Starbucks

Presented by : Ashish Mittal Roll No : BAN2010XMBA1P001 Date : 13th July, 2011 ITM Executive Education Center, Bangalore

Current Goals
Build an International Model Scale & Grow Profitably Reach new customers with Seattles best Coffee Optimize & grow US Retail Business Elevate Partner Experience Build World Class CPG Business Accelerate in China ; CSR Lead premium single cup category

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Presentation Outline
        

Introduction to Starbucks Industry Overview Company Overview Site Analysis Recommendations for Improvement Focused Recommendation for Improvement Final Action Plan Impact Analysis Wrap Up

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Introduction to Starbucks
Company started in 1971 in Seattle, Washington  Grew from 55 stores in 1989 to over 2,200 stores today  March 2011 marks Starbucks 40th Anniversary  Products sold include:


- beverages - pastries - whole coffee beans - coffee-related retail items

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Industry Overview

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Industry Definition


Specialty Eatery Industry

Fits within the largest segment of disposable income spending -- food and beverages Steady growth in this segment in the 1990s has led to an abundant number of new companies As demand for convenience has made eating out a normal routine, the demand for specialty food services has increased in recent years

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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

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Industry PEST Analysis



Political Influences
Relationships between coffee producing nations and US State & Local government controls

Economic Influences
Constant demand for food and beverages 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

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Company Overview

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Starbucks Corporate Strategy

 Maximize

market penetration  Provide a relaxing, attractive social atmosphere  Offer high-quality products  Create a great working environment  Achieve profitability

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Starbucks SWOT Analysis



Strengths
Largest market share in industry Differentiated atmosphere

  

Weaknesses
Aggressive expansion could lead to managerial / financial problems

Opportunities
Whole bean sales in supermarkets

Threats
Lack of ownership of coffee farms can lead to price fluctuations

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Company Financial Performance (2010 FY)

The Frappuccinos

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Company Financial Performance (2010 FY)

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Company Financial Performance (2010 FY)

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Quick Highlights

 Revenues Increased to a record of $10.7Billion Operating Income increased by $857 Million to $1.4 Billion  2010 Highest full year comparable sales growth First ever dividend for shareholders Offer special Cash Award to eligible partners in recognition of their contribution to Starbucks strong performance in 2010.

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http://moneycentral.msn.com/investor/invsub/results/state mnt.aspx?symbol=SBUX

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Business Segments
United States Inernational Global CPG Seattles Best Coffee Op Segment The Frappuccinos

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Retail Sales mix by product type for Co operated stores

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Licensed stores by region:

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Performance Comparison Graph

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MDA Financial Highlights

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MDA Fiscal 2011 View Ahead

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Info by Operating segment for fiscal years noted (in Millions):

The Frappuccinos

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Balance Sheet

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Wrap-Up
Starbucks is the market leader in a growing market segment  Starbucks is known world-wide for its highquality food products and differentiated Third Place atmosphere  The Wellesley location embodies the ideals of the corporate mission and has been very profitable, but there are still opportunities for improvement


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