Category: Starbucks

Introduction

Starbucks was established in 1971 by three local businessmen to sell high quality whole beans coffee. Starbucks opens its first coffee store in Seattle, Washington. In 1990 Starbucks grow its base camp in Seattle and furthermore construct another broiling plant. In 1990s Starbucks opens 60 retails shops in United Kingdom. Toward the finish of 2000s Starbucks all out branches was 3500. Coffee is one of the quickly developing industry in this world because of its business methodology. Expansion of Starbucks around the world is still in the beginning times and Starbucks has an open door for future development. Starbucks principle objective was to dispatch itself as the most famous and regarded brand on the planet.

The organization fundamental goal was to the extension of its branches everywhere throughout the world, to expand its retail business, grow new methods, item and present new appropriation directs so as to accomplish its objectives. With various assortments of espresso and organic juices, Starbucks is consistently the principal alternative that the client picks when he/she frantically needs coffee. Be that as it may, now and then clients are likewise exhausted of going to Starbucks as they are not demonstrating a lot of enthusiasm for changing things as per the desires of clients. Hence, in order to fulfill the needs of the clients, starbucks must start thinking out of the box and follow a new innovative business approach (“Starbucks Marketing”, 2016).

Growth opportunities

Starbucks is effective when it actualized the launch of fresh juice in United States. Once Starbucks has begun serving fresh juice it was running successfully in United States since it has enough assets, framework to dispatch new items in the market. It required some investment for Starbucks to arrive at this new items for clients. Another part that Starbucks organization must consider and use Information Technology assets to get everything in one place and guarantee smooth progression of change and execution of espresso, tea and new natural product juices. For web based marketing, Starbucks put away part of cash for online advancements and commercials to arrive at clients. The organization arranged for free trial of the items to such huge numbers of individuals in all the supermarkets. This activity results numerous individuals to purchase this item and this arrangement is suggested by numerous clients. This can bring about numerous proposal of the organization to the individuals and they can alter the re-discharge the item if necessary. They run web based life notices and web based outdoors this can arrive at numerous clients, so they can put orders as indicated by their enthusiasm for espresso and juices. Not only is Starbucks concentrating on expanding its footprint, but also changing its store mix.

It is significant for the organization to consider that individuals don’t favor fresh juice in winter, so the organization ought to set up its own marked tea for winter. For this organization should spread their examples in all the stores and advancements utilizing online life and get clients audit and dispatch their marked tea and this speculation may cost high for the organization however the profits will be high. Instead of opening more dine-in restaurants, the coffee giant is concentrating on drive-thrus in the outer edges of urban and suburban areas (“Starbucks growth strategy”, 2016).

Tailored Menu based on Customer’s Interests

The eating habits of the customers are evolving. Individuals resemble to eat alongside some espresso. These interests can be known just on the off chance that we connect with the clients. There will be numerous customers consistently to the stores. The assessment of the clients can be gathered with the assistance of an online study where they can give data of whether they are happy with the administration or not. Most of the customers are anticipate having the choice of breakfast with a cup of coffee at Starbucks.

Starbucks essentially consists of wide assortment of espressos, can put together the feedback from clients about the progressions that are required to the menu with the assistance of web based survey. Utilizing IT, Starbucks can really make an online connection and give a customized platform where ideas for new items can be given by customers. When the surveys are given, a group can utilize IT to gather the most wished focuses and the progressions can be made to menu. Many other food companies like Dunkin Donuts and Krispy Kreme follow this method and get useful feedback from customers, which has helped them progress in their business. Starbucks wants to get coffee drinkers to eat more food at its stores (Garnick, 2017).

Increased Efficiency of distribution channel

Distribution channel is the core of any business. We do know venture from an espresso bean to a cup is muddled. To make it simpler flexibly chains are required. At first, as there is only one store, the significance of circulation channel isn’t required at Starbucks. Be that as it may, presently the stores are being extended and there is have to send the fixings to the stores on schedule. This expanded part of costs for Starbucks and the deals dropped. Let us consider a scenario when Starbucks didn’t know that its supply chain was meeting the company’s preset objective. One piece of information that things were not exactly right: the organization’s operational expenses were rising despite the fact that deals were cooling. Between October 2007 and October 2008, for instance, distribution chain costs in the United States rose from US $750 million to more than US $825 million, yet deals for U.S. stores that had been open for in any event one year dropped by 10 percent during that equivalent period.

Utilizing IT, to defeat the issues of supply chain, they can really make an arrangement where the conveyance channel can be streamlined, the expenses can be decreased lastly upgrade the offices. This assists with decreasing the weight of costs on the organization and builds the deals. Furthermore, an authority group can be designated to keep an eye on the supply chain choices (Cooke, 2010).

Conclusion

Starbucks is a global organization with recognition all around the world. Starbucks uses a simple yet effective method, “connecting links between treating employees with dignity and respect and producing good product and services.” That was the main considerations that separate Starbucks from others and bring the fruitful to Starbucks. Starbucks expansive its business with the assistance of entrenched techniques of it situated itself in the market. Be that as it may, each item has an actual existence cycle and that value declines with time. The same applies for starbucks as time passes, so this is the ideal time for them to move their market and arrange their systems to increase their customer base and business.

References

1. Cooke, J. (2010). From bean to cup: How Starbuck’s transformed its supply chain. Supply chain quarterly. https://www.supplychainquarterly.com/articles/438-from-bean-to-cup-how-starbucks-transformed-its-supply-chain
2. Garnick, A. (2017). Starbucks aims to double Food Business. Puget Sound Business Journal. https://www.bizjournals.com/seattle/news/2017/03/22/starbucks-aims-to-double-food-business-by-2021.html
3. Let’s look at Starbuck’s Growth Strategy. (2016). Trefis Team. https://www.forbes.com/sites/greatspeculations/2016/09/19/lets-look-at-starbucks-growth-strategy/#45530c753d71
4. The History and Introduction to Starbucks Coffee Marketing. (2016). https://www.ukessays.com/essays/marketing/the-history-and-introduction-to-starbucks-coffee-marketing-essay.php

Introduction

Starbucks corporation is an American multinational chain of coffee shops that started in Seattle, Washington on the 31st of March in 1971.

It was founded by Zev Siegl, Gordon Bowker and Jerry Baldwin who were three university friends that really liked coffee. They were inspired by the novel “Moby Dick” and by the sea; that’s where the logo of Starbucks came from. It represents a siren that calls people to grab a cup of coffee and the green color represents freshness and growth. In this report I will give a brief summary about Starbucks coffee’s CEO and his leading style. Also, I will discuss Starbucks coffee’s organizational culture, social responsibility, the company’s global strategies and operations.

BODY

Kevin Johnson is an American businessman and a software engineer. He first worked at IBM during late 1980’s, then worked in global technical support at Microsoft. He also worked as a chief executive of Jupiter Networks from September 2008 to January 2014. He joined Starbucks in September 2009 as a board member. He was appointed chief operating officer for two years. Since 2017, Kevin Johnson is the CEO of Starbucks.

He has a big role in the growth of Starbucks; he implemented many changes including mobile ordering and pickup. He also made a global distribution deal with Nestle in the US and China. Due to a terrible incident with two black men in Philadelphia Starbucks, Kevin made anti-bias trainings for management and new hires mandatory. Moreover, the CEO opened centers and research labs to test new products and equipment ideas.

He was named one of Seattle’s most influential people of 2018 In Seattle magazine for partnering Starbucks and Mary’s place and supporting homeless families. Kevin Johnson prioritizes employees by encouraging them to become part of the company’s growth. He also started an internal program to help employees start their own projects. His open-minded approach encouraged professionals to be innovative and collaborative.

