Starbucks : A Business Model

As the world’s number one specialty coffee retailer, Starbucks sells coffee drinks, food items, coffee beans, and coffee-related accessories and equipment. In addition, Starbucks sells whole-bean coffees through a specialty sales group and grocery stores. Starbucks has grown beyond coffee into related businesses such as coffee-flavoured ice cream and ready-to-drink coffee beverages. The purpose of this paper is to analyze Starbucks business strategy, customer value proposition, company’s operations and the risks to financial results and reporting in the short term.

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.

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

It can expand its supply network by increasing its global presence. Starbucks has great opportunities in growing economies. It should create coffee houses in places such as India and China, where it has invested modestly now. Starbucks can also broaden its target market by offering more products. They could perhaps increase the number of stores that sell beer and alcohol, which could considerably increase their sales.

Starbucks is striving to build a better company by expanding our focus in three areas that can have a significant impact. These areas include working with farmers to develop a future, bringing green retail to a global scale, and building opportunities for the younger generation.

Starbucks Corporation has been around since 1971. What makes Starbucks unique from other coffee-bar shops is not only their wide selection of products, but the environment they provide to all customers. Starbucks sustains competitive advantage by constantly looking for new ideas, new products, as well as new experiences for guests. Starbucks also offers a selection of music, and unique designed coffee mugs. The company even hires designers to come up with artwork for commuter mugs. Starbucks’ forte is incorporating differentiated features such as their different flavored coffees that no other company offers. They

Starbucks is a strong competitor in the service sector and a leader in the gourmet coffee industry. With a continued growth rate in store openings and maintaining successful profitability of its operations, Starbucks has demonstrated its ability to sustain a reliable and steady growth. Starbucks’ ability to contend with the vulnerability to current financial threats such as economic recession, higher interest rates, and global competition, is constantly proven by its incomparable brand image, its continual product innovations, and its exceptional customer service. This

In all companies, there are many strengths, weaknesses, opportunities, and threats. Starbucks is one of the world’s leading coffeehouse chain. The beginning of Starbucks was in 1971, the first store ever to open in Seattle’s Pike Place Market. Thanks to Howard Schultz the founder of Starbucks the beginning was far from the end. Schultz was bright and new that Starbucks would have a future. In 1987, seventeen stores open in Chicago and Vancouver. 1988, thirty-three stores were open, Starbucks committed to giving their employees full/part time jobs with full health benefits. In 1991, Starbucks first store in an airport, having 116 stores open at the time. 1994, 425 stores opened, first drive-thru was established. In 1995, they began selling the world’s most popular and favorite drink the Frappuccino, with 677 stores opened. 1996, the first store opened outside of North America in Japan and Singapore, having 1,015 stores. In 1998, Starbucks partnership with Magic Johnson, opened stores in underserved neighborhoods, with 1,886 stores. In 2002, the best thing any store can have is Wi-Fi, Starbucks launches free Wi-Fi in stores, over 5,800 stores. In 2006, Starbucks launches the industry’s first paper beverage cup containing post-consumer recycled fiber, with 12,440 stores opened. In 2008, Starbucks adopted a new mission statement, “To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.” With 16,680 stores open. In 2011, launch first annual

First, Starbucks has effectively applied the product differentiation strategy. To achieve it, the company has specialized in different product mixes, aligned its business locations to a specific ambiance that suits the context, and varied the customer experience, thus resulting in a higher customer service satisfaction. Further, Coskun, Basligil, and Baracli (2008) note that Starbucks prides in having their customers enjoy a premium service. Therefore, the company’s signature strategy has worked well thus far, as competitors find it difficult to imitate. Second, the enterprise has coordinated its acquisition and portfolio strategy, thus consolidating the market. As discussed in the background chapter, Starbucks has a portfolio network of eight brands under its stable. Third, Starbucks’ international expansion strategy has worked well, with a presence in 70 countries (Starbucks, 2017). These factors, coupled with its financial capability, offer Starbucks an edge over its

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Introduction .................................................................................................................................... 3 Background Analysis ....................................................................................................................... 3 Business Model Framework ............................................................................................................ 4 Value Creation................................................................................................................................. 5

The company is also investing in introducing complimentary products such as take home coffee beans and coffee accessories for customers. Apart from this, Starbucks is also partnering to sell their coffee through other intermediaries.

Starbucks opportunities are; entry into the health and wellness space, growing presence in certain Asian markets, growing their mobile commerce market, and growing their office coffee marketplace. Their threats are extreme competition and compliance costs associated with government regulations (MarketLine 27)

The company overview is made to deliver an overview and structure of Starbucks Corporation. In addition, the company overview contains timeline of Starbucks, business segments, leadership organizational chart, products, legal entities, success factors, and risks that Starbucks face.

As the number one specialty coffee retailer, Starbucks offers hot and iced drinks, breakfast and pastry items, as well as boxed meals and sandwiches to customers in over 18,000 coffee shops in 60 countries. Also known as the premier roaster, Starbucks has created a high level of brand reputation because of its top quality services they prove to their customers. Starbucks wants to create top quality for their customers as well as create unique customer experience for each individual customer. They use premium coffee beans that they roast with great care to ensure a great, bold taste in their coffee. Starbucks also makes sure that each store is more of a community feeling, rather than a store establishment, and

Year by year Starbucks is become a proper life style: from a different type of coffee to the confortable armchair, to free wiifi with the ability to download MP3 music. Moreover, Starbucks is used also as a meeting point for businessmen whom instead going to the office prefer to discuss working field in a common area. This is why Starbucks is different from several other cafeterias company such as McDonald, Costa and Dunkin Donuts.