sarah fitzgerald lauren norris matt mariella towson university mngt 481
TRANSCRIPT
Sarah FitzgeraldLauren Norris Matt Mariella
Towson UniversityMNGT 481
I. Industry – Sarah Fitzgerald Products & Service Size of the Industry Financials Type of Competition Main Competitors Market Share Strategies Used by the Industry Porter’s Five Forces Forces Impacting
Environment
Products & Services The Foodservice Industry
Encompasses those places, institutions, and companies responsible for any meal eaten away from home
Includes restaurants catering operations and any other format
The Restaurant Industry Encompasses those places that serve
food and beverage QSR → Quick Service Restaurant FSR → Full Service Restaurant
Size of Industry
That is 9% of today’s workforce
Second largest employer after the government
Financials $1.5 Billion spent a day
in the Restaurant Industry
The annual revenue per employee is $35,000
A typical QSR makes around $800,000 with around 25 employees
A typical FSR makes around $1.5 million with around 50 employees
Type of Competition This Industry is involved in multi-national
competition
This industry is all over world, both the food service and restaurant industries
Main Competitors McDonald’s
Yum! Brands
Darden Restaurants
Starbucks
Brinker International
Market Share
Strategies Used by Industry Considering the size of the Industry, it
seems that all strategies are used No one specific strategy stand out Depending on the restaurant, depends on the
strategy McDonalds uses the Hybrid Strategy Olive Garden uses the Global
Porter’s Five Forces Model Threats of New Entrants
High Power of Buyers
Very High Power of Suppliers
High Intensity of Competition
Very High Threat of Substitutes
Very High
Forces Impacting the Environment Consumer Income
Restaurant Food Costs More Than Home Cooked Meals
Quality of Food
Quality of Service
II. Firm - Lauren Norris Relative Position of Starbucks History of the company Products & Services Strategy Competitive Advantage Market Financials S.W.O.T. Analysis
Relative Position of Starbucks #1 specialty coffee retailer in the world
Suffering financially
Causes Consumers are becoming more health conscious Economy Rising fuel costs Reached the saturation point in some U.S. markets Consumer awareness has peaked
Plan Plan on closing 500 locations in the U.S. Cut 7 % of workforce or 12,000 jobs Open less U.S. stores and focus on international markets
Founded in 1971 in Seattle, Washington Originally called Starbucks Coffee, Tea & Spices Founders - Jerry Baldwin, Zev Siegel, and Gordon
Bowker Got idea from friend who had a specialty coffee shop in
California
Howard Schultz joined the company in 1982 Inspired by a trip to Italy Started selling espresso drinks in restaurants Schultz purchased company in 1987
Starbucks Story
Products & ServicesIn stores
Coffee and Beverages Fresh, rich-brewed coffees - 30 blends Hot & iced Italian-style espresso
beverages Premium teas Water (Ethos)
Food Pasties Sandwiches Salads
Merchandise Home espresso machines Coffee brewers and grinders Premium chocolates Coffee mugs and accessories Gift items
Entertainment Music Books Films
Online
Coffee Tea Equipment Gifts
Mass Retailers
Coffee Frappuccino DoubleShot espresso Iced coffee Coffee Liqueurs Chocolate Tazo Tea
Strategy Differentiation strategy Expansion
Competitive Advantage Unique, quality product Atmosphere Employees
Brand recognition Economies of scale
World-wide 43 countries outside the U.S. 7,087 company-operated stores 4,081 licensed stores
Market
Primary Operations
U.S.
International Canada U.K. Thailand Australia Germany China Singapore Puerto Rico Chile Ireland
Stock PriceJuly 2006 High $38.33 Low $32.93
July 2008 (as of 7/13)
High $16.05 Low $13.63
June 1992 (16 years ago)
Public offering $17. a share
Quarterly Statements December 2007Revenue $2,767.6Gross Profit $1,581.6Operating Income $333.1Total Net Income $208.1
March 2008Revenue $2,526.0Gross Profit $1,419.3Operating Income $178.2Total Net Income $108.7
S.W.O.T. AnalysisStrengths Brand recognition Quality product Extensive product list Atmosphere Strong human resources Good supplier relationships Large retail distribution
system Strong financial history
Weaknesses Dependent on a single source
of income Prices high relative to
competition Dependent on suppliers Merchandise in stores
Opportunities Oversees markets Untapped U.S. markets Use brand name to start a
new product line or business (related diversification)
Threats Changing consumer tastes
and preferences Economy – people may be
unwilling to pay high prices Political conditions abroad
may hinder expansion Reaching the saturation point
in some U.S. markets
III. Matt Mariella Mission Core Competencies Value Chain
IV. Matt Mariella
Analysis & Recommendations
Mission To establish the company as the premier
purveyor of the finest coffee in the world, while maintaining its principles as the company grows
Principles1. Provide a great work environment2. Embrace diversity3. Apply high standards of excellence4. Satisfy customers5. Contribute to the community and the
environment6. Recognize that profitability is essential to future
success
Core Competences High quality, roasted, whole bean coffee
products
Pastries, Ice cream, Liquor, and chocolate Coffee accessories (mugs, not espresso
machines) Employees Atmosphere
Value Chain – Suppliers Raw Materials - Milk, Syrup, Coffee beans,
Pastries, drinks
Operational - manufacturing equipments, IT hardware/software, paper products, books, CDs, and coffee accessories, etc.
Tiva Supplier Accreditation Program 5 categories to qualify Discounts to qualified suppliers
Value Chain – Distribution Channels In store distribution Drive thru Online
Value Chain Strengths
Economies of scale
Supplier accreditation program
Employees as a core competency
Company strategy is for all employees to know the core competencies inside and out
Related diversification helps core competencies /competitive advantage
Weaknesses
Dependant on suppliers
Not very vertically integrated
Losing sight of core competencies
Analysis - Problems Economy is slowing business Competitors offering lower priced drinks Rising fuel costs Locations Reaching saturation point in some U.S. markets Consumer awareness has peaked Criticized for using coffee beans not on the fair trade
market Have a lot of inventory that is not being sold
Analysis - Starbucks Solution Closing 500 stores Firing 12,000 employees
Horizontal integration Music, CD, Book
Start Using pre-ground coffee beans $1 refillable coffee short cups Start purchasing fair trade coffee beans
Opening 600 Wi-Fi stores in New York and Seattle
Recommendation Refocus on core competencies
– premium coffee (not $1) Stop using pre-ground coffee
beans because of loss of aroma
Coffee making process Follow 4 principles1. Use the right proportion of
coffee to water2. Use fresh boiled water3. Use fresh ground coffee (can’t
sit more than 20 mins.)4. Brew the coffee for the right
amount of time
Continue blending new coffee beans together to make new products
Offer free entertainment
Expanding sales of liquor, chocolate, or ice cream
Continue purchasing fair trade coffee beans
Choose smarter locations for stores
Seek talented employees to support growth
The End