Category: Starbucks

Entry Barriers of Starbucks in India

Starbucks is the main forte espresso retailer on the planet. The organization needs to convey the best espresso items and offers handmade drinks. Starbucks isn’t just about drinking espresso yet about an extraordinary encounter. The organization pursues a universal extension system through vital unions. Starbucks needs to keep contenders from having a head begin, expand upon the developing enthusiasm for Western brands and exploit the higher espresso utilization rates. After building a fruitful brand in Japan and China Starbucks needs to enter the Indian market. Starbucks found a neighbourhood provider for their espresso, Tata. Be that as it may, the organization has not yet discovered an accomplice to enter the Indian market.

In this report, we will give a blueprint of a portion of the difficulties Starbucks may confront when entering the Indian market. We will give an investigation of the outer condition in India. Later we will portray the qualities and shortcomings of the organization and the chances and dangers the Indian market offers. We will consolidate inward and outer examination to propose four potential procedures to focus on the Indian market.

PEST(LE) Analysis

The PESTLE examination is an instrument which gives knowledge into the outside condition in which associations work or will work and helps the technique plan of those associations. Since Starbucks is wanting to enter the market in India, the PESTLE examination will assess positive and ominous conditions in the nation’s political, financial, social, innovative, lawful and natural setting.

• Political factors

The political components affect the guideline and controlling of business and the spending intensity of shoppers and different organizations. We should consider those components as significant and even essential relying upon the political arrangement of the nation we are working in and the political state of the nation all in all.

The Indian economy has been liable to the arrangement of positive monetary changes since 1991 which had made a superior workplace for outside organizations and has made it feasible for remote speculators to work in the nation all the more effectively. The changes have additionally brought about higher development rates, lower expansion and increment and simplicity of remote speculations. The present Indian government – United Parties Alliance (UPA), headed by the Indian National Congress party (INC) has indicated more resilience towards outside nations when all is said in done and towards FDI in various financial divisions. These changes have set India in an ideal position on the planet financial stage.

Mulling over the world of politics in India overall, the organization intricacies and the administrative FDI controls and guidelines, it is more secure for Starbucks to enter India through a joint endeavour or a key coalition with an Indian organization that can give a cushion from the conceivable political strain. Moreover, Starbucks can confront some resistance from the current contenders (CCD, Barista, and so forth.) using political impact and deferring strategies. Even though circumstances like these are conceivable to occur, the shot is low considering that the Indian market is enormous enough to hold more organizations and the pioneers in the Indian gourmet espresso industry won’t be unequivocally influenced by Starbucks’ entrance.

• Economic factors

In financial terms, India is encountering developing GDP with levels arriving at 7.4% for 2009 and 8.3% for 2010. The GDP per capita has additionally been assessed to have stable development over the most recent couple of years, coming to $ 3â 500 out of 2010. [1] Additionally, the large amounts of expansion, which crested at 11% toward the start of 2010, arrived at stable one-digit figures before the year’s over because of India’s national bank premium levels change.

The ideal condition for Starbuck’s entrance is given by the huge urban communities in the nation. Mumbai is viewed as the nation’s money related focus and obliges numerous remote budgetary associations just as numerous IT organizations. Delhi and Bangalore, other significant urban areas with a populace totalling just underneath 20 million, are focuses of call-focus centre points and universal IT organizations.

Aside from that, The Indian Government is as yet taking a shot at improving horrible factors, for example, far-reaching neediness, deficient physical and social foundation, organization, restricted non-horticultural business openings, administrative and outside direct venture controls, lacking access to quality fundamental and advanced education, and the irregularity of rustic to-urban relocation. Besides, the administration endeavours to decrease its financial deficiency in 2011 to 5.5% of GDP from 6.8% in earlier years.

• Socio-Cultural elements

As one of the principal attributes of the organization, the moral methodology towards the interior and outer partners is just about a trademark for Starbucks. The organization is generally known for its accommodating methodology towards sourcing its espresso and related items and towards changing over its representatives to talented baristas and committed brand envoys. Notwithstanding that, the organization assumes a significant job as an economical pioneer available and passes on every through its steady business system.

This situating as the feasible business player is a significant feature for the Indian market and its numerous socio-social measurements. It gives Starbucks position concerning a significant social pattern that with the developing business pace of youngsters, their discretionary cashflow additionally develops and they become a truly productive objective group of spectators. As per sources, the number of inhabitants in the nation comprises of over 60% of the individuals between the age of 15-59. Likewise, with the westernization of the social patterns, an ever-increasing number of youngsters trust western brands and lean toward outside products. They additionally go for similar patterns and attempt to impersonate a similar status of restrictiveness youngsters in the US and Europe search for. This spots Starbucks at an extremely powerful position, where it has a decent chance and numerous conceivable outcomes to catch fast clients. The main issue is that they won’t be the first available with strength espresso offering and their generally initiative position could unequivocally be undermined and just supported by their image picture.

Next, to that, the way of life and food of India represent an intriguing test. The blend of the customary tea-drinking populace together with the contrasts among Muslim and Hindu and the developing distinction among different areas of the nation, making it very to partition and the spot is solid shopper gatherings. All things considered, the most evident detachment concerning espresso utilization is noticeable in the city versus country regions partition with the urban populace having unmistakably higher inclinations for espresso. In any case, the quantities of espresso buyers stay low with moderate negative development figure somewhere in the range of 2000 and 2005 – 6.7% and 2.0% separately.

• Technological factors

In 2004 Starbucks went into a vital partnership with Tata Coffee LTD., the biggest espresso maker in India. With consenting to this arrangement, Starbucks at long last found the accomplice it required. An organization which met every one of the conditions and norms pursued by Starbucks. Goodbye sealed its quality standard by winning a gold decoration for the best Robusta espresso on the planet.

The factor of value is significant in the Indian market as great espresso beans are effectively accessible. With this vital association with the Tata Group, the organization, Starbucks, may probably prevail with aggressive valuing in India.

Another significant innovative factor is the absence of a foundation in India. In any case, having such an accomplished nearby accomplice, Starbucks does not confront any issues with this issue.

• Legal factors

The lawful condition in India probably won’t be seen as positive as the one in the USA or Europe according to worldwide business. Debasement in the nation is high and it raises concerns.

Starbucks has officially encountered a few downsides from the lawful condition in India. The instance of ‘Captivated’ is being referenced for instance of frail copyright and trademark assurance in the nation.

Even though the business openings stay appealing since India has indicated critical improvement in changes towards global business and speculation. Because of these enhancements, the nation’s has pulled in FDI’s. Lower levies and lower hindrances to section have made the Indian market incredibly encouraging and willing to change.

• Environmental factors

The Starbucks espresso is for an enormous part reliant on the nature of espresso beans. A few natural fractures must consider for developing espresso. Adequate water and trees and differing widely varied vegetation are significant for developing espresso beans.

The fast development of the populace and monetary improvement will prompt a few natural issues like uncontrolled development, urbanization, industrialization, strengthening of the horticulture and decimation of the woodland. The developing populace hurts common assets and the earth. Along these lines, India must develop reasonably.

Outer elements

• Opportunities

Following India’s financial advancement in 1990 the nation encounters quickened development which arrives at a normal of 7% in the years after 1997. This, close by the expanding levels of GDP, brings about developing discretionary cashflow of purchasers. In a nation where social patterns assume a significant job in a general public developing pay and ways of life makes interest for western products.

As of late, there has been a developing number of retail chains. They suit the high-pay and the upper-centre fragment, which happens to be the objective gathering of Starbucks. Putting bistros in such places is a major open door for accomplishing high benefits and is something that Starbucks has involvement with.

Starbucks Effect: the Meaning and Aspects

Starbucks effect may sound like a medical term or acronym, concomitant with caffeinated beverage or drink addiction, but rummaging through the pages of any medical journal, wouldn’t dig up anything. Rather, it is used as a parlance to delineate the phenomenon which benefits the homeowners dwelling near a Starbucks outlet. For the time being, let’s hold onto the horses running into our minds, before we make it to the depth of this subject, and ponder over the journey of transformation of a petite coffee bean store into a massively successful worldwide and globally eminent brand.

Starbucks – A must visit for any coffee connoisseur

Established in 1971 by three consociates; Jerry Baldwin, Zev Siegl, and Gordon Bowker, inspired to vend high-quality coffee, this Seattle-based coffeehouse chain has modified the way the world drinks coffee outside home and work. Initially, the store just dealt in coffee beans and coffee equipment but subsequently, it embarked on the voyage to quench the thirst of “coffee-yearning” people of Seattle by brewing superior grade “caffeine- infusion” libation. However, with the visionary Howard Schultz coming into picture, the local coffee chain augmented into a $84 billion fraternity. Upon his entry, the business expanded by introduction of aromatic and luscious espressos, mochas and lattes. What he believed in was, not to woo employees away from competitors, but unleash the enthusiasm that is already within employees, just dormant. Complete with intrinsic motivations and positive emotions, Schultz stimulated his employees to toil as to achieve greater returns and make the brand ubiquitous. Starbucks generally preferred a strategy of premium prices, using a menu and store layout somewhat modified for local tastes. It has expanded its tea, bakery, and grab-and-go offerings with acquisitions of Teavana, La Boulange, and Evolution Fresh, respectively. Currently, it offers a range of exceptional products encompassing more than 30 blends and premium coffee, Frappuccino, refreshers smoothies, pastries, sandwiches, yogurt parfaits fruit cups and what not to savour. Carrying out operations in over 76 countries, this premier and iconic roaster, marketer and coffee retailer has inaugurated nearly 28000 stores, becoming a very well-known and “heavenly” like- site to hang out for the coffee lovers.

