Starbucks Executive Summary Company Mission

As “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” (Starbuck, n.d.) Starbucks mission statement. The company has the principle and concerns all stakeholders including their suppliers, employees which recognized as “partners”, customers, communities, shareholders and even environment. Starting from their products itself (coffee bean, tea, cocoa), they’re passionate to find the finest sources, finest process of products with improving the quality of life of the farmers. With the feeling of partners, all employees treat with respect and pride, also the engagement with customers and sense of human connections by the friendly and warming stores’ atmosphere to earn their royalty and trust, responsibilities and contribution to communities and social, and one of the important missions is environmental friendly these make them “Starbuck” as a leader for changes and new standards.

Business strategy

Forward thinking and nimble in decision making

A full-fledge transformation

Blueprint for change was the transformation agenda

Store-level economics and operation efficiency; reigniting emotional attachment with customers; and realigning Starbucks organization for the long term (Schultz, 2009)

Focused on:

Operation excellence from Supply-chain to Backend IT system on store-level operation for better informed decision

Go to the market engine; more efficiency channel to reach customer

Those to bring products and initiative to market faster and more cost efficiency

But it’s not enough, true transformation is to improve customer experience by innovate and differentiate.

New investment to partners (Store and employee) to improve customer experience including better services, quality of beverages, store environment

New program for royalty card program

Customer concern Healthy food, Starbuck offer new products with wholegrain and take out artificial trans-fat, high-fructose corn syrup, artificial flavors and dyes

Use technology to improve customer communication; social network and digital media. Starbucks voted as most engaged brand with Facebook (Social network).

Also launch iPhone application to help customer finding store location, determine nutrition information or royalty card program

New concept store design with Seattle, London and Paris scheme.

All new structure stores will be certified with environment friendly

Become the world largest buyer of Fair trade certified coffee and partner with Conservation international to address climate change

International Strategy:

Focus on potential market UK, Canada and Japan and working on China which believe that China will be one of the largest markets outside US.

Seize new opportunity by distribution grocery channel to reach customer.

New product Starbucks VIA Ready Brew as instant coffee for single serve at home and takeaway option from the store that will be distribute on the store and grocery channel in international market in fiscal year 2010

New branding Seattle’s Best Coffee (SBC) as new position and focus for new customers that plan to create franchising and distribution opportunities in 2010

Global Responsibility strategy:

Financial report rearrange cause of internal management alignment: Previously business reported into 3 segments; US market, international market and Global Consumer Product Group (CPG), currently the US will be reported in CPG.

Company-operated retail store strategy: increase market share by open new additional stores in existing market, new market, increasing sale in existing stores

Specialty operations; Licensing – retail store, Licensing – packaged coffee and tea, Licensing – Branded products (ready to drink or bottle beverage

Industry Structure

Primary competitor: Chain fast-food, specialty coffee shop

Wholesale and mail order supplier in specialty product; packaged and instant (soluble) coffee)

SWOT Analysis

Starbucks revenue rose slowly in 2008 and net profit fell significantly. The growth rate began to be negative the first time in 2008 since 1997. (Pascal J. Gambardella, 2009)

One of the reasons may come from the economy recession that reduced customer spending but in the same period some company such as McDonald’s sale increased which can be assumed that customer finding for most value for the spending from the less income.

Secondly, Starbuck strategy of fast store expanding especially in U.S. markets that almost every a corner in the big city had Starbuck store has to find more customer to keep up with new opened store. So in 2008 and Jan 2009, Starbuck had closed around 800 stores in U.S. and 100 stores internationally.

Another reason was from increased rival in coffee-house business and new competitor from fast food chain restaurant; McDonald and Dunkin’s Donuts that have large number of stores and existing customers provided with varieties value or economy meals and beverages. Even Starbucks tried to provide hot breakfast but finally had to stop by the customers’ complaint of smell detraction from coffee house environment.

4.1.) Strengths

4.2.) Weaknesses

4.3.) Opportunities

4.4.) Threats

Core competencies and competitive advantage

Strategy recommendations

New distribution channel in drive-thru stores

Package instant coffee in stores, grocery store, discount store

New business partner to compete with chain Fast-food (McDonald), such as Burger King (Hungry Jack), Subway

Provide more variety of products, menus; meals, warm food or even equipment, accessories and coffee making machine in some large space store

Research and Development: increase or focused more in survey and research to find out new innovation or differentiation from existing customers and potential customers

Potential fallout