STAR BUCKS

CORPORATION A NEW S
CURVE
Group Members
Hashim Mahmood Khawaja
Faisal Rehman
Rahat Jaan Mohammad
Shahab Ahmad
INTRODUCTION
CASE OVERVIEW
 Economic recession
 Lean store practices
 back from the brink of “destruction”
 From 8 $ to 80 $
GENERAL ENVIRONMENT ANALYSIS:

 Political
 Economic
 Socio-Cultural
 Technological
 Environmental
 Legal
INDUSTRY ANALYSIS

 Threat of New Entrants: Moderate

 Threat of Substitutes: High
 Bargaining Power of Buyers: Moderate to Low
Pressure
 Bargaining Power of Suppliers: Low to Moderate
Pressure:
 Intensity of Competitive Rivalry: High to
Moderate
COMPETETIVE ANALYSIS
 For years, Starbucks had little competition both at
home and abroad.
 competitors couldn’t match its business model, a
modern coffee shop, serving as a third place an
affordable luxury
 But in recent years, things have changed, both at
home and abroad. Starbucks is facing growing
competition :
McDonald’s McCafes .
Dunkin Donuts
Starbucks VS McDonalds
 McCafe is strongly coming up as one of the Starbucks
Competitors which is gaining market share.
 This is because huge number of McDonald’s stores
across the globe.
 Coffee house not only specializes in coffee but food
and other beverages as well.
 In 2015 McCafe was among the top three coffee
sellers with over $1.4 billion from slightly over 4,500
outlets.
Internal Analysis of Starbucks
Corporation:

Core competence of Starbucks:

 Product differentiation strategies by offering a

premium product mix of high quality.

 Selling the finest quality coffee and related

products, and by providing each customer a unique

Starbucks Experience.
 clean and well-maintained stores that reflect the
culture of the communities in which they operate.
 Human resource management
Starbucks SWOT Analysis

Strengths
 Strong Market Position and Global Brand Recognition
(Operation in over 60 countries)
 Products of the Highest Quality.
 Location of its Stores.
 Human Resource Management
 Rated 91st in the 100 best places to work for by Fortune Magazine.
 Goodwill among consumers due to Social Responsibly
Initiatives:
 Use of Technology and Mobile Outlets
Weaknesses:

 Expensive Products
 Self-Cannibalization through overcrowding
 Negative large corporation image:
 Starbucks does come under increased scrutiny and have to
invest in corporate social responsibility activates and maintain
tight control over labor practices.
 American/European coffee culture clash with that
of other countries.
Opportunities:
 Expansion into Emerging Markets
 Expanding Product mix and offerings
venturing into the Tea and fresh juice product offerings
 Expansion of retail operations
sell packed coffee products, iced beverages and merchandizes through
large box retailers.
 Technological advances
Mobile applications,10% of its transactions in the US have been made using
mobile applications
 New distribution channels
 introduced a beta version of a delivery system called Mobile Pour
Threats:

 Increased Competition
Dunkin Brands, McDonalds
 Price Volatility in the Global Coffee Market
fluctuations in the market prices of high quality coffee beans
 Changing Consumer tastes and lifestyle choices
shift of consumers toward healthier products
 Business level strategy
Offering ‘third-place’ experience
 Effectively positioned as a ‘third place’ away from home and

work, where people can spend time in a relaxed and

comfortable environment with their friends or alone
Selling coffee of the highest quality
 They focuses on the quality of its products and customers pay

premium prices for high quality. Excellent customer services as

one of the solid sources of Starbucks competitive advantage
. International market expansion
 In total, 2719 new Starbucks stores opened during the last two
years
Integrating technology into various business
processes
 Purpose of new technology is not just to improve its website or
to process payments
 Integrate technology new product development, communication
of the marketing message, completing sales and monitoring the
level of customer satisfaction
 Starbucks include the launch of Mobile Order & Pay feature,
which allows customers to buy without getting in line
 The launch of voice ordering app and sending text message
notifications to customers when their mobile orders are ready
 Corporate level strategies
RELATED CONSTRAINT DIVERSIFICATION
 Starbucks used related constraint moderate level of
diversification
 As 70% of its revenue came from its core business of coffee

selling
Premium Juices
 Starbucks diversified into premium juices business by providing

highly healthy juices with more ingredient

 Food items accounted for 19% of revenue in 2010 up from
13% during the downturn.
 Bakery products
 Four new sandwiches the improved low-calorie breakfast
sandwich was a direct response to McDonald’s recently
launched Egg White Delight
Premium loose-leaf tea
Starbucks invested 90 billion in tea industry and acquired, and
this one was meant to be a game changer
Starbucks paid a whopping $620 million in cash for Teavana
Holdings
Serving of wine and bear at selected location
In the evening Starbucks started an experiment of offering beer
and wine which faced criticism due to local regulations against
alcohol
Carbonated beverages
 During the summer of 2013, Starbucks began testing its own
carbonated, handcrafted, caffeine-free cold beverage called Fizzio,
in select U.S. and Chinese markets
 Starbucks tapped into the $8 billion energy-drink market Starbucks
Refreshers in two flavors: Cool Lime and Very Berry Hibiscus.
Social Media Investment
 Starbucks invested heavily in social media which , included the
Starbucks Digital Network, as well as Face book, Twitter, Instagram,
Pinterest, YouTube, Google+, and a successful crowd sourcing
platform called My Starbucks Idea
 My Starbucks Idea online community had generated more than
80,000 ideas. One of the most popular customer-generated ideas
was digital tipping, which Starbucks added as a feature to its mobile
payment app in 2014.
MERGERS AND ACQUISITONS
Acquisition of evolution fresh
30 million dollars in cash to acquire the evolution fresh a
California based premium juice company which uses a new
process of juice making keeping the ingredient of fruits
enriched in the juice
 Acquisition of la boulange café & bakery chain

Starbucks used $100 million in cash in 2012 to acquire Bay

Bread, and its 19-store La Boulange Café & Bakery chain,
located in San Francisco
Merger with DANONE
 Agreement with DANONE to develop an exclusive line of
Evolution Fresh
 Fresh dairy products, starting with a Greek yogurt parfait to

be sold exclusively in Starbucks stores in

ACQUISITON OF Teavana Holdings, Inc.
 Starbucks paid a whopping $620 million in cash for Teavana
Holdings, Inc a purveyor of
 High end loose leaf teas and tea making products that had
300 shopping mall locations.
INTERNATIONAL AND COOPERATIVE
STRATEGIES
 Cooperative strategy is the strategy in which firms
combine recourses to create competitive advantage
to outperform their competitors. Starbucks involved
in two types of cooperative strategies Joint ventures
and Non-equity strategic alliance; supply contracts.
 International strategies are the strategies used at
International level by company
JOINT VENTURE

 Kind Healthy snacks

 DANONE
 Keurig Green Mountain
SUPPLY CONTRACT
 Grocery stores and supermarkets
ALTERNATIVE EVALUATION

 LOCAL SPECIAL DRINK SIMILAR TO COFFEE

 VERTICAL ACQUISITON
 NEW COFFEE FLAVOUR
 INVESTING IN RESEARCH OF COFFEE BEANS
 WEEKLY DAYS ASSIGNED FOR DIFFERENT
PROFESSIONALS
 IMPROVED CUSTOMER DATA BASE
Alternative choice strategies
 LOCAL SPECIAL DRINK SIMILAR TO COFFEE
 INVESTING IN RESEARCH OF COFFEE BEANS
Strategic Alternative Implementation

 Action items
 Action plan