Memo Report – Starbucks

1. There are several sections to an annual report. The two main sections are the written section from management to shareholders, and the second section is the 10-K. The written section is entirely optional; some companies omit it while others prepare an extensive write-up. There is no set form for this section. Starbucks' 2011 Annual Report has a 4 page write-up with a letter from Howard Schultz and a brief description of the company's business for the past year. The 10-K does have a set form. It includes a five-part discussion of the business; the financial data, which is the largest part of the report; a five-part discussion of relating to governance and the executive and the last part is the exhibits.

There are 15,756 Starbucks stores in 44 countries. To have that many stores, serve that many people, and ensure they still maintain the best and highest quality of beans, really sets some doubts. Starbucks has truly become the McDonald’s of the coffee industry because of the supply and demand. In the Starbucks business, quantity is greater than quality because quantity equals to money, where as quality costs more money. There is no win/win situation with this equation when your business is serving practically the world.

Starbucks grew so much in the last couple years. The company now has over 21,537 stores in 64 different countries. They have 12,000in the United states, 1716 in the country of China, 1330 in the country of Canada and 808 in the United Kingdom, this is just a small list of countries that have Starbucks in their country there are many more countries. Starbucks partners with other brands and companies to keep themselves relevant in their industry. (Loxel 2015) The brands in which they’ve partnered with include Teavana, Tazo, and Seattle’s Best Coffee, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, La Boulange and Verismo. Starbucks employees over 182,000 employees and has an estimated revenue of $14.89 billion. Over the last 20 years, the company has expanded rapidly with an average of two new stores opening every day.

It was the branding strategy. Starbucks had three components in its branding strategy. The first component was the coffee itself. The second component was the service "customer intimacy" as referred to by Starbucks. The third component was the atmosphere. (as explained above).

Starbucks is acclaimed for its superior value proposition in the early 1990’s by creating an experience around the consumption of coffee, a ‘third place’. The brand is positioned to offer the highest quality coffee, close customer intimacy, and warm atmosphere or ambience.

coffee business. It is the current market leader with over 17000 stores worldwide. It has no debt

Starbucks also constantly introduce new and promising supply strategic strategy along with ethical environmental goals such as C.A.F.E. Practices. Those strategic moves allow them to gain control of their own coffee suppliers which will drives its business to grow tremendously in the international market for the next few years to come. Strong business model is also a key factor which allows Starbucks to take the right steps to ensure their long term goals are successful, as they own a multinational business model which allows them to have a widespread of products that can be customized to suit national requirements. Nevertheless, having such robust business model, Starbucks ought to have continuous improvements and continue building its goals and expectations else their business will be in a downfall situation; therefore, it is important for them to set their objective and strategies clearly and react decisively for any challengers they may face in the dynamic

Starbucks has been expanding globally and has such a recognized label they know don’t even have to put it on some of their drinks. Starbucks has added an average of two stores on a daily basis since 1987, reaching a steady growth, with California having the highest concentration: 560 stores within 25 miles. They opened their first store in Beijing in 1999 and there are now 376 stores in china. They expect to reach 1000 by 2015.

Starbucks was #45 on the Forbes list for world’s most innovative company (Forbes 100, 2015). They closed 600 stores in 2008. In 2012 they opened 1500 stores. The 2015 financial report includes a 7% increase in the global comparable stores; American sales increased 8%; China/Asia Pacific sales increased 11% (Financial Release).

Starbucks achieves this through a vast range of high quality products that positions them as a premium coffee producer and distinguishes itself from its competitors.

Starbucks is world’s leading coffee chain store with a strong vision and values. Today, they have more than 21000 stores in over 65 countries. Their product includes coffee, hot and cold beverages, pastries, sandwiches etc. Starbucks has been maintaining high quality product and customer services all over the world. They differentiated the company by introducing authentic Italian coffee culture to US market. However, in early 2008 they faced major challenges with the financial crisis in economic system which forced them to close many stores worldwide. Secondly, they faced challenges to deal with increased competition and cheaper rival hence, their earnings fell 28% to $109 million. In addition, the prices of the products are higher than their direct competitors. Also, they expanded their business at such level that they couldn’t focus on the brand image and quality of the products. They were losing core values of the company. At that time Howard Schultz, board chairman & founder of Starbucks had observed the urgency to transform the business immediately. He then returned as Chairman and Chief Executive Officer and announced to close more than 600 stores in 2008. To manage the challenges and to give their customers distinct ‘Starbucks Experience’ Schultz took different approaches. Schultz pointed out ‘Seven goals’ or ‘Big moves’ to transform the business and revamp the leadership team. The transformation agenda was created with a strong vision of the company as well as these

After evaluating each alternative (Exhibit 2), we recommend that Starbucks invest $40 million per year to increase labor hours per store in order to solve the problem with the quality of service. Starbucks should also set up an internal strategic marketing team. This will allow Starbucks to have a proactive feedback of customer satisfaction and hence faster improvement. We also noticed that labor cost is high for Starbucks' North American operations. To keep labor cost at reasonable level, Starbucks should reduce waste in making drinks, keep consistency in drinks, and improving productivity. We recommend

B.1) Early days - The original coffee shop: cofounders’ philosophy - Howard Schultz enters the picture - Collecting ideas - Expanding the vision and building the concept - Howard Schultz’s Il Giornale venture B.2) Shifting gears - A shift in the

Using Porter’s five force model we can analyze Starbucks and the industry it is in. First looking at industry competitors. There are many competitors in the industry. Specialty coffee was to have around a 15% growth rate in 1994 (Starbucks, Ivey). This increase is due to the face that consumers are being more health conscious. Coffee is also the second most valuable commodity world wide (Business Insider). To stay ahead of competition and reduce the risk of imitation Starbucks has certain tools and qualities other companies do not possess. Starbucks has a signature roasting system (Starbucks, Ivey), that allows them to keep records of the way certain blends were made. It also has extensive training for all partners from CEOs to its baristas. This allows Starbucks to surpass the other competitors. (Sara)

Starbucks decided to close 600 stores in the US – that is about 8% of US companyowned stores. One way to increase the number of customers is too keep opening new