Starbucks Sustainability Report

Starbucks uses price targeting to identify customers willing to pay more by charging different prices for products that cost essentially the same to produce. Starbucks’ menu has products ranging from $2.20 to $3.40. This price difference stems not from a $1.20 difference in production cost, but rather a subtle way of encouraging customers to signal their willingness or ability to pay higher prices, and therefore allow Starbucks to increase its profits.

There were two main start-up decisions. The first is the choice in furniture. The option was given to choose either Used Furniture for $2,000, or several other choices for $4,000. These others were New Modern, New Green, Urban, and New Elegant. So, sticking with my theme, I went for the Used Furniture. Being located where my new coffee shop is and well as my expected general customer classification, I don’t have the liberty to charge a premium for coffee. According to Kate Taylor in her article Some Starbucks locations quietly raised prices on brewed coffee and cookies on Pumpkin Spice Latte launch day, she says, “Starbucks just quietly raised prices at a sizable chunk of locations.” Starbucks can reach a much larger crowd than my simulated shop, therefore, I decided to take my approach differently with the cheaper route.

External Environmental Analysis of Starbucks and the Coffee Industry Harold Brown Strategic Management March 3, 2011

Starbucks desire as the leader in the specialty coffee industry is to be acknowledged for its responsibility to coffee farmers and their families to improve their well-being. The corporation’s primary stakeholders are broad organizations such as, coffee trade associations, suppliers, and groups with interest in sustainable coffee production. Including non-profit groups focused on human rights, social justice, and environmental issues. Other stakeholders include governmental agencies such as, U. S. AID (Starbucks Corporation, 2010).

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.

In today’s business world, companies have changed. Companies are looking to adjust to their business and community expectations by making changes in the technological machinery and devices they use to reduce the company’s negative environmental impact. In order to sustain economic businesses, companies should not only concern about the financial benefits, but also ethic firms have to care about people, society, and the environment as well (Elkington 72). A portion of their profits goes to programs in charge of reducing any negative effects and promoting sustainable and social development. This social responsibility has been implemented with the purpose of satisfying the company’s and the community’s necessities in order to create a good and long-term win-win relationship. Corporate Social Responsibility (CSR) is becoming essential for today’s company’s success. Corporations have the obligation of developing strategies that will benefit employees, customers, and the community. Today we will focus on how Starbucks has made use of its corporate social responsibility to succeed in the business world and how Dunkin Donuts is still trying to stay in the market. After oil, coffee is the second most valuable commodity in the world. More than 50 percent of Americans drink coffee everyday — three to fourcups each, more than 330 million cups a day and counting (Neal).

There are many sellers in the market heating up pricing competition. Competitors like McDonald’s, Dunkin Donuts, Peet’s Coffee and other specialty coffee companies incentivize price wars. Furthermore, coffee’s demand is elastic which makes it difficult to increase prices without greatly reducing the demand. This makes differentiation and positioning very important. Also, it is easy for customers to switch from coffee vendors. Whichever company is most convenient for the customer will likely win the business. Competition is a top priority in the industry.

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.

Starbucks is not only a high-priced coffee shop but it offers a combination of quality, authority, and relative value. Starbucks sets its prices on the basis of a simple idea: high value at moderate cost. When people feel that they are getting a good deal for their money, they are more likely to pay a higher cost. Quality is key. Starbucks has to maintain strict quality controls in its coffee sourcing as well as in its customer service and related products to justify its costs (O 'Farrell, n.d.).

Starbucks is undoubtedly an international brand. The history of coffee traces back to Ethiopia, Africa, India, Arabia, and Europe, and has been traded abroad since the 11th century. Understanding the demand and widespread market for coffee, Starbucks has triumphantly capitalized both the domestic market, and the varied international markets as well. Possessing about 6,500 retail sites worldwide, Starbucks’ net is spread across thirty countries and has been found as one of the most recognized brands all over the globe in equality to McDonalds and Toyota. This organization’s ability to build an international brand has been unprecedented- particularly since it represents a specialty

business model may seem, there is plenty of hard work invested and financial risks taken to grow

The larger known coffee businesses were beginning to show signs of stagnation in the 1970’s and 1980’s. Unlike Proctor & Gamble other large manufacturers, specialty coffee producers were small independent distributors. According to the Harvard Business School report on Howard Schultz; During the early 1980’s the average American consumed less than two cups of coffee per day, with almost one of every two men , women and children over the age of 10 does not drink coffee at all. The large coffee business started to compete for market share in a shrinking market. The smaller independent specialty coffee producers were selling only high quality Arabica beans. Arabica beans have less caffeine, less

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.

When Starbucks started their target market were people who enjoyed coffee not just for an energy boost from the caffeine, but people who enjoyed sitting down and drinking a well-prepared cup. Upon visiting Italy and falling in love with the coffee bars and the experience that they offered, Schultz envisioned a place between your home and work where you could sit and enjoy your coffee. Starbucks wanted to control their coffee from “raw green beans to the steaming cup” this meant that they had to talk with their farmers to make sure the quality was up to their standards. They were getting coffee from different places around the world that had different characteristics that would attract the type of coffee drinkers they wanted and tasted good. When preparing the coffee they first would ground the roasted beans, this was one of the ways that they attracted people to drink their coffee because it was freshly grounded before brewing. They used manual coffee pots to brew their coffee, which is more time-consuming but showed how dedicated they were with the quality of their product unlike other big companies. Starbucks was priced as a premium cup of coffee compared to other coffee shops, because of the steps they took to make a high-quality cup of Joe from start to finish. They put a lot of time and effort making sure that the atmosphere of

As Starbucks continues to expand, more profits and more risks are in store. The corporation’s brand and reputation may be put at risk as the quality of the products supplied by third parties is outside of the company’s control (―Starbucks Corporation Fiscal 2009 Annual Report‖, 20). Partnering with farmers and suppliers meant letting go of control over the quality of certain products. In order to retain customers and protect their brand, Starbucks must establish and maintain effective working relationships with reputable farmers and suppliers, which could increase costs.