Starbucks has a very recognizable organizational culture through its values, customs, traditions and behavior in the organization’s context. The employees work as partners in a warm and friendly ambiance; they also interact with customers. Starbucks includes several organizational culture dimensions. The first one is to pay attention to details, employees work with precision and pay attention to details. The second one is people orientation; managers make decisions by taking into consideration their effect on people and the third dimension is team orientation because all the work is in teams and not individuals.

Starbucks cares about making a positive social or environmental impact. Their social responsibility is based on three points: community, ethical resourcing and the environment.

They help providing education, work opportunities and making difference in peoples’ lives. Moreover, they give training opportunities for youth and have a very big military commitment. They hired 25,000 veterans and military spouses in 2018. To be as environmentally friendly as possible, Starbucks is employing the dark green approach and is committed to recycling and conserving water and energy. This has a very good impact on the company.

Starbucks is operating in 76 countries in more than 24,000 stores all over the globe; in Africa there are shops in Egypt, South Africa, Morocco and Tunisia. In Europe, in the United Kingdom, Turkey, Germany, France, Spain, Poland, Ireland, Switzerland, Netherlands and other countries. Also in Asia, in China, Japan, South Korea, Thailand and other countries. They opened their first international store in Tokyo in 1996. Starbucks coffee’s global attitude is very centralized beneath its CEO but all the company’s international activities are operated by a subsidiary named Starbucks Coffee International Inc. This subsidiary develops all businesses outside the United Sates. This shows that Starbucks is taking a polycentric approach to staffing.

Starbucks is using the concentration strategy as a main growth strategy for the company. Its main growth strategy is based on increasing the number of stores, not just dine-in restaurants but also drive-thrus in the outer edges of urban and suburban areas. Also, through licensing for merchandise and franchising in some countries such as Dominican Republic. But that’s not the only growth strategy that Starbucks uses. It concentrates on expanding its global reach by entering more countries especially in the middle east and Africa. Moreover, Starbucks Coffee uses product development as a secondary growth strategy by creating new products to gain more revenues.

The SWOT analysis is a strategic management tool that assesses the strengths, the weaknesses, opportunities and the threats related to the business and its internal and external environment. The SWOT analysis of Starbucks considers the strengths and weaknesses inherent in operations in the coffee, the coffeehouse and related business. It also considers the opportunities and the threats related to the competitive landscape.

Starbucks coffee’s strengths are its strong brand image because the company has a growing population of loyal customers which adds to the stability of the coffeehouse of the business. Also it has an extensive global supply chain because Starbucks coffee’s suppliers are carefully selected based on the quality of coffee beans. Moreover, its moderate diversification through subsidiaries which minimizes the effect of market and industry risks. Starbucks coffee’s weaknesses are its high price points, because it limits the company’s market share especially in areas with lower incomes. Also, its generalized standards for most products because it limits the flexibility of the coffee and the coffeehouse chain business. The third weakness is the imitability of its products.

Starbucks coffee’s opportunities are expansion in developing markets because it increases the revenues. Also, business diversification which helps improve the company’s long-term stability. Starbucks coffee’s threats are competition involving low-cost coffee sellers because there are other coffee shops that serve similar products with lower prices. Also, the imitation of the products. Last but not least, the independence of coffeehouse movements.

CONCLUSION

In conclusion, the background of Starbucks Corporation reveals that it has a strong leadership position in the market, a suitable work environment, innovation commitment and organizational financial sustainability. Starbucks continues to accelerate its international presence, and as a result it continues to be one of the top leaders in the coffee industry and customer oriented organization.

Starbucks

Starbucks Corporation is an American multinational chain of coffee houses and roastery reserves headquartered in Seattle, Washington. As the world’s largest coffeehouse chain, Starbucks is seen to be the main representation of the United States’ second wave of coffee culture. Since the 2000s, third wave coffee makers have targeted quality-minded coffee drinkers with hand-made coffee based on lighter roasts, while Starbucks nowadays uses automatic espresso machines for efficiency. As of early 2020, the company operates over 30,000 locations worldwide in more than 70 countries. Starbucks locations serve hot and cold drinks, whole-bean coffee, microground instant coffee known as VIA, espresso, caffe latte, full- and loose-leaf teas including Teavana tea products, Evolution Fresh juices, Frappuccino beverages, La Boulange pastries, and snacks including items such as chips and crackers; some offerings (including their annual fall launch of the Pumpkin Spice Latte) are seasonal or specific to the locality of the store.

Since, the foundation of the starbucks company it has gained a lot fame around the world and opened its branches almost in every edge of the world. Officially, company was found in 1971. Company also opened its branch in China also.

Since their entry into China in 1999, they have been focused on developing a company that is committed to sharing the Starbucks experience with Chinese consumers, “one cup, one person and one neighborhood at a time” while passing on classic coffee culture. They care about their partners, so that they can provide customers with a Starbucks experience that exceeds their expectations; and about the community, so that they can all work together to contribute to others.

Currently Starbucks has opened more than 4,300 stores in 180 cities in mainland China, employing over 58,000 partners. Their unique scale allows them to practice their promises every day through every single one of Starbucks stores.

The company currently opened six flagship stores in China which pay tribute to love of coffee. These stores are located in Beijing Kerry Center, Beijing Tai Koo Li, Chengdu Tai Koo Li, Shanghai Disney Town, Shenzhen MIXC World and Suzhou Center.

Statistics

Starbucks’ unique digital platforms, including the Starbucks Mobile App and My Starbucks Rewards helps the staff connect with their customers outside of the stores. Starbucks has always been committed to creating emotional connections between the staff and customers through continuous innovation. In December 2015, Starbucks launched their official Tmall flagship store to combine its unique store experience with an online “fourth space”, which was the first “Internet+Coffee” platform for Starbucks. In December 2016, Starbucks announced a strategic partnership with Tencent, on China’s top mobile social application – WeChat – to introduce a social gifting experience to encourage an emotional connection with others in today’s digital age.

Today, Starbucks announced it will invest approximately $130 million (USD) in China to open a state-of-the-art roasting facility in 2022 as part of its new Coffee Innovation Park (CIP). As Starbucks largest manufacturing investment outside of the U.S. and its first in Asia, the CIP will incorporate a roasting plant, warehouse and distribution center, creating highly-skilled jobs and new career opportunities that will further drive smart and sustainable coffee manufacturing in China. The plant will serve as a key component of the Company’s global roasting network. The bold infrastructure investment further deepens Starbucks multi-decade commitment to strengthen the specialty coffee industry in China, where it aims to have 6,000 stores by 2022.

Building on Starbucks sustainability announcement in January, the CIP will incorporate advancements in sustainable manufacturing, smart supply chain innovation, and technology to support the aspiration to deliver the most energy- and water-efficient roasting operations for Starbucks in the world, while minimizing waste. The new roasting plant facility will be designed with the intent to apply for U.S. Green Building Council LEED Platinum certification, as well as China’s Three Star Green Building standards.

From farm to cup, Starbucks has helped shape the specialty coffee industry in China through continued investment in training and infrastructure, including the opening of the Starbucks Yunnan Farmer Support Center in 2012 to provide open-source agronomy resources to coffee farmers throughout the region. The new CIP, wholly-owned and operated by Starbucks, will source coffees from China and around the world directly from origin for processing, roasting, packaging and distribution, for the first time in China. Construction of the CIP will begin later this year in the city of Kunshan, an hour from Shanghai.

With the CIP set to handle Starbucks largest roasting capacity outside the U.S., the investment highlights the Company’s ambition to further globalize its roasting network and reinforces Starbucks strategic focus on the U.S. and China as its two lead growth markets. Currently, Starbucks operates six other roasting facilities — one in Amsterdam to support European markets, and five in the U.S. The warehouse, roasting and distribution capabilities of the CIP will lay a strong foundation for continued business growth and development in China.

