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on 23 October 2013

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Transcript of Starbucks

Strategic Consultants
Drew Sewell
Jiawang Tang
Shannon De Luca
Nan Xia
Zhenhuan Hu

Values & Guiding Principles/ Policies

Strategic Issues

Lack of International revenue
Declining customer relationships
Low market share
Over saturation of Starbucks stores

Strategic Analysis
Strategic Group Map
5 Generic Competitive Analysis
Broad Differentiation
SWOT Analysis

Strong relationship with coffee farmers/suppliers
High employee motivation
Strong sense of identity
Renowned Brand
Different Specialised coffee
Customer loyalty
First-movers advantage
Propensity for innovation
CSR activities
Uncontrolled expansion
Lack of distinct marketing strategies
Premium price and price hikes drive less-affluent customers to competitors
Inflexible pricing
Does not tailor branches to location
Overseas Expansion
Technological Advancements
New Emerging distribution channels
Product line extension
Instant coffee in department stores
Push for Starbucks coffee in coffee huts/houses/restaurants
Mobile Technology
Competition from fast-food services
Global economic recession
Bargaining power of customers
Expansion of internet causes increased corporate visibility
New entrants
Specialty coffee being eliminated since traditional methods of growing have changed

1971 Start to sell coffee beans in Seattle
1987 Localisation to Nationalisation
1991 International Expansion
2011 Corporate Social Responsibility
Operating Profit Margin
Current Ratio
"To build a company with soul"
Starbucks should be an experience
Become the most respected brand name in coffee
Store Design
Employing the right staff and value them
Quality is number one in coffee
CSR a priority in all Starbucks does
Market Research
Distribution through packaged coffee
Partnerships with local cafe's
Store establishment into promising markets
Store Expansion Strategy

Now time for a quick coffee break!
Rivalry Among Competing Sellers
Other firms offering substitute Products
Bargaining power of buyers
Potential New Entrants
Rivals Compete on price, product selection, location and experience
Very low customer switching costs make product differentiation critical
Bargaining power of Suppliers
5 Forces Model
Alternatives: Home brew, tea, soda & energy drinks
A threat of substitution for the "third place" atmosphere of the coffee shop, parks and other community spaces
As a coffee shop, beverages are a luxury, not a necessity
Additionally, consumers currently have many options for on-the-go coffee and coffee shop beverages from competitors
Starbucks' advantage: First-movers
Starbucks quality brand, uniqueness, commitment and loyalty to their shareholders will have limited impact of any new entrants into the market
Coffee is a commodity, it's expected that suppliers compete primarily on price.
Suppliers gain some bargaining power through quality, organic certification, and fair trade certification
Seek to differentiate product offerings with attributes appealing to wide audience
1. Create superior product features, design & performance
2. Improve customer service
3. Pursue research & development activities
4. Strive for innovation
5. Increase marketing
6. Seek out high quality inputs
7. Improve employee skill, knowledge & experience
Increasing revenue until GFC hit
Affected heavily by GFC - operating revenue decreases
Low international growth
2006 & 2007 were peak growth
Stock performance reached its peak at 40
Decreasing Stores
Decrease in customer traffic at the stores because of "Starbucks everywhere" approach

Starbucks should continue to decrease store numbers based on weaker performing stores

This will increase customer traffic at each store

Increase Customer Satisfaction
Shift focus back to customer satisfaction by creating an atmosphere in-store like original vision
Encourage baristas and staff to engage with customers and get to know their name
Re-train frequently
Use loyalty cards and discounts to benefit customer
Increase marketing by highlighting their CSR activities, core values and great coffee
Market not only the Starbucks but also the starbucks products consumers can buy seperately
Full transcript