Starbucks - Creating Value

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.

Jerry Baldwin, Gordon Bowker, and Zev Siegl founded Starbucks in 1971 in Pike Place Market in Seattle, Washington. They were inspired to pursue this company by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans. Since then, Starbucks has grown into the largest coffee chain in the world, with over 23,000 locations worldwide.

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.

IntroductionMicro environmental factorsThe micro environmental factors are the forces close to the company that affect its ability to serve its customers. The factors are also known as the internal environmental factors such as the company itself, marketing intermediaries, its suppliers, customers ,competitors and publics which are within or close to the company that have an impact of the organization strategy.

Several key success factors exist for Starbucks, a leader in the coffee industry. They include

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“We are not in the coffee business, serving people. We are in the people business, serving coffee”, Howard Schultz’s philosophy has shaped and continues shape Starbucks, the world’s number one specialty coffee retailer with over 21,000 outlets in more than 65 countries nowadays (Starbucks, 2011). Starbucks was founded in 1971 and Howard Schultz joined Starbucks in 1982. In 1987, Howard acquired Starbucks and changed the name to Starbucks Corporation.

Starbucks is a major coffee company that we have in America as well as being expanded around the world. By using the SWOT analysis we noticed how Starbucks is falling apart and what can be used to make the company the way that it is set up. They wanted to continue to grow stores and by the companies wanting to continue to branch out globally by having continuous competition across the world. Another strength that this company has to offer is Starbucks is the leader of the coffee market. It is a strong brand to compete with. It is hard to go against them because they are always thinking outside of the box which is stated on page 211. Another strength that this business has to offer is on page 211 where Starbucks has always strived to be a good neighbor by providing a place for people to come together and by committing to supporting financially in where stores are located.

1.Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion.

He has developed and promoted a strategic vision from the beginning: to make Starbucks "the most respected brand name in coffee and for the company to be admired for its corporate responsibility." Two key values that supported this vision were "to build a company with a soul" and to pursue "the perfect cup of coffee." Simple phrases, but they have given direction to a highly successful enterprise!

This is a manufacturing company and there are multiple departments that support the organization strategies and objectives. Mainly, they are the Product, Equipment and Production

Coffee is the “second most exchange after petroleum” and settle the livelihood of 25 million poor families” (Uting-Chamorro, 2005). Its ranking as a major export for many countries and therefore a determinant of the wellbeing of national economies, gives it indicative importance in the global company. Howbeit, coffee also disproportionately affects small-scale farmers. Coffee is commonly sold on the commodity of the market - when price is determined by supply and demand. As an agricultural fruit, the supply of coffee is dependent upon numerous factors including trade relations, weather, and other market conditions.

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

Starbuck’s value chain and the way it functions are a reflection of its history, strategy, its approach for carrying out the strategy and the activities involved in creating a product to marketing and sales [3].

Grabbing morning coffees and afternoon pick-ups are essential parts of the day for millions of people worldwide, providing an excuse to step outside and take a short walk. The thirst for caffeine is what attract the customers and make coffee such a huge and profitable business. In almost any civilized city today, a cup of coffee is never too far away and in urban environments, it’s hard to walk for five minutes without seeing a vendor. Its 41 years of existence makes it a pretty solid company in the grand scheme of coffee stores.