Starbucks vision extends far beyond roasting. Once in operation, the CIP will integrate green coffee bean warehouse management and processing, with plans to co-locate a highly-automated and ‘intelligent’ distribution center that will become the heart of Starbucks distribution network in China. The facility also will serve as a training ground for coffee roasters and key roles across Starbucks coffee supply chain in China.

As of May 2020, Starbucks has around 31,256 locations spanning 79 countries and territories on six continents:

• Luckin Coffee reached 2000 by January 2019, and expected to reach 4500 by the end of the year, beating Starbucks which is expected to have 4,121 stores. This company is current opponent of Starbucks
• Luckin Coffee’s rapid expansion is turning into a nightmare scenario for Starbucks for a number of reasons. One of them is that Luckin has begun to steal the buzz from Starbucks by opening up stores in high profile places like the Forbidden City —where Starbucks was famously evicted a decade ago.

Then there’s the prospect of Luckin Coffee challenging Starbucks for monopolistic behavior, according to Statista. And that could end up costing Starbucks a great deal of money and time, as has been the case with other American companies.

Meanwhile, there’s Luckin’s business model, which focuses on smaller stores, technology, and speedy delivery, which appeal to the younger generations.And there’s more: price competition—the worst nightmare of every business. Luckin Coffee products sell 20% below those of those starbucks.

That’s expected to put pressure on Starbucks’ market shares, sales growth and profit margins, especially as the Chinese economy slows down.

But equity analyst, John Zolidis isn’t concerned about Starbucks competition in China. “We spoke to the company about this within the last two weeks and also touched on the expansion of Luckin coffee which is trying to go from zero locations to 4,000+ in just a few years,” says Zolidis. “Based on our exchange with the company, we believe that China guidance is very reasonable and even offers the potential for upside due to company initiatives including delivery. Further, we would argue that coffee (even premium priced coffee) is not economically sensitive in the sense that a $1000 Iphone might be.”

Still, winning the minds and the wallets of Chinese consumers won’t be easy. China is a diverse rather than a homogeneous consumer market, which consists of three segments:

• The highly globalized segment, in which Chinese consumers display similar preferences and tastes with consumers in highly developed countries. This segment extends over three eastern regions: The Pearl River Delta, which includes Hong Kong, Guangzhou and Shenzhen; the Yangtze River Delta, which includes Shanghai and nearby cities; and the Beijing-Tianjin region.
• The highly localized segment, in which consumers maintain their local preferences and tastes. This segment may be found in the most remote rural areas of central and western China.
• The semi-global market segment, in which consumers display a mix of global and local preferences. This segment is a collection of “mega-cities” like Fuzhou, Zibo, Qingdao, Shantou, Dalian and Huizhou.

So far, Starbucks has expanded into the easy target, the highly globalized segment, which requires little localization of the products sold in its home market.But it will be extremely difficult to reach the other two segments, without substantial changes to its business model.And that will further undermine the company’s scalability, revenue growth and profitability.

Reference list

1. https://www.forbes.com/sites/panosmourdoukoutas/2019/01/21/starbucks-worst-nightmare-in-china-is-coming-true/#7738b8a517ec
2. https://en.wikipedia.org/wiki/Starbucks
3. https://stories.starbucks.com/press/2020/starbucks-coffee-innovation-park-in-china-extends-global-roasting-network/

The estimating technique of Starbucks has gotten dynamic in the ongoing years as it endeavoured to modify its valuing to meet changes in the expense of crude materials just as movements in the buying intensity of the market during the beginning and movement of the monetary crisis. The dynamism of the evaluating procedure of Starbucks rose out of the adjustment in context over its pricing. In a meeting with Troy Alstead, the official VP, boss regulatory official and CFO of Starbucks, he communicated the thorough and constant endeavours made the organization to coordinate its estimating configuration dependent on the investigation of client explore.

Components considered in the investigation are land area, expenses and edges, and item size inclinations of clients or client gatherings. This implied value developments upwards or downwards however the advantage to clients is a higher priority than the value shifts. In the succeeding years, Starbucks would probably proceed with dynamic estimating by thinking about monetary and advertising perspectives.

The financial parts of the valuing of Starbucks incorporate information costs and different expenses moved to the purchaser. Changes in these variables influence the valuing methodology of Starbucks. The expense of Starbucks espresso is because of the nature of the espresso beans fermented for clients. The ease of work in espresso ranches prompted the reasonable exchange development. This prompted long haul direct buy understandings among Starbucks and its wellspring of crude espresso beans. The advantage for espresso ranchers is pay security in the drawn-out advantage for Starbucks is the steady nature of espresso beans provided by espresso manors. This converted into greater expense for espresso as information.

The vacillation in the cost of dairy items likewise influences the cost of Starbucks. The organization has expanded its cost in any event multiple times since 1990 and one of the common purposes behind the ascent in cost is the expansion in the expense of dairy items. Nonetheless, the decreases in dairy item cost turned into a help to Starbucks since these momentary decreases in dairy item cost, not at all like cost increments, are not prone to influence the cost of Starbucks items.

Oil cost unpredictability likewise influences the estimating of Starbucks in view of increments in transportation cost of crude materials to Starbucks and its shops and vitality cost remembered for the working expense of the organization. Starbucks likewise decides its cost through different expenses moved to clients, for example, publicizing costs. The nature of experience and brand esteem likewise structure some portion of the cost of Starbucks. These make its cost generally higher when contrasted with contenders, for example, McDonalds and Dunkin Doughnuts just as neighbourhood bistros.

Starbucks’ estimating methodology is painstakingly determined and dependent on a blend of the objective market, utilizing an excellent way to deal with marking. The solid brand character drives deals, despite having more extravagant items. Furthermore, Starbucks’ advancement procedure additionally drives mindfulness and deals around extraordinary occasions and occasions.

Menu at Starbucks- The menu at Starbucks is profoundly specific and centered. The menu things are applicable to the evaluating system, on the grounds that the valuing procedure shows how the organization can value high while additionally accomplishing ideal edge. The menu is actually the equivalent at each and every store, and the absence of factors implies that Starbucks can source item in mass to drive down the expenses.

Starbucks additionally offers a decent choice of choices, without overpowering the client. For instance, food choices are a small amount of the contributions at numerous different shops and they are pre-made and prepared to warm. The organization loses on that unique touch that you may see at a neighbourhood bistro, yet Starbucks eateries are very effective.

Starbucks is an American coffee brand, chain and company that began its journey in 1971 to provide people with the best coffee and coffee experience. It opened its first location near Pike Place Market in downtown Seattle, Washington and now operates over thirty thousand companies worldwide. From the beginning, the company has been set up to ethically source and roast the best quality coffee in the world. Throughout the years, the coffee company has managed to build a strong brand for themselves, by putting in an enormous amount of efforts in establishing a strong organizational culture. Organizational culture is known as an organization’s beliefs, rituals, language, assumptions, values, and ways of interactions that are used to make their organization more unique. This essay will analyze the Starbucks Company organizational culture and will discuss how it has been established in the company, leaders, workers and communities. This essay will also discuss how their organizational culture reflects in their industry and this essay will advise those who are seeking to become a member of this company on how one should behave in it.

