Starbucks

Presented by: Yatheesh Rao, Harish Shetty, Ravijith Rai, Sheethal K, Ragavendra, Tina Crasta

JKSHIM

CEO Say‟s:
“The success of Starbucks demonstrates… that we have built an emotional connection with our customers… we have a competitive advantage over classic brands in that everyday

we touch and interact with our customers directly. Our
product is not sitting on a supermarket shelf like a can of soda. Our people have done a wonderful job of knowing your

drink, your name, your kids names”

Introduction to Starbucks
  

Company started in march 30, 1971 in Seattle, Washington Founders: Zev Siegl, Jerry Baldwin and Gordon Bowker Grew from 55 stores in 1989 to over 17133 stores today in

49 countries
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11068 stores in USA itself Products sold include: - beverages - whole coffee beans - pastries - coffee-related retail items

Cont,..
    

Revenue: US$9.77 Billion Operating income: US$476 Million Net income: US$391 Million Total assets: US$5.58 Billion Total equity: US$3.05 Billion

Employees: 128,898

CEO- Howard Schultz
Entrepreneur Howard Schultz joined the company in 1982 as Director of Retail Operations and Marketing, and after a trip to Milan, Italy advised that the company should sell coffee and espresso drinks as well as beans. The owners rejected this idea, believing that getting into the beverage business would distract the company from its primary focus. To them, coffee was something to be prepared in the home, but they did give away free samples of pre-made drinks. Certain that there was money to be made selling pre-made drinks, Schultz started the „Il Giornale’ coffee bar chain in April 1986

Cont..
In 1998 Howard Schultz had ample reason to be proud of what

Starbucks had accomplished during his past 11 years as the
company's CEO. The company had enjoyed phenomenal growth and become one of the great retailing stories of recent history by making exceptional coffee drinks and selling dark-roasted coffee beans and coffee-making equipment that would allow customers to

brew an exceptional cup of coffee at home. Today have created a
unique brand image.

Vision Statement

“The heart of our company‟s continued success lies within our
two cornerstones: Our coffee and our people.”

We will cultivate the growth of our partners with the same passion and care that we dedicate to the growth of our coffee.

5 Key Leadership Principles
1.

Make it your own: Leaders at Starbucks have provided a structure that allows partners to infuse themselves into their work, so that they can inspire customers in legendary ways. The leaders call this the “5 ways of being” :  Be welcoming- “offering everyone a sense of belonging”,  Be genuine- “connect, discover & respond”,  Be considerate,  Be knowledgeable &  Be involved.

Cont,…

2. Everything matters. 3. Surprise & Delight. 4. Embrace resistance. 5. Leave your mark.

Starbucks Corporate Strategy

   

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

Alignment of Store with Corporate Strategy

Contrary to the mission statement focus, the reduction of staffing
levels appears to be more important than developing satisfied customers

The relevance of the benefits package is misaligned considering the average age of employees

The high turnover rate of partners and managers is detrimental to
customer environment

Social Responsibility
Starbucks is committed to a role of environmental leadership in all facets of their leadership. They fulfill their mission by commitment to:

Understanding of environmental issues
Striving to buy, sell and use environmentally friendly products

Encouraging all partners to share in their mission.

Financial Performance during 2000-03

Revenue increased from $1.8 billion in 2000 to $4.1 billion in 2003.

PAT from $94.6 million in 2000 to $268.3 million in 2003.

Starbucks SWOT Analysis

Strengths – Largest market share in industry – Differentiated atmosphere Weaknesses – Aggressive expansion could lead to managerial / financial problems Opportunities – Moving into untapped markets (India) Threats – Lack of ownership of coffee farms can lead to price fluctuations.

Recommendations For Improvement

Revamp the employee reward system
Focus profitability measures on profitable sales,

not just reduction in staffing

Revamp Employee Reward System
Large percentage of the staff are under the age of twenty  Benefits package focuses on medical, dental, and vision care, as well as the employee stock options  Outside of hourly wage, and semiannual raises, there are few monetary rewards

THANK YOU

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