Starbucks was originally established in 1971 by three enterprising academics who shared a common love for coffee. The original strategy was to sell quality coffee and introduce consumers to drinking coffee, a concept created by Alfred Peet in the United States. In 1981, Howard Schultz, who was greatly interested in the growth of Starbucks, joined the company as operational director of marketing, but the founders refused his proposal to reposition and sell Starbucks coffee beverages. During a trip to Italy, Howard Schultz discovered the concept of Italian espresso bars. After founding his own company Il Giornale in 1986, Howard Schultz purchased assets of Starbucks in 1987 and thus Starbucks Corporation was fully established.
The success of Starbucks is based on the vision of this man, Howard Schultz, who developed an innovative concept, in which the consumer could drink his coffee in an atmosphere specific to the company policy, in which he created an experience around coffee consumption. Howard Schultz succeeded in making Starbucks one of the best known and most respected brands in the world of coffee. Following national popularity, the company experienced success overseas, in Canada and Great Britain. Howard Schultz hired experienced talent to help create a profitable business with a social conscience. Indeed, Howard Schultz attached great importance to the social aspect in the company's management. Starbucks is a company that knows a strong turnover, and in which employees receive many benefits such as health insurance, stock option programs or funding their retirement. Thus, each "partner" takes his work to heart, which creates strong customer satisfaction. Starbucks has seen impressive growth since its inception; the share price has increased by over 5000% since its IPO on Nasdaq in 1992. Nevertheless, in the face of the economic crisis of 2008 and the arrival of more competitors in the market, how can Starbucks continue to evolve?
Three areas of study will be covered in this paper: what types of benefits Starbucks has developed throughout its history and what its expansion strategy has been, how Starbucks can maintain its brand image, and finally, how the company can withstand the threats against the company in the current market.
In the context of globalization, it has been proved that value adds to the dynamics of the creative aspect of a company. So Starbucks was among the first with the concept of "The Third Place", and received public encouragement. Internationally, Starbucks has had some problems in Ethiopia, with which it came into conflict because of the ownership of certain varieties of coffee. In addition, the implementation strategy differs in each country, in fact, it is sometimes difficult for companies to succeed in a country where citizens have their own habits, as in France where there are many pubs. However, coffee is supported by associations such as "International Coffee Agreements" (ICA), which allows the development of the coffee economy, and encourages the consumption and the qualities of coffee.
[...] This gives Starbucks both an advantage and a disadvantage. Firstly, it allows Starbucks to be in a strong position since it has diversified suppliers. However, the company must relegate checking coffee quality and compliance with CAFE standards to these first- tier suppliers, the cost of checking all of the chain being too expensive for Starbucks. In addition, the coffee supply chain suffers from a lack of infrastructure. The coffee harvest is done by hand and, carried at arm's length. Coffee producers mostly remain poor. [...]
[...] • National and international • Price increase of milk. expansion. • Differentiation of coffee farmers: organic coffee, fair trade coffee etc . • Appearance of pods (Nespresso, Senseo, Tassimo) • Compete with restaurants, cafe bars, supermarkets. • Threat of new entrants like McDonalds that has opened Mc Cafes. • The legal form of Starbucks outlets depends on the host country; they must adapt. • Cost associated with opening a new store. • Many intermediaries exist between coffee production and sale. [...]
[...] Bibliography • Strategic 8th edition (PIN) by Gerry Johnson, Kevan Scholes, Richard Whittington, Frederic Fréry PRICE: Cost to the consumer High prices (€ 2 espresso) Credit Terms PROMOTION: communication advertising Word of mouth Marketing point of sale (co据灥⁴景∠桴物汰捡≥ 灓湯潳獲楨Ɒ䴠摥慩删汥瑡潩獮楃敮慭䥍⁘䅍䭒呅义⽇吠剁䕇⁔ 䅍䭒呅剐䑏䍕㩔挠獵潴敭慶畬䠠杩畱污瑩⁹景猠牥楶散眠摩慲杮㠨ⰷ〰‰潣扭湩瑡潩 獮ഩ倍䅌䕃›潃癮湥敩据楄瑳楲畢楴湯挠慨湮ncept of "third place") Sponsorship, Media Relations, Cinema MIX MARKETING/ TARGET MARKET PRODUCT: customer value High quality of service wide range (87,000 combinations) PLACE: Convenience Distribution channels assortments Catchment area and coverage - Very good networking Point of sale Means of transport Actual Competitors: - McDonald's - Restaurants, bars & hotels - Dunkin 'Donuts, Peet's Coffee and Tea, Coffee Bean, Second Cup STRONG COMPETITION Threat of new entrants: LOW - Growing market - Presence of barrier to entry, because need for heavy investment Bargaining power of suppliers: HIGH - Relationship of partnership for the control of producers Bargaining power of customers (distributors): - Short: Stores power MIDDLE - Long circuits: grocery stores, convenience stores (2)-power LOW The international community: AVERAGE Scientific Certification verifies the responsible behavior of companies buying the coffee. Threat of substitutes: AVERAGE • There are no real alternatives • Substitute products are all other beverages. [...]
[...] Technologies resulting from research and development allow companies holding patents to achieve productivity gains, time and therefore ensure profitability. b. The SWOT analysis reveals several strengths within the company: Internal analysis: Strengths Weaknesses • Starbucks is present in • Wifi connection fee is many parts of the value chain of charged, unlike other competitors the coffee industry. like McDonalds or Columbus Café. • Social enterprise, • Starbucks does not touch regardless of turnover, good any of the target market; the training of baristas and managers, family is not present. [...]
[...] This strategy will consist of cutting- edge social practices. We then see the emergence of health insurance for all employees working in the company, a stock option plan, a comprehensive training program, many opportunities for internal promotion, a real diversity in its choice of partners, and finally, the ability to hold these open forums so that everyone can express them with respect to the offer. All its actions reinforce the motivation of employees while reducing turnover and reducing the costs associated with training (one of the lowest in fast food). [...]
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