starbucks global quest in 2008: is the best yet to come?
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STARBUCKS COFFEE
Antoine MarionBayou JulieHazet CharlesHéberlé CamilleHelson Yohann
“We aren’t in the coffee business, serving people. We are in the people business, serving coffee”, Howard Schultz (2004)
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Problem Statement
Starbucks Global Quest in 2006:
Is the best yet to come?
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1. Starbucks’ overview
2. Business model
3. Internal and external analysis
4. Recommendations
Summary
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Starbucks’ overview
20,366 stores in 61 countries
Largest coffeehouse company in the world
Founded in 1971
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Business model
High quality products
Customer’s experience
Added value in stores
High attendance location
Take away culture
Customer willingness to pay:
HIGH
HIGH MARGIN PRODUCTS
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INTERNAL & EXTERNAL ANALYSIS
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PestelOpportunities Threats
Political • International government trade regulation & tariffs
• Foreign politic
Economic • F&B demand• International market
• Crisis• Competition• Rents and wage rates• Exchange rate and taxation
Social • Health consciouness• Cultural differences
Technological • Self serving machines• Bio technologies /
agricultural development
• Competitor’s distribution lines
Environmental • CSR
Legal • Environmental regulations• F&B industry regulation
MAIN FACTOR: EXTERNAL & SUSTAINABLE TRADE 4
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Porter
HIGH COMPETITIVE / ATTRACTIVE MARKET
Competitive rivalry
+++
Substitute
products
-
Customers
++
New entrants
+++
Suppliers
++
COMPETITIVE RIVALRY- Intercept customers- Price competition- Independents
SUPPLIERS- Volatility of prices- Export quotas
SUBSTITUTES- Snacks- Soft drinks
CUSTOMERS- Price sensitive
(financial crisis)- Loyalty
NEW ENTRANTS- Low barriers- Social media
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SWOTStrengths
• Loyalty• Image
Weaknesses
• Communication• Expensive products
Opportunities
• International market• Fair Trade
Quality products Customers’ awareness
Threats
• Competition• Customer’s purchasing
power
Quality experience Orientation of customers’ choice
OPPORTUNITIES FOR INTERNATIONAL EXPANSION 6
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Mapping
+
+
Brand image
Price
PREMIUM PRODUCTS 7
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Key success factors
Management Brand management Geographic coverage Sustainable management
of employees
Quality Quality control Good coffee knowledge
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Corporate Strategy 1 market Several
products
Strategy (until 2006)
Diversification by acquisition
Rapid Store expansion + focus on location
by joint venture by partnership
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CSR Strategy
• Fair Trade• A « great place to work »• Conservation International partnership (1998)• The starbucks foundation (1997)
« We've always believed that businesses can - and should - have a positive impact on the communities they serve. »
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Financial analysis
2000 2001 2002 2003 2004 20050
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2
3
4
5
6
7
8
9
Net Margin Income (%)
2005$3 million in long-term debt$1,8 billion in net investment$193 million long term liabilities
Healthy situation
How to continue in this way?
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OUR RECOMMENDATIONS
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Two Alternative strategies
World expansion
• Continue domestic expansion
• Worldwide expansion: Huge opportunities in BRIC
Customers’ Experience
• Improve stores’ atmosphere
• Enhance « Third place » concept
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Decision gridCritical Issue Weight World
expansioncustomer’s experience
Brand and reputation
0.4 4 10
Competitive advantage
0.3 6 9
Financial impact 0.2 4 6
Ease of setting up
0.1 3 5
TOTAL 1 4,5 8,4
FOCUS ON CUSTOMER’S EXPERIENCE14
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Customer’s experience Strategy
• Continuity of innovation in the coffee business
• Customer Relationship Management
• Adaptation to local markets
• Collector products
CHALLENGE THE STATUS QUO 15
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…THE BEST YET TO COME!
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With this strategy…
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Thank you for your attention!
Any questions?