Frias, Nicole Joy S.

BSMA July 31, 2021

Starbucks Coffee Company

Is a retail company that sells beverages

primarily consisting of coffee-related drinks and food.
In 2018, Starbucks had 53% of company-operated
stores vs. 48% licensed stores. The revenues for
company-operated stores accounted for 80% of total
revenues, thus making Starbucks a chain business
model.

Starbucks Coffee’s Corporate Mission Statement:

“To inspire and nurture the human spirit, one person,

one cup and one neighbourhood at a time.”

Starbucks Coffee’s Corporate Vision Statement:

“To establish Starbucks as the premier purveyor of the

finest coffee in the world while maintaining our
uncompromising principles while we grow.”

Core Values

Starbucks core values comprise “teamwork, integrity, respect for culture, and perseverance.

Objective

Our objective is to maintain Starbucks standing as one of the most recognized and
respected brands in the world. To achieve this, we are continuing the disciplined expansion of
our global store base, adding stores in both existing, developed markets such as the U.S. and in
newer, higher growth markets such as China, as well as optimizing the mix of company-
operated and licensed stores around the world. In addition, by leveraging the experience
gained through our traditional store model, we continue to offer consumers new coffee and
other products in a variety of forms, across new categories, diverse channels and alternative
store formats. We also believe our Starbucks Global Social impact strategy, commitments
related to ethically sourcing high-quality coffee, contributing positively to the communities we
do business in and being an employer of choice are contributors to our objective.
 SWOT ANALYSIS

STRENGTHS WEAKNESSES
 Strong brand correlation and  Volatile supply costs
public image
 High product prices
 Strong financial performance  Unhealthy choices
over time
 Diverse product offerings

THREATS
OPPORTUNITIES
 Issues with its
 Expansion into supply chain (cost,
developing markets strikes)
 Further product
Diversification  Easily imitated
 Partnerships with other
 Lower-cost coffee
companies and brands restaurant chains
Strengths

1. Strong brand correlation and public image

Starbucks is one of the most well-loved consumer brands on the market. With nearly countless stores
across the United States and lines around the corner for most drive-thrus, customers are fiercely loyal to
this chain and continue to contribute to its longevity. In many ways, it was responsible for making coffee a
“premium” product instead of a common commodity. Furthermore, it continues to maintain a strong brand
presence through favorite products and aggressive PR efforts. Starbucks is one of the top five most
admired companies in the world. (Fortune)

2. Strong financial performance over time

All of this consumer buzz has led to powerful sales figures year over year, which has allowed Starbucks
to explode in the number and density of stores in its key markets. Starbucks would often open thousands
of stores in a given year, saturating the market and pushing out competition. Even emerging markets like
China have seen aggressive expansion over the past few years.

Starbucks operated over 31,000 stores worldwide. (Statista)

3. Diverse product offerings

For such a basic food item as coffee, Starbucks has created dozens of proprietary beverage options that
are tightly bound up with the overall brand, such as the ever-popular pumpkin spice latte. Branded
merchandise further allows consumers to promote their loyalty to the company, and moving into
supermarket goods allowed consumers to bring their favorite blends to their homes or offices instead of
relying solely on the restaurant. Starbucks’ pumpkin spice latte has sold over 350 million cups.
(Mashable)

Weaknesses

1. Volatile supply costs

Starbucks’ prices are directly tied to the cost of its coffee beans. Since it touts itself as a purveyor of fine
coffee products, it presumably purchases higher-quality beans, and when any increase occurs in
procuring the raw coffee beans themselves, that cost must be passed on to the consumer in some way.
Continued increases in coffee prices may result in even higher prices at the register, which could turn
some customers away. Coffee bean prices have changed dramatically over time, with a 164% price
increase from 2007 to 2011, and an overall 20% increase from 2007 to 2021. (Business Insider)

2. High product prices

Even a regular cup of coffee is far more expensive than at competing restaurants, and there are dozens
of drinks and options for customization that add up. Additionally, brewing coffee from home or at the office
is much cheaper for those who see coffee as a staple instead of a luxury. Beating this perception and
justifying high prices can be difficult and is a hurdle that Starbucks must jump over every day. Starbucks
products cost an average of 38% more than products sold by competitors. (Business Insider)
3. Unhealthy choices
Many drinks offered by Starbucks are high in calories and sugars, making them dangerously unhealthy if
consumed on a frequent basis. The simple alternative for consumers would be to select an option with
fewer additives, but the company has made its reputation on flavored and sweetened products that
appeal to consumers’ taste buds. Providing healthier alternatives and modifications to its recipes will be
key in sidestepping this problem. A Starbucks cinnamon roll Frappuccino contains 510 calories and 85
grams of sugar. (Business Insider)

Opportunities

1. Expansion into developing markets

Starbucks already has a very strong foothold in America and is growing more stable in China every year.
It can use these successes as a model for expanding into other diverse markets, building on lessons
learned and connecting with other populations to build an even stronger worldwide brand reputation. By
becoming the first or the largest player in key markets, it can continue its amazing track record of
expansion.

Starbucks is available in 83 worldwide markets. (Investopedia)

2. Further product diversification

Starbucks is well known for certain products, but the brand can do even better by exploring other avenues
for specialty items. It can look into other beverage options that further customize the base coffee product
or even look into completely different products like teas, sodas, and infused waters. Its food menu could
also be expanded to allow for greater consumer choice.

Starbucks has a 78% customer satisfaction rating. (Statista)

3. Partnerships with other companies and brands

By co-branding some products with those from other companies, or cross-promoting other brands in its
stores, Starbucks can take advantage of the benefits of a partnership with other established corporations.
When this kind of collaboration is done well, it reinforces public perception of both brands and can
increase sales for both parties.

Starbuck has partnered with Nestle on a line of coffee creamer products sold at commercial retailers.
(CNN)

Threats

1. Issues with its supply chain (cost, strikes)

Any changes to the supply chain can cause major issues down the line – failed coffee bean crops,
significant weather events, even employee strikes at third-party providers. These issues make the
company beholden to even the slightest fluctuations anywhere along the line, from growing the beans to
brewing them in the restaurant. Starbucks should find ways to minimize potential shortfalls wherever
possible.
Coffee prices are expected to rise due to weather-related crop shortages. (Sprudge)

2. Easily imitated
As previously discussed, coffee can be found nearly everywhere, and many of the baseline menu
offerings can be copied at a much lower cost. If Starbucks wants to own the market for “basic” coffee
beverages, it must overcome the perception of simpler drinks as choices that cannot be easily imitated,
either through highlighting the original beans or the brewing process.

Retail sales for coffee in the United States is $5.18 billion. (Statista)

3. Lower-cost coffee restaurant chains

Other chains that offer breakfast foods have coffee on their menus, and prices for a regular cup of coffee
are much lower than can be found at Starbucks. Whether due to lower profit margins or a minor drop in
quality, these chains present a major threat to a company that thrives on more expensive sales.

McDonald’s coffee products are far less expensive, and can be made with many of the same options as
Starbucks. (Delishably)