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Copy of Starbucks' Strategy and Implementation
Transcript of Copy of Starbucks' Strategy and Implementation
Finding the Perfect Blend
Presented By: Shania Ali & Sameen Ashraf
History of Starbucks Coffee
Created in 1971
Howard Schultz spent most of his working hours in the four stores learning the retail aspects of the company business; Schultz was overflowing with ideas for the company.
Schultz joined Starbucks in 1982. On a trip to Italy, Schultz realized that he wanted to transform Starbucks to not only retail fine coffees but also serve these beverages.
VISION & MISSION STATEMENT
COMPONENTS OF MISSION STATEMENT
PROFITABILITY AND GROWTH
CONCERN FOR PUBLIC IMAGE
CONCERN FOR EMPLOYEES
PORTERS FIVE FORCE MODEL
The organization’s resources, its capabilities and competencies make up the internal environment of the organization.
The company should have the ability to identifying and determining the competitive power of their resources and capabilities to create competitive advantage
3) Global consumer product (CPG)
STRATEGIES IN ACTION
STRATEGY IMPLEMENTATION: (Expansion strategy)
Enter New Market Segments
Starbucks revenue declined greatly during the recession in 2009. The company's revenue dropped by at painstaking 70%. Starbucks changed their expansion strategy to reflect the times. They closed
Strategy: ensure that Starbucks products are more accessible to existing and new customers where they work, shop, dined, and travel. Promoted new occasions for enjoying Starbucks products.
Strategic Objectives: capitalize on Starbuck's growing brand awareness and strength to create a broader foundation for long-term growth in revenues and profits
In house sales group to market Starbuck's coffee products to retailers such as restaurants, airports, country clubs, universities, and hospitals.
In 2009, Starbucks generated $372.2 million in revenues from providing whole bean and ground coffees and assorted other Starbucks products to 21,000 food service accounts.
Joint venture with PepsiCo (North American Coffee Partnership. Created new coffee-related products in bottles or cans for distribution through PepsiCo.
Sales of Frappuccino ready-to-drink beverages reached $125 million in 1997 and achieved national super- market penetration of 80 percent.
MAJOR paradigm shift for Starbucks
In 2007, North American Coffee Partnership entered a venture called International Coffee Partnership (ICP) to introduce Starbucks-related beverages markets outside North America
In 2008 Starbucks partnered with Apple iTunes and began offering a Pick of the Week music card. They continued to offer CDs, this time with the Pick of the Week music.
In 1998 Starbucks licensed Kraft Foods to market and distribute their whole bean/ground coffee in grocery stores and mass-merchandise channels.
In 2010 Starbucks coffee was available in 33,500 grocery/warehouse clubs in the U.S. and 5,500 retail outlets outside of the United States.
$370 million from these sales' revenues in 2009
2008, Starbucks targets non-coffee drinkers by offering fruit cups, yogurt, parfaits, salad, and smoothies. In 2009 they added healthier lower-calories pastry alternatives.
Starbucks innovation has proven a strong competitor against other retailers. Their constant innovation and acquisition of diverse companies allows for them to stay relevant.
Rivalry has increased because it saves costs for consumers to switch brands Competitors such as McDonald and Dunkin Donuts have been able to compete with Starbucks by offering products that are becoming more alike to those of Starbucks.
Dunkin' Brand Revenues
McDonald Corp Revenues
Green Mountain Coffee Roasters Revenues
Caribou Coffee Company, Inc Revenues
ACTION PLAN & Recommendations
Revitalize and reinvent Starbucks experience for customers. Offer non-coffee innovations: salads, yogurts, Refreshers
Offer substitutes to competitor's products. Dunkin Donuts Original Blend vs Starbucks Blonde Roast
In response to McDonald's introduction of premium coffees and coffee based beverages. Starbucks stepped up their advertising expenditures.
of McCafe' in 2009 has been able to rival against Starbucks. In response to McDonald's inexpensive line of coffee-based beverages, they teamed up with Burger King in 2010 to sell beverages from their newly acquired company,
Seattle's Best Coffee.
Starbucks changed their expansion strategy to reflect the times. They closed approximately 100 underperforming stores within the United States and shifted their focus form planting new stores to concentrating on reinventing the intmate coffee house experience of their roots.
There are numerous competitors to Starbucks that provide substitute products but a substitute experience. Starbucks prides itself in personal customer service. Baristas call guest by names and drinks are customizable.
Starbucks' Corporate Social Responsibility Strategy
Ethically sourcing all of the company's products
Starbucks' 2015 goal: to purchase 100 percent of its coffees through sources there were either Fair Trade Certified or met C.A.F.E. Practices guidelines.
Starbucks Youth Action Grants encourages young people in community, a program to provide medicine to people in Africa with HIV, the Ethos Water Fund
Service contributions totaled 246,000 hours in 2008 and 186,000 hours in 2009.
2015 goal: Get Starbucks partners and customers to contribute more than 1 million hours of community service by 2015
Increase recycling, reduce waste, be more energy- efficient and use renewable energy sources, conserve water resources, and tomake all company facilities as green as possible.
Starbucks provided funding to organizations that made loans to small coffee growers
...to build a company with soul...
represent a weak competitive force because of the good relations they have. Starbucks is a member of an initiative that boots earnings for small coffe growers so they are able to invest in their farms and communities.
Buyer bargaining is strong
for Starbucks. Companies like McDonalds are offering consumers premium coffee and coffee based drinks at a lower cost. Starbucks has the advantage in that they also offer a coffee house experience not just quick serviced coffee drinks.
By the year 1980s the company had four Starbucks Stores in Seattle area and had been profitable every year
"To establish Starbucks as the most recognized and respected brand in the world and become a national company with values and guiding principles that employee could be proud of “
PROPOSED VISION STATEMENT
“To inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time.”
ACTUAL MISSION STATEMENT
“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”
PROPOSED MISSION STATEMENT
Establish Starbucks as the premier provider of the finest coffee in the world and also to be established as the most employee valued company while maintaining our uncompromising principles as we grow together with technological advances.
PRODUCTS OR SERVICES
BARGAINING POWER OF SUPPLIERS
PORTERS 5 FORCE MODEL
Human Resource Management, and a high quality service.
Starbucks has a flat organizational structure that allows for rapid communication between senior executives and frontline staff. Furthermore, the company had developed a strong coffee education and an employee loyalty (thanks to higher wage and social advantages).
Offering high quality products
A great atmosphere
Maximize market penetration
New distribution channels
Quality of services
Critical parking place
Less spending on advertisement
Direct relationships with coffee farmers
Ready access to consumers
Misuse of brand names
Less profit for joint ventures
The market for each of their business segments are characterized by vigorous competition among major corporations with long established positions and a large number of new and rapidly growing firms.
Anyway, as Starbucks have a good financial capacity with good strategies; it can overcome all the competitors to shine high as the first class coffee provider..