STARBUCKS By Shubhangi Lakhanpal

WHO ARE THEY?

Starbucks Corp. Starbucks was founded
engages in the by Gordon Bowker,
production, marketing, Zev Siegl and Jerry
and retailing of Baldwin on 31 March
specialty coffee. 1971.

It opened its first store Its headquarters are in

in Seattle’s Pike Place Seattle, Washington,
Market. United States.

Howard Schultz took He turned it into one

charge of Starbucks in of the world's top
the 1980s brands today
START-UP PHASE
In search of quality coffee, Bowker had been driving to Vancouver to a coffee and
tea company called Murchie’s.

That’s when Bowker thought of starting their own coffee company in Seattle,
Baldwin and Siegl liked the idea.

Siegl found a gourmet coffee company in Berkeley, called Peet’s.

He called Alfred Peet who was from Netherlands and worked in his family coffee
business. “He had a depth of knowledge of coffee that was unparalleled in this
country”, said Siegl.
 Baldwin and Bowker each made trips
to Berkeley to briefly apprentice at
Peet's and observe the business.

Peet agreed to supply their company

with fresh-roasted coffee beans.

Meanwhile, in Seattle, the partners had

found the location they wanted, a
corner storefront just north of the Pike
Place Market.

Rent was $137.50.

CONTINUED…
As start-up funding, each partner put
up $1,500 and they finagled a bank
loan for $5,000.
 Net worth: $5.4 billion
Howard Schultz took charge of Starbucks in the 1980s and
turned a regional coffee company into one of the world's top
brands.
Schultz expanded Starbucks from 11 stores to more than
HOWARD 30,000 worldwide and made it a social hub for many
Americans.
SCHULTZ Howard Schultz followed the idea that customer centricity
comes from employee centricity
Starbucks was one of the world’s first companies to offer both
comprehensive healthcare coverage as well as equity in the
form of stock options to part-time workers
Schultz stuck to the core values of Starbucks.
 MISSION
STATEMENT
“To inspire and nurture the human
spirit – one person, one cup, and
one neighborhood at a time.”
 1. Starbucks manages to create a
friendly abode by nurturing
human spirit amongst its
employees and customers.

2. As the mission statement

emphasizes on gradually
building deep relationships
“one person, one cup and one
neighbourhood at a time”.

3. This shows how the firm wants

to impact each and every
customer and employee.

4. At the same time, the mission

statement also discusses how

MISSION STATEMENT Starbucks is making a

conscious effort to pave its

ANALYSIS
way into every neighbourhood,
even if it’s one gradual step at
a time.
 VISION
STATEMENT
“To establish Starbucks as the premier
purveyor of the finest coffee in the
world while maintaining our
uncompromising principles while we
grow.”
 VISION
STATEME
NT
ANALYSIS
TO BECOME THE MAINTAIN ITS TO CONTINUE TO
MAKERS OF THE COMPANY’S GROW WHILST
FINEST COFFEE IN THE UNCOMPROMISING MAINTAINING
WORLD PRINCIPLES COMPANY STANDARDS
RESPONSIBLY GROWN
COFFEE
Over the last decade, Conservation International has helped Starbucks develop buying guidelines
that address the principles for ethical sourcing.
Called Coffee and Farmer Equity (C.A.F.E.) Practices, these guidelines help our farmers grow
coffee in a way that’s better for both people and the planet.
Starbucks bought 367 million pounds (167 million kilograms) of coffee in the 2009 financial year.
Eighty-one per cent of that – 299 million pounds (136 million kilograms) worth – from C.A.F.E.
Practices approved suppliers.
Starbucks began purchasing Fair Trade Certified coffee in 2000, helping grow the market for Fair
Trade Certified coffee in the US. And in 2009, we increased our purchases to 40 million pounds (18
million kilograms) – making us one of the largest purchasers of Fair Trade Certified coffee in the
world.
CORPORATE SOCIAL
RESPONSIBILITY
The Starbucks Foundation
awarded $1.4 million in
Opportunity for All grants, to
help 63 programs across the U.S.
create pathways to jobs and
careers for students, young adults
and other people facing barriers.
October 2019:

Starbucks announces it will invest

$10 million to support
entrepreneurs, small business
owners and non-profits in
Chicago.
CONTINUED…

Every Tata Starbucks store supports a girl’s education.

These girls are based out of rural and educationally
backward villages across 20 districts of Rajasthan,
Madhya Pradesh and Uttar Pradesh.
We are partnering with the NGO Educate Girls to
improve the lives of these girls, by sponsoring the costs
of enrolment, and retention in schools for the girls,
ensuring improvement of their learning (literacy &
numeracy) outcomes and sustained education of the
girls.
STARBUCKS FOODSHARE
PROGRAM
Refrigerated trucks pick up
A strategic partnership was
the donations and transport
started with Feeding America
them to a nearby distribution
in 2016, wherein at the end of
center. From there, donations
each day, Starbucks partners
are sorted and delivered to
collect surplus pastries and
local food banks and mobile
fresh food to donate.
food pantries.

