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Overview
Strategic Issues
Recommendations
Background
External Analysis
Internal Analysis
Competitive Actions
Strategic Issues
How do we get big and at the same time, stay small?
Keeping experiences consistent across the globe
Recommendations
Maintain their brand image while adapting product offerings as they
expand internationally
Increase number of Ready-to-Drink offerings
Horizontal Integration - Develop delivery system for coffee customers
Vertical Integration - purchase of coffee growers
Background
Created by 3 promising entrepreneurs
Discovered by Howard Schultz
Il Giornale
Bought the Starbucks name
Developed strong management team
Employee Care
Expanded rapidly
Background
At the time of the case, Starbucks had
3,500 stores
17 countries
37,000 employees
Revenue of $2.2 billion
Net Income $95 million
Plans to continue expanding
General Environment
Retail Coffee Industry
Demographic
Rising Incomes
Economic
Affordable Luxury
Sociocultural
Baby Boomers
Health Trends
Fast-Paced Society
General Environment
Retail Coffee Industry (Continued)
Technological
Home Use
Global
Different Tastes
International Travel
Political/Legal
Varying Rules & Regulations
Strategic Groups
Zabars
Degree of
Specialty
Starbucks
Gloria Jeans
Nestle
General Foods
Proctor & Gamble
McDonalds
Burger King
Cost Leadership
Organizational Structure
Competitive Actions
New Competitive Strategy:
Less focused on store growth
More focused on broadening product selection
Out of store products
Pricing points of products
Delivery
Competitive Actions
Motivation:
Increase revenues per purchase
Prevent market oversaturation
Unique customer experience
Competitive Actions
Entry Strategies:
Joint ventures
Acquisitions
Green Field investment
Competitive Dynamics:
Very competitive
No more first mover advantages
Corporate Analysis
Related Diversification: Economies of Scope
Leveraging core competencies by acquiring Starbucks in 1987
6 retail stores, roasting plant in Seattle and the Starbucks name
Related Diversification: Market Power
Pooled negotiating power by entering a long term licensing
agreement with Kraft
8500 supermarkets in 15 states
To accelerate sales growth in grocery channel
Corporate Analysis
Vertical Integration
Starbucks refused to franchise to ensure quality
control
Bought its own coffee direct from producing
countries
Recommendation
Continue to expand internationally through joint
venture
Control raw materials price by purchasing
Recommendations
Maintain their brand image while adapting product offerings as they
expand internationally
Increase number of Ready-to-Drink offerings
Develop delivery system for coffee customers
Vertical Integration - purchase of coffee growers
Conclusion
Strategic Issues
Recommendations
Background
External Analysis
Internal Analysis
Competitive Actions
Corporate Analysis
Questions?