Starbucks organizational culture starts with its values, the company has four values that help make their coffee experience different from other competitive companies. The first value focuses on creating a cultural environment in which everyone feels that they belong, and everyone feels that they are welcomed. The second one is to deliver the best in what they do and be holding themselves accountable for the results. The next one is to act with courage, being willing to challenge obstacles and look for new ways for the company to grow as well as others. The last value is to always be present and connect with others both with dignity and respect. The company created rituals to reinforce and communicate their values to employees and created them for those who already work for the company to remind themselves of those values. One of their rituals was designed by one of the company’s founder Howard Schultz, the ritual was made to plant the love for coffee to the new hires entering the company. One of the first things that the new hires do when starting the job is a tasting of the manager’s favorite coffee. This tactic is done to shows the store managers passion for the coffee and it is done to reflect that passion onto the new hire. Over the next few days the new hires are required to taste all the coffee blends that Starbucks offer and then document their reactions to them. Employees that have been there for a long time like executives sometimes do tastings again to remind themselves of their passion for the coffee. The companies cultural is so well established that they even have their own well-known cultural language in all their coffee shops. Starbucks cultural language is well implanted in all their loyal customers, for example when a customer enters to purchase a drink, they automatically know the names of the drink’s sizes. The customers know that a small is called a tall, a medium is called a grandee and a larger is called as a venti and so one. Its cultural language is so well implanted in every customer that even outside of the coffee shops when asked what size they purchased; the customer will always respond with Starbucks given names to the drinks sizes.

Starbucks culture continues in the company’s leadership, the company uses the same values to reflect into their managers, human resource, development programs, baristas and baristas interactions with customers. The companies corporate culture follows the servant leadership, which is a philosophy that focuses on leaders serving the employees and helping them use all their talents and potential, so that the organization is built to benefit society. Starbucks corporate culture uses this philosophy and translates it as employees first in their workforce, meaning that leaders, managers and supervisors are to support employees to ensure that they grow within the company. The company uses this type of leadership to emphasizes on the care of the employees moral and emphasize on customer satisfaction. This feature was established in the company’s culture by former president Howard Behar, because it fit his belief that employees who are cared for are the ones that will care for the customers. The company’s culture also follows another tactic called openness which was also established by Behar designed to make employees less fearful to voice their opinions to leaders or managers. This tactic also helps leaders, managers, and supervisors to have an open mind and become better listeners to their employees.

Starbucks conducts business worldwide and even then, their culture follows them within those environments and within their business buildings as well. Starbucks culture dose not only stop when it comes to strengthening their team, they also strengthen communities they conduct business in. All Starbucks stores are part of a community and are committed to strengthening those communities. One hundred percent of all Starbucks stores worldwide participate in community services annually, they recently launched a new service program. The new service program was designed to engage retail partners by allowing them to work part time at their stores and part time at a Local Points of Light Program Location. Starbucks will also start donating one hundred percent of their food in stores that did not sell for the throughout the day, to help rescue food and not waist. For those who are interested in joining this company’s workforce, The best advice to follow in order to make it far in the company, is to enter the company with an open mind. People who enter with open minds will be better off in the job because they will learn to be a better communicate not only to their team, but to customer. They will learn that they are cared for but with that care they must have the open mindset to not just think of themselves, they must learn to think about others.

Starbucks is one of the many companies that created their own cultural organization for the purpose of showing inhabitants what the company strives for both internally and environmentally. Each company has developed their own unique cultural organization that affects their environmental and internal surroundings differently. Their own unique cultural development is what helps build loyal customers, because those who believe in what the company stands for will continue to buy their products.

Starbucks has a section of its website entitled, “Starbucks Stories & News,” where the Executive Vice President, Rossann Williams, updates the company’s stakeholders about how the company is navigating through COVID-19. In the first letter, written on March 4th, 2020, Williams addresses the company’s partners’, customers, and communities, on the precautionary steps Starbucks has taken during the pandemic. There are five steps listed addressing cleanliness, consumer’s personal cups, travel, large meetings, and reporting/supporting someone impacted by the virus. The five steps make it quick and easy for readers to grasp.

Not only is the company taking steps to increase the cleaning and sanitizing of all stores, but they are paying their partners additional profits to perform these CDC recommended and time-consuming tasks. Also, the establishment is still honoring the 10-cent discount to customers who bring in personal cups, even though customers are unable to use them during this time. The restrictions on large meetings and travel and the examples listed above, prove the company is taking steps to protect their employees, partners, and customers. The post effectively addresses everyone employed by the company and the public transparently and compassionately. Williams writes with a positive tone to give the audiences, listed above, peace of mind and encourage their continued support of Starbucks.

Method of Communication

The letter posted on Starbuck’s website ensures their partners, employees, and community are informed about how the company is addressing COVID-19. Also, a letter is a professional way of communicating with both a large and diverse audience.

Design Elements

The letter has a plain appearance. Its simplicity makes readers focus solely on the content rather than on design elements that take away from its intended purpose. Also, minimalism gives the letter a professional look that balances with its serious content pertaining to the COVID-19 pandemic.

Rhetorical Approach

EVP Williams leverages all three rhetoric appeals as communication tools in the letter. She employs ethos or an appeal based on the character of the company by stating, “we quickly initiated a regular cadence of communications with our store partners to ensure they have the support they need. We’ve already taken a series of precautionary steps in response to this emerging public health impact…” Also, the last few paragraphs begin with, “we are also,” and “we will continue.” This reveals the company’s trustworthiness as it pertains to taking action in response to the pandemic. Also, Williams uses buzz words like, “transparency” to further emphasize the credibility of Starbucks.

The author also used logos, or logic, in detailing first the company’s two key priorities, “caring for the health and well-being of our partners and customer and playing a constructive role in supporting local health official and government leaders….” She describes in detail the precautionary steps the company is taking to meet those objectives.

Finally, Williams engaged pathos, or an appeal based on emotion, to connect with her intended audience. She writes, “First and foremost, the health and well-being of our partners and customers remains top of mind and our highest priority” and “Our focus remains on two key priorities: Caring for the health and well-being of our partners and customers and playing a constructive role in supporting local health officials and government leaders….” In doing so, Williams connects emotionally with the audience by expressing care and compassion. Towards the end of the letter, Williams writes that the company hopes that partners will look back on how Starbucks handled this pandemic and see how much they cared for their people, customers, and community. Using all three forms of rhetoric makes this a very powerful letter.

Communication Issues

The letter has two communication issues. For one, it has a lot of text, which can prevent the audience from reading it fully. Adding photos that relate to the letter’s content will not only make the letter more visually engaging while emphasizing the company’s credibility. For example, photos capturing the stores getting cleaned and sanitized would prove that Starbucks is taking the pandemic seriously. Also, part of the letter is vague, leaving readers without pieces of information. The author mentions gaining lessons from their leadership team and partners in China, she does not share what those learnings included. Also, Williams concludes the letter by stating, “Guided by our Mission and Values, and a commitment to one another….” She failed to explain the company’s mission and values, leaving less of an impact and opening the doors to misinterpretation. To further support connecting emotionally with her audience the author might have stated how often she intended to provide communication updates to her audiences. In this way, she would be demonstrating the extent the company truly prioritizes both their partners and customers.

Conclusion

Overall, Williams clearly communicated how the company is navigating through the pandemic. Williams connects with the audience by writing compassionately and transparently. Adding photos and greater detail around some vague statements, as well as setting expectations of the timing and frequency of future communications will enhance the letter’s effectiveness. These improvements will better educate and engage the intended audiences while also building the company’s credibility.

Introduction

The Starbucks Cooperation, (Starbucks Coperation, 2015) is one of the world’s leading coffee roasters and retailers of speciality coffee. From opening its first store in downtown Seattle in 1971, the global expansion of the Starbucks name has been rapid and strategic (Roll, 2017). In 2018, Starbucks accounted for 29,324 stores worldwide of which 15,041 of them are based in the firm’s home nation of the United States. This dominance within the American retail coffee and snacks sector has given them significant market power in determining industry trends. As a result, Starbucks strategically balances its customer loyalty, premium value coffee and homelike atmosphere within its shops to surmount its competition and excel with the American population.