At scale, Starbucks hopes to

provide 50 million meal
10 million people fed through
donations annually and divert
this program (2018)
60 million pounds of food
waste from landfills.
STRENGTH
S
Experimentation and Innovation:
1. The Company’s ability to roll out new
initiatives and products relatively
quickly is a considerable competitive
strength.
Insight-driven products:
2. Its use of customer data in developing
its product range.
3. One powerful way Starbucks uses data
arises from the buying habits across
large consumer numbers.
4. Insights from this data suggest
variations and developments from
existing products.
Store design:
1. Can also be called rand localization, is just one of the creative ways Starbucks connects with its
customers, integrating local aesthetics into each of its stores.
Home-like environment:
2. Starbucks has cultivated an environment that’s welcoming and open.
3. It is the “third place” for customers, after home and the workplace.
4. Every detail, from the lighting to the furniture, has been carefully considered to ensure customers
feel at home in their stores.
5. Take the round tables, for example, which were specifically chosen to help solo people feel less
alone, but also open up communication with larger groups.
Strong brand image:
6. In 2021, Starbucks was the most valuable restaurant brand worldwide, with a brand value of over
38.4 billion U.S. dollars.
Strong financial performance:
7. Operating income increased 74% to $216.0 million in Q3 FY21, up from $124.2 million in Q3
FY20.
 ANNUAL
REVENUE (IN
MILLIONS OF
US $)
Good quality products:
1. The world's best coffee brand has utilized quality-based
differentiation to differentiate itself from rivals.
2. Starbucks has used the formula of quality based product
differentiation to achieve higher popularity and customer loyalty.
Motivated workforce:
Starbucks employees have an 82 percent job-satisfaction rate,
according to a Hewitt Associates Starbucks Partner View Survey.
1. Starbucks is known for giving their employees great benefits,
such as health coverage,, parental leave, and tuition coverage,
among other things.
2. Starbucks employees are shown respect through their job title as
“partners” rather than being labeled as workers by managerial
staff.
WEAKNESSES
Expensive coffee:
1. Starbucks is often criticized for its overpriced coffee.
2. Not everyone can afford expensive coffee so this can
lead to loss of potential consumers.
Unhealthy:
3. Not every drink item at Starbucks is unhealthy, but
some should only be drunk occasionally.
4. This is because Starbucks drinks, especially
frappucinos, have sugar and calorie content which
has a detrimental impact on ones health.
CONTINUED…
High overhead costs:
1. Starbucks doesn’t outsource any service due to
which its overhead costs tend to be high
2. Since this is such a large company, you will see
that their expenses are quite high. In addition to
things like rent, electricity, supplies, and
employee costs, there are also marketing and
advertising.
OPPORTUNITIES

COVID-19 and Customer loyalty:

“Within the quarter, we saw significant acceleration in the number of customers who downloaded
the Starbucks App and joined Starbucks Rewards, totalling three million in the quarter, and up
17% from Q2.”

Engagement with Starbucks Rewards’ customers also outpaced non-Starbucks Rewards members,
with year-over-year sales growth from Starbucks Rewards customers turning positive in early
July.
“As a result, Starbucks Rewards as a percentage of tender in Q3 rose four percentage points from
a year ago to 46%, which is above the pre-COVID trend. [This] highlights our success in
acquiring new loyalty members as well as re-engaging our existing customer base,” Johnson said.
CONTINUE
D…
Expansion strategy (Drive-thru)
Instead of opening more dine-in
restaurants, Starbucks is
concentrating on drive-thrus in the
outer edges of urban and suburban
areas.
projecting that it will expand drive-
thru to nearly 45 percent of its U.S.
portfolio by 2023, up almost 10
percent from fiscal 2020.
Pre-COVID, roughly 80 percent of
sales were to-go
CONTINUED…
This strategy is aimed at increasing the company’s store penetration.
Starbucks remains confident that it will see a minimum 5% comparable sales
growth in the U.S.
The average American will spend over $1,200 on drive-thru food annually.
drive-thru visits increased 26 percent in the April, May, and June quarter and
represented 42 percent of all restaurant visits.
In July when more restaurants were reopened, drive-thru visits still increased 13
percent.
 Competitors:
Starbucks’ competitors like Dunkin’ Donuts also
sell similar products like coffee, that to at a cheaper
rate than Starbucks.
The firm says Starbucks coffee is priced about 38%
higher than competitors, which is especially hurtful
in the afternoon.
Rising price of Arabica coffee:
Besides Arabica parchment, the prices of Arabica
Cherry have also moved up to the levels of ₹4,700-
5,000 per 50 kg bag, an increase of about 20 per cent
since early January this year. (2021)
With already high prices, Starbucks could struggle if

THREATS the price of raw coffee beans keeps increasing.

 CONTINUED…

Rising prices of dairy products:

The latest Global Dairy Trade (GDT) auction on 16
February showed a 3% rise. It was the 7th increase in a row
COVID-19:
The company’s revenue fell by 38% year on year
following the lockdown imposed due to the pandemic
global same-store sales fell 5% in its first quarter, which
ended Dec. 27, more than analysts’ estimates of a 3.4%
decline
ANSOFF’S MATRIX
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Consumer Competitor Market

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