Deducing the Starbucks Effect

Essentially, “Starbucks effect” is a conceived term used to portray the outcome of opening of a store, which leads to magnification of the property’s worth in the native area. A new Starbucks gives a sense to developers that the neighbourhood is on the rise. Coupled with this literary evidence, the statistics given by the real estate research group ‘Zillow’, which has conducted ample research on the Starbucks Effect, points a compelling view that the value of property within a quarter-mile of a Starbucks rise faster than those that aren’t. More specifically, the data shows that between 1997 and 2014, the holdings in close proximity to the coffee shop appreciated in value by 96%, compared to 65% for all U.S. residential properties. The greatest impact was witnessed in Boston, where nearby home values went up by a magnificent value of 171% in the same time period. It was 45% points over and above all the houses in the city as the outlet is usually a harbinger of good times for a locality. While residences near a Starbucks sell, on average, for $137,000, those that are distant from it are exchanged for just $102,000. It has also been corroborated that over 17 years, the Starbucks correlation was reflected by a 96% appreciation. Meanwhile, property far and away from it did not surpass 65% mark.

Living near the coffee shop entails gains for householders, whether he/she is a coffee drinker or not. Surveyors found a 0.5% increment in housing prices within a year of inauguration of Starbucks in a locality. Basically, it means that for a home estimated at $1.3 million—the median in both New York and San Francisco—a single new upscale coffee shop would raise the figure by $6,500.

But digging a little deeper to get more insight, it seems to be kind of a chicken and egg situation. It’s not actually like Starbucks can take full credit for changing a community. Simply stated, an increased number of commuters stopping for coffee and food and that the stops may have a discernible impact on the distances people drive, does not give rise to this phenomenon.

Then, how does the retail giant stay ahead of the curve? The soaring apartment prices are not due to the actual Starbucks opening but may be more of an indicator of affluent customers in the zone. As a matter of fact, the coffee chain is exceptional in finding locations that are up-and-coming. It has fine-tuned its ability to flourish and get ahead of the neighbourhood curve by successfully identifying the demographic, income, and economic metrics and trends that drive residents towards copious sales of elevated-priced coffee. When it comes to choosing retail locations, the Starbucks has a crew of 20 analytics experts around the world poring over maps and geographic information systems data, assessing factors like an area’s traffic patterns and businesses. The company also empowers dozens of regional teams to reach their own conclusions about location and draft store design and a host of other factors necessary to hold up this concept. In order to maintain its competitive edge and franchise esteem, it is imperative that it continually keeps on finding the next optimal store location and position itself as “first mover” in order to capture and maximize local market share before its competitors can get on the ground. The general perception is if we see a new outlet, or similar premium-priced competitor store pop up in our suburb, rest assured it would be a positive symptom of thriving real estate values. The correlation between increasing property values and Starbucks is termed the “Starbucks Effect”.

The Bottom Line

It is imperative to ascertain whether the Starbucks is the main mechanism driving the greater rise in worth or the added increase in value is part of a larger chain of events—some unrelated to coffee—that contribute to an increase in demand for housing. For this, correlation and causation should not be confused with. Regarding correlation, the credit for this should be given to the Starbucks site selection/real estate department, who did an excellent job in pinpointing neighbourhoods undergoing strong income and population growth, which induced a surge in property values. On the contrary, Starbucks offers umpteen amenity that up-and-coming localities want. The outlets encourages and enables people to spend time just hanging out, either visiting or working, well beyond the time that it takes to consume a cup of coffee or a snack. Consumers, usually teens, are drawn to non-traditional spaces, store’s Wi-Fi facility and comfortable seating. The increase in young adults means an increase in demand for housing. This implies to the causation aspect.

Unsurprisingly, Starbucks sustains its popularity through shrewd and unconventional marketing strategies. In a nutshell, the Seattle-based coffeehouse chain is arguably the most prominent of its kind. It has a phenomenal appeal- the ‘emerald mermaid’ remains beloved by millions, and is deservedly credited, by both its fans and detractors, with revolutionising the modern cafe experience.

The Milestones of Starbucks as an International Corporation

Cost of Production

Coffee and tea are highly dependent on weather conditions because they are both agricultural products. Weather conditions can harm the supplies which would result in a shortage and the prices would increase. Examples of these weather conditions are heavy rain, storms, early frost, and droughts. On the other hand, an unexpected surplus would result with ideal weather which would drive the price of the commodity to decrease. Arabica coffee prices fluctuated a good bit in the last five years and between 2014 and 2015, it showed two record prices. The first prices showed $4.72 per kilogram and the second showed $4.97 per kilogram (“Coffee Arabica Price”, 2017). Arabica coffee is priced at $3.67 per kilogram as of February (“Coffee Arabica Price”, 2017). In the past five years, Robusta coffee also varied, however, unlike the Arabica coffee experiencing peaks, Robusta coffee experienced two noticeable dips. In 2014, the first price was at $1.76 per kilogram and in 2016 the second price was at $1.63 (“Coffee Robusta Price”, 2017). Robusta coffee is currently selling for $2.35 per kilogram (“Coffee Robusta Price”, 2017).

With extremely low yields, experts suggest that the price of Robusta coffee would eventually reach a four and a half year high (Toovey, 2017). Another key ingredient for coffee which is milk is experiencing a change from dairy to alternatives milks. The dairy industry is struggling with falling prices while the alternative milk is growing in sales and in popularity (Shah, 2016). In 2014, alternative milks hit $5.8 billion and by 2019 the milk is expected to almost double the price according to the BBC Research (Shah, 2016). Starbucks carries a variety of milk supply, for example, soy, whole, two-percent milk, nonfat, almond, and coconut (Cullum, 216). The demand for non-dairy milk is the second-highest consumer request stated by the company (Ayoub, 2015). Non-dairy milk usually does cost more than dairy milk. Starbucks will likely experience higher expenses within the growing market, and they will experience their profit margin shrinking as a result.

Unless, Starbucks is planning to rise costing pricing to the customers again like the company did when the price of coffee increased. However, throughout the years, dealing with the price hikes, Starbucks has proven that there doesn’t need to be a price spike in commodities to increase its menu prices. In fact, when Starbucks experienced a two-year low within the coffee prices declining, the company’s product prices stayed the same citing that the decrease would help offset the growing operational expenses, for example, marketing, labor cost, and rent (Gillespie, 2016). Due to high rent, Starbucks closed some of the locations in New York in 2015 (Green, 2015). It is important to note that this decision was not made due to Starbuck’s inability to afford the price increase, but because it wasn’t worth the money since other surrounding locations are just as effective as the locations that were closed (Green, 2015). Rent prices soared 20% in Manhattan, a location where Starbucks obtains nine stores per square mile (Green, 2015). Varying between 5 to 15 percent in 2016, “baristas” received a raise (Isidore, 2016). Coffee beans account for approximately 20 percent of the overall cost within the Starbuck’s industry per analysts (Gillespie, 2016).

The company’s variable cost include milk, syrup, coffee, straws, beverage cups, and heat sleeves (Lonen, 2014). The cost of those items will vary based off production activity. Spending cost will increase to keep up with demand because of the high output activity and while that is happening low activity will decrease spending due to the company’s adjustment to reduce the output. Regardless of the level of output, the fixed costs will remain the same with rent, advertising, and wages.

Overall Market

With their McCafé line, McDonalds and Dunkin Donuts remains Starbuck’s two leading competitors within the premium coffee industry in 2016 (White, 2016). Within the nation’s market, last year statistics showed that Starbucks had control of 40 percent, Dunkin Donuts with 22 percent, and an “other” category with 38 percent (Statista, 2016). It is possible that their market share is within the latter from the assist of the McCafé’s launch back in 2009. When comparing, in 2014 Starbucks and Dunkin Donuts obtained 85 percent which is a 27 percent drop within the two years (Brownell, 2014).

The barriers of entry to get into the coffee market are low, accepting Starbucks’s status level and attempting to become one of their competitors would prove to be difficult which would make the overall barriers of entry high. First, Starbucks obtains massive economies within their scale which results in cutting the cost of coffee and dairy, and non-dairy products. Furthermore, the company obtains a strong-brand name along with a loyal-customer base, who still stops in the stores and make purchases even after the price hikes occur. In the premium coffee market within the U.S. and globally, Starbucks hold the leading contender, however, Starbucks once started out as a single store located in Seattle, Washington before the company took off and became one of the most recognized chains.

Within the premium coffee market, there are a small number of competitors making Starbucks’s market structure oligopoly. Currently, Starbucks only hold two competitors which as stated before is McDonalds and Dunkin Donuts, however, Starbucks may see some other players in the mix soon. Burger King Worldwide Incorporated received Tim Hortons Incorporated in 2014, which is a fast food restaurant that is Canadian-based and known for their donuts and coffee; they plan to expand the locations within the U.S. (Shaw, 2014). When it comes to oligopolies, participants can “set prices, rather than take them” which allows companies to make profit margins higher rather than what a free market would allow (Investopedia, 2017). The product pricing of Starbucks remained the same when coffee beans priced went down, the competitors let their hopes down of luring customers away from the company’s “premium prices”. The “cheating” company could be isolated and put under financial strain if Starbucks would decide to implement another increase to product prices, which according to the trends, its likely to happen (Investopedia, 2017). To compete for a larger market share, Starbucks relies on methods, for example, product differentiation and branding since the company’s appeal is obviously not its prices.