When discussing the concept of strategy, it is important to note that it encompasses the means in which an organisation achieves their premeditated objectives (Grant, 2015). In order to successfully implement objectives and goals, whether they be profit or customer orientated, businesses and organisations need to formulate a strategy in which they work by. This includes understanding the strategic position of the organisation and setting out outlines and principals on how a company would address these goals.

Introduction to Michael Porters Framework

By using Michael Porters Five Forces framework, we can analyse and evaluate the industry environment by investigating external influences that shape the competitive market and through this theory, organisations can devise an optimal strategy to achieve success market (Greenspan, 2019). The five forces used to formulate these influences are the power of suppliers, the threat of entry and of new competitors, industry rivalry, threat of substitute products and finally the power of buyers. When we apply Porter’s five forces to Starbucks, we will be able to investigate the external environment that may affect Starbucks’ competitive environment.

Threat of new entrants

Another key area of Porters 5 forces framework is the threat of new entrants. This area concerns the extent of how a new entrant could pose a threat on existing competitors within the same industry (Wilkinson, 2013). Due to the competitive nature the retail coffee industry with the United States, it is argued that there is a moderate threat of entry from new competitors within the sector. This is due to the fact that it is considered to be only moderate level of initial investment in order to be able to operate within the industry (Geereddy, n.d.). In relation to Starbucks, it can be argued that they may feel a considerate threat from new entrants as smaller coffee retailers can quickly establish themselves on a localised scale due to the fact that they have lower supply needs and offer no switching costs for consumers (Sakal, 2018). On the other hand, large and established brands such as Starbucks lead the industry as they have advanced economies of scale and extensive brand development which has been achieved over a number of years (Greenspan, 2019). This plays favourably to Starbucks because due to their advanced and large global scale they have the necessary funds and developed distribution systems to be able to expand outside of the localised areas (Larson, 2008) and thus, outside of the United States. Although this is a relatively easy market to penetrate, larger firms such as Starbucks hold an advantage as they have more of a focused and developed customer service strategy which is apparent in all their stores (Greenspan, 2019). This consequently results in loyal customer retention who continually return to the Starbucks store.

Threat of substitutes

Included in Porter’s 5 forces framework is the potential threat of substitute products within the industry. This takes into account when a close substitute of a specific product exists within a market, it therefore increases the probability of consumers switching to alternative retailers for cheaper options (Chartered Global Management Accountant, 2013) or purchasing other commodities in place of the industry’s product (Wilkinson, 2013). For example, the price of a product determines whether customers are going to purchase it, if already established companies seek to charge higher than new entrants in order the diminish the level of threat, this can ultimately lead to customer migration and a loss of profits (Cleverism, 2014). In the case of Starbucks it can be argued that the threat of substitutes is very high as products such as caffeinated carbonated drinks like canned energy drinks and products from Pepsi and Coca-Cola are on the rise (Sakal, 2018). These products pose a threat on Starbucks’ in store sales as they have a significantly lower retail price and can be bought more readily from supermarkets. In addition, it could be defended that these substitutes threaten companies such as Starbucks as they are more convenient and accessible to customers; they do not require waiting in queues, face to face interaction with employees or as stated earlier, products like these can be purchased outside of Starbucks’ outlets. In order to keep up with this trend and lower the threat level from these products, Starbucks have developed their own range of canned ready-to-drink products in partnership with PepsiCo (PepsiCo, n.d.). This is displayed in Figure 1 below. Such as canned their Nitro Cold Brew (Lucas, 2019). On their website, they market these products as ‘a premium experience’ that can be taken anywhere you want (Starbucks Branded Solutions, 2019). Starbucks is strategically trying to overcome threats by new entrants by expanding their range of products by keeping up with market trends. For example, in 2012 Starbucks acquired American tea retailers Teavana Holdings Inc who produce and market premium tea products (Financier Worldwide , 2013). This move by Starbucks further cements their customer retention, by expanding into alternative products, under the same brand name of Starbucks. Nonetheless, the threat of substitute products competing besides Starbucks does amount pressure onto their margins; with the demand to be conceiving new ideas or rival products to reduce this threat and to be continually gaining competitive advantage.

Bargaining power of buyers

The bargaining power of buyers concerns the pressure and influence customers/consumers can put on firms to gain a reduction in price or an increase of quality of the product/ service being displayed (Corporate Finance Insitute, 2018). This power can have an impact on the competitive environment as it influences the industry’s ability to gain profits (Wilkinson, 2013). The bargaining power of buyers can be determined by factors such as the bargaining leverage of customers and the price sensitivity of the buyer. If the bargaining leverage is high, this results in greater price sensitivity which effectively gives the buyer a large amount of power. It potentially can have a detrimental effect on their trading as products are being marketed at a lower price, therefore profits are lost and consumer surplus is higher (Decter, 2017). In terms of Starbucks and the bargaining power of suppliers, negotiations on price for primary buyers like individual customers are incredibly difficult. This is partially due to the vast scale of this business; it would not be possible to charge exclusive prices to different customers. Due to the ample choice of takeaway coffee retailers within the USA, customers have the choice to swap to alternative retailers that offer the same premium coffee, but at a lower price. To some extent, it may be argued that Starbucks gives an opportunity to their consumers to bargain their prices due to their 25¢ reusable cup discount which was introduced in 2018. This discount encourages consumers to bring their reusable coffee cups and in return they receive a 25¢ discount off their order (Gabbatiss, 2018). Starbucks have also introduced their own line of reusable plastic coffee cups in order to encourage consumers to partake in this scheme. This strategic choice made by Starbucks aptly offers consumers a sense of bargaining powers while simultaneously benefitting from those who do opt into the discount scheme by offering the means to do so, such as purchasing one of Starbucks’ own brand reusable cups.

Bargaining power of suppliers

It is a known fact the relationship between producers within an industry and their suppliers is comparable to the contact producers may have with consumers (Grant, 2015). Suppliers have a large influence over the profit potential and competition of an industry, this is because suppliers have the ability to raise prices of supplies and modify the quality of merchandise sold to the producers (Mars, 2018). As included in their 2018 annual report, Starbucks have coined the Starbucks Global Social Impact Strategy, this aims to act ethically and sustainably when sourcing their coffee and in addition contribute to local communities (Starbucks Corporation, 2018). Due to the vast number of retailers of speciality coffee and the many suppliers of Arabica coffee beans, which is commonly used by retailers, companies have to differentiate their products in order to retain competitive advantage. This means that companies such as Starbucks look for higher quality goods in order to be distinct from other retailers, such as outsourcing from premium coffee farmers. Due to this demand, these farmers have the capability to negotiate with producers as speciality farmers are not short of clients, resulting in a high bargaining power for Starbucks’ suppliers (Larson, 2008). On the other hand, due to the sheer scale of the Starbucks corporation within the USA and the large supply requirements, their financial loyalty to suppliers holds a considerable weight. This consequently means that suppliers have a low bargaining power against Starbucks as their trade with the global brand is vital to their production.

Competition Rivalry

Continuing on, one of Porter’s 5 forces includes the intensity of rivalry with an industry. It considers the amount of competition within the environment in which an industry operates in how much impact this may have on profit (Wilkinson, 2013). For example, a very competitive market can have many negative effects for the companies involved as there is less room for negotiation of prices and lower profit margins (Martin, 2014). Considering the intense nature of the speciality coffee market in the USA, the competitive rivalry in this sector is very high. In the case of Starbucks, it falls into the monopolistic competition category. This means that it exists in a market where there are a high number of retailers of the same product/service and therefore many buyers of these products. In order to try competing with this, retailers try offer a differentiation of the product, (Schwartz, 2016). As previously mentioned, Starbucks holds the largest market share within the United States with 39.8% (Lock, 2018). Although this figure dominates the other key players within the speciality coffee industry, it could be said that this amounts pressure onto Starbucks to upkeep this influence within the industry and to be continuously creating strategic and innovative ways to keep their already existing clientele while also attracting more customers (Kaci, 2017). On the other hand, it may be argued that although this amounted pressure on Starbucks creates high competition, Starbucks dominates the industry through their product differentiation by offering high quality coffee products and services. Since 2018, Starbucks have extended their service by partnering with food delivery service, UberEats. Starbucks currently have 15 million users every month using this service across more than 500 cities across the USA (Santana, 2019). This venture gives Starbucks the upper hand within the industry as it creates more convenience for the customer and gives Starbucks another operating cash flow margin outside of their drop-in stores, thus increasing their competitive advantage. Positively, Starbucks maintains their competitive advantage within the industry by acknowledging and implementing their high customer service and strategic branding, which conclusively results in high customer loyalty towards the Starbucks brand (Dudovskiy, 2017).

