Starbucks:

Strategies to Sustain Competitive Advantage

Presented By: Kriti, Lakshmi, Karishma, Sanya, Jyoti, Karthik, Akashdeep, Nikhil &

Introduction
Specialty

Coffee Industry Initiated in 1996 per capita consumption was 1.7 cups/day/person. Decline in 1960-70. Significant increase in growth of Consumption due to various factors: Replaced Alcohol with Coffee. Community Gathering Place.

Contd
Affordable

Luxury. Increased Knowledge about Coffee. Starbucks Overview Start year - 1982 Values and Beliefs 25 years from now.. Relationship with Internal and External Customers

SWOT ANALYSIS
STRENGTHS:
Strong International Image. Customer Satisfaction Focus on High Standards of Product Quality. Innovation Unique Experience Atmosphere Highly motivated and trained staff Augmented Product Disciplined Real-Estate approach Strong specialty sales partner

Weaknesses
Lack

of consistency and standardization in the design of merchandising program. Difficult to recruit quality employees. High dependency on suppliers. Option of growing its own high quality coffee is not there

Opportunity

Tremendous growth opportunity in Ready to eat Drink segment. Mail Order Business. (Encore) Strategic alliance with Mc Donalds. New specialty sales partners. Venturing into flavored coffee. Promote Doppio strategy in highly populated countries (South East Asia) Potential market in Pacific rim countries. (Japan, Australia, New Zealand) Build on online model. (America Online Caf Starbucks store) Opportunity to cater to the higher echelon restaurants and day-part chains.

Threats

Improvisation of Supply Chain Operations (keeping in mind the challenge to support 4 business units simultaneously) Local Competition.(The Second Cup & Caribou) Increased Health Awareness .( Ill effects of caffeine)

BCG Matrix Present Product Line

STARS
Specialty Coffee Market growth rate

CASH COW US Speciality Stores

QUESTION MARK Dreyers Ice cream Bottled Frappucino Starbucks merchandise Supermarket sales DOGS Whole beans

Relative market share

Plan of Action for 1996-2001

1996

Investing in our own coffee plantations: - Pooling farmers together to enjoy economies of large scale production. -Supporting them with relevant education/training in order to improve yield. -Helping them with finances to improve farming technology. Help with loans though our corporate tie ups.

 1997

Roll out a recognized training and educational program to attract potential employees for Starbucks which ends with a job in hand for them. -Employment generation both part time and full time jobs. -Feed manpower for large scale expansion. 2.Concentrate on retail markets & grocery markets. - Offer higher margins - Innovative, attractive offers on purchase of ice-creams, grounded coffee and bottled beverages.

 1998

1.Tie up with corporate houses, and have our own outlets in their premises. Introduction of a mini store format Flexibility of accommodation Promotion of merchandizing

 1999 Tie up with Mc Donalds

-Invest in R&D to complement the product line of Mc Donald. -Appropriate competitive pricing strategy with regard to the target market of Mc Donald. - Have a fully dedicated staff of Starbucks behind the Mc Donald counter serving our coffee, ensuring the quality control and customer service.

 2000

1. 2. 3. 4.

1.Promote Doppio Strategy and open specialty stores and spread it majorly in high population countries in the Pacific rim. -Target markets would be Pacific rim countries. Japan (Tokyo, Kanagawa, Osaka) China (Beijing, Shanghai , Guangzhou) Hong Kong Australia ( Canberra, Sydney, Melbourne)

 2001

-Concentrate on retail merchandizing of products. 1. Attract wholesale, corporate gifting orders with customization as an option. 2. Offer merchandize at specialty stores as well as retail and grocery outlets. -Promote mail order business. Attract wholesale orders. Provide quick home delivery service.

1. 2.

Conclusion
Keeping in mind the plan of action for the years 1996-2001, we would expect to see ourselves as a major coffee brand present not only in the west (US & Canada)but also in the high potential markets of South East Asia (Japan, Australia, Tokyo, India). We aim at being easily accessible world over and primarily concentrate on customer satisfaction over and above revenue generation.