Recommendations

Clearly Starbucks remains the dominant player when it comes to the premium coffee market, however, there is always rooms for improvement within any company. The company’s “Mobile Ordering App” has made Starbucks deal with some dissatisfied customers due to problems related to the app. Starbucks’s sale were negatively affected because when customer would enter the store and it would be crowed and the customer would have to experience a longer than normal wait time which resulted in customers exiting the store immediately (Taylor, 2017). The company must forecast the impact that these ongoing problems may have on the future demand so Starbucks can adjust the schedule of their supply and production to maximize the profits. Ongoing, the company must take advantage of the growing consumption of tea and specialty beverages. In 2016 the tea market reached $14.5 billon and data suggest that in 2024 it should reach $21.3 billion (Gebely, 2017). Considering that it is relevancy to the firm, another recommendation would be to invest interest in the alternative milk market. The scarcity and pricing would have a tremendous impact since the company has the second-highest request for the non-dairy milk.

Over Dunkin Donut, Starbucks is the leader in the market share by 20 percent as of 2016. If the mobile ordering app causes the sale to drop any further than what they already have or a possible boycott, the company could very much so lose market share. However, when it comes time to focus on the growing popularity over the tea (due to recent health trends) and specialty drinks, Starbucks could balance any potential losses that they may run into. Additionally, by Starbucks investing some interest in alternative milks, the company will ensure the availability of commodity in the future.

There is a small consumer response to the company’s price hikes that was revealed by the demand trends and price of elasticity of demand. Starbucks’s total revenue presented a very sturdy come up for the past five years even throughout increasing price several times. This result probably come about due to the fact that the price increases only account for small portions of consumers’ income and purchasing power of the Millennials. The companies that commit social and environmental responsibility obtain purchases from the Millennials because they are conscientious shopper and will be willing to pay more for goods and services from these companies. It is highly important that Starbucks continues their role in making a difference in the world.

Tim Hortons VS Starbucks

Tim Horton is a Canadian fast food restaurant chain, specializing in coffee and donut items. It is Canada’s largest quick service restaurant chain. It is one of the most popular and demanding coffee shop in the modernized era of Canada. It was established by the two partners Tim Hortons and Ron Joyce in May 17, 1964 at Hamilton Ontario After the death of the Tim Horton the other partner Ron Joyce bought the Horton family’s shares for $1 million and took over as sole owner of the existing chain of forty stores. Joyce expanded the chain quickly and aggressively in both geography and product selection with the expansion of Tim Hortons restaurants, there was many major changes observed in the coffee and donut industry due to which some small scale and local coffee shops take their feet back from the industry because the company have clear mission statement and have clear goal of achieving the major position in the industry and want to be king as well as rich in the economy. As with the increase in growth of Tim Hortons restaurants, the owner of the Wendy’s restaurant decides to open a restaurant where both of these brands where operate together so that the companies earn more profit. Having the clear vision in the business contributes a lot in achieving the desire goals as the Tim Hortons have.

Mission Statement

Mission statement is one of the important document in the business which plays very significant role in business. Basically this written statement which briefly explains the company’s goal and philosophies. It also defines “what an organization is, why it exists, its reason for being”. Every company has the strong mission statement which helps the company in performing its functions and directs their efforts in achieving the goals which are set in the statement. Tim hortons also have mission statement which helps it to achieve its desire reputation and position in the competitive market so that they can remain at the top in the food industry. Mission statement of the Tim Hortons is to provide the superior quality of its products and services in order to make its customers happier and to achieve their attraction so that they can never think about any other restaurant. In their statement the overall goal of Tim Hortons is also reflected which is to be a quality leader in everything they do in their restaurant. The main focus of the Tim Hortons is to excel in the food industry and get innovate products and to enhance the existing services which strives the Tim Hortons to be the best through determination and passion. Tim Hortons also have the mission of serving their products to maximum number of people with a short waiting time so that customers get their meals as quick as possible and set that quick service in their mind so that they come to their restaurant net time without any hesitation. Promoting the coordination and team work among the employees is another mission of the Tim Hortons to direct their behavior and efforts towards the company’s goal.

Core Values

Values are defined as the beliefs and ethics of the organizations towards the thing which are surrounding all around. Core values are very important values which dictates the companies the behavior and efforts toward the goal and which tells the company about what is wrong and what is right for the company for present as well as for the future. Core values also help the companies to determine if they are on the right path and fulfilling their goals by creating an unwavering guide. Core values also reflect the decision making strategies of the management and how they interact with stakeholders. . Tim Hortons have many moral values which shows their coordination in the team members and how the mangers and all other employees work together under one roof and in such a manner which automatically highlights the values and culture of the this company. Addition to this tim hortons also have the values know that their Team Members are the heart of their Restaurants. They have great relationships with our Guests and provide them with the incredible service by which their brand is known for and the reason for its existence. Tim Hortons have the culture of rewarding its employs for their efforts in achieving the company’s goal of connecting more customers.

Social ResponsibilityActivities

Social responsibility means performing the task or activities which are valuable for the development of the society. it is an ethical framework and suggests that an entity of an organization that has an obligation to act for the benefit of society at large. As to survive in the competitive and demanding market where the customers have many choices, the companies have to perform the social activities which helps the company in making strong goodwill in the market due to which the reputation goes up among the other competitors. Tim Hortons also perform many social activities which are handless contributors of the success such as starting the Tim Hortons children’s foundation which have there are several programs which are designed in such a way to make the campers more responsible, caring and motivated individuals. Moreover Tim Hortons also contributes in providing the opportunities to the children to participate in local sports event organized by it. Tim Horton also perform a social work of providing the employment opportunities to the job seekers as well as to the farmers who grow coffee specially for them. Tim Hortons also donates its share of profit to the social charities across the Canada and US through the smile cookies.

Environmental Sustainability Activities

Every business uses the resources of the society in order to produce its goods and services which help the company to earn their living. In order to continue the usage of resources, company have to perform some environmental sustainability task so that the company can use the resources easily without any restrictions or obligations in this demanding era there is need to perform more and more sustainable activities which guides the company to use the resources in such a way which benefits the present as well as future generation. Tim Hortons perform many environmental sustainable activities which save the environment from many disastrous problems. Tim Hortons have ecofriendly packing designs, waste reduction at the restaurant and green building designs, and many other activities which are done to protect the environment from harm. It also reduces the 35% of usage of water consumption at the operating office. In order to protect the environment from the waste material. Tim Hortons addressing the waste generated at restaurants through reduction, reuse and recycling initiatives.

STARBUCKS

In Canada, there are many coffee shops were exist who serve the different types of coffee drinks to the people who enjoy the society. starbucks is one of the coffee shop and restaurant who offers the wide variety of coffee to its customers. Starbuck was founded in Seattle, Washington in 1971 by three partners name Jerry Baldwin , Zev Siegl and Gordon Bowke. It is considered as an Americana coffee and coffeehouse corporation who have 28,218 number of branches all over the world. Starbucks is also be choose as the main representative of “second wave coffee”which distimguish its coffee from other coffee venues in US through its taste, quality and customers point of view or experience. Starbucks serves hot and cold drinks, whole- bean coffee. Microground coffee which is omne of the special coffee of te starbucks. It also offers snacks and frappuccino beverages which make it more demanding and popular among the customers because customer always demand wide variety of things so that they can enjoy their meals. Starbucks is not just passionate purveyor of coffee, everything else going in the coffeehouse enhance the reputation and level in the competitive market.

Mission Statement

Every company has one mission statement which identifies company’s vision for the future that what they are doing and what they have to do for securing the future growth in the market. Moreover, mission statement also clarifies the path on which the company has to operate for its survival and serving the society its products and services. it also shows the philosophies used by the company to become unique and quality superior from the other competitors who also serve the same products to the market. Starbucks also have the strong mission statement which governs its policies. Starbucks mission statement is to inspire and nurture the human spirit which means one person, one cup and one neighborhood at a time. This statement shows how the Starbucks operation support the difference from the market. Starbucks also have the vision of always been and will always be about the quality which mean how they are passionate for sourcing the finest coffee beans which are roasted with great care in order to protect the people who grow them. in mission statement Starbucks also put focus on the partners which means employees perform their tasks with passion not with pressure in which they all hold each others to that standard. Addition to this, Starbucks’s vision focuses on leadership in the industry which gives company success in respond to the environment depend upon the effective implementation of this statement.

Core Values

Core values are defined as those values which shows the company’s fundamental beliefs which dictate the behavior of the company and help them in understanding the difference between right and wrong means that whether the company is on right track or not. Core values also reflect the attitude and culture of the company which display the real image of company in front of customers and society. Core values plays very important role in making the ladder of success for the company. Starbucks also have many core values which are implemented in the company in order to make the company reputation and standard. Starbucks have the value of creating a culture of warmth and belonging in which everyone is welcomed with respect and love. Moreover Starbucks also have a value of coordination and belongingness which means all have the feeling of one. Moreover, it also have the value of acting with courage, challenging the status quo and searching the new paths to grow the company and being present , connecting with transparency, dignity all these values together build a set platform for the Starbucks.

Social Responsibility Activities

Social responsible activities means performing some activities which contributes to the development of the society and raise the level of the economy at that place where the society enjoy the higher standard of living as well as the higher quality of life. to achieve their target. The company has to do some of the social activities to remain in demand and in the eyes of the customers. Performing social activities is one of the important responsibilities of the company Starbucks also performing several social activities in order to contribute some efforts towards the betterment of society. Moreover, Starbucks also helps the communities where its stores are located and to the ones where the coffee is grown. Starbucks also implemented the Youth employment program in which it helps the homeless and out of foster care and who have low level of education which make them eligible for earning the cost of education so that they can achieve their education and secure their future. Adding to the social activities done by Starbucks, it also donates $0,05 to $0.15 per transaction to the nonprofit organization in order to help the needy people and serve the society something valuable.

