STARBUCKS

SHUBHADIP BISWAS PGDM10-12 IILM-GSM

HISTORY
Jerry Baldwin, Zev Siegl, and Gordon Bowker-FOUNDERS OF STARBUCKS-1971 IT USED 2 BE A RETAILER HOWARD SCHULTZ STARTED HIS CAREER AS A SALESMAN IN SWEDISH KITCHENWARE 1982HE BEGAN HIS JOURNEY WITH STARBUCK 1983-ON A BUSINESS TRIP TO MILANHE SAW AN EXPRESSO BAR WITH DIFFERENT CONCEPT

HISTORY
HE LOVED IT----IT WAS A WARM COMMUNITY EXPERIENCE HE PROPOSED THE IDEA ------BOARD OF DIRECTORS REJECTED IT HE LEFT STARBUCKS & OPENED HIS OWN COFFEE BAR COMPANYII GIORNALLE 1987HOWARD BOUGHT STARBULKS FROM THAT TIME TO NOW ON STARBULKS IS MOST POPULAR COFFEE BRAND WORLDWIDE FOR ITS FAMOUS FRESH BREWED COFFEE

COFFEE INDUSTRY ANALYSIS

BASIC COFFEE SPECIALTY COFFEE---HIGHER QUALITY COFFEE GROWING IN 7% ANNUAL GROWTH RATE

COFFEE INDUSTRY ANALYSIS

COFFEE SHOPS MAKE UP THE FASTEST GROWING PART OF THE RESTAURANT BUSINESS, CHECKING IN WITH A 7% ANNUAL GROWTH RATE! WORLD COFFEE PRODUCTION IS ESTIMATED AT 110 - 120 MILLION BAGS PER YEAR 14 BILLION ESPRESSO COFFEES ARE CONSUMED EACH YEAR IN ITALY, REACHING OVER 200,000 COFFEE BARS, AND STILL GROWING AMERICANS CONSUME 400 MILLION CUPS OF COFFEE PER DAY, OR EQUIVALENT TO 146,000,000,000 (146 BILLION) CUPS OF COFFEE PER YEAR; MAKING THE UNITED STATES THE LEADING CONSUMER OF COFFEE IN THE WORLD.

COFFEE INDUSTRY ANALYSIS

THE NATIONAL COFFEE ASSOCIATION ESTIMATES THAT THE US COFFEE MARKET WILL REACH $29 BILLION IN 2011 STARBUCKS ALREADY HAS A PRESENCE IN CHINA, BUT THE INDIAN MARKET REMAINS LARGELY UNTAPPED. RECENTLY, STARBUCKS ENTERED INTO A PARTNERSHIP WITH TATA COFFEE ,THE NATION'S BIGGEST COFFEE PRODUCER TO HELP TAP THE COUNTRY WHERE COFFEE CONSUMPTION HAS INCREASED BY 89% IN THE PAST 13 YEARS. CURRENTLY ONLY 22% OF URBAN YOUTH GO TO CAFES, AND ACCORDING TO CAFE COFFEE DAY EXECUTIVES, THE INDIAN MARKET HAS THE POTENTIAL TO HOUSE UP TO 5,400 CAFES. CURRENTLY LESS THAN ONE-THIRD OF THOSE CAFES EXIST.

CURRENT SCENARIO

STARBUCKS IS THE LARGEST COFFEEHOUSE COMPANY IN THE WORLD, WITH 17,009 STORES IN 50 COUNTRIES, INCLUDING OVER 11,000 IN THE UNITED STATES, OVER 1000 IN CANADA, AND OVER 700 IN THE UK.
SBUX.O $36.72 -0.14-0.38%

STARBUCKS SELLS DRIP BREWED COFFEE, ESPRESSOBASED HOT DRINKS, OTHER HOT AND COLD DRINKS, COFFEE BEANS, SALADS, HOT AND COLD SANDWICHES AND PANINI, PASTRIES, SNACKS, AND ITEMS SUCH AS MUGS AND TUMBLERS.

CURRENT SCENARIO

THROUGH THE STARBUCKS ENTERTAINMENT DIVISION AND HEAR MUSIC BRAND, THE COMPANY ALSO MARKETS BOOKS, MUSIC AND FILM.
STARBUCKS POSTED EARNINGS OF 399.3 MILLION OR $0.37 EPS, UP 86% COMPARED TO $199.4 MILLION FROM SAME QUARTER LAST YEAR. THIS FIGURE BEAT ANALYST ESTIMATES OF $0.32 EPS.[SALES ALSO ROSE 17% TO 2.8 BILLION AS COMPARABLE STORE SALES ADDED 8% IN DOMESTIC MARKETS.

REVENUE GROWTH OF STARBUCK

PESTEL ANALYSIS
POLITICALHIGH TARIFF AFFECTS STARBUCKS PRODUCTION,ABILITY TO SOURCING BEST COFFEE BEANS ECONOMICAL1.HIGHER EXCHANGE RATE---MOST OF SUPPLIERS OF STARBUCKS ARE EXTERNAL---RESULT=INCURRING HIGHER COST-COFFE MAKING IS BEING EXPENSIVE WAYOUT---EXTRA COST TO CONSUMER?? OR MAKING LESS PROFIT??

