2. • 1971 - Starbucks Coffee opens is first store in the Pike Place
Market in Seattle, Washington.
• 1984 - Howard Schultz convinces the original founders of
Starbucks to test the coffee bar concept.
• 1988 - Starbucks comes out with their first mail-order
catalog, enabling mail-ordering of their coffee in all 50
states.
• Grew from 55 stores in 1989 to over 15,000 stores today
• Products sold include:
•- beverages
•- whole coffee beans
- pastries
- coffee-related retail items

3. Interior & Exterior of starbucks

4. Introduction to Starbucks
 Starbucks Corporation is an American global coffee company and
coffeehouse chain based in Seattle, Washington.
 Headquarters: Seattle, WA, United States of America
 Founded: 1971, Pike Place Market, Seattle, Washington, United
States
 CEO: Howard Schultz
 Founders: Gordon Bowker, Jerry Baldwin, Zev Siegl

5. Mission Statement

6. Guiding Principles of starbucks
• Provide a great work environment and treat each other with
respect and dignity.
• Embrace diversity as an essential component in the way we do
business.
• Apply the highest standards of excellence to the purchasing,
roasting, and fresh delivery of our coffee.
• Develop enthusiastically satisfied customers all of the time.
• Contribute positively to our communities and our environment.
• Recognize that profitability is essential to our future success.

7. Coffee: Some Facts
First consumed in East Africa during
the 11th century.
Quality of beans – Robusta & Arabica.
Produced in 70 countries.
Global coffee production – 134.2 mn
bags.
More than $70 bn retail sales
globally.

8. Industry Definition
Specialty Eatery Industry
 Food and beverages
 Steady growth in the 90s leading to increased
competition
 Demand for specialty food services has increased in
recent years

9. Percentage Share of different countries in Number of
Starbucks Stores
UNITED STATES
ASIA-PACIFIC
12%
EUROPE-AFRICA
NORTH-SOUTH AMERICA
2% 1%
85%

10. Yearly Sales Data of Starbucks
NO OF STARBUCKS STORES OVER THE
YEARS
12000.00
8000
10000.00
7000
8000.00
6000
5000
6000.00
Years
4000
Years
3000
4000.00
2000
2000.00
1000
2000 2001 2002 2003 2004 2005 2006 2007 2008
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
0.00
1988
1987
0

11. Process Differentiation
(the value chain)
Financing, Legal Support, Accounting
Firm Infrastructure
Recruiting, Training, Incentives, Feedback
Human Resources
Equipments, Production, Packaging, Selling
Procurement
Getting the coffee : Where & How
Inbound
Logistics
Billing and
collection
Delivering
the
product
Promotions
and
Advertising
Technology & Development
Customer
satisfaction
and
feedback
Primary activities

12. Industry and Competitive Analysis
Market Structure
Monopolistic Competition
Competitive Activity
Many companies are in the market and competition is fierce
Competitors use location, product mix, and store atmosphere
differentiation to establish market niche
Industry Costs and Capital Structure
Low to moderate costs for each location
Major start-up expenditures are property and equipment
Major operating costs are labor and cost of sales

13. International Competitors
Dunkin Donuts
Sells coffee beans both online & at
physical outlets
Fresh brew coffee
Similar services & products as
Starbucks
Mc Donald’s
Offers number of specialty coffees
Huge penetration
Established fast-food retailer

14. VALUABLE RESOURCES:
Creating Competitive Edge
• Physical Resources
–Large number of outlets (Hub & Spoke Model)
–Operations in 40 countries with 9000 cafes
–Hi-tech coffee machines & equipments
• Intangible Resources
–Techniques to roast & brew coffee
–Large satisfied customer base
–Building employee relationship
–Reputation for having the finest products and services in the world
•
•
•
•
High quality of products
Quality of Workforce
Strategic Store Location
Tangible Resources
•Coffee beans (Ex. They have sole ownership of the Narino Supremo
beans, which is considered to be one of the highest quality coffee beans in
the world.)
• Intangible Resources
•Perception/Reputation of quality (beans, company name, etc)
•Largest and best known of coffee house chains

15. Corporate Culture:
Company Values
• No compromise on Quality
• No Franchising
• Not selling artificially flavored coffee beans
• Employee freedom of expression
• Customer is of Prime Importance
•“Just Say Yes” to customer requests
•Modify Products as per customer’s preferences
•Satisfy customer at all costs
»Eg: Providing a free-drink coupon if the
customer is not satisfied

16. Industry PEST Analysis
Political Influences
State & Local government controls
Economic Influences
Changes in disposable income could influence purchase levels
Social Influences
Consumer preferences could shift from coffee to other
beverages
Technological Influences
Use of technology can improve operational efficiencies

17. SWOT Analysis
Strengths
 ever experienced a strike or work stoppage
 Good relationships with coffee suppliers
 Value employees
 Located in high traffic areas
 Employee turnover rate is 60%, compared to 140% in the
fast food business
 They don’t move into new markets until they dominate the
ones they expand into

18. SWOT Analysis
Weaknesses
 Excessive focus
 Employees report to two division heads
 Increasing shareholders dilutes their interest
 They have expanded too quickly, and have already
saturated the US market
 They do not allow smoking in their stores, alienating some
of their customers

19. SWOT Analysis
Opportunities
 Expansion into European and Latin American markets
 Distribution agreements, such as hotels, airlines, and office coffee suppliers
 Reducing alcohol consumption in the US leads to bars being used less which
leads to people needing another place to go
 Use supermarkets as a way of expanding into international markets
 Numerous brand extension
 Improve on perception of instant and decaffeinated coffee to expand that
market share

20. SWOT Analysis
Threats
 The coffee market is saturated
 Cost of coffee beans is expected to rise in the near future
 Supermarkets threaten whole bean sales
 Farmers might switch from coffee to vegetable crops
 High competition from Japanese competitors
 Consumers trend toward more healthful fare

21. Customer Willingness to Pay
Why go to Starbucks?
A place to think and Imagine
A place to gather and talk
A Third Place beyond Work and Home
Leather Chairs Newspapers Couches
The Authentic Coffee Experience: the
artistry of espresso making
Fast Service and Quiet Moments
Stores Designed on 4 stages of coffee
making: growing, roasting, brewing and
aroma
Mails, Music, Work

22. Conclusion
Starbucks has been increasing its debt every year, and at a pace that is
faster than their assets are growing (which is clearly unhealthy).
This is why we chose for the firm to slow down its expansion and to focus
more on marketing their products.
In such a saturated market as the one that they are in Starbucks needs to
focus on increasing consumer awareness and to decrease debt as much as
possible.
In closing we believe that Starbucks can become even more profitable if
they slow down their expansion and concentrate on the stores that they
already have open.