Starbucks Coffee Company is the leading retailer, roaster and brand of specialty
coffee in the world. The goal of Starbucks is to establish the company as the premier purveyor of the finest coffee in the world while maintaining the organization’s uncompromising principles. In addition, Starbucks wants to develop its brand beyond being the preferred outlet from which to purchase coffee to becoming the preferred consumer brand.
The coffee company has capitalized on the new found popularity of specialty coffee with its addition of coffee bars globally. Starbucks Common Stock increased from $3.31 per share in 1994 to $10.00 per share by the mid 1990’s. Despite the success of Starbucks, the company is faced with many challenges to continue the growth of its business. The key strategic problem that Starbucks faces is maintaining the quality of their brand while leveraging the brand image and going into different sales and distribution channels.
1. Is the leader in specialty coffee industry (p7).
2. Its commitment to quality (p7), values (p8), & principles (8).
3. Its policy toward its employees (pgs 8, 17).
4. Its openness to innovation
a. Pepsi-Coal – Frappuccino.
b. Distinct Roasting equipment and process. (longer shelf life; p10)
c. AOL Café.
5. Worldwide resources for coffee beans.
a. 50% from Latin America.
b. 35% from Pacific Rim.
c. 15% from E. Africa.
d. SB trains exporters.
6. Supply Chain Operation (SCO)
7. Page 11:
a. Its coffee.
d. Ownership philosophy.
e. Real estate approach. (Location, building, & cluster strategies)
8. Extensive training for Starbucks’ “baristas” (employees).
9. Mall kiosk program.
10. Its Brand image.
11. Key specialty sales partners (p14).
12. Diverse distribution channels. Such as:
a. Grocery chains.
13. “Encore” mail order program (p16).
14. The vision and leadership of Howard Schultz (pgs 16 – 17).
15. Its Six Guiding Principles.
1. Rapid growth is taxing SCOs (p11; also see Strengths #7)
2. The challenge of finding good employees (p12; also see Strengths #8)
... middle of paper ...
...t being only for breakfast to it being an anytime beverage.
5. Starbucks is to be not just coffee, but an experience.
6. Retail system is Starbucks’ anchor of its brand-building strategy, this can “catapult” Starbucks beyond its roots (by a report from Merril-Lynch).
7. Grocery store sales are not essential for survival, but are necessary to remain a major player (Orin Smith, p15).
8. Supermarket merchandising will pull customers out of lower priced categories of coffee to the higher priced specialty coffee brands (p13).
9. “Starbucks’ has executed its strategy to near perfection (quote from an investment company, p19).
10. Starbucks expects to have 2,000 retail stores by the year 2000.
My Opinions –
My opinions are embedded in the “Issues Analysis” section of the paper.
1. Coffee sales in specialty stores will increase from 19% to 54% by 1999 (see Facts #8).
2. Starbucks estimates a growth of 17% by 1999 (p5).
3. Starbucks expects a lower cash investment to open future stores (see Exhibit 4).
4. Starbucks expects to increase its number of stores on the Asian-Pacific Rim from 13 to 100 by 1999 (Ex. 5).
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