3. The History of Starbucks
1971
1982 Gordon Bowker
Zev Siegel
Jerry Baldwin
Howard Schultz
II Giornale 1985
1987

5. Coffee / Coffee house industry

6. NIDA

8. 1. What are the attractive and unattractive
feature of the specialty coffee/coffee
house industry?
Attractive
• Opportunity - Market growth
• Gathering places
• Alternative to drink

9. Unattractive
• Excessive competition
• Regulate coffee houses
• The cost of coffee beans

10. 2. What are Starbucks’ sources of competitive
advantage and are they sustainable?
7-S : Strategy
• Make a powerful about product ‘ s quality
• Pampering employees
“ Schultz believes that happy employees are
the key to competitiveness and growth.”
He said “ I want our employees to know we
value them”
• Developing relationship with suppliers and
customers
• Brand loyalty
• Capital and technology
• Atmostphere
• Location

11. 7-S : Structure
• avoid the overlap problem
7-S : System
• Efficiency of selection system
and storage system

12. 7-S : Shared value
• Employee ownership
7-S : Style
• Slow growth policy

13. 7-S : Staff
• Empowering corporate culture
• Employee turnover
7-S : Skill
• Recruitment and training
• Service

14. STARBUCKS : Mission Statement

15. STARBUCKS : A New Coffee Vision

16. STARBUCKS : GOAL
Short-term goal
Open 1,500 locations in 2005
(note: Starbucks does not franchise).
Long-term goal
30,000 Locations within year 2015.
To be as recognizable a brand as Coke.

17. STARBUCKS : Corporate Strategy
Howard Schultz has 4 companies as Role Models
Service & Training
Highly Growth
Employee ownership
Social sharing

18. STARBUCKS : Corporate Strategy
Securing the Finest Raw Material
High Quality ARABICA, Narino Supremo , Fair Trade,
Vertical Integration
The STARBUCKS Experience
We re not only just selling a cup of coffee, We re provide
an Experience
Building a Unique Culture
The Happy employees are the key to competitiveness and
growth
Slow-Growth but Intensively
No franchise, Mail order expansion, Foreign Partner :
Starbucks Way
Leveraging the Brand
Multiple Channels of Distribution, Brand Extensions

19. STARBUCKS WAY : International Affair

20. STARBUCKS : SWOT Analysis
STRENGTH
Global presence, Strong Brand
A disciplined innovator
Increase in revenues and profits
Clustering of company units

21. STARBUCKS : SWOT Analysis
WEAKNESSES
Reliance on US market (75% of
Income)
Reliance in beverage innovation (Just
started to extension)
Lower returns on equity than peers
Problem in some international
operations

22. STARBUCKS : SWOT Analysis
OPPORTUNITIES
Growth in coffee market
New Product
Market expansion: Asia growth potential
Decreasing of carbonates and alcoholics
drink
No major competitor in retail beverage
segment

23. STARBUCKS : SWOT Analysis
THREATS
Volatile coffee markets
Rising dairy costs
Slowing US retail sales, drop of US
coffee drinker
Competition
CEO (Smith) retiring in 2005

24. STARBUCKS : SWOT Analysis
STRENGTH WEAKNESSES
Global presence, Strong Brand Reliance on US market (75% of
A disciplined innovator Income)
Reliance in beverage innovation
Increase in revenues and profits
(Just started to extension)
Clustering of company units Higher cost in employee wages
Strong in coffee supply chain Lower returns on equity than peers
Problem in some international
operations
OPPORTUNITIES THREATS
Growth in coffee market Volatile coffee markets
New Product Rising dairy costs
Market expansion: Asia growth
potential
Slowing US retail sales, drop of US
coffee drinker
Decreasing of carbonates and
alcoholics Competition
No major competitor in retail beverage CEO retiring in 2005
Only 1% of US pop. has tried
Starbucks

25. 3. How will Starbucks keep its marketshare,
given the rapid entry of new competitors?
Try to do follow the corporate strategy that can
make Starbucks be a fastest growing.
Securing the Finest Raw Material
The STARBUCKS Experience
Building a Unique Culture
Slow-Growth but Intensively
Leveraging the Brand
Add some issue about International Expansion and
Diversify some new product.

