Starbucks Coffee Corporation Essay Sample
Starbucks Coffee Corporation Essay Sample

Starbucks Coffee Corporation Essay Sample

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  • Pages: 8 (2161 words)
  • Published: August 27, 2018
  • Type: Essay
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The purpose of this evaluation is to use different analytical methods to evaluate the company and provide conclusive recommendations. The CEO, Howard Schultz's leadership qualities are a strength as he introduced Italian coffee houses to the US despite facing opposition from within the organization. Consequently, he established coffee shops with a cozy atmosphere similar to the Italian model.

An ideal location for spending time with loved ones is available. Starbucks provides their renowned world-class coffee beans, including the Narino Supremo variety, which they completely manage. Additionally, the beans undergo a unique roasting process.

Expressing disapproval of any unfortunate groups that are not considered flawless. The company's approach to labor/management relations involves a policy of mutual respect, healthcare, training, and profit-sharing programs that result in high morale, loyalty, and increased productivity.

Starbucks values a re

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laxed work environment and follows a slow-growth policy. Thorough research is conducted prior to entering a new market in order to ensure full domination. Although this approach could have drawbacks, Starbucks has managed to achieve rapid growth and become one of the fastest-growing companies in the United States.

Starbucks achieved a 63% increase in gross revenues in 1999 by using direct mail marketing and strategically locating stores. The company selects areas with proven success in this type of marketing, determining the best placement for a store based on tracking email orders to identify the highest concentration of existing customers within a city.

Starbucks has opened a store in an overseas country by leveraging their existing customer base. To enter the Asian market, they have collaborated with a Japanese company based in Tokyo through a joint venture. The organization has utilized different marketing strategies like establishing coffeehouses

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and carts within hospitals to reach out to untapped markets.

One of their offerings includes air hoses, as well as office buildings, supermarkets, banks, and shopping malls. Furthermore, they provide a loyalty program for frequent coffee purchasers which rewards them with a complimentary cup of coffee after reaching a specific purchase threshold.

The company Starbucks could be severely impacted by its slow-growing policy, which is usually good for new companies but may not be effective for them particularly in the East Coast market. Analysts suggest that the company's growth does not match its potential.

Starbucks coffee shops require a higher than average amount of capital to open as they do not offer franchising. In contrast, the top four competitors do offer franchises and do not solely rely on coffee shops for sales. Despite high capital demands, Starbucks has a low turnover rate in the retail industry.

Starbucks incurs a high turnover cost due to the quality and quantity of training provided to new employees, resulting in a 50% turnover rate compared to the usual three-figure rate. The company prioritizes educating the public about coffee, necessitating that each employee attend 24 hours of training. In contrast, some competitors primarily train their staff while on the job.

Although the market is maturing and experiencing a slowdown in volume growth and profitability, Starbucks maintains a loyal customer base consisting of younger frequenters through their use of preparation scenes.

The aging population consumes less coffee, resulting in reduced individual store profits. Additionally, younger customers are less loyal. However, there is an opportunity for private label sales. Starbucks recognized this and entered the market by producing a label for Costco when retail merchandisers

were seeking a private label coffee bean.

Despite lower returns, customer awareness has increased globally, particularly in the Asia-Pacific region where the Japanese have a traditional coffee culture centered around formal coffee houses. Starbucks has expanded into this market through Starbucks Coffee International Inc. and there is a growing interest in Western-style coffee and coffee houses. Customers also want to be able to purchase food alongside their coffee for added convenience. Starbucks has started meeting this demand in select coffee bars.

Expanding their menu to offer light snack options, including those for lunch and throughout the day, is likely to attract more customers. Additionally, there is a strong demand for tea in the country.

Starbucks encountered an increasing demand in 1995 with the launch of a selection of preserved and pre-made teas. This opened up a new opportunity for expansion, but as their customer demographics shift,

The potential to maintain profitability would be enhanced by this merchandise. The decaffeinated coffee market is significant and appears to be inadequately met according to analysts. Although Starbucks provides decaffeinated coffee, the demand presents an opportunity for the company to capitalize on. In terms of threats, Starbucks' main competitors consist of four other high-end coffee producers: Pete's Coffee and Tea located in San Francisco; Barney's Coffee and Teas situated in Orlando; as well as Gloria Jean's Coffee Bean and Seattle's Best Coffee.

Although they market differently, each company has a strong position in a portion of the coffee market and poses a significant threat to Starbucks because of the growing demand for gourmet coffee and changing market demographics. Seattle’s Best Coffee is waiting for Starbucks to educate the public about gourmet coffee, and will

then open a store in that market.

Long-standing java makers, like Maxwell House, who are considered secondary rivals have entered the market by selling instant cappuccino and bottled chilled java drinks. Additionally, grocery stores are now offering gourmet java beans in bulk quantities.

Gloria Jean’s, a gourmet coffee company, is taking over the East Coast market. However, the prices of coffee beans are rising due to farmers switching to more profitable fruits and vegetables. This increase in prices is caused by a shortage of Colombian farmers willing to grow premium coffee beans. In the past, the best beans were bought by European markets until Starbucks entered the industry. Unfortunately, growing premium coffee beans is not as profitable as other crops for farmers.

The demand for java beans may not be fully met and there are concerns about the saturation point in the coffee bar/cafe market, indicated by smaller rivals being absorbed by larger companies. Additionally, expanding internationally could potentially result in a loss of Starbucks' unique culture, which is based on quality and customer loyalty. Analysts are questioning whether they can maintain the company's culture if they cannot ensure the same level of quality across all locations.

