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Starbucks strategic analysis
Starbucks strategic analysis
Business analysis of Starbucks coffee company
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The year was 1971 when three partners opened the first Starbucks. The business started out as a local roaster and retailer of whole bean and ground coffee and as the business grew they took inspiration from the Italian coffeehouse tradition. The Italian coffeehouses are a place for conversation and a sense of community, a stop between home and work. This experience was something Starbucks wanted to bring to the United States. They had found their niche. Following this, Starbucks grew quickly and began opening several stores all over the country, and shortly thereafter the world.
Since the beginning of Starbucks in Seattle, the company has expanded exponentially. Starbucks is today the leading roaster and retailer of specialty coffee in the world, with more than 18,000 stores in 62 countries (Starbucks, 2014).
This essay aims to discuss the company that is Starbucks, with a focus on their financial business functions. The discussion will include the internal and external environment of Starbucks to reach a further understanding of the company as a whole. The company’s objective being very centred around expansion this essay will conclusively look to evaluate the financial functions and their importance to this cause, as well as the issues the functions might face.
External Environment
Starbucks primarily operates in the retail coffee shop market. The UK coffee shop market alone is estimated at over 16,000 outlets and showed a strong growth of 6.4% in sales during 2013 (FDIN, 2014). The branded coffee chain segment recorded a turnover of £2.6 billion, delivering a higher than market sales growth of 9.3% (FDIN, 2014). The coffee shop sector has seen a considerable growth the past 15 years and Allegra Strategies (as cited in FD...
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...most effective and beneficial manner.
• Technological advancements – The development in the technology involved in coffee making and the software used in the cash registers will allow the staff of Starbucks to work more efficiently. The average queuing time for each customer will be reduced as a result of this, allowing more customers to be served in a day. This will improve customer relations and cost-effectiveness.
Works Cited
Starbucks. 2014 Our Heritage [Online] Available: http://www.starbucks.com/about-us/our-heritage [24 March 2014]
The Food & Drink Innovation Network, FDIN, 2014. Uk Coffee Shop Market Demonstrates Strong Sales Growth [Online] Available: http://www.fdin.org.uk/2014/01/uk-coffee-shop-market-demonstrates-strong-sales-growth/ [25 March 2014]
Worthington & Britton, 2006. The Business Environment 5th ed. Harlow: Pearson Education Limited.
To achieve the quest of improving the customer experience, they are providing the customers with extraordinary service, a friendly environment, and high-quality products. The customer’s experience with Starbucks has defined their visits with the saying, “one cup at a time, every day” to indulge their visits. This statement led the company to adopt their mission statement of, “To inspire and nurture the human spirit - one person, one cup and one neighborhood at a time” (Starbucks Corporation,
Starbucks hold high regards in the coffee house industry. On news.starbucks.com, the chief financial officer Scott Maw urges that the position that Starbucks hold in the coffee house industry, is that “Comp growth: 20 consecutive quarters of comp growth of 5% or greater; In the US, our largest
The first Starbucks appeared in 1971, which was located in Seattle’s Pick Place Market, and the founders were Gordon Bowker, Jerry Baldwin, and Zev Siegl. In the beginning, they learned about coffee from Alfred Peet, the owner of Peet’s Coffee. He helped the three founders to open another store in 1972. After eight years, Siegl left the company to manage other business. Later on, Starbucks was continuing grow. In 1988, it already had 26 stores. Four years later, it operated 165 stores. In 2011, it has more than 17,000 stores in over 50 countries. Out of existing 17,000 stores, approximately 8,870 stores are company-owned, 8,139 are licensed stores. As for today, Starbucks has more than 20,000 stores in over 60 countries. The headquarters is located the same place where the three founders opened the first store, Seattle. Other large divisions are in Japan, United Kingdom, China and Australia.
One of the main problems which Starbucks is currently facing is the watered down “Starbucks experience”. Over the years the baristas and the atmosphere of Starbucks locations have lost the appeal which they originally possessed. The baristas which work at Starbucks have lost their personal touch of customer service, as well as the connection which should be made with the customers. If baristas were taught how to properly make drip coffee, engage the customer, teach them about the product which they are consuming, etc. then the company could bring back the original vision. A passionate barista which knows about the product has the ability to teach consumers, as well as share the craft that is roasting coffee. Another problem which has occurred over the years is the lack of pos...