Environmental Sustainability Activities

Every business exist in the market use the various resources of the environment to manufacture its products and fulfill the demand of its customers and keep on using these resources until these are available. And to make long term use of resources, business has to protect these resources by performing the environmental sustainable activities so that the resources were used in efficient manner. Starbucks also uses many resources of the environment and it also performs various tasks to protect the environment from harmful materials. Starbucks started the recycling and waste reduction program in which Starbucks recycle the recycling items by itself. Starbucks also began providing recycling in the front of the house in a number of key markets in Canada and US. In order to save water in the environment, Starbucks installed dishwasher in all the stores so the usage of water might be reduced. Starbucks uses wooden products, recycling floor tiles and paint with lower amount volatile organic chemicals in their stores which directly reflects how the Starbucks save the resources of environment.

Type of Alliance Between Tata Global Beverages and Starbucks

About

This is a join venture between Tata Global Beverages and Starbucks Corporation. Both the companies owns 50% if the companies share. It is know as Tata Starbucks Limited and founded on 19 October 2012. It is operated in India and has 115 stores. Tata Beverages is an Indian tea and coffee plantation company and Asia’s largest coffee plantation company. Starbucks is an American coffee company and coffeehouse chain. It is known as Starbuck A Tata Alliance in India (Tata Starbucks, 2019). The first store was opened in Mumbai on 19 October 2012 and then they started expanding to different cities. This has opened the new market entry opportunity for Starbucks in Indian market and the increasing trend in the beverage market has helped Starbucks to get good number of market share. All coffee that are sold in the Indian outlets are supplied by Tata Coffee (Tata Starbucks, 2019).

Products

There are various products that represents the Indian style offered only in India. Products that are offered in India are Tandoori Paneer Roll, Chocolate Rossomalai Mousse, Malai Chom Chom Tiramisu, Elaichi Mewa Croissant, Chicken Kathi Roll and Murg Tikka Panini (Tata Starbucks, 2019). They have started a tea brand named as Teavana which offeres 18 different varieties of tea. Also, there one tea that is exclusively sold in India is spice majesty blend.

STARBUCKS

About

Starbucks is an American company started in 1971 in Seattle, Washington. They first started as roaster and retailer of whole bean and ground coffee, tea and spices in Seattle’s pike place market. They have over 17,000 locations in 50 countries (Our Company – Starbucks). Starbucks offers variety of coffee and snacks. They have some specialty beverages that they offer seasonally. They also offer pre-packaged cold beverages such as Frappuccino which is the most consumed pre-packaged cold beverage offered by Starbucks. Also, “Starbucks Evenings” locations offer beer, wine and appetizers (Starbucks, 2019).

Products

Starbucks offers varieties of hot and cold beverages. They offer lower calories and sugar free beverages in which they use they use skim milk, they also give option to choose between natural sweeteners and artificial sweeteners or sugar-free syrup flavours (Starbucks, 2019). They sell iced beverages and these are offered in fruit flavours. They have varieties of sizes: Demi (89 ml) smallest size, Short (240 ml) smaller of two original sizes, Mini (300 ml) smaller than three original Frappuccino sizes, Tall (350 ml) larger of two original sizes. They have espresso and cappuccino. The sell tea as “Teavana” in variety of flavours. Not only beverages but Starbucks also offer different snacks and breakfast items. Those who are health conscious they offer protein boxes. They have covered almost all the market segments.

Customers

Starbucks target market are the individuals who are willing to pay extra for quality and service of products. They are also targeting more health-conscious customers by offering low calorie beverages. They target students, employees and professionals and both upper and middle class (Starbucks Segmentation, Targeting and Positioning, 2017). Their target market are high income and high spenders, urban-ish and on-the-go, healthy professionals, socially conscious customers, flexible to change (Who is starbucks’ Target Audience, 2019). Starbucks has 52 stores in Africa, 7484 stores in Asia, 1889 stores in Europe, 16309 stores in North America, 57 stores in Australia and New Zealand and 404 stores in South America.

TATA GLOBAL BEVERAGES

About

Tata Global Beverages is an Indian multinational non-alcoholic beverages company (Tata Global Beverages, 2019). It was in 1964 and its headquartered in Kolkata, West Bengal. It is world’s second largest coffee and tea producer and Asia’s largest coffee and tea producer. It has many subsidiaries brands through which they market tea, these subsidiaries are Tata Tea, Tetley, Good Earth Teas and Eight O’clock. Tata tea is the biggest selling brand in India and Tetley is biggest selling brand in Canada, US and UK. They produce 7 crore kgs of tea in India and they own 54 tea gardens and 10 tea blending and packaging factories (Tata Global Beverages, 2019). They have product and brand presence in more than 50 countries. They also have joint venture with PepsiCo called NourishCo which produces non-carbonated drinks.

Products

The products of Tata Global Beverages are Tetley, Tata Tea, Vitax, Joekels, Good Earth, Jemča and Teapigs (Products, 2019).

TYPE OF ALLIANCE

I think it is a strongly coupled strategic alliance because they have signed a contract for a joint venture and also in their contract they have agreed to promote agronomy practices which includes training for local farmers, technicians and agronomists to improve coffee-growing and milling skills (Tata Coffee & Starbucks sign MoU for Strategic Alliance in India, 2011). In their JV they have decided to pay equal license fee to Starbucks and Tata Global Beverages for using their brands and services (Tatas to get brand royalty from JV with Starbucks, 2012). Starbucks will use one of Tata’s roasting facility in Coorg as a part of agreement and then they will buy other roasting facilities together. Starbucks will buy coffee beans from Tata Coffee estates. This will open the door for Starbucks to enter into the Indian market. In their Sourcing and roasting agreement Tata Coffee will roast and export coffee to Starbucks Coffee Company and Tata Starbucks (Starbucks Stories, 2019). Tata has gained a lot of experience in the retail business which has been helpful for Tata to get more knowledge about the Indian market (Starbucks comes to India, Selling Coffee and Atmosphere, n.d.). One of the major benefits that the Tata is bringing on the table is the number of outlets owned by them and some can be used for the Starbucks (Starbucks comes to India, Selling Coffee and Atmosphere, n.d.).

ADVANTAGES AND DISADVANTAGES

Advantages

• Starbucks will get roasted coffee from Tata Coffee.
• They don’t have to buy the place for the outlets because it will be provided by Tata as they have different stores in many places and will provide space in their hotels.
• Easy entry into the Indian market.
• It benefited Tata Coffee to gain access to US market by exporting the coffee beans to Starbucks in the US.
• Starbucks gained access to Indian airline industry as they provide coffee on Vistara airline one of India’s fastest growing airline industry.
• Tata will get the brand value of Starbucks.
• Tata will get more in-depth knowledge about different beverages of Starbucks.
• Starbucks will get knowledge about the Indian market trend from Tata Coffee.

Disadvantages

• Increased competition in the Indian market.
• Difference in trend and cultural aspects.
• The Indian market is mostly tea-based culture.
• More number of lower income group people cannot afford high priced coffee of Starbucks.
• No frequent visits of Indians in café.

References

1. Our Company – Starbucks. (n.d.). Retrieved from Starbucks: https://www.starbucks.ca/about-us/company-information
2. Products. (2019, March 23). Retrieved from Tata Global Beverages: http://www.tataglobalbeverages.com/brands/tea/products
3. Starbucks. (2019, March 21). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Starbucks
4. Starbucks comes to India, Selling Coffee and Atmosphere. (n.d.). Retrieved from Knowledge@Wharton: http://knowledge.wharton.upenn.edu/article/starbucks-comes-to-india-selling-coffee-and-atmosphere/
5. Starbucks Segmentation, Targeting and Positioning. (2017, April 15). Retrieved from Research Methodology: https://research-methodology.net/starbucks-segmentation-targeting-and-positioning-targeting-premium-customers-with-quality-products-and-service/
6. Starbucks Stories. (2019, March 23). Retrieved from Starbucks: https://stories.starbucks.com/stories/2012/tata-global-beverages-and-starbucks-form-joint-venture-to-open-starbucks-ca/
7. Starbucks-Tata Global join venture: Can Starbucks master the india blend? (2012, February 05). Retrieved from The Economic Times: https://economictimes.indiatimes.com/industry/cons-products/food/starbucks-tata-global-joint-venture-can-starbucks-master-the-india-blend/articleshow/11760739.cms?from=mdr
8. Tata Coffee & Starbucks sign MoU for Strategic Alliance in India. (2011, January 13). Retrieved from Business Wire: https://www.businesswire.com/news/home/20110113005670/en/Tata-Coffee-Starbucks-Sign-MoU-Strategic-Alliance
9. Tata Global Beverages. (2019, 18 March). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Tata_Global_Beverages
10. Tata Global Beverages gains after Starbucks expands partnership. (2016, June 28). Retrieved from Business Standard: https://www.business-standard.com/article/news-cm/tata-global-beverages-gains-after-starbucks-expands-partnership-116062800389_1.html
11. Tata Starbucks. (2019, February 17). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Tata_Starbucks
12. Tata Starbucks Ltd A Strategic Analysis. (2012, November 10). Retrieved from LinkedIn SlideShare: https://www.slideshare.net/ranganathpandit/tata-starbucks-ltd-a-strategic-analysis-15117792
13. Tatas to get brand royalty from JV with Starbucks. (2012, February 12). Retrieved from Business Standards: https://www.business-standard.com/article/companies/tatas-to-get-brand-royalty-from-jv-with-starbucks-112020200080_1.html
14. Who is starbucks’ Target Audience. (2019, February 05). Retrieved from Small Business – Chron.com: https://smallbusiness.chron.com/starbucks-target-audience-10553.html

Innovation and Technology Strategies within the Starbucks Coffee

Levitt (1967), stated that to maintain the business in the strong competitive businesses’ world companies must adore innovation, not only as a desired however because it is a necessity for the company keep the existence and its growth in the marketplace.

