International coffee and coffeehouse chain based in Seattle, Washington, USA. Starbucks is the largest coffeehouse company in the world, with 16,120 stores in 44 countries. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks, and items such as mugs and coffee beans. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company’s products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also sold at grocery stores.
From Starbucks’ founding in Seattle as a local coffee bean roaster and retailer, the company has expanded rapidly. In the 1990s, Starbucks was opening a new store every workday, a pace that continued into the 2000s. Domestic growth has since slowed, although the company continues to expand in foreign markets and will open a net of 900 new stores outside of the U. S. in 2009. The first location outside of the United States and Canada was established in 1990s, and they now constitute almost one third of Starbucks’ stores.
As of early 2009, Starbucks has more than 16,000 stores in 48 countries worldwide, 11,006 of which are located in the United States, followed by Canada with 976 and Japan with 845 locations. On July 1, 2008, the company announced it was closing 600 under-performing company-owned stores and cutting U. S. expansion plans amid growing economic uncertainty. On July 29, 2008, Starbucks also cut almost 1,000 non-retail jobs as part of its bid to re-energize the brand and boost its profit. Of the new cuts, 550 of the positions are layoffs and the rest are unfilled jobs.
These closings and layoffs have effectively ended the company’s period of growth and expansion that began in the mid-1990s. On January 28, 2009, Starbucks announced the closure of an additional 300 under-performing stores, and the elimination of 7,000 positions. CEO Howard Schultz also announced that he had received board approval to reduce his salary to $10,000 per year. Strengths. • Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004.
The company generated revenue of more than $5000 million in the same year. • It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries. • Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a respected employer that values its workforce. • The organization has strong ethical values and an ethical mission statement as follows, ‘Starbucks is committed to a role of environmental leadership in all facets of our business.
‘ Weaknesses. • Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time. • The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk. • The organization is dependant on a main competitive advantage, the retail of coffee.
This could make them slow to diversify into other sectors should the need arise. Opportunities. • Starbucks are very good at taking advantage of opportunties. In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD. • New products and services that can be retailed in their cafes, such as Fair Trade products. • The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge.
• Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential. Threats. • Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future? • Starbucks are exposed to rises in the cost of coffee and dairy products. • Since its conception in Pike Place Market, Seattle in 1971, Starbucks’ success has lead to the market entry of many competitors and copy cat brands that pose potential threats.
‘Starbucks’ mission statement is ‘Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining their uncompromising principles while they grow. ‘ The following six guiding principles will help us measure the appropriateness of their decisions’ more? Then go to Starbucks. Conclusion In order to keep this high position on the market “Starbucks” should expand to the industries inferior to their. For example they should get into milk industry and make their own brand milk, or open a factory for recycling and produce things like cups, paper bags and advertising materials.
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