PESTEL ANALYSIS
2.INCOME DISTRIBUTION OF CONSUMER AFTER THE ECONOMIC CRISIS,2007 UNEMPLOYMENT FIGURES ROSE. PEOPLE WHO WERE ABLE TO CONSUME STARBUCKS EXPENSIVE SPECIALTY COFFEE NOW SAW IT AS A LUXURY IN SOME LOCATION. RESULT=SUDDEN DROP IN SALES VOLUME,2009

PESTEL ANALYSIS
SOCIAL ISSUE1.CHANGING TASTEUSA IS CONSUMING MORE SPECIALTY COFFEEIMPORT OF 1.3 BILLION IN 2010 INDIA ,CHINA---PEOPLE PREFER TEA. SO DIFFICULTY IN IMPLEMENTATION OF STRATEGY-AMERICANISATION IN DEVELOPING COUNTRIES. 2.HEALTH CONSCIOUSNESSNEED TO INTRODUCE NEW HEALTHY ALTERNATIVES NORTH AMERICANS ARE REPLACING ALCHOHOL WITH COFFEE 3.COFFEE BARSA PLACE FOR MEETING,A PLACE OF RECREATION

PESTEL ANALYSIS
TECHONOLOGY STARBUCKS FOR PROMOTING BAND GLOBALLYUSING SOCIAL NETWORKING SITES IMPLEMENTED NEW PHONE PAYMENT SYSTEM STARBUCKS CARDONLINE PAYMENTIT ALSO HELPS TO INCREASE CUSTOMER LOYALITY

PESTEL ANALYSIS
ENVIRONMENTAL COFFEE HARVES IS DEPENDENT ON WEATHER CONDITIONS,HEALTH OF COFFEE TREES,HARVESTING PRACTICES,DISEASE AND INFECTION CAUSED BY INSECTS

OPPORTUNITIES AND THREAT-OPPORTUNITIES-- ENTRY INTO NEW MARKETS GROWTH IN COFFEE MARKET THREATS COMPETITION WITH MCDONALD, CARIBOU COFFEE AND PEET'S COFFEE IN THE BROADER MARKET FOR SPECIALTY COFFEE. THEY ARE SELLING GOOD COFFEE FOR BETTER VALUE PREVIOUSLY-SECOND CUP---GROWTH OF SECOND CUP WAS A HEADACHE.

INTERNAL ANALYSIS STRENGTH AND WEAKNESS-STRENGHTH 1.BRAND IMAGE 2.STRATEGY TO CAPTURE KEY LOCATIONS AND OPENING STORES 3.ROASTING TECHNOLOGY 4.VALUED AND MOTIVATED PARTNERS[EMPLYEES]

INTERNAL ANALYSIS STRENGTH AND WEAKNESS-WEAKNESS 1.AGGRESSIVE EXPANSION WITHOUT PROPER INFRASTRUCTURE IS STARBUCKS THERE?? ANSNO RESULT=PUT A STARBUCKS THERE. QUESTION ARISES-----QUALITY VS VOLUME 2.STARBUCKS HAS NOT FOCUSED ON ITS PRODUCT DIFFERENTIATION OBJECTIVES 3.PROBLEM IN DISTRIBUTION CHANNELSTARBUCKS HAS CHARGED THAT KRAFT'S ALLEGED NEGLECT AND MISMANAGEMENT OF THE BUSINESS -- WHICH BRINGS IN ABOUT $500 MILLION IN ANNUAL SALES. THE WORLD'S BIGGEST COFFEE CHAIN WANTS TO END THE PARTNERSHIP ON MARCH 1 AND REPLACE KRAFT WITH PRIVATELY HELD ACOSTA INC.

LARGEST PUBLICLY TRADED FOOD SERVICE COMPETITORS-----FY 2009

company mcdonald Yum brands starbucks Darden restaurant revenues $22745 $10836 $9775 $7218 Net income $4551 $1083 $391 $372 $79 $4 $200 $131 $48 Net margin 20% 10% 4% 5.2% 2.2% 0.1% 7.9% 5.3% 3.4% restaurants 32478 37000 16635 1773 1689 6451 11925 2212 3141 40% 80% 88% 46% 71% 0% franchised 81%

Brinker $3621 international Wendy $3581 international Burger king holdings Jack in the box Cke restaurants $2537 $2471 $1419

COMPETENCIES OF STARBUCKS-ROASTING TECHNOLOGY VALVE TECHNOLOGY VALUE AND MOTIVATED PARTNERS REAL ESTATE APPROACH BAND IMAGE QUALITY EFFICIENT SUPPLY CHAIN SYSTEM

CORE COMPETENCIES
ROASTING TECHNOLOGY BRAND IMAGE

MARKETING STRATEGY
THE GLOBAL ECONOMY CONTINUES ITS RECOVERY, STARBUCKS IS PLANNING TO OPEN AN AVERAGE OF MORE THAN ONE STORE EACH DAY. ACQUISITIONAPRIL 2003, STARBUCKS COMPLETED THE PURCHASE OF SEATTLE'S BEST COFFEE AND TORREFAZIONE ITALIA FROM AFC ENTERPRISES 1998-tazo tea company ; 1999-hear music;2008-clover PARTNERSHIP UNITED AIRLINES NORDSTORM BARNES AND NOBLE BOOK STORE

MARKETING STRATEGY
PEPSICO PRICECOSTCO RED HOOK BREWERIES DREYERS ICE CREAM ARAMARK APPLE TATA COFFEE Acosta Inc

STARBUCK STRATEGY

RESULT OF SWOT ANALYSIS-1.STARBUCKS AGGRESSIVE GROWTH STRATEGY HAS MADE IT DIFFICULT TO DELIVER CONSISTENTLY HIGH QUALITY PRODUCTS AND SUPERIOR CUSTOMER SERVICE WORLDWIDE. 2.STARBUCKS NEEDS TO REFOCUS ON THE PRODUCT DIFFERENTIATION STRATEGY RATHER THAN EXPANDING. 3.MARKET PENETRATION WILL NOT BE A PROBLEM IF STARBUCKS CREATES PROPER INFRASTRACTURE GLOBALLY.