In Starbucks coffee chain case developed by ‘Blue Ocean Strategy’s theory of innovation, using as an example one of its demanded successes. Companies can create the strategy of blue ocean in two diverse ways, in some cases companies can build a new businesses that they don’t have rival competing for the same place, generating a new demand that they are chasing to be different from the businesses which already exist, or some businesses can create the blue ocean from the red ocean which they change the restrictions of industry that already existed in the marketplace ( Mauborgne and Chan Kim, 2004).

The company has invested in its coffee stores to established the its store as the third place for customer between their home and job, investing continuously in its premium version of the brand calling Starbucks Reserve Roastery where the brand combined a selection of rare coffees and retail innovation to give to the customer an entirely coffee experience, where the company offers in its premium version stores, main bar, roasting area, experience bar, renowned bakery and coffee library. It makes Starbucks coffee chain a great example, it changed the boundary of the traditional coffee industry and became very success company.

Starbucks coffee chain has focused on technology as its main strategy to engaged consumers and give to them a fully company’s experience, the company new business model Starbucks Reserve Roastery the premium version in Shanghai for instance the company has combined offline and online digital experience, the company has stimulated consumers use their mobile phone in store in order to discover more about the company’s history and what the premium version of the company has to offer to the customers, through an interactive experience augmented reality (AR) and multi-sensory experience, customers have to use their mobile phones in store, thus, the augmented reality experience is a floor-to-ceiling, wall-to-wall visual image of Starbucks and its coffee process.

Therefore, the company has focused on personalized digital relationship, that is going to give to the organisation a new profits opportunity. The company launched the new model of its loyalty programme in order to influence more customers and place a customised order and pay, the mobile order and pay app is now available to non-Starbucks rewards members, teamed up with Visa Card, integrated directly into Starbucks loyalty programme, it empower purchasers earn stars in and out of Starbuck’s store, worldwide Visa Card is accepted as payment.

References

1. Mauborgne, R. and Chan Kim, W. (2004) ‘Best in brief: Blue ocean strategy’, WARC Market leader, 27 Available at: https://www.warc.com/content/article/mkt/best_in_brief_blue_ocean_strategy/79644#about-the-author [ Accessed 06 March 2019].
2. Levitt, T. (1967) ‘Innovative imitation’, Business Source Complete, 4(2), pp. 35-45

The Features of Starbucks in South Africa

Upon closer investigation of the Starbucks dilemma in South Africa, it can be concluded that there are a multitude of reasons as to why they are not as successful as they would like to be. The following is a brief summarization of the current situation for Starbucks in South Africa. Taste Holdings, the local license holder for Starbucks in South Africa, has withdrawn from their dealings with Starbucks and their other food companies, and they have sold their 13 Starbucks locations for 7 million rand or about $464,000. They have retreated to their dealings with luxury jewelry and watches in order to focus on what they perceive as healthier and more secure markets. The reason for this shift is because their investment did not pay off. Originally, Taste Holdings wanted to open roughly 200 locations throughout South Africa, but they only managed to open 13. These alone have not been sufficient enough to provide a return on the initial investment. Even if more were opened, they would still be in the negative. Each location was coming out positive when taking annual earnings into consideration, but that was not enough to provide returns on all investments. Having to pay a portion of their earnings back to Starbucks was also a big financial hit to Taste Holdings, and it proved to be a massive source of stress for them. To summarize, the three primary reasons for Starbuck’s current situation in South Africa would be ridiculously high startup costs for each location, percentages to be paid back to Starbucks causing a financial burden for Taste Holdings, and unreasonable prices that were bested by local competitors at each location. These are only three of the more central issues with Starbucks in South Africa, and there was definitely a collection of smaller, contributing issues that were not addressed within a reasonable period of time.

Environment

Starbucks locations in South Africa cost a ridiculous amount to open and operate. According to an article on Business Insider South Africa, the investment would be about 3 to 5 million Rand on average; whereas, their one of their closest competitors, Vida e Café, builds a location for about 1.5 million Rand according to their director of business, Hitesh Patel. The difference is far too extreme, and they currently have no means to bridge that gap. In addition to the startup costs for each individual location, the menus for Starbucks are far too expensive when compared to their competitors. The following is a chart sourced from an article on Business Insider, South Africa: Sources: Seattle Coffee Co. (Online), Vida e Caffe (Sandton) & Starbucks (Melrose Arch)/Table: Business Insider SA.

Premium brands like Starbucks are expected to have a hard time conducting business in South Africa because of the inherent economic situation there. There is a massive difference in economic classes because South Africa has one of the smallest middle classes which sits at roughly twenty percent. The middle class would be Starbuck’s primary target market when entering this region, but the size is an obvious issue. Taste Holdings and Starbucks must have had some confidence in their strategy when initiating their dealings, but their efforts were in vain and full of flaws on multiple levels. The most obvious level would be the economic inequality issue in South Africa. For years, the country has suffered from an ever growing lower class and an overbearing, elite minority. Long have the people of South Africa been starved under the foot of an oppressive economic elite. The disparity here can be seen by viewing aerial photos of the South African living conditions. You can see luxurious mansions surrounded by greenery and lavish amenities, but you can also see vast fields of dingy housing swamped in the staining sludge of poverty and stagnation. According to a CNN article by Katy Scott, the richest ten percent hold seventy-one percent of the wealth, and the poorest sixty percent hold seven percent of the wealth in South Africa. The latter group is obviously not the target market for Starbucks or Taste Holdings, but they cannot be ignored. Their existence speaks to the rigidity of the barrier that exists when considering pricing. Starbucks and Taste Holdings want a target customer that can afford the elevated prices that come with the brand of Starbucks. They were able to find these consumers, but there are simply not enough people in this target market to reap a substantial profit large enough to pay back initial investment costs. It also isn’t possible to break even with this target market. By pursuing this route, Taste Holdings and Starbucks also, unknowingly, pursued stagnation. Realistically, Starbucks can target middle to upper class individuals, and they did so. The truth of the matter is that Starbucks may have to adjust their target market in order to survive in South Africa. The chaos and rigidity of South Africa also apparent in their government and political history. As stated before, the nation has long been influenced by a ruling elite that aims to selfishly pursue their own prosperity over the wellbeing of the overall population. Similarly, to the economic situation, the political situation has isolated large segments of the population. In the previously referenced CNN article by Katy Scott, the following information is stated:

“More than half of South Africa’s population (55.5%) live in poverty (making less than $83 a month. 25.2% live below the poverty line. 64.2% of those living in poverty are black, and 41.3% are mixed-race. Six percent are Indian or Asian, and one percent is white. In South Africa, the majority of the elite, the top five percent, is made up of the white population. This is according to Murray Leibbrandt, economics professor at the University of Cape Town.” (Scott 2)

This cultural segmentation puts Starbucks in a box. More revered brands tend to be tossed into the elite category and reserved for only the middle to upper classes. Lower income groups would not only be unable to afford the brand, but they would also resent Starbucks for catering to the elite. Of course, the previous statement relates back to pricing issues. These pricing issues have always been present for coffee in South Africa.

Cultural Influences

South Africa, like all of Africa, is known for its production of coffee. It is said that Africa is the birthplace of coffee, and the continent has had a long reputation for quality coffee. South Africa is a unique case in regards to Africa’s coffee culture. Coffee is not indigenous to South Africa, so South Africans have long preferred indigenous alternatives such as tea. This is why tea is much more affordable compared to coffee in South Africa. The country is still known for producing its fair share of coffee, but it is still “playing second fiddle” to tea. South Africa also has a history of accepting low quality coffee imports. Coffee Magazine’s Dylan Cumming states the following:

“South Africa did not sign into the International Coffee Agreement (ICA) due to their political position in the nineteen-sixties to eighties. This agreement aimed to keep coffee prices high and stable in the market. Because of South Africa’s lack of involvement in this agreement, they became a dumping ground for low quality coffee for years.” (Cummings 1)

Coffee has been historically consumed by South Africans through inexpensive coffee powders, mixtures of tea and coffee, and, more recently, local coffee houses that provide steeper prices but remain active due to proper price management. Examples of local coffee houses would Seattle Coffee Co. and Vida e Café. These companies stand as competition for Starbucks when it decides to try its hand at the South African market a second time.