SWOT Analysis

In order to successfully assess the strategic choices made by the Starbucks cooperation, it is important to determine what is are the future choices of the firm. To do this, we can apply a SWOT analysis. This strategy incorporates the strengths, weaknesses, opportunities and threats regarding competition within the industry, specifically in the USA and its internal project planning (Bbamantra, 2017). The strengths of the Starbucks company refer to the internal factors that influence their success within the industry. As a major player within the American retail coffee industry, it can be said Starbucks have successfully developed an accomplished business model. Starbucks keep their core values at the forefront of their decisions. This includes creating a luxury coffee drinking experience, which diversifies them from competition. Through this focus on quality and service, Starbucks retain loyal customers and therefore sustaining the profitability of its business (Lombardo, 2019). In order to identify the flaws within the Starbucks, it is important to analyse internal factors that may affect profitability. The Starbucks brand relies heavily on the US market and currently 49.8% of all Starbucks coffee outlets are in the USA (Eckstein, 2019). This means that Starbucks is very sensitive to economic variation and could result in instability for the brand. The second part of the SWOT analysis focuses on the external factors that could promote business growth and opportunities. The Starbucks corporation can boost their sales through the expansion of emerging markets. An example of this is that Starbucks have invested in the expansion of drive thru hubs for customers, in place of their usual dine-in outlets (Forbes, 2016). Starbucks anticipates that 80% of their current shops will have a drive thru option by the end of 2019. In terms of threats towards the Starbucks business, in March 2018 the superior court in California, Los Angeles ruled that producers of coffee in the state must have a cancer warning label on as a cause of the carcinogens in the drinks. This as a result led to people avoiding products such as these, leading to a loss of customer retention and damaged brand equity (Rosenberg, 2018).

Conclusion

Starbucks continually drives to pioneer the retail coffee industry within the United States. This is thanks to their effective implementation of strategic choices which has given them the chance to develop their strategic position outside of the US and into new emerging global markets, such as Asia. In order to sustain this success, Starbucks must play close attention to internal and external factors influencing their business and how to keep up with the everchanging climate of this industry and to stay on top. Starbucks’ biggest weakness can be said to be their pricing strategies, if they hope to stay on top, they must offer more competitive prices as other players within the industry are starting to offer a similar quality of beverage, but at a fraction of the price that Starbucks does. Ultimately, if this change is implemented, Starbucks could attract more customers and gain more profit. Overall, it can be said that Starbucks are strategically successful due to the impact they have had not just within in the speciality coffee industry, but globally; by redefining the household commodity of coffee, into a developed customer experience.

A company’s effort is powerful. It can impact the sales, profits, recruiting employees and working ethics. A great company effort attracts people who want to work or do business with a company. By creating good opportunities at their company, it can inspire employees to be more productive and positive at work. It’s easy to see how the company makes an effort that impact the employees working with them.

Starbucks give importance in protecting their employees who are working under them. In compliance with their Global Human Rights Policy, Starbucks supports equal opportunity in the hiring process by making decisions on employment based solely on job related requirements and does not use forced labor. They do so by providing them with a safe healthy workplace which are free of all forms of harassment that includes sexual and racism issues. When Starbucks comes up with such progressive policies that implemented by their management so that everyone is treated equally and fair, the employees would feel safe to work with Starbucks.

Besides that, the employees would feel more valued when Starbucks creates more opportunities for them to grow. Starbucks creates an environment where any individuals can work with them despite of their abilities. When opportunities like this are created for them, those individuals won’t feel insecure about their self-esteem but they would be rather confident about themselves where they could work normally as everyone.

Next, the employees will be acquired with new knowledge and skills required for their company. Starbucks management will encourage the employees to upgrade themselves with skills and drills provided by the company so that the employees who work with them have valuable experience. By doing this, the employees will get to apply the skills they learn from the courses they attend at their working place to improve their performance and to develop their future career as well. Therefore, when everyone is in it together, they will all make an effort to achieve their organizational goals.

Starbuck’s company impacts the community by purchasing organic coffee beans from the local farmers in order to support them by providing a better future and to have a stable climate on the planet. Although they purchase coffee beans from the farmers, they would perform a quality check that should meet the Starbucks high standard quality.

Finally, Starbucks look after the community by creating a place to manage waste, protect water quality, conserve water and energy while preserving the biodiversity by reducing agro-chemical use to protect the planet as well.

Introduction

This report fundamentally assesses the activity the board approaches which are executed by the organizations for maintaining their business effectively. Other than that, this investigation has picked the Starbucks organization as an enormous association for evaluating its project management.

Project Management is the act of starting, arranging, executing, controlling, and shutting crafted by a group to accomplish explicit objectives and meet explicit achievement criteria at the predetermined time. The essential test of venture the executives is to accomplish the majority of the undertaking objectives inside the given imperatives.

The primary constraints are scope, time, quality and budget. The secondary and more ambitious, challenge is to optimize the allocation of necessary inputs and apply them to meet pre-defined objectives.

Critical Success Factors

User Involvement

Social Media is a platform for Starbucks Company as they constantly updating their updates in it. From there, they connect to customers by replying or answering their queries. Besides social media, Starbucks also launched their own mobile app. This makes the user or customers to have more personal contact with their account. As it is launched, it gets customers more connected to Starbucks.

Clear Business Objectives

Mission statement: ‘To inspire and nurture the human spirit — one person, one cup and one neighbourhood at a time.’

Vision statement: “To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”

These statements are concise, clear, and inspiring, especially in terms of achieving and maintaining the premier status in the coffeehouse and coffee industry.

Project manager expertise

Back to 1971, first Starbucks Coffee shop was opened in Seattle. Three partners were inspired to sell high quality coffee beans by coffee roasting entrepreneur, Alfred Peet. He taught them all about roasting coffee. They became experts in coffee and gradually upgrade their retail and start to sell freshly brewed coffee, which when most customers came to get their coffee beans, they were indulged with the fresh coffee brewed.

Critical Fail Factors

Competition

McDonald’s and Dunkin Donuts are an example of company that able to serve high quality products but at lower price compared to Starbucks. This has become a question to most customers as they could get the similar quality product at cheaper cost.

Human Resources

Starbucks Coffee, although a big company, they lack of human resources service. Partners(staff) were not considered as they launched a promo of 12-hour period. They expected partners to cooperate with the promotion period and to give great customer service at the same time. The pay for the barista is also not as much as big as this company is. Most partners gradually resign after one another due to lack of human resource and also the low rate pay.

Conclusion

Starbucks has maintained its place in the coffee industry, by becoming a coffee giant that continuously grows and expands. To do so efficiently, Starbucks must stay aware of the possible threats that could impact their desired growth. Performing a PESTLE analysis can help identify external factors and the determination of these factors that could present future opportunities for Starbucks to capitalize on. Starbucks must stay aware of recent trends while working to grow with these trends to stay relevant. Organizations such as Starbucks are the first ones in the market with trend-centric products, become recognizable leaders and gain loyal consumers with brand loyalty.

