Cost And Market Challenges : The Cost Analysis Of Starbucks

GMCR’s warns of the potential impact of the price of coffee on the gross profit margin. To combat this, GMCR had made a number of purchase commitments to ensure an adequate supply of coffee (GMCR Annual Report, 2010). The market price for coffee is impacted by numerous factors including weather, economy, and competition. It is vital that GMCR continue to take proactive measures to secure against unforeseen spikes in coffee prices. The price of coffee does not only impact GMCR’s ability produce coffee for the Keurig brewer under its namesake but impacts their partner suppliers as well. GMCR purchases coffee from brokers, farms, estates, and cooperative groups and essentially diversifies its coffee supply, reducing some supply risk (GMCR Annual Report, 2010).

With time the small industry of coffee has modernized into a multibillion dollar industry that surrounds the world. With the growth of the industry there has been many world wide changes. Over the past 30 years coffee shops have jumped to the front of the public culture. New coffee shops have changes the face of American cities along with British, German, Colombian, Kenyan and Indonesia towns to name few. (Coffee a comprehensive guide to the bean, the beverage, and the industry) Around the world coffee has become part of the daily culture and coffee shops have grown to accommodate the massive demand that people ask for. Without the growth of the industry there would be a shortage of the product and many would have to go without their beloved beverage. In the United States alone there has been a massive increase in the number of coffee shops. In 1980 the number of coffee shops was a year 2,000 and by 2008 there was an astonishing 27,715. (Coffee a comprehensive guide to the bean, the beverage, and the industry) This was an increase of over ten times in the short time. 11,000 of those stores, almost half, were Starbucks one of the biggest coffee brands in the worlds. The growth of Starbucks is due to the work of Howard Schultz a worker for the company before they became as massive as they are today. Starbucks started very small in Seattle, Washington in the mid 1970’s. Howard bought out the owners and then went on to turn the small company into a massive corporation. (Coffee a

Within the coffee industry Starbucks Corporations has grown from a small shop to a leading coffee distributor, proving to have financial strength and determination to continue growth. With the weakening economy the continued success of Starbucks

* Employment law: the profitability of the company could be influenced by US governmental concerns regarding minimum wage that companies are required to pay their staff. In addition, reduction in licensing and permit costs in countries producing coffee beans for Starbucks would lower the production cost for farmers resulting in savings that would be passed on to the consumer.

Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.

In regards to the company Starbucks, their cost of production includes the cost of coffee beans, milk, plastic products, advertising, rent and labor. When it comes to the high price of Starbucks coffee customers should consider the cost of what goes into the coffe, Howard Schultz said “I am concerned about dairy, both domestically and around the world, and we are working feverishly with our suppliers, (and to) identify new suppliers (Thomnson, R. 2014). When it comes to the price of coffee, “prices recently hit a two-year high due to crop-damaging drought in Brazil, the top producer” (Thomnson, R. 2014). This has a huge impact on the price consumers pay for their coffee.

starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One

This Module 1 SLP will be the first part of an in-depth market analysis. The company I have chosen is Starbucks Coffee Company. The first Starbucks opened in 1971 at Pike Place market in Seattle, WA. Eleven years later, Howard Schultz was hired by the company to be the director of retail operations and marketing. The first Starbucks with the current coffee house look and feel was opened in 1984 in downtown Seattle. The Starbucks headquarters is still located in Seattle, WA. Currently, Starbucks is relying on retail expansion, product innovation, and service innovation to achieve this long-term goal once set by current chairman Howard Schultz: “The idea was to create a chain of coffeehouses

Starbucks’s has been able to surpass its rivals and continue being one of the premier roaster and retailers of specialty coffee in the world since its inception in 1985. Such an accomplishment has been sustainable due to a concrete company strategy. When Starbucks’s first debuted back in 1985 it was the first coffee shop to bring specialty coffees to the mass market in the United States. Along with only purchasing and roasting top quality coffee beans they designed their strategy in a way which gave the customer the ability to customize their drinks to meet each person’s individual preference. They also included free Wi-Fi in all of their stores, which in turn increased an already competitive advantage even more by not only offering customers

For more than three decades since Starbucks started its operations, the company was considered as a leading coffee chain operator. However, in 2008, the company faced a significant financial downturn that almost cost it its position in the marketplace. Through strategic planning and adopting a differentiation strategy, Starbucks, under the CEO Howard Shultz, recovered from the financial decline to regain a competitive advantage over other big companies like McDonald's and Panera Bread. This paper will discuss the business strategy and management for Starbucks Company and emphasize the importance of business strategy. It will cover the strategic basics of Starbucks, its financial downfall, an analysis of its profitability and a comparison with its key competitors as well as its technological threats and opportunities.

Starbucks utilizes a differentiation business model by offering an overall unique and high quality experience for the consumer. From the high-quality food and drink options, to the uniquely roasted coffee and supreme customer service, Starbucks aims to provide an experience unobtainable anywhere else. Starbucks also focuses heavily on rapid expansion by seeking out profitable geographical areas and overcrowding those areas with stores in order to exploit profits and slow down competitors. Starbucks’ compliments this with its horizontal acquisition strategy, extending their product line through acquisition of competitors. This provides Starbucks with a differentiation strategy focused on providing a diversified product mix

When Starbucks Corp. (NASDAQ: SBUX) last raised its coffee prices in late June, coffee was selling in the commodity markets at around $1.76 a pound, after peaking at around $2.12 a pound in April. Coffee was trading at around $2.20 a pound Tuesday morning, its highest price in two and a half years. Starbucks said in its third-quarter conference call last July that it had hedged 60% of its coffee needs for its 2015 fiscal year, which runs on the same calendar as the coffee year. The Wall Street Journal cites an analyst who said that locking in coffee prices for 2016 presents more difficulties. Producers, especially in Brazil, may want to hold

In order to cut overhead costs Starbucks merged with other retail locations, such as Costco, Target, Omni hotel, and resorts, and online at amazon.com. Even though Starbucks expands globally one of the major risks because of the recession, was increasing coffee prices. Starbucks faces many other challenges, such as lower wages with employees, and frustrated store managers. Coffee is the main source of why they call it Starbucks. The major focus is the quality of improving their coffee and customer service instead of raising their prices on coffee.

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

Starbucks is a retail company which operates internationally in coffee and food serving, also providing added value services. The company’s ubiquity causes forces Starbucks to deal with several challenge from external environment.