Research Methods

When examining the coffee market in South Africa and Starbuck’s involvement in it, secondary research is being performed on my part. I am able to access a vast network of researchers online that have already committed themselves to fleshing out my selected research topic. In taking advantage of existing information and research to supplement my own research, I am acting as a secondary researcher. If I were “on the ground” in South Africa on a mission to compile coffee consumption data and report my findings, I would be performing primary research. If I were compiling new information and reporting it in a way that hasn’t been done before, I would also be acting as a primary researcher. In conducting secondary research, there are both advantages and disadvantages. Firstly, I am able to pick and choose which information I think is most appropriate for my research. I can better compare and contrast researchers and their studies in order to formulate a more unique and all-encompassing report. The disadvantages involved in secondary research is that I, as an individual researcher, have much less knowledge on any specific subject. In outsourcing my data, I am forced to take on a more general understanding of the subject because I am collecting bits and pieces of information from each researcher that I use as a reference. In drawing from secondary sources to create a multi-faceted research report, I am unable to deeply dive into any singular facet. To conclude, a secondary researcher like myself must opt for a more general understanding of a topic in order to make a report more well-rounded and less “laser focused” on any particular bit of information.

Entry Mode Selection

When entering South African, Starbucks chose to grant a License to Taste Holdings to open 200 locations. By choosing Licensing as their international market entry method, Starbucks was able to avoid some unnecessary risk. Starbucks knew that South Africa was a risky market, and they were naturally hesitant to rush into things themselves. By giving Taste Holdings a license to open locations, Starbucks could attempt to make a big move into South Africa without incurring full responsibility. Starbucks may have also had some degree of confidence in Taste Holding’s ability to understand and cater to the native market. Taste Holdings was supposed to be the entity that would work to understand the place and promotion aspects of the marketing mix. Ideally, Taste Holdings would have been able to work with Starbucks to better address the product and price aspects of the marketing mix. Together, these entities made the effort to go forth with these roles. Unfortunately, things did not work out as they had hoped. While Starbucks suffered an embarrassing defeat in South Africa, Taste Holdings stands as the primary failure in the expansion effort because they failed to collaborate with Starbucks and adjust to the market constraints in South Africa.

Market Segmentation and Target Market

When Starbucks and Taste Holdings first decided on an STP strategy, they were didn’t exactly miss the mark entirely. Starbucks provides premium coffee products, and the only market segmentation that can afford this is the lower middle class and above. With coffee still being a niche product in South Africa, it would still require a guiding hand to nurture its development into the mainstream. If anything, new products could have been introduced to bridge the gap between coffee and tea. This could lead to more regular customers. To attain consistent customers that can support each location and spread the normalization of coffee consumption, Starbucks would require the targeting of the middle class and above market, and Starbucks set out to do just that in South Africa. While this market could afford to regularly purchase Starbucks products, they would still be likely to choose cheaper alternatives that retain a similar standard of quality. If Starbucks and Taste Holdings could have found a way to lower product costs to a competitive level, the results would be at least satisfactory. The task of lowering prices of individual products would fall to those involved in supply and production logistics. If great minds worked together, a creative solution could be achieved. A more important problem with cost would be the cost of opening a new location. As stated above, each location was costing between three to seven rand while a competitor was opening locations for 1.5 Rand per location. The difference is painful to see and must be eliminated if investments are ever to be returned. The thirteen locations that had been opened by Taste Holdings were generating a profit, but the profit gained was not enough to make up for the absurd startup costs. In order to avoid making this mistake again, Starbucks is going to need a lower startup costs going forward. A Starbucks in South Africa is going to have to look very different from a Starbucks anywhere else in the world because it must evolve to its environment. Failure to lower startup costs is failure to evolve. Starbucks knew that South Africa was going to be a difficult environment to succeed in, but they never prepared for an evolution of their storefronts. To state yet again, most of the blame lies on Taste Holdings for their failure to manage the license appropriately. If Taste had realized what changes needed to occur, they may have been able to communicate with Starbucks in order to make the changes happen, but they failed in this respect. Once storefronts evolve to lower startup costs, Starbucks will be able to generate profitable business with their original target market. Lower cost locations will also appeal to the lower classes of South Africa, and there will likely be less resentment towards the brand. Lower pricing overall also contributes to mass brand appeal in the region because of the economic disparity that exists there.

Conclusion

When assessing what happened with Starbucks in South Africa, we can see that they did not adequately assess the market that they aimed to enter. When deciding to grant a license Taste Holdings to operate their business in the country, they failed to catch that Taste would be likely to retreat from the food industry entirely. Taste proved to be a bad manager of the Starbucks brand, and the local ecosystem was not properly adapted to. Of course, Starbucks knew very well of the coffee culture present in South Africa. They knew of the history of coffee and how often the population consumed it. An ideal target market was selected, the middle class. Unfortunately, this segment was very small and unable to provide the revenue that would have returned the investment that Taste had made. Ultimately, Taste was forced to leave the market entirely because of their failure to deal with economic complications. Everything narrowed down to costs. Startup costs for new locations exceeded what the competition payed by nearly double, and individual product prices were bested by every local competitor. Regardless of economic disparity between classes of South Africans or the history of culture in the region, costs adjustments could have remedied the situation. It seems that Starbucks was unyielding in their commitment to branding; they didn’t think to adjust ingredients, storefronts, suppliers, or products. Starbucks is a premium brand in South Africa, and the usual company image would help to enforce this premium status. Nonetheless, maintaining rigidity of brand is not worth suffering losses. If some adjustments had been made, Starbucks could have lowered costs and maintained operations in South Africa.

Starbucks and Elements of Leadership

Introduction

In this research assignment two learning outcomes will be discussed and they will be written as LO1 and LO2, in LO1 I will be differentiating between what a leader and manager is. And in LO2 I will give some examples of how they apply their roles to Starbucks. The research assignment will start off by introducing Starbucks and explaining a little about their history including founders, and what inspired them to create Starbucks. Then I will explain their Mission, Vision, and Goals all with examples of how Starbucks achieves them.

Next the paper will move into learning outcomes. The first learning outcome will be the differences between a leader and manager. It will be titled as leader’s vs Managers, in that section what a leader and manager is will be defined and what some of their roles and functions in an organization. Lastly will be about how they differ and in which way they are similar.

Thirdly the paper will shift to the analysis were learning outcome two will be achieved. I will first give a small introduction to Starbucks leader Kevin Johnson background, secondly will identify his leadership style and explain what it is, after that I will give some examples of how he applies it in Starbucks; also in this section some theories will be introduced and analyzed.

Lastly will come the conclusion, it will be split into two parts the first will be a recap of all that was discussed in the research assignment, the second part will be the recommendations were I will be giving some recommendations to the Starbucks.

Company profile

Starbucks primarily competes in selling retail coffee, it’s a prestigious brand of coffee and snacks. It is considered both a product and a service, because they sell Starbucks ‘coffee’ and products to consumers. they first opened their doors in March 31/1971 with their three coffee enthuses founders Jerry Baldwin, Gordon Boawker, and Zev Siegl. Two teachers and a writer. decided that they would open up a coffee shop in Seattle Washington. Starbucks started off as a place where customers could purchase high quality coffee beans and equipment.

Their main supplier at the time was Dutch immigrant Alfred Peet. He was well known in LA for importing coffee beans from Arabica. Alfred was also their inspiration to create Starbucks according to an article written by a Peter Bondarenko on Britannica.com were he states that “through him the Starbucks founders based their business model on selling high quality coffee beans”. Business was blooming for Starbucks in the late 70s early 80s they were dominating the coffee trade in Seattle. In 1982 Howard Schultz joins Starbucks as a marketing and operations director, around that time co-founder Zev Siegl left the partnership to peruse some other interests he had. In the next three years Howard will continue to work for Jerry Baldwin and Gordon Boawker till 1985 when he comes back from a trip to Italy.

Inspired by what he saw in Italy. he loved the small cafes that sold espressos and cappuccino trip Howard Schultz decided to open up his own coffee shop after resighning from Starbucks, his new coffee shop was called Giornale he sold what espressos, cappuccinos, and teas. A few years later around 1987 Baldwin and Bowker put Starbucks up for sale Seizing the moment ( or opportunity?) Schultz quickly bought it and put his own shop under the Starbucks brand name.

A few years down the road around 2000 -2001 is were Starbucks really picked up momentum. Starbucks stores were opening up in Canada, Australia, Bahrain, Hong Kong, Qatar, Saudi Arabia and the United Arab Emerits. With over 4000 stores around the globe. Starbucks in present day is considered a multinational and global coffee company ranked as the 132 on fortune 500.

Mission, Vision and Goals

• Vision: to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow
• Mission: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. They are achieving their mission through their employees, by having a culture of belonging and inclusion and by doing that it has created a harmony in the employees which in turn achieves their statement “inspire and nurture the human spirit” which intern trickles down to the customers, showing us that Starbucks will take their time in inspiring one person and one neighborhood at a time till they reach their goal.

In 2018 there was an incident that took place in Starbuck Philadelphia, were two African-Americans men were denied access to the restroom, asked to leave and then later on arrested when questioned the employee for the reasons why he was not allowed to use the restroom. On May 30, 2018 Starbuks close over 8000 of their stores throughout the country for a mandatory employee sensitivity training, to reconnect with their mission statement “inspire and nurture the human spirit”.

• Goals: Their goal is to satisfy the coffee enthusiasts. And Starbucks meets their goal by catering to the wants of the customers. They serve great quality beans, a variety of flavored coffee with the change of the seasons for instance in the winter they offer Peppermint Mocha and Chestnut Praline Latte. While in the summer they offer a Cold Foam Cascara cold brew, and for fall their amazing Pumpkin spice Latte. And all the coffee is brewed and spiced to the preferential taste of the customer (hot, cold, or shakes).

Values: With our partners, our coffee and our customers at our core, we live these values:

• Creating a culture of warmth and belonging, where everyone is welcome.
• Acting with courage, challenging the status quo and finding new ways to grow our company and each other.
• Being present, connecting with transparency, dignity and respect.
• Delivering our very best in all we do, holding ourselves accountable for results.