References

1. About Us. (n.d.). Retrieved from Starbucks My: http://www.starbucks.com.my/about-us
2. Mission Statement. (n.d.). Retrieved from Starbucks My: http://www.starbucks.com.my/about-us/company-information/mission-statement
3. Project Management. (n.d.). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Project_management
4. Starbucks. (n.d.). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Starbucks
5. Starbucks Digital. (n.d.). Retrieved from Inside Highered: https://www.insidehighered.com/blogs/student-affairs-and-technology/why-starbucks-gets-digital-engagement
6. Starbucks Failure. (n.d.). Retrieved from BusinessStudies: http://www.businessstudiesqa.com/2017/12/starbucks-failure-in-australian-market.html

In 2007, Starbucks began to show signs of market saturation in existing markets. As Schultz developed his five-year plan, despite the successes during his second run as CEO, Starbucks still faced market saturation. In the third quarter of 2016, comparable-store sales had begun to drop. In order to achieve the goals he set in 2014, Schultz needed to find a way to increase sales again.

Top Management Team

Howard Schultz

Howard Schultz graduated from Northern Michigan University in 1975 with a bachelor’s degree in communications. After graduating, Schultz began his career working for the Xerox Corporation as a salesman. In 1979, he entered the coffee industry as General Manager for Hammarplast, a coffee equipment manufacturer. Starbucks was a client of Hammarplast and piqued Schultz’s interest. In 1982, he joined Starbucks as Director of Operations and Marketing. He bought the original founders out of the company in 1987, with the goal of bringing the Italian coffeehouse experience to America.

Schultz resigned as CEO in 2000, taking up the mantle of Chairman in the same year. He returned to the company as President and CEO in 2008 and has transformed the company, incorporating sustainability, strengthening the Starbucks community, and innovating the future of the coffeehouse brand.

Kevin Johnson • President & Chief Executive Officer

Kevin Johnson joined Starbucks in 2009, serving on the board of directors. In March of 2015, Kevin became the President and Chief Operating Officer. In this position, he focused on leading businesses globally and all core support functions of the Starbucks supply chain. When Howard Schultz transitioned to Executive Chairmen, Johnson rose to assume the role of President and Chief Executive Officer. Outside of Starbucks, Johnson graduated from New Mexico State University with a degree in business administration and started his career at IBM. After IBM, Johnson spent sixteen years working at Microsoft, followed by five years as CEO of Juniper Networks. Johnson also spent time on the National Security Telecommunications Advisory Committee. He works with nonprofits supporting causes including distributing technology to nonprofits, supporting women in business, and youth and family counseling in the Seattle area.

Rosalind Brewer • Chief Operating Officer & Group President

Rosalind ‘Roz’ Brewer works as the Chief Operating Officer and Group President at Starbucks. She leads corporate-run businesses in North America, as well as the licensed stores. She was appointed to the Board of Directors in March 2017. Before joining Starbucks, Brewer worked as CEO of Sam’s Club, making history as the first woman and the first African American to lead a division in the Walmart corporation. She also worked with the Kimberly-Clark Corporation for 22 years, starting out as a staff scientist. Brewer’s bachelor’s degree is from Spelman College, and she later attended both Wharton’s Advanced Management Program and Stanford University’s Directors’ College. In addition to Starbucks, Brewer works on the boards at Amazon, Lockheed Martin, Molson Coors Brewing Company, and Spelman College. In 2018, Brewer was ranked by Fortune as #33 on the list of the 50 Most Powerful Women in Business.

Competitors

The primary competitive category that Starbucks falls under is that of Specialty Coffee Shops. Coffee club and informational resource JavaPresse defines a specialty coffee as “an approach to coffee that is fueled by globally conscious ethics, a rich appreciation for quality and diversity, and a thriving community that spans the globe.” Companies that produce this specialty coffee will pursue a quality coffee from the farms, serve as a global community, and will prioritize relationships between company and consumer as well as company and supplier. These competitors include Dunkin’ Donuts, Caribou Coffee, Peet’s Coffee and Tea, and premium craft coffee companies.

Dunkin Donuts

• Lower prices than Starbucks, with a similar menu
• Originally focused on coffee, baked goods, and ice cream
• Began selling premium espresso-based drinks in 2004
• Directly competed with Starbucks product expansions
• Starbucks released bottled coffee drinks with PepsiCo; Dunkin released bottled coffee drinks with Coca-Cola
• 58% of Dunkin’s franchises reported sales came from coffee sales
• Starbucks still maintains a 75% market share of ready-to-drink bottled coffee drinks

Caribou Coffee

• Smaller scale, directly competing with core offerings
• Specialty coffee
• Sustainable business practices, ‘third place’ customer experience, and high-quality drinks
• As of May 2015, operated about 600 stores worldwide across 11 countries

Peet’s Coffee and Tea

• Custom coffee roaster started in 1966
• Traditionally focused on fresh, whole bean coffee; More recently increasing freshly brewed drinks
• Recently acquired Mighty Leaf Tea, as well as craft coffee companies
• Pursuing similar strategies as Starbucks and Caribou

Premium Craft Coffee Companies

• Providing the highest possible coffee to the customer, despite cost and service time
• Emerging movement among dedicated coffee drinkers
• Also known as ‘third-wave’ coffee

Other competitors outside of the coffee shop category include McDonald’s, Panera, Keurig Green Mountain, and JAB Holding.

• McDonald’s
• Quick-service Restaurant AKA Fast Food – specializes in selling food products for an estimated $5 per meal
• Offering healthier options, all-day breakfast, and espresso-based McCafes
• Lower quality service and environment than Starbucks, focusing on price and efficiency
• Winning markets based on price and blind taste-testing
• Ownership is primarily franchise, with slowly declining revenues
• Panera
• Quick-service restaurant
• Specializing in healthy, organic baked goods and meals
• Aiming for a “warm, inviting, and comfortable environment” and for all-natural/organic products
• About half of all restaurants are franchised
• Presence of stores is growing, but with mixed financial response
• Homebrewing Companies
• Keurig Green Mountain, Nespresso, etc
• Targeting customers who want to brew coffee drinks from home
• Brewing with single-serve machines for basic coffee (Keurig) to complex espresso mixed drinks (Nespresso)
• No service, but market primarily based on low cost and convenience
• Has been pursued by Starbucks with single-serve pods
• JAB Holding
• German investment company with heavy portfolio of coffee and consumer packaged goods
• Owns a variety of coffee shops, coffee brands, and quick-service competitors
• Caribou Coffee, Peet’s Coffee and Tea, Einstein Noah Restaurant Group, Krispy Kreme, Keurig Green Mountain, and more
• Varied product and service offerings across the many brands

SWOT Analysis

Internal Strengths

Mobile Performance – Starbucks was on the leading edge of mobile app performance, especially with its mobile order and pay system and high performing loyalty program. Starbucks has aligned itself as the coffee app

Benefits for Partners – Starbucks has continually provided benefits for its employees, who are known as partners. This includes tuition-free education from Arizona State University, stock options, and access to health care.

Sustainable & Ethical Structure – Across its the span of Starbucks’ goods and services, it has emphasized both sustainable solutions and ethical business models. This includes purchasing Fair Trade coffee, establishing a resource center for farmers (CAFE), LEED-certified stores around the world, using environmentally friendly materials, and sourcing local materials.

Social Responsibility & Activism – Howard Schultz has been very vocal about political and social issues via the Starbucks Corporation. The company has supported a variety of causes, verbally and with actions. Actions include partnering with (RED) to raise awareness and funds for HIV/AIDS, banning guns in their stores, hiring military veterans and spouses, and more.

