Economic Analysis Of The Starbucks Corporation Essay

Topic: An examination into the rise and fall of Starbucks Coffee Company and its relationship to certain microeconomic principles.

Starbucks Corporation, generally known, as Starbucks Coffee is the leading retailer and a brand of world’s forte coffee in the world, with more than 15,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim, wherever in this world where premium quality coffee is in demand. Starbucks is the largest coffeehouse company in the world ahead of UK rival Costa Coffee, with 20737 stores in 63 countries and territories, including 11910 in the United States, 1496 in China, 1442 in Canada, 1052 in Japan and 772 in the United Kingdom. The first Starbucks was open in 1970. The name was inspired from Herman Melville’s Moby Dick, a definitive American novel regarding the 19th century whaling industry. The nautical name matches seamlessly for a store that imports the world’s finest coffees to the cold thirsty people of Seattle. In May 1998, Starbucks have finally successfully entered the European market through its acquirement of 65 Coffee Company stores initially originated from Seattle in the UK. Both companies shared a common culture, focusing on a great commitment to customized coffee, similar company values and a mutual respect.

1. In the beginning, how was Starbucks different from other coffee options for coffee drinkers in the United States? What activities and assets did Starbucks leverage to differentiate itself from competitors?

Starbucks is known for their Frappuccino’s; unfortunately they are on a downward spiral in sales due to competitors such as McDonalds. In 2008 Starbucks admits to its losses due to their competitors. “Company executives now freely admit that such thinking is largely to blame for the woes that led to Tuesday’s announcement that Starbucks will close 600 U.S. stores and eliminate thousands of jobs. The coffee giant’s missteps have come at a spectacularly bad time, hitting as the economic slump deepens and consumers are seeing their discretionary spending eaten up by rising gas prices and grocery bills (Linn).”

People love to drink coffee. Coffee shops, independently owned or chains are every corner. Statistics show that people are taking more coffee every day. It is a very profitable business.

In this assignment, a savvy financial analyst researching companies in which to invest a U.S. publically-traded company that would be a good investment was chosen. After a lengthy search, a company that my family is unduly familiar with, Starbucks, was chosen and in the following pages a financial analysis will be described.

Statistics show that over half of the American population consumes coffee on a daily basis. You may drink coffee hot, cold, mixed, or even in a frappuccino. Individuals are able to make coffee at home, or buy it on the go. Coffee provides people with caffeine, which ultimately gives energy for hardworking people all around the world. The main focus for this paper will cover the following topics, with coffee as the basis: causes for shifts in supply and demand, how coffee supply and demand influence price, quantity,

Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?

I've chosen the Starbucks Corporation on which to do my case assignment for the session. I first became interested in Starbucks while working on a paper for a previous marketing class. I became intrigued at the entrepreneurial spirit that such a large corporation had managed to maintain throughout its massive expansion. Starbucks corporation, unlike many of its now-defunct rivals, has done an outstanding job since its meager beginnings in 1970 with the execution of its strategic process; resulting in it currently owning 40% of the specialty coffee market and boosting annual sales exceeding $7 billion according to Burt Helm. Historic successes and recent turmoil within the company, including a near 40% decline in 2007 in profits (Sullivan

The company that I am writing about is Starbucks, the international coffee shop chain. The company's financial statements for this analysis are from the FY2011 Annual Report and 10-K. The company has 10787 stores in the United States, of which 38% are franchised and the remainder are company-owned. The franchise model is more common when the company operates internationally. There are 6216 Starbucks stores internationally and of these 63% are franchises, with just 37% company-owned. The franchise model for international expansion has been utilized to help Starbucks expand quickly in foreign countries and to mitigate foreign political risk and to ensure that the product/service offering is tailored to local tastes (Thompson, 2012). The company is now in the process of buying back some overseas franchise stores in order to retain more profits for itself (Franchise Press, 2011). This paper will take a look at the company's most recent annual report to analyze the financial statements.

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.

This paper will explore the science of Managerial Economics, the cost effective management of scarce resources, through an exploration of the Starbucks Company. This will include an assessment of relevant market forces, market structure and the economic theories that guide business decisions for this company.

can order and pay for their drinks in a flash while stacking up rewards for each purchase made. This Strategy has significantly drawn people to Starbucks due to its highly anticipated services, products, and marketing strategies that differ from most fast food restaurants. The next service is the Starbucks webpage where the customers can go onto the site and view product and also make purchases. This service is quite excellent for those that want to checkout items online through the site, because it incorporates a similar process as the application on your smartphone. Starbucks also incorporates equipment and drinkware to their massive line of products. First their Drinkware consists of cups and mugs that are affordable to the customers. These cups come in many colors and aesthetic values, which make people interested in purchasing. Starbucks had the right idea when they decided to manufacture these cups out to their customers because not only were they a huge success for the business, but it also made Starbucks distribute more merchandise. Cold cups, which were from stainless steel containers. These containers made a rise once the popularity rose for other merchandise. These containers were sold very often to customers and once again made a surprise since it was from the same line of cups and mugs category. As more popularity grew in their products so did the equipment used to make customers coffee. First Starbucks decided to manufacture coffee makers, presses, and expresso

The consumer market is segmented according to age as well as preferences. People working in offices located close to the coffee bar and on sophisticated teenagers. Younger consumers are often willing to spend more on fancy coffee blends and signature drinks; the health-conscious would be willing to pay extra for “healthier” substitutes such as organic products; My market research shows that these are the customer groups that are most likely to buy coffee products. Since coffee consumption is universal across different income categories and mostly depends on the level of higher education.

Corporate Strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of business.[1] In the case of Starbucks the corporate strategy they have implemented is unique to their industry which has allowed them to differentiate from their competitors and is summarized best by Howard Schultz CEO of Starbucks, “We’re in the people business serving coffee,[2]” high quality specialty coffee and related products in a European café environment. It is clear Starbucks is in a growth strategy utilizing three key techniques that support its Mission, “to inspire and nurture the human spirit – one person, one cup and