Leaders vs Managers

Intro Leaders and Managers are the individuals that keep a company ,business, or organization (whatever you want to call it). They keep it operating smoothly through team work and dedication, both are very important to a business because leaders cannot keep track of all the empolyees and make sure their needs are meet (like proper on the job training, their salary is always on time). They need someone who can be responsible for all of that, that is were Managers come in the leader delagates the tasks and the managers make sure they are done.

Definition of leader

A good leader is someone who motivates, delegates power to others, infulencess, and inspires others through their vision. Warren Bennis once said that “leadership is the capacity to translate vision into reality”. (BrainyQuote, 2019)

• Role in an organization
• Definition of manager
• A Manager is a person who is responsabel for people and day to day operations of an organization
• Functons in an organization
• Chart for Similarities and diffrences

What is a leader and a Manager? Well it is often said you cannot have one without the other. A Leaders in the simplest terms is a person who inspires and motivates others to do greatness through their actions. Warren Bennis “ the manager has his eye on the bottom line; the leader has his eye on the horizon”.

• Managers are people who get things done with the help of people and other resources. (Rosemary Stewart, 1967 AND 2010 beyond)
• General Managers is responsible for their units performance, and relies on the managers that are in charge of each function
• Functional Managers are responsible for an area of work- either a line manager or staff manager
• Line Managers are in charge of a function that creates value directly by supplying products or services to customers
• Staff Managers are in charge of activities like finance, personnel, purchasing or legal affairs which support the line managers
• Project Managers are responsible for a temporary team created to plan and implement a change, like a new product or system

(BrainyQuote, 2019)

Starbucks: Integrated Marketing Communication

Introduction

Starbucks Corporation, an American company founded in 1971 in Seattle, WA, is a premier roaster, marketer and retailer of specialty coffee around world. Starbucks has about 182,000 employees across 19,767 company operated & licensed stores in 62 countries.

Starbucks was established in 1971 by three local businessmen to sell high quality whole beans coffee. In 1981 when Howard Schultz visited the store, he plans to build a strong company and expand high quality coffee business with the name of Starbucks. Starbucks air is to provide high quality of coffee to its consumer and aim to achieve product innovation, retail expansion and provide service quality for long term.

Starbucks open its first coffee store in Seattle, Washington. In 1990 Starbucks expand its headquarters in Seattle and also build a new roasting plant. In 1990s Starbucks opens 60 retails shops in United Kingdom. At the end of 2000s Starbucks total branches was 3500.

Starbucks in India

TATA Starbucks Private Limited, formerly known as Tata Starbucks Limited, is a 50:50 joint venture company, owned by Tata Consumer Products and Starbucks Corporation, that owns and operates Starbucks outlets in India. The outlets are branded Starbucks ‘A Tata Alliance’. In January 2011, Starbucks Corporation and Tata Coffee announced plans to begin opening Starbucks locations in India.

Different in India

Apart from the usual products offered internationally, Starbucks in India has some Indian-style product offerings such as Tandoori Paneer Roll, Chocolate Rossomalai Mousse, Malai Chom Chom Tiramisu, Elaichi Mewa Croissant, Chicken Kathi Roll and Murg Tikka Panini to suit Indian customers. All espressos sold in Indian outlets are made from Indian roasted coffees supplied by Tata Coffee. Starbucks also sells Himalayan bottled mineral water. Free Wi-Fi is available at all Starbucks stores.

Tata Starbucks launched the Starbucks Delivers program in early 2019. The service offers home delivery from Starbucks outlets through a partnership with Swiggy. The service was first launched in Mumbai, with plans to roll it out to other cities.

As of July 2020, Starbucks operates 174 outlets in 10 cities of India. The latest store came up at Zirakpur Punjab which is also the first drive through store of India.

The role of IMC in Starbucks

The philosophy of marketing is changing and so are the instruments and approaches. It has been interactive; it has been powered by users, and has seen a massive change to social media. What’s now captured the marketers’ attention is Integrated Marketing Communications (IMC). It is a marketing technique that incorporates all of a company’s promotional mix, such as advertisement, social media promotion, sales promotion, direct marketing etc. to communicate and inform about a product or brand.

IMC is used by advertisers to provide an uninterrupted brand experience by incorporating contact across all open media platforms. As part of a effective integrated marketing plan, IMC integrates public relations, advertisement, internet , social media, and so on; as well as numerous other communication components into one single organisation, all transmitting the same message. It is a practical transversal mechanism to execute all kinds of vital tasks for the company such as marketing, operational, financial and production.

Starbucks adopted the integrated and multi-channel marketing strategies idea way in advance of other brands. Starbucks’ power base in IMC is twofold: strong branding and strong appreciation of the customers. Using famous platforms to encourage and connect has been on the cutting edge.

Things that makes Starbucks awesome is branding and creating meaningful content.

• Consistent branding: Starbucks stores are recognisable in appearance and can be recognised from afar. Starbucks stores are present at nearly every airport which gets a strong footfall. Corporations are one of the large-scale target markets that Starbucks caters to. It has branded itself as a luxury coffee shop with good ambience, which also acts as a corporate meeting spot.
• Website content: Starbucks provides its customers with Website content designed to meet their target audience. Customers can go online to check their benefits, locate local stores and be a part of their latest campaign. Videos are used for message delivery and storey telling.
• Integrated Content: Starbucks communicates by email to its registered customers. These messages are well organised, visually focused and provide useful details about Starbucks products. It retains more emphasis on education and awareness than promotion.
• Mobile Experience: One of the strongest tools in their marketing arsenal is the Starbucks app. Upon installing the app, one can use the phone to pay for items, reload funds to a bank, and locate shops. Starbucks leads the way in mobile experience, which makes total sense when considering their product.
• Consumer Engagement: If any brand needs customer engagement lessons, all they have to do is go to Starbucks. Whether providing free coffee to random customers, or giving them presents at festivals, they’ve done everything. Starbucks recently gave their Venti (biggest size) cup coffees for Rs 100 to mark the opening of its 100th store in its relentless effort to engage customers.

The true strength of Starbucks’ effective marketing relations campaign is their specific content, incorporated seamlessly through the multiple platforms.

Role of the Ad agency in Starbucks

Starbucks works with three agencies primarily in India: JWT (for creative and digital), Edelman (PR), and Showtime (for event launches in Mumbai and Delhi). Apart from that, there’s a lot of work going on in house at Starbucks in Seattle (HQ). We have strong knowledge and expertise teams to work in global markets.

Starbucks’ goal in partnership with these ad agencies is to be highly trained professionals, have a wide range of experience and have a strong market perspective.

For Starbucks, Digital is a very relevant and essential tool, as it is a main pillar that we use to connect with our clients. We have tried to do things other than social media contact and Facebook and Twitter that are innovative and imaginative for the new media platforms. They also developed an app to launch our first Delhi sales outlet that customers could share with their friends and family, as well as share their views about Starbucks as a passion for brand and coffee.

Role of the consumer behaviour towards Starbucks

Members of the loyalty have earned a ‘star’ for every visit to a Starbucks location since. In April, Starbucks announced a shift from a visit-based model to a $-spent model, and is now awarding 2 stars for every dollar spent (125 stars per reward). But many Starbucks customers are still dissatisfied with the service ‘s latest setup — Maybe because the new model rewards people who spend more per transaction, instead of rewarding people who visit Starbucks more frequently.

People have taken to social media to express their dissatisfaction with the brand, saying that this move back to Starbucks makes them extremely reluctant. According to Starbuck’s, the old version of the loyalty programme has led to a number of Starbucks clients doing ‘transaction splitting’ If more bonus points are won, each item in the transaction will need to be paid separately, which has contributed to slower transactions and dissatisfaction for other customers.

This latest loyalty programme, Starbucks said, simplifies the process and makes it easier for consumers to do so. If real then it makes sense not to have a ‘reward hack’ for the most loyal clients in order to optimise their rewards. But the distinction may be immaterial to most customers. Starbucks may have caught lightning in a bottle, or they may have done a better job of aligning the rewards with the desired behaviour and adapting them to the optimal effect, and changing the reward package to do so again.

Brands with ambitions similar to Starbucks could see consumer loyalty value improvements by delivering more customer-focused promotions, if they were willing to play the longer game. Consider heading towards rewarding at the time of sale for add-on purchases, ‘Double incentives if you buy a pastry with your coffee!

Role of Source, Message & Channel of Starbucks

The communication strategy of Starbucks is implemented by ads, ads, launch deals, media use, product promotion, social support, public relations, and expenses. These are the secret to getting closer to the customers. These are the basis for pulling customers to make a final decision on buying the product. The contact process model is ‘the mechanism of knowledge exchange and transfer to exchanging information and conveying. The model of the communication mechanism consists of encoded, distributed, decoded, and eventually received. There is background noise in the advancement of the communication process model that can undermine the message and likely discourage the objectives together.

The sender of the message, in this case Starbucks is looking through the feedback loop for a response from the target. The process of encoding involves translating an idea into a figurative image, using words, pictures and facts. Starbucks is a brand-oriented company. Hence this communication process is helpful. The next step of the model for the communication process is a transition. Using various avenues for Starbucks to convey the message would include social media, the internet, emails and mobile apps. Starbucks has substantial virtual communication. To reach the maximum number of targeted recipients and a minimum number of non-target receivers; companies must select the most effective avenue that best fulfils their purpose. The third and fourth step outlined in the communication process model is decoding and the receiver. The decoding process occurs when the receiver interprets the significance of the message symbols as encoded by the sender. The intended receiver is the person who is the communication ‘s target. One challenge for any message sender is how the receiver interprets the message.