26. 3. How will Starbucks keep its marketshare,
given the rapid entry of new competitors?
Work to make foreign operations profitable as quickly as
possible.
Continue to pursue rapid expansion of Starbucks stores in the
U.S.
Continue to pursue the opening of Starbucks stores in foreign
countries using both licensing and company-owned and -
operated stores.
Look at making more acquisitions of coffee-house chains as a
way of entering foreign country markets.
Experiment with bigger Starbucks stores having a bigger
menu-offering than just coffee and pastries—sit-down meals
to attract lunch and dinner traffic.

27. 4. How can Starbucks have a slow-growth
policy and yet be one of the fastest growing
company?
Slow-growth policy but intensively to expansion
No Franchise : Owner stores
Mail Order Expansion
Profitability in All Locations
Foreign Partner : Starbuck Way
Reliability in Quality and Service
Customer Satisfactions
International Affair : Starbucks Way

28. 4. How can Starbucks have a slow-growth
policy and yet be one of the fastest growing
company?
Starbucks Location
1000
900
800
676
?
700
600
425
500
400
272
300
NOW
165
116
200
84
65
33
100
0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

29. 4. How can Starbucks have a slow-growth
policy and yet be one of the fastest growing
company?
Starbucks Location
8,648
10000
9000
6,850
8000
5,688
7000
4,709
6000
5000
3,501
4000
2,135
1,886
3000
1,412
1,015
2000 676
425
272
165
116
1000
65
84
33
0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

30. 5. What are the advantages and
disadvantages of Starbucks’degree of
vertical integration and channel expansion ?
Advantages of vertical integration
Product quality s control
1. Good relationship with Supplier / Coffee bean Farmer
2. Control production / Control Roasting

31. 5. What are the advantages and
disadvantages of Starbucks’degree of
vertical integration and channel expansion ?
Advantages of vertical integration
Service Quality s Control
1. Employee Feeling : Business s partner
2. Benefits programs
3. Recommendation :Product s choosing, Coffee bean,
Production, How to do by yourself.

32. 5. What are the advantages and
disadvantages of Starbucks’degree of
vertical integration and channel expansion ?
Advantages of vertical integration
New Standard

33. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
Disadvantages of vertical integration
Product quality s control
1. Cost, Expense
2. Time
3. Employee managing
4. The pressure to other saler and farmer
Service Quality s Control
1. Cost, Expense
2. Time for training

34. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
Advantages of channel integration
Expansion to foreign country (Starbucks Coffee
Internal Inc.)
1. Selling for local food
2. Proper Decorate for local Starbucks
retailer and architecture

35. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
3. Method to choose the Partnership & Country
Method to choose the location for new starbucks
shop
Alliance with other company / business

36. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
Alliance with other company / business
smith brother

37. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
Expand product line
1. Frappuccino Group
Frappuccino blended coffee
Frappuccino blended cream
Frappuccino blended tea

38. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
Expand product line
2. Tea Line
3. Use the famous local law material in foreign
country retail

39. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
High – Speed Wireless internet Service

40. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
Disadvantages of channel integration
The Risk (from Expansion to foreign country )
1. Service Quality
2. Brand Royalty , Attribute of Starbucks shop
3. Low quality Partnership
4. scramble with the customer group
Alliance with other company / business
1. Decision Limited
2. Quality of Product / Service

41. 5. What are the advantages and disadvantages
of Starbucks’degree of vertical integration and
channel expansion ?
klDisadvantages of channel integration
Expand product line
1. Attribute of Starbucks Product
2. Product’s Quality : Use the famous local law
material in
foreign country retail

42. 6. What should CEO do?
1. Expansion to Global Channel
2. Launch New Product Continuously
3. Expansion Production Base to other continent

43. 6. What should CEO do?
4. Increasing Relationship with customer
5. Built high – Standard to control quality all of
Starbucks shop
6. Expansion Product to Dinner food / Main food
7. Built the knowledge, culture, vision to New
CEO

44. Thank you for
interested in
our Starbucks