Expanding internationally poses a significant threat to the company's overall health since it requires an immense amount of capital to establish new stores. This threat is characterized by the Five Forces (Environment), specifically the threat to entry. Economies of scale have given Starbucks a competitive edge as they are the exclusive purchaser of Narimo Supremo coffee beans, obtained through negotiations with suppliers. This bulk purchasing has resulted in lower prices. Compared to other main competitors, Starbucks' entry into the market is

more expensive in terms of both capital and training costs.

Accessing distribution channels is easy in this competitive market, which keeps prices competitive. However, with Starbucks as a major threat, rivals may enact revenge through advertising, special offers, and more.

Is the government enacting new laws that will weaken competition in the market? As the market grows, some people complain about noise and disturbance outside coffee shops at night. Local authorities may require licensing that can limit future expansion into new areas. The importance of differentiation is highlighted by Starbucks, which offers high-quality products at a premium price, along with first-rate training.

When it comes to purchasing a full harvest for java houses, the priority is placed on the atmosphere and location. Giving certainty, agreed prices, and a single point of contact for the supplier, there is a considerable amount of buyer power and control in the comfortable relationship that can be established.

The Potential Supplier Power: Agricultural suppliers may focus on growing more profitable fruits and vegetables, which could increase the value of java beans. There are no indications of providers wanting to buy java establishments/chains. The Threat of Substitutes: Consumers may opt for product substitutions due to lifestyle changes, such as drinking mineral water/soft drinks instead of coffee. This trend is likely to continue as healthier lifestyles become more popular, such as visiting the gym at lunchtime instead of a coffee shop.

Various industries including computing, gaming, and movies are constantly competing for customers' money. This results in a competitive environment, with rivals trying to capitalize on the success of Starbucks advertising. Additionally, the threat of counterfeit products is a legitimate concern.

Providing guidance for clients in investing

and offering Narino Supremo java beans that are not threatened by competition, while acknowledging the changes in the political environment since September 11th and the resulting uncertainty felt by many. This decrease in travel may lead people to spend more on domestic activities and visit more local coffee houses.

In terms of economic factors, Starbucks believes that it has maintained strong sales despite market conditions. When consumers are unable to purchase expensive items like cars, they opt for the more affordable indulgence of a $2 cup of coffee and other small luxuries.

Feeling good can come from spending on minor things that are of high quality. Sociocultural diversity in America encompasses various factors such as race, culture, and religion.

Despite multiculturalism being common in numerous locations, Japan has preserved a significant portion of its culture and beliefs without substantial alterations to its ethnic composition.

The embrace extends to various elements, including novel concepts and technology. Additionally, it encompasses pursuits aligned with Western culture, such as soccer and revered figures like The Beatles and the Mini. Furthermore, fashion inclinations like dresses fashioned in Western style and cuisine from the West are also part of this acceptance.

The Japanese are the third largest coffee consumers globally and have a thriving coffee culture that includes both casual and formal establishments. Merging this established coffee civilization with modern technology presents an excellent chance for prosperity. With the advent of the internet, a new market has emerged where sales can be made from home, and products can be delivered to customers or businesses across various countries.

Information technology and e-commerce have become a major force in trading, providing new opportunities for communication and offering merchandise

to clients that they could not typically reach. Despite the difficulty of suggesting changes to a seemingly thriving company like Starbucks, it is essential to keep up with these advancements.

However, the Performance / Importance matrix (table 1) is determined through an analysis of SWOT, PEST, and Porter's five forces.

The text within the

tags highlights several factors contributing to the company's success, including its high-quality merchandise, positive staff relations, diverse market options, and rapid growth.

Starbucks is seeing success in diverse selling and their partnership with Asia. However, it may be necessary for small changes to be made. While the gifts shown in the P/I matrix have the potential to be a waste of resources, they could also serve as a loss leader.

Retaining the authenticity that has been established, Table 2 presents the matrix for the probability of success. It reveals that the sale of decaf coffee has a high likelihood of success.

It is important to monitor the success of merchandise diversification and international sales, as well as private labels which may generate less profit but can increase consumer awareness.

Starbucks faces threats mainly from primary and secondary competitors, as well as from market saturation and international opponents. Furthermore, there is a risk from the Narino Supremo coffee bean suppliers/farmers on whom the brand relies for its reputation. The company should consider a two-pronged strategy to gain a foothold in a new area using its capital while slow capital growth limits expansion opportunities; this would give primary competitors the chance to snatch market share through advertising and customer education.

One solution to prevent transcript cats from taking advantage of an opportunity left open by Starbucks is to saturate

the market with more franchises in the same country. However, there is a looming threat from java agriculturist/providers who may shift from producing Narino Supremo coffee to more profitable fruit and vegetable crops. Such a move would cause the price of coffee beans to rise, negatively impacting Starbucks, and eliminating one of their major differentiators. To mitigate this threat, I recommend backward integration by gaining control over the supply of Narino Supreme coffee beans.

Howard Schultz's goal for Starbucks was to become the leading provider of exceptional coffee across the globe, as stated in Bowman's book "Strategy in Practice" (Prentice Hall Europe, 1998) and referenced by Grant.

The second edition of "Cases in Contemporary Strategy Analysis" by M. and Neupert K. E. was published by Blackwell in 2001, along with the work of Johnson G. and Scholes K.The text within the mentions a book called “Exploring Corporate Strategy” by Mabey C. and Mayon-White B., which is the fifth edition published by Prentice Hall Europe in 1999. Another book mentioned is “Managing Change” Second Edition, which was printed in 1993 by Paul Chapman. The text also refers to a website for Starbucks.

Visit the com website.

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