Starbucks has evolved one of the fastest flourishing companies not only in the United States but throughout the world. Starting from 1992, the company's net revenue improved with annual growth rate of 20%, to
Starbucks is a premium coffee retailer, which started in 1971. It is established in 70 countries all over the world. Starbucks has revolutionized the coffee market by selling expensive and high-quality coffee. It has marketed itself as a third place between home and work. They select the locations in such a way that Starbucks is on their way to work and while coming back home from work.
The importance of economic indicators to the strategic planning process in any organization is the ability to benchmark economic conditions that contribute to improve profitability, business growth and market size. Leadership sets up the mission “to establish Starbucks as the most recognized and respected brand in the world.” In doing so, they have created a set of industry-leading, comprehensive coffee-buying guidelines addressing coffee quality, financial transparency, social and environmental responsibility. Starbucks strategy is also expanding market in globally to provide high quality coffee in convenient and visibility locations. They are continuing to innovate and extend the business with imaginative new ready-to-drink beverages and expanded packaged coffee offerings (Starbucks Corporation, 2007).
Opportunities available to Starbucks include growth of its supplier range, expansion to emerging economies, increased diversification of its product offerings and the growth of its retail operations; which are aimed at growing Starbucks’ profitability and market presence.
In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises, bringing the total number of Starbucks-operated locations worldwide to more than 6,400. On September 14, 2006, it was announced by rival Diedrich Coffee that it would sell most of its company-owned retail stores to Starbucks.
In the United States, coffee is the second largest import (Roosevelt, 2004). Furthermore, the United States, consumes one-fifth of all the worlds¡¦ coffee (Global Exchange, 2004). The present industry is expanding. It is estimated that North America¡¦s sector will reach saturation levels within 5 year (Datamonitor. n.d.). According to National Coffee Association (NCA), 8 out of 10 Americans consume coffee. In addition, it is estimated that half of the American population drinks coffee daily. The international market remains highly competitive. It is estimated that 3,300 cups of coffee are consumed every second of the day worldwide (Ecomall, n.d.). The latest trends included dual drinkers, an increase in senior citizens...
This paper will provide an argument for diversification to be presented to board of directors for Starbucks. A strategy for diversification indicating the products and industries for diversification and how synergies may be gained will be provided. The identification and the discussion of the foreign market Starbucks should enter will be presented, along with the strategy it should use to enter the market. Challenges Starbucks may face in the foreign market will be discussed, as well how it might respond strategically to minimize the impact of these challenges.
Starbucks Financial Analysis Company Overview Starbucks is the world’s largest specialty coffee retailer, with more than 16,000 retail outlets in more than 35 countries. Starbucks owns more than 8,500 of its outlets, while licensees and franchisees operate more than 6,500 units worldwide, primarily in shopping centers and airports. The outlets offer coffee drinks and food items such as pastries and confections, as well as roasted beans, coffee accessories, teas and a line of compact discs. The company also owns the Seattle's Best Coffee and Torrefazione Italia coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products.
Starbucks has identified high value opportunity in China, India, Brazil and Japan. The large expansion opportunity of twelve billion in China alone is enough to drive Starbucks to expand globally. The organization has planned to double its footprint to 3000 stores in China by 2019 ("Starbucks Details Five-Year Plan to Accelerate Profitable Growth", 2014). Starbucks realizes that eventually there will be a diminishing return on their existing market within the US due to market maturity and there are only two ways to expand through diversification in their offerings and entering new markets. Given the international opportunity for growth and expansive tea market in Asia, the company will enjoy the benefits of the growth opportunity. Management’s decision to continue to grow globally is a driving force that has yielded
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,
With clear core values towards providing quality coffee, the best service, and atmosphere, Starbucks has enjoyed great success since it was founded 30 years ago. The company has being doing very well for last 11 years with 5% or more store sales increase, even with the rest economy still reeling from the post-9/11 recession. However recent research, conducted to Starbucks, have showed some concerns regarding company’s problem meeting customers’ expectations.