Promotional Budget

Starbucks is strongly committed to a positive image in the community according to the Corporate Social Responsibility. Through cultural and environmental events Starbucks has transparent relationships with consumers and the media.

Their stores are friendly to the community, with a focus on recycling and waste reduction. They build goodwill among communities they operate in Strong Social Responsibility Initiatives undertaken

Starbucks spent 245.7 million US dollars on advertising in its fiscal year ending in September 2019. In the coffee chain, which spent nearly 15 million dollars more on promoting its products and services, there is a decline in global advertising investments compared to the previous year. On a global scale, the Starbucks brand was worth 32.42 billion U.S. dollars in 2018.

Starbucks Creative strategies

Starbucks embrace various types of strategy to build their branding in the market. Starbucks has numerous capabilities that likes market leadership, and its outlets, as customers mean their locations, which means that it is the place where customers can relax from work or home and manage their supply chain. According to Porter (1998) there are three types of basic strategies a company can use to establish itself like cost leadership, differentiation itself from the others and focus on the market. Cost leadership has the strategy of develop a low-cost product but it has a high quality and also reduces operational cost. Differentiation means a strategy which is unique and self-created strategy.

Starbucks’ first outside American store was joint venture with a local company Sazaby Inc. to start its business in Tokyo in 1996. The pace of international expansion significantly increased after Starbucks established the business. Starbucks expanded its business in the UK in 1998 with more than 60 busy town hall locations and opened stores in Taiwan, New Zealand, Malaysia and Taiwan the same year.

Starbucks opened their first store in China (Beijing), South Korea, Lebanon and Kuwait in 1999, and seven markets in Hong Kong, Shanghai, Qatar, Saudi Arabia, Dubai, Australia and Bahrain in the next year. Due to the position of its coffee shops, Starbucks is using the approach which is real estate management approach. Starbucks prohibited smoking in order to try to keep the coffee taste safe in the shops, and asked staff to refresh from drying perfumes. Prepared foods were kept sealed, so that customers would smell coffee rather than other foods. Starbucks is a community-oriented business that launches new strategies in various regions of the USA, such as commuter mugs and T-shirts, in line with the culture of each city. (like peach shape coffee mugs for Atlanta State, Paul Revere picture for Boston State and the Statue of Liberty for New York city).

The Features Of Strategic Management Of Starbucks

Executive Summary

The aim of this paper is to discuss about the Strategic Management of Starbucks and to know about the internal and external factors of the company. It further discussed about the SWOT Analysis and recommended some important terms that can be implemented by the company. It is then concluded that that brand name is one of the major strengths, whereas, premium pricing act as a major weakness for the company.

Introduction

Strategy Management is a way of management that is followed in an organisation to reach towards a goal and objective. It also includes to analyse the internal environment, the competitive environment, evaluate strategies and many more. (Stewart, 2020) This paper will focus mainly on the internal and external factors, the PEST framework also about SWOT analysis of Starbucks. This will further elaborate on identifying the threats and opportunities of the organization.

Hence, this paper will discuss on the Strategy Management that is followed by Starbucks and also it will also suggest about some future modification that they can add on to the organisation.

Discussion

An overview of the Organisation- Starbucks is a global chain of roastery reserves and coffeehouse, the headquarter of Starbucks is in Seattle, Washington. Starbucks café is famous in almost every part of the world and it therefore unlocked its doors to Australia on 2000 and opened the first store in Sydney CBD.

External Analysis-

Posters 5 Forces: – (Geereddy, 2020)

• Supplier Power: It is the control amount that a vendor of goods or services can apply on the buyers. It is connected by the capacity of vendors to boost their prices, reduce their quality, or restrict the amount of goods they will sell, but the Bargaining Power of Suppliers of Starbucks is low to medium. Since, Starbucks directly source cocoa from the farmers it removes the need of a mediator which support both Starbucks and farmer to be profitable in the trade. This helps Starbucks to bring down the bargaining power of the supplier.
• Competitive Revelry: It analyses the number and power of your competitors. Where rivalry gets extreme then companies draws customers with price cuts and huge-impact marketing crusade. The force of competitive rivalry of Starbucks is medium to high. Since, competition for market participation is high and there exist a monopolistic competition in the industry. As Starbucks has the highest market share followed Dunkin and McCafé and the premium quality product which Starbucks provides have some advantage over the competitors.
• Buyer Bargaining Power: It refers to the stress that customers can apply on the companies to make them provide better client service, better quality products and lower prices. Buyers Bargaining Power is one of the strengths that frames the competitive structure of a business. The Buyers Bargaining Power in case of Starbucks is medium to low. Though, single customers do not have enough influence but they are quality conscious and ready to pay premium price for quality products. Based on these factors the bargaining power of customers is low.
• Threat of Substitution: It refers to the probability of the buyers finding an alternative way of finding a new substitute. The Threat of Substitution in case of Starbucks is medium to high. Some substitutes that provide threat to Starbucks are: pubs, restaurants and home-made products which add up to big threats to Starbuck.
• Threat for New Entrance: The position of the marker gets affected by the capability of others to enter the market. The Threat for New Entrance in case of Starbucks is medium. As Starbucks have a good brand image and affective pricing strategies, it is difficult for a new brand to have a competitive advantage over Starbucks but still there is holds a threat with aggressive pricing.

PEST Framework

Political Factors: The primary political factor refers to suppling the raw materials. This has gathered a lot of focus from politicians over the countries. Starbucks also needs to follow the rules and regulations of the countries from which they purchase their raw materials. Some other factors to consider are: employment policy and tax laws.

Economic Factors: The continuous global economic crisis is the main factor that effected Starbucks economically. Because of the recession the customers are convinced to transfer to low-cost alternatives. It also has to deal with increase in labour and additional expenses. Some other factors are: domestic currency exchange rates, tax level, domestic economic situation in various markets.

Socio-Cultural Factors: As already mentioned, Starbucks might give up the quality to provide cheaper products. The other factors that lead to social factors are: consumer choice, level of education among the public in domestic market, change in values within the population, change in the way of living of the population, change in working arrangements.

Technological factors: Since, at the present-day internet plays a huge role, Starbucks started to provide free wireless internet in their joints, which attracts more customers. Starbucks also facilitated cashless payments like mobile and card payments. Some other technological factors are: agricultural growth, arrival of new and innovative technologies, development in biotechnology.

Internal Analysis

The first positive factor of Starbucks is, that among all the coffee retail brands it holds the top spot in coffee retail world. Since, it has a strong financial performing capacity due to which holds a strong place in the coffee making world.

The value of the company is more then 4 billion dollar which gives it a competitive edge over the competitors. Since, it one of the largest coffee houses in the globe, the intangible assets of Starbucks symbolise the brand name and superior quality with an affordable rate it is always remembered among the customers.

Other positive factor of Starbucks is that since, it is the biggest coffee house in the globe and so its large size and volume, it can provide flexible rates that is affordable by all level of consumers like the premium along with the middle-tire. This company is also known for pioneering human resource management in the industry and the skill associated with people makes the difference between success and failure. Starbucks also creates a positive environment and provide all sorts of benefits which helps both the employees and the customers to feel delightful when they ae around.

One of the negative factors of Starbucks is, that it does not have any diversification among the services that they are providing and strongly depends on coffee beans which bring down the profitability of the brand. This fluctuates the price of coffee beans and therefore it should modify and bring some variety in the product.

Due to the non-flexibility in the price range the working consumers prefer McDonald over Starbucks for coffee. Starbucks must revamp their product line-up to compete with their competitors like McDonald and Burger King which is rapidly growing due to quick grab and bite breakfasts and other meal options.

SWOT Analysis

[bookmark: _Toc59352463]Strength: The main strength of this organisation is the strong brand image that it carries and have a large global supply chain and it also made diversification through subsidiaries. The company carries loyal customers throughout the world which adds consistency to this coffee house. It also provides flexibility in the price range.

]Weakness: In this competitive market one of the main weakness that Starbucks carries is the high price point which makes it difficult for many customers to afford it. The products of this company can be easily copied which is the major drawback for the company and most of the products are very generic in nature.

Opportunities: There are many opportunities that this company can use for their advantage like expanding their business in developing markets which will help them to improve their long-term stability. There is also an opportunity of tie-ups and making alliances with different firms which will boost their overall growth in the market.

Threats: Like every other company Starbucks also faces some threats which limits them from growing and expanding their business. This threat involves local coffee sellers who sales their product at low cost and gives a tough competition to Starbucks and also there are many local coffee houses which is a major threat to Starbucks due to price advantage.

From the above discussion it can be understood that like any other company Starbucks also have some strength and weakness which includes political threat that brings obstacles for importing raw materials from other countries. Due to the global economic crisis situation Starbucks financial stability gets effected. One of the strengths is that it provides free wireless internet to the consumers which makes them more popular. The SWOT Analysis highlights that brand name is one of the major strengths, whereas, premium pricing act as a major weakness for the company.

Conclusion

From the above discussion it can be concluded that as any other company Starbucks have many strengths and also suffers from many weaknesses. The brand name is one of Starbucks biggest strength and the kind of services that they provide is remarkable that is the reason of Starbucks being one of the globally famous coffee houses. One of the major drawbacks is that the price rate is much higher that brings a threat to the company as the local vendors provides the same product within a cheaper price.

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