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Presented by: Aditya Singh
Introduction to Starbucks Industry Overview Company Overview Recommendations for Improvement Focused Recommendation for Improvement Final Action Plan Impact Analysis Wrap Up
pastries .200 stores today More than 2400 stores in 33 countries outside the US More than 1500 stores in 31 markets outside North America Products sold include: .Introduction to Starbucks Company started in 1971 in Seattle. Washington Grew from 55 stores in 1989 to over 2.coffee-related retail items The Frappuccinos .beverages .whole coffee beans .
Starbucks Experience The Frappuccinos .
Industry Overview The Frappuccinos .
the demand for specialty food services has increased in recent years The Frappuccinos .food and beverages – Steady growth in this segment in the 1990’s has led to an abundant number of new companies – As demand for convenience has made eating out a normal routine.Industry Definition Specialty Eatery Industry – Fits within the largest segment of disposable income spending -.
product mix. and store atmosphere differentiation to establish market niche Industry Costs and Capital Structure – Low to moderate costs for each location – Major start-up expenditures are property and equipment – Major operating costs are labor and cost of sales The Frappuccinos .Industry and Competitive Analysis Market Structure – Monopolistic Competition Competitive Activity – Many companies are in the market and competition is fierce – Competitors use location.
Industry PEST Analysis Political Influences – Relationships between coffee producing nations and US – State & Local government controls Economic Influences – Constant demand for food and beverages – Changes in disposable income could influence purchase levels Social Influences – Consumer preferences could shift from coffee to other beverages Technological Influences – Use of technology can improve operational efficiencies The Frappuccinos .
Company Overview The Frappuccinos .
attractive social atmosphere Offer high-quality products Create a great working environment Achieve profitability The Frappuccinos .Starbucks Corporate Strategy Maximize market penetration Provide a relaxing.
customers. – Overall strategic approach Goals: – Financial – Strategic The Frappuccinos .Mission and Goals Mission/vision: – Define industry. etc. values.
Starbucks SWOT Analysis Strengths – Largest market share in industry – Differentiated atmosphere Weaknesses – Aggressive expansion could lead to managerial / financial problems Opportunities – Whole bean sales in supermarkets Threats – Lack of ownership of coffee farms can lead to price fluctuations The Frappuccinos .
Value Chain of Firm Activities Firm Infrastructure Human Resource Management Technological Development Procurement M A R G IN Operations The Frappuccinos Marketing & Sales Outbound Logistics Inbound Logistics Service .
898 4.8 100.0 5.0 19.2 23.648.1 100.2 2.2 25.9 20.8 14.7 5.980 2 1.7 15.RESULT OF OPERATIONS DATA Net Revenues ($.0 84.7 -1.0 1.288.3 20.551 216.3 -0.004 3.5 3.6 -5.3 4.4 19.5 18.3 7.792.1 5.386 2.7 .904 311.9 15.6 15.294.0 12.594 240.0 84.9 15.624 409.665 178.8 19.2 9.932 184.2 10.347 625.6 20.072 496. in thousands) Company-operated retail Specialty: Licensing Specialty: Foodservice and other Total Specialty Total Net Revenues (Data taken from 2004 Annual Report) 2004 4.075.0 1 22.1 15.8 2.449.0 23.6 17.457.247 2003 3.1 1.1 6.5 5.6 10.8 100.1 1.823 189 164 354 2.4 100.522 2002 2.2 21.229.721 419.8 5.6 27.2 22.3 15.8 3.378 565.908 2001 2.869 5.6 3.798 271.177 Percentage Relationship to Total Net Company-operated retail Specialty: Licensing Specialty: Foodservice and other Total Specialty Total Net Revenues Growth Rates (%) Company-operated retail Specialty: Licensing Specialty: Foodservice and other Total Specialty Total Net Revenues Percent Change in Growth Company-operated retail Specialty: Licensing Specialty: Foodservice and other Total Specialty Total Net Revenues 11/09/10 84.071 836.9 9.0 -0.0 84.
Staffing Individual Stores Individual Inventory. Inventory. Orders. Distributors. Channel Members Orders. Budgets. Future Sales The Frappuccinos . Mgmt. Inventory. Staffing Individual Stores Corporate IT System Vendors. Transfers Stores Sales..The use of IT at Starbucks Sales.
Order Cycle Times Yes Yes Pastry? .40 Min No Bottleneck Capacity 114 / Hr The Frappuccinos .53 Min No Take Customer’s Order Bottleneck Order? .27 Min .53 Min Yes No Pastry? .
Recommendations The Frappuccinos .
Tighten focus on creating the “Third Place” environment 3. Revamp the employee reward system 2.Recommendations For Improvement 1. not just reduction in staffing The Frappuccinos . Focus profitability measures on profitable sales.
and vision care. dental. and semiannual raises. as well as the employee stock options Outside of hourly wage. there are few monetary rewards The Frappuccinos .Revamp Employee Reward System Large percentage of the staff are under the age of twenty Benefits package focuses on medical.
Focused Recommendation Improve “Third Place” Environment The Frappuccinos .
Pros and Cons of Discounted Opportunities Revamp the Employee Reward System Pros – Employees are motivated with more incentive to perform – Lower employee turnover rates – Positive reinforcement which leads to higher feelings of job satisfaction Cons – Pay and benefit structures dictated by corporate HQ – Cost of benefits would additional benefits lower site profitability – New reward system requires additional management The Frappuccinos .
Pros and Cons of Discounted Opportunities (Cont.) Focus Profitability Measures on More Than Just Staffing Pros – Higher staffing levels benefit other employees – Better customer service – Improved customer focus could lead to higher sales Cons – Staffing is a cost that will decrease profitability – Upper-level management perception of low employee productivity – Employees may get in each other’s way The Frappuccinos .
Three-Step Action Plan For Improvement Decrease employee turnover rate – Focus on hiring older employees where benefits package is more appropriate – Base raises on performance rather than maximizing raises for economic reasons – Develop and actively maintain a reward system for employees (i.e. employee of the month) – Develop a system of regular employee communications / meetings The Frappuccinos .
Action Plan (cont.) Improve site accessibility and cleanliness – Upgrade front door and restrooms for handicapped accessibility – Add a baby changing station – Redesign restroom to separate cleaning supplies from bathroom or move cleaning supplies to another location – Focus employee attention on restroom cleanliness The Frappuccinos .
etc. have book / poetry readings.) Enhance Starbuck’s differentiated atmosphere – Utilize entertainment budget to hire outside entertainers. – Display the store’s collection of games and activities more prominently – Make the location more of a “scene” The Frappuccinos .Action Plan (cont.
Impact Analysis . By improving Starbucks’ atmosphere. it will become a more attractive place to go. the physical facility will not detract from atmosphere. and by rewarding employees based on merit current turnover rates will be reduced. The Frappuccinos . By focusing on site accessibility and cleanliness.Benefits By focusing on the initial recruitment and hiring stage.
Potential Risks Customers may not react positively to the changes being made Not enough available employees to meet realigned hiring needs Claims of age discrimination and negative affect on sales in youth demographic Costs associated with planned change The Frappuccinos .
but there are still opportunities for improvement The Frappuccinos .Wrap-Up Starbucks is the market leader in a growing market segment Starbucks is known world-wide for its highquality food products and differentiated “Third Place” atmosphere The Wellesley location embodies the ideals of the corporate mission and has been very profitable.
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