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SUMAIRA YOUSUF

MUZNA REHMAN
BEENISH HAYAT
RABIA FATIMA
LAILA FAREED
AMNA TAYAB
ERUM ASIF

Presented to: Ms NOOR USS SABBAH


KHAN
Discuss the types of growth strategies
that Starbucks has used.

Starbucks has used following types of


growth strategies:

CONCENTRATION

Starbucks went globally, opening hundreds


of thousands of stores round the world.

It targeted its customers demographically.


HORIZONTAL INTEGRATION

Starbucks used horizontal Integration when it


bought its competitor Tazo, LLC. to market a
selection of premium tea products.

DIVERSIFICATION

• Related Diversification
Food items
Coffee Beans
Coffee flavored ice-cream
Ready to drink beverages
Coffee related accessories and
equipment
• UNRELATED DIVERSIFICATION

Starbucks launched pre-paid cards.


It launched hear music café.
A Magazine called Joe was also
launched with Time.
It has co-branded website with Yahoo.
It made partnerships and joint ventures
with Kellogg and Pepsi.
Evaluate the growth Strategies Starbucks is
using. What do you think it will take for
these strategies to be successful?

Its broad strategy is to grow into a global empire.

Starbucks long term goal is 15,000 stores in US


and 30,000 stores globally.

For 2006, the company’s goal is to open 1,800


new stores globally and reach $7.6 billion in
revenues.

Goals for the next 3 to 5 years include:


Increasing total revenue by 20 %
Earn per share growth between 20 to 25%
Starbucks has gone globally; opening hundreds of stores in 37 countries
keeping customers of all ages in focus and is planning to grow even more.

To Expand more Starbucks also sells


Food items
Coffee beans
Coffee flavored ice-cream
Ready to drink beverages
Coffee related accessories and equipment

Starbucks has started a pre-paid card service and has also opened a hear
music café.

It is also expanding its business through joint ventures.


It will take:
Time.
Effort.
Resources.

As they are now moving into the markets


of Russia and India, it’s important to do
Industry Analysis first, that are:

3. Threats of new entrants.


4. Threat of substitutes.
5. Bargaining power of buyers.
6. Bargaining power of suppliers.
7. Current rivalry.

They also have to respect the culture and the heritage of the countries they go in.
What competitive advantage(s) do you think
Starbucks has? What will it have to do to
maintain that (those) competitive
advantage(s)?

Starbucks has the following Competitive Advantages:

Customer responsive culture and aura inside


Inside aura invokes the warm feeling of community.
Competitive advantage over classic brands.

Valued Employees
Employees are highly valued Starbucks
It has lowest level of employee attrition

Finest Coffee
Starbucks has started a Café life that never existed.
Strong Brand Management
Starbucks has been very powerful in brand
management.

Wide Geographic Coverage


Starbucks covers a wide geographical
area.

Quality Control
The company’s growth is governed by
whether the quality is maintained.
Steps to maintain Competitive Advantage

Starbucks should be aware of the new


entrants coming into the Industry.

As Starbucks is expanding globally, it has to make sure


whether customers there are not switching to other drinks.

Cost is according to what customers can


afford and are willing to pay.

Farmers should be sufficiently paid, so they


don’t switch their supplies to competitors

Needs to keep check on competitors actions

The strategy that will give Starbucks a competitive advantage is Differentiation,


Do you think Starbucks brand can become too
saturated – that is extended to too many
different products? Why or why not?

Starbucks brand cannot become too


saturated by extending to different
products.

The reasons Starbucks has extended to too


many products:

The growing number of stores seemed a threat


to Brand Image.
The Competitors has prices lower as compared
to Starbucks .
In order to remain competitive, innovative and attractive brand, Starbucks is
introducing many new products to broaden its appeal.

CEO has stated:


“All company growth is governed by whether the quality can be maintained. It
there is any uncertainty about the quality, a new strategy won’t fly in, no matter
how good it might seem, that is to say they wouldn’t compromise with the quality
in extending the range of products.”
Do a brief SWOT Analysis of
Starbucks?

STRENGTHS

Joint Ventures.
Quality Control.
Customer responsive culture and aura inside
Starbucks.
Finest Coffee.
Wide Geographic Coverage.
Strong Brand Management.
Product diversification.
Established logo, developed brand, copyrights,
trademarks, website and patents.
Company operated retail stores, International stores.
High visibility locations to attract customers.
Valued and motivated employees, good work
environment.
Good relationships with suppliers.
Industry market leader.
Globalized.
Widespread and consistent.
Knowledge based.
Strong Board.
Strong financial foundation.
WEAKNESSES
Size.
Lack of internal focus (too much
focus
on expansion).
Cross functional management.
Product pricing (Products are
expensive as compared to its
competitors).
OPPORTUNITIES
Expansion into retail operations.
Technological advances.
New distribution channels (There would
be new ways in delivering the products).
New products.
Distribution agreements.
Brand extension.
Emerging international markets.
Continued domestic expansion/domination
of segment.
THREATS
Competition (restaurants, street carts,
supermarkets, other coffee shops, other caffeine
based products).
US market saturation.
Coffee price volatility in developing countries.
Negative publicity from poorly treated farmers in
supplying countries.
Consumer trends toward more healthy ways and
away from caffeine.
Fragile state of worldwide production of specialty
coffees.
Corporate behemoth image.
Cultural and Political issues in foreign countries.
QUERIES
SESSION

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