Starbucks Corp., an international coffeehouse known for being the most powerful coffee provider with an environment that features a clean and warm experience for the customers who want to engage in enjoying some free-time. It was founded in 1971.
• Starbucks is a renowned organization.
• Powerful brand in the coffee industry (Starbucks Experience).
• Top 50 of Fortune’s ‘World’s Most Admired Companies List’.
• The firm’s stores (retailer as well as licensed) generated approximately US$ 10.4 billion revenue in the fiscal year 2008.
• It has a total of approximately 16,706 stores, of which company operated stores are 8,850 and licensed stores are 7,856 (as of Dec 2009).
• It has globalized its operations and is operating in approximately 50 countries.
• It is listed in the Fortune 500 list of companies, due to the respectable environment and value of the workforce that the employers provide.
• Ethical values hold critical importance in its success.
• Product diversification exists as a strong force in which the essence and core of the business is coffee (more than 30 blends), alongside are the beverages, fresh baked food, and they also provide merchandize.
• Locale of the stores has high visibility, and they are accountable for attracting customers.
• It is the market leader with the highest share in the coffee industry also in terms of market capitalization.
• It has a strong Board and also has a strong financial foundation.
• Brand is associated with high quality coffee and unforgettable customer experience i-e ‘the Starbucks Experience’.
• Specializes in coffee, and due to the immense impact it has in the industry, it achieves economies of scales easily.
• It has a reputation that defines innovation and creativity, but it is also known for a fact that too much innovation may alter the course of the firm i-e it may lose the originality.
• The organization has expanded business risk because of the fact that it has spread most of its wings in the U.S.
• Overly dependent on a single product line (coffee) as a competitive edge.
• Internal business focus is overlooked due to the expansion factor.
• Number of increasing competitors in the market.
• Product pricing is very expensive, even if high quality is regarded.
• It has closed down many of its outlets due to numb sales in many regions.
• Management is cross-functional.
• The corporation created a Compact Disc burning service by partnering with Hewlett Packard in the Santa Monica cafe in fiscal year 2004. The customers created their own music CD, it created a sense of reliability regarding the customers.
• New markets are available that are ready to be exploited such as India and Nations in the Asia Pacific.
• Co-branding with other renowned giants of food or beverage industries.
• It can also create new distribution channels regarding delivery service.
• It can exploit distribution agreements to minimize costs.
• Brand extension is also a factor that can be further developed into both food and non-food commodities.
• To develop its Customer Relationship Management system, it can achieve high worth regarding its potential customers and greater customer loyalty.
• The value chain process can still be made efficient (procurement to supply chain to distribution).
• It should introduce fair trade products and become profitable to farmers in order to provide itself with more customer loyalty and positive public opinion.
• It can also sell whole bean in the super markets.
• Uncertainty remains as to something more appealing might become the next favourite for the customers, and coffee may get replaced.
• Many entrants and copy-cat brands are a serious threat to the brand.
• Being established widely in the U.S., it has a serious threat to face if the U.S. market faces saturation.
• Volatility of pricing in the different countries.
• Farmers treated poor brings a negative image regarding the brand that affects the loyalty level of the customer.
• Trends that are creating barriers to the consumption of coffee due to the level of caffeine it contains.
• Cultural as well as political problems in many foreign countries.
• Cost of procurement of the raw material rising, also exchange rate changing unfavorably.