The Advantages and Disadvantage of Starbucks

Since Starbucks entered the coffee retail business, the company has made many trade-off business decisions. The first major trade-off was made when Howard Schultz wanted to acquire present day Starbucks from three entrepreneurs Baldwin, Siegel and Bowker. Therefore, Schultz prior to the acquisition made the trade-off to open his own coffee bar in 1986 instead of staying at Starbucks as the manager of retail sales and marketing. A bold feat, Schultz was able to replicate success and was offered to buy Starbucks for $4 million. At the time of the acquisition, many investors, including the former Starbucks owners, would not expect that the American consumer would pay a premium for coffee products. Schultz, after calculating the opportunity cost, was convinced that Starbucks would become a large coffee chain not only in the United States but internationally too. Reflecting this approach, Schultz’s trade-off worked. Starbucks, according to our book has revenue exceeding $13 billion and nearly 200,000 employees. The company has also expanded to 40 countries with 17,000 stores (Hill et al., 2015).

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 has created a competitive advantage with their product quality by setting themselves apart from their competitors. “The Company has stayed with the upper-scale of the coffee market, competing on comfort rather than convenience, which is the case with its closest competitors, McDonald’s and Dunkin Donuts” (Mourdoukoutas, Panos). Consumers believe they are receiving a better product and experience when they purchase from a Starbucks as opposed to another large food service company that may sell coffee.

Customers yearn for top notch coffee and pay willing high prices compared to others. Coffee drinkers, are not only paying for convenience, but know it is good coffee. Restaurants favor one of two business models: the standard retail business model or the franchise model. Starbucks is a standard model chain, which means it does not franchise out. The bulk of its profit come from locations the company owns. Sometimes this business model can hinder expanding. Starbucks beat the odds of this by going to high populated areas with lots of traffic. Meanwhile globalization is playing a role in how companies can

To ensure brand richness, Starbucks bring the best ingredients and quality control, they also assure that all the employees are constantly involved and be aware of its mission and vision.

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 not only sell coffee in their top notch coffee houses but also distribute it. Starbucks has a reputation of providing their customers with the best coffee bean available and in order to get such a high grade bean they help the coffee bean plantation owners to improve their business to provide a better quality coffee. Starbucks and coffee are an American staple.

Starbucks customers are diverse, well educated, young business people looking for a quick and easy way to grab coffee on their way to work. Starbucks values a strong relationship with their customers so they are

Starbucks is currently the industry leader in specialty coffee. They purchased more high quality coffee beans than anyone else in the world and keep in good standings with the producers to ensure they get the best beans. Getting the best beans is only the first part, Starbucks also has a “closed

Starbucks employs the product, promotion, place and price method of marketing. They place great emphasis on their products and have established themselves

Starbucks is one of the most recognized brands in the world. They believe that the uncompromising quality of their product and their focus on making personal connections with their customers helps them differentiate themselves from other brands.

Starbucks is an American coffee company which is widely known as the representative of coffee and other beverage distributors globally. Alongside many other coffee companies all around the world, Starbucks has been able to distinguish itself from others by application of many customer friendly factors such as quality, taste and as well as good customer experience. These factors have successfully been able to raise it recognition in many parts of the world as well as popularizing darkly roasted coffee.

The Starbucks Company is a purveyor of gourmet coffee that was founded in 1971 at Seattle’s Pike Place Market (Retrieved March 10, 2015, from http://www.starbucks.com/about-us/company-information). At that time Starbucks was a single storefront that offered premium, fresh roasted whole bean coffees. Since opening that single store Starbucks has grown to an international presence with branding that is recognizable worldwide. In addition, Starbucks has increased their product line beyond hot and cold coffee beverages to include hot and cold teas, packaged whole bean and ground coffees, high quality, fresh foods and coffee making equipment and supplies. Starbucks operates a total of 19,767 company operated and licensed stores and operates in 62 countries. In addition to the Starbucks’ brand the company also owns and operates other well-known brands such as Teavana and Seattle’s Best Coffee. (Retrieved March 10, 2015, from http://news.starbucks.com/uploads/documents/Starbucks_Fiscal_2013_Annual_Report_-_FINAL.PDF)

Starbucks control the supply chain so that they can make sure the coffee is the highest quality. And the starbucks locations are always in downtown area or high-population area which brings customers more convenience. The decoration style is trying to make customers feel as comfortable as they can. Although starbucks is not unique enough as other private coffee shop, starbucks is the highest coverage coffee shop with high quality coffee and comfortable areas. It is a coffee shop brand that people can easily find and walk in.

In terms of competition and the forces, which could limit the success of Starbucks it is important they stay ahead or even with other companies concerning innovative products. Many more micro companies are coming up with new products with a similar quality and a lower price/cost. It is important that Starbucks continues to search for innovative products to continually satisfy their customers. At the same time “rivalry” amongst Starbucks and smaller providers of coffee will continue to increase as the demand for coffee continues. The buyers bargaining power is significant as they can determine the cost, type of product, quantity and ultimately