Internal Weaknesses

High Prices – Starbucks represents a higher price point to maximize its profits, blocking the access of lower-income customers. These prices are also higher to accommodate for more materials and resources that may not be the cheapest option, given that they value sustainability and ethical products over low cost

Product Imitations – Starbucks’ physical product is not a unique product. In-store coffees have been imitated by many, and product expansions nearly directly copied.

‘Divisive’ Social Stances – With Starbucks and Schultz being vocal advocates for many social causes, it caused criticism from shareholders. Blowback included a forced store shutdowns due to a protest by gun owners and Schultz releasing a statement to tell critics to “buy shares in other companies” if they did not approve of the social actions

Lack of Insulation in Financial Crashes – During the 2008 financial crisis, Starbucks took a major blow from consumers who eliminated extraneous, non-necessary spending.

External Opportunities

Health Conscious Consumers – More health-conscious consumers have strayed away from fast-food style business like McDonald’s, but still purchase from quick-service restaurants that can provide quick, on-the-go meals. As Starbucks diversifies its food menu, expanding into more healthful products, it can attract more health-conscious consumers.

Increased Support for Eco-Friendly & Ethical Business – As issues like climate change and pollution to become more and more mainstream, customers have become more interested in supporting businesses that represent eco-friendly options. By zeroing in on this concept, Starbucks can increase their green marketing to emphasize its eco-friendly aspects, elevating themselves as the greenest coffee shop.

At-Home High-End Coffee Makers – also recession proofs – During the 2008 financial crisis, customers cut back on coffee shop purchases, but continued drinking coffee from home. Using at-home machines from a classic Mr Coffee to higher-end Nespressos, consumers did not eliminate the coffee drinking habit but rather altered it to a more budget-friendly alternative. By expanding more into the at-home coffee market, Starbucks can add an element to their business that will make them more recession-proof.

External Threats

Low-Cost Competitors – Other major restaurant chains have undercut the Starbuck base by providing similar products for a significantly lower price. McDonald’s is a primary competitor when it comes to cost.

Imitations by Competitors – Other competitors are followers in the coffee market and target brand extensions for imitation. Dunkin Donuts has previously done this with its bottled coffees released in partnership with Coca-Cola after Starbucks released its bottled coffees in partnership with PepsiCo

Threats to Coffee Crop – There are a variety of threats to the coffee crop including geopolitical limitations, monetary exchange rates, high labor production changing weather conditions, and climate change. These factors are impossible to control, and one change could affect coffee crop production for years to come.

Past Actions Taken by Firm

When Howard Schultz took the reins again at Starbucks in 2008, he had developed a “transformation agenda,” that set goals for developing the Starbucks customer experience. These goals included igniting emotional attachment, making each store a stronger part of their local neighborhood, and engaging and inspiring employees. A major element of achieving these goals included adopting new technology allowing for increased customer engagement. These new technological practices included using social media, a loyalty program, and an innovating online ordering system.

Social Media allowed both corporate partners a voice to communicate with all of their customers on social media, but individual stores as well, reaching into their communities in a familiar way, bringing Starbucks’ global marketing initiatives to a local scale. At the corporate scale, social media also provided a low-cost customer support system. When consumers reached out with problems or questions, social media allows them to get answers in just minutes, and communicate in a way that feels more direct and authentic.

Starbucks developed a custom app, making its loyalty program digital. In an era where smartphones were ubiquitous, especially among Starbucks ‘ main demographics, the consumer is more likely to be carrying a phone than a variety of membership cards at all times. The app was available on Apple and Android phones and allowed a variety of options including earning loyalty rewards, finding stores, and a new mobile order and pay option.

Mobile ordering and paying allowed customers to skip the store lines, and pick their drinks up directly from the barista. This option increases a store’s operating efficiency and allowed it to take more orders, quickly during their peak hours. Starbuck was one of the early adopters of this system, In the fourth quarter of 2016, mobile ordering represented 6% of all US transactions.

Beyond its own technology, Starbucks partnered with other tech companies, in order to bring better and unique services to its own customers. These partnerships benefited both the customers and the store’s employees and included other innovative companies like Spotify, Lyft, and Google.

Recommendations

In order to combat market saturation problems, it is my recommendation that Starbucks strengthens its digital engagement. A diversified menu will not do anything to aid a company if the customers aren’t aware of it. Today’s world is a technology-filled one, and the influence that the digital world has on customers and companies is only going to increase in time. Taking the initiative to develop and further Starbucks’ digital engagement with current and potential customers gives them an opportunity to develop their relationship with the customer, in a way that feels more unique and special to the individual. My recommendation has three main action points: online customer service, loyalty program, and social media.

My first digital engagement recommendation is to dedicate customer service resources to provide a strong contact point by social media, as well as a texting-based chat option. In order to provide an efficient, effective customer service system, Starbucks must be available in a way that makes customers comfortable to reach out regarding any and all issues they may have, no matter how big or small. The millennial demographic, defined as ages 20-35, is the largest consumer of coffee in the US. According to 2017 research, millennials prefer text-based communications over email or phone. In addition to that, 1 in 3 social media users prefer social media-based customer care to phone or email, resulting in 67% of consumers using social media networks for issue resolution. These data points emphasize the importance of providing a customer service situation that accommodates customers, making the process of contacting and issue resolution as easy as possible.

My second digital engagement recommendation is to review the current usage of the Starbucks reward system and update it to incentivize customers to use it more. In early 2019, it was announced that Starbucks’ loyalty program had topped 16.3 million people, and was growing an estimated 1 million people, per quarter. The process of getting people to join the loyalty program isn’t an issue, but keeping people active loyalty members does present a problem. The loyalty system allows customers to earn points for every drink they purchase with their loyalty app and then rewarding them at certain points milestones. In order to return loyalty members into active status, there needs to be a higher incentive for them to spend. This includes increasing the value of rewards, increasing the frequency of rewards, and providing more ways to earn points. Having in-app contests, weekly perk days, or seemingly random double or triple point earning opportunities, customers are more incentivized to remember, pay attention to, and use the Starbucks loyalty app.

My third and final digital engagement recommendation is to leverage the power of social media. According to data released by Apple, social media networks ranked among the top 20 apps of 2018. These include YouTube in the number 1 spot, Instagram in 2, Snapchat in 3, FB Messenger and Facebook ranking 4 and 5, respectively, newcomer TikTok coming in at 16, and Twitter at 20. More than ever, social media is the biggest opportunity to reach customers, with both paid and unpaid potential reaches. It is important to dive deep into the community aspect, finding ways to increase Starbucks’ transparency and increase customer trust. This can be done through something like Facebook groups to build a community around a special interest, or through IGTV, Instagram’s long-form video streaming service. Give customers a curated insight into how the world of Starbucks works, and make them feel like they are a part of not just the community around the corporation, but the community inside the corporation. Market research should be done to aid in the decision of what direction to go in, looking into the goal customer reach, and working backward to find out where they spend the most time. Whether it’s Gen Xers on Facebook, Gen Z on TikTok, or socially active individuals on Twitter, social media provides a simple, cheap, and effective system for reaching your customers in a familiar, and relaxed way.

Conclusion

Based out of the iconic Pike Place Market in Seattle, Washington, Starbucks has risen from a bean roaster to one of the largest specialty coffee shops in the world. Howard Schultz developed the concept, turning one coffee into an experience, a ‘third place’ for social interactions. As the company continues to grow, it has begun to hit the point of market saturation in the United States. This paper analyzed the historical growth of Starbucks as well as the domestic and global coffee culture to understand how the corporation has come to this point, and provide digital engagement recommendations on how to approach market saturation. The recommendations were dedicating customer service resources to provide a text-based and social media support system, review and update the Starbucks loyalty program to encourage and incentivize higher usage, and leveraging the power of social media to creatively reach specific demographic segments where they are currently spending most of their time online.