald’s and Tim Hortons (Hawley, J., 2015). The coffee industry is so diverse that competition for brand-name coffee is a constant battle. Plus there are various producers and styles of coffee around the world, like Cuban coffee, French press coffee, American specialty coffee drinks and more, not to mention local coffee shop competition as well. Competition is
The threats facing Starbucks include trademark infringements and increased competition from local cafes and specialization of other coffeehouse chains, and the saturation of the markets in developed economies, and supply disruptions. Furthermore, the increasing prices of its inputs such as dairy products and coffee beans pose a threat
The purpose of this report is to analyze two companies in the coffee industry that could be our potential investment. Starbucks and Dunkin’ Donuts are the companies that many foresee as good profitable companies that can give us the necessary return on investments. Investments must be made after carefully researching each potential investment. Different factors that may lead us to a better deal. One must look at the industry, and the coffee industry is, in fact, the second largest commodity in the world.
Starbucks Coffee, Tea, and Spice opened its first store in April 1971 in the Pike Place Market in Seattle, by owners who had a passion for dark-roasted coffee that was popular in Europe, but hard to find in the U.S. (Harrison et al., 2005; Venkatraman & Nelson, 2008). The company’s mission was to provide Seattle with the best access to dark-roasted coffee, and sought to educated customers about the product. As a matter of customer education and acceptance of the product, Starbucks grew and expanded into the successful domestic market it is today. Much of this success can be attributed to a focus on the total customer experience and s...
Coffee is a worldwide cash crop of which demand has exponentially increased over the years. “Coffee is (after oil) the world’s second most important traded commodity” (Cleaver 61). Competing coffee brewing companies wage war on offering the freshest, best tasting coffee the market has to offer. With such stiff competition there must be enough coffee beans deemed to be good enough in quality to supply the increasing demand. Starbucks can be considered one of today’s top competitors if not thee top coffee manufacturer presently in business. This successful company has had a huge impact on the coffee industry as well as the world. They have gone through great length to provide consumers with an excellent product as well as create a legacy that shows how to best go about running a massive corporation while keeping the environment clean and healthy.
Starbucks is currently the industry leader in specialty coffee. They purchased more high quality coffee beans than anyone else in the world and keep in good standings with the producers to ensure they get the best beans. Getting the best beans is only the first part, Starbucks also has a “closed loop system” that protects the beans from oxygen immediately after roasting to the time of packaging. They did this through their invention of a one-way valve which let the natural gasses escape but keeping oxygen out. This gave them the unique ability to ensure freshness and extended the shelf life to 26 weeks. Starbucks isn’t only about the coffee, it’s also about a place where people can escape to enjoy music, reflect, read, or just chat. It is a total coffee experience. The retail outlet has been responsible for much of Starbucks growth and has contributed substantially to their brand equity.
Starbucks is the world’s largest coffee roaster and retailer of specialty coffee in the world. We have enjoyed great dividend returns over the past 5 years, and our growth has been on the rise. We are currently saturating the US market, while the emerging markets of developing countries offer many possibilities for growth and increased revenues. In our US market we should look at offering more items on the menu that complement our long-standing tradition of pleasing our customers. Exotic Juices, and snacks served with the same service could add a nice margin to the bottom line. In addition, the ability to offer a drive through service for the consumer that loves fine coffee but does not have the time to stop and visit should be on our “trial” market plan for the next few years.
There is speculation that the company was pouring too much capital into its complex system of joint ventures and licensing agreements, and could not get a hold of its operational costs. They decided to source some of their merchandise and disposables to less expensive suppliers as an immediate cost-cutting measure. They also decided to cut back on the number of new stores and shut down unprofitable ones. Starbucks has had to learn the hard way that external forces go far beyond a society's taste in coffee, and that too much growth can have negative effects.
As with any company considering new products in new markets, there are risks associated with it, and Starbucks would need to be prepared to respond accordingly. With diversification, Starbucks will have the opportunity to increase its growth. Also, this strategy will permit the company to add related or unrelated products to its existing business. This will be the opportunity the company needs in order to expand its products, by offering new products to its customers. If Starbucks is considering diversifying, it’s essential to adopt a strategy that is fitting for the company....
Starbucks is a worldwide company, known for is delicious brews of coffee and seasonal varieties of tasty drinks for any occasion. Starbucks opened with two main goals, sharing great coffee with friends and to help make the world a little better. It originated in the historic Pike Place Market of Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The creation of Starbucks’ name came from the seafaring tradition of early coffee traders and the romance evoked from Moby Dick. At the time, this individual shop specialized in the towering quality of coffee over competitors and other brewing services enabling its growth to becoming the largest coffee chain in Washington with numerous locations. In the early 1980s, the current CEO Schultz saw an opportunity for growth in the niche market. After a trip to Italy he brought back the idea of a café style environment of leisure and social meetings to the United States we now see in Starbucks locations today. Schultz ultimately left Starbucks to open his own coffee shop, Il Giornale which turned out to be a tremendous success. Fast forward a year later, Schultz got wind that Starbucks was going to sell all their components of Starbucks including their stores and factories, he immediately acquired the funds to buy Starbucks and linked both operations. Within five years he was able to open more than 125 stores starting in New England, Boston, Chicago, and gradually entered California. He wanted Starbucks to be a franchise system based on the mission of telling the truth and emphasize the quality,
Bruss (2001) argues that the company hopes as well to make new investments in new coffee types. Starbucks has recently developed a new type of coffee called green-coffee. These strategies are created with the objective of support Starbucks’ commitment to buy coffee that has grown and processed by suppliers. They meet certain conditions of social, economic and quality standards. In addition to that, the company is paying additional premiums to those vendors who meet the specific requirements that the company wants.
I will briefly summarize and examine issues facing Starbucks. Starting from there I will pick the most important issue and study it from different positions. In the end of my I will try to suggest what steps should be made to keep the company in continuing its quest to become one of the most recognized and respected brands in the world.
The strategic vision that Howard Schultz had for Starbucks was "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow". This s...