Company Analysis of Starbucks

CHAPTER: 01
INTRODUCTION TO STARBUCKS

1.1 Introduction
Starbucks is an American company that operates the largest coffeehouse chain and one of the
most recognizable brands in the world. Headquartered in Seattle, Washington, the company
operates more than 35,000 stores across 80 countries (as of 2022).
Starbucks was founded by Jerry Baldwin, Gordon Bowker, and Zev Siegl, opened its first
store in 1971 near the historic Pike Place Market in Seattle. The three Starbucks founders
had two things in common: they were all coming from academia, and they all loved coffee
and tea.
Starbucks was named after “Starbuck”, a character from the novel “Moby-Dick.” The logo is
meant to reference “the seafaring tradition of the early coffee traders.”
1.2 Company introduction
Starbucks as a global largest coffeehouse chain American company which operating in 72
countries and have 31,256 stores in worldwide (Starbucks stores: U.S. and international |
Statista, 2020). Starbucks was established in 1971 by three businessmen which are history
teacher named Zev Siegl, a English teacher named Jerry Baldwin, and a writer named
Gordon Bowker because they all have a same passion which is love to have a fresh tea and
coffee. After that in 1971, they borrowed some money and invested to open establish their
first store which named as Starbucks in Seattle which is planning to serving excellent coffee
beans and providing fresh roasted beans and mean to accomplish retail extension, item
advancement, and offer support quality as long as possible. On the 1981, Howard Schultz
joined Starbucks as the head of advertising and retail operations. Then, Starbucks starts
giving their espresso to coffee bars and some fine restaurants and Howard raises the
possibility of café culture in Seattle after he come back from Italy (Starbuck, n.d.).
Soon, Starbucks started growing their business by expanding up to 4 stores in Seattle and
compete with other competitors by providing high quality roasted beans. In 1995, Starbucks
already had opened up to 667 stores in North America and proceeding to expand its store to
Japan as the first location for different countries. In 1996, they started to expand their
business to Singapore and Philippines. In 2000s, Starbucks already expand their business to
most Asia countries and they are expanding to Europe, Latin America countries and today
Starbucks has become world largest coffeehouse chain company
1.3 Visions
Vision statement strategically direct business operations toward leadership in the coffee market
and the coffeehouse industry. On the other hand, the corporate vision statement reflects the
strategic direction of the business in terms of what it wants to achieve in the future. In this case,
Starbucks’ corporate vision focuses on leadership in the industry. The coffee company’s success
in responding to its competitive environment depends on the effectiveness of implementing these
corporate stateStarbuckThe Starbucks mission statement is “to inspire and nurture the human

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Company Analysis of Starbucks

spirit — one person, one cup, and one neighbourhood at a time.” And the Starbucks vision
statement is “to establish Starbucks as the premier
purveyor of the finest coffee in the world, while maintaining our uncompromising principles
while we grow.”
1.4 Mission
Our mission,
With every cup,
With every conversation,
With every community ,
With nurture the limits possibility of human connection.
Starbucks’ mission statement indicates a gradual approach. The “every cup, every
conversation, every community” component shows that the coffeehouse business ensures
meaningful impact on every employee and customer. In parallel, this part of the corporate
mission means that Starbucks’ business purpose and goals involve continually and gradually
growing the business, one place or community at a time.
In March 2023, Laxman Narasimhan took over the reins as Starbucks ceo following a unique
six-month immersion unlike any other in Starbucks history. As he charts a new course for the
company during an unprecedented time, he is unveiling a new mission that serves as an
homage to Starbucks past, while evolving toward a new future. The mission is simple: “With
every cup, with every conversation, with every community – we nurture the limitless
possibilities of human connection.”
1.5 Aims and Values
Being present, connecting with transparency, dignity and respect. Delivering our very best in
all we do, holding ourselves accountable for results. We are performance driven, through the
lens of humanity.
Value is added to the beans through Starbucks' proprietary roasting and packaging, which
helps to increase their selling value. The beans are then sent to distribution centres, a few of
which are company-owned and some of which are operated by other logistic companies.

 Creating a culture of inclusion. Starbucks values inclusion, diversity, and equity. It is

nurturing a culture of warmth and belonging throughout the company to ensure everyone is
welcome. The company has adopted several policies and initiatives to create a culture of
inclusion. The Starbucks Foundation has expanded its Neighbourhood Grants program with an
additional $1.5 million for community-based NGOs that serve disadvantaged communities.
 Acting with courage. One thing Starbucks is known for is finding new ways to grow. The
company always seeks to challenge the status quo. While most Western food companies have
struggled to capture the Chinese market, Starbucks is expanding rapidly in China. Its soon-to-be-
completed Starbucks China Coffee Innovation Park in Jiangsu Province will provide new
technologies for roasting coffee beans that can reduce carbon emissions by more than 30%.
 Being present. Whether it is transparency, social dignity,
 Starbucks is always present and ready to help in the search for solutions. The company has
one of the most ambitious sustainability targets for 2030 and that officially began in 2021 to

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coincide with its 50th anniversary. “Our eyes are wide open knowing that we do not have all the
answers or fully understand all the complexities and potential consequences,” . “Now, it’s time to
create new ways of working, investment of resources, and urgent action.“
 Delivering our very best. Starbucks is always innovating and looking for new technologies
and ways to improve its coffee, customer experiences, and services. The company recently
adopted block chain-based technology that can take customers on a thrilling journey to the
source of their coffee and where their beans were roasted. It brings the customer closer to their
beloved drink.

1.6 Goals and objectives

Basically Starbucks offer their customers an elegant taste of coffee, teas, espresso and baked
goods in a single stop. Starbucks also known as the largest international coffee house,
Starbucks operates in more than 50 countries and Sweep the American market share by 20%.
In order for Starbucks to maintain the growth and show their potential in order to dominate the
coffee house industry, Starbucks has formed few objectives and strategies to successfully
launch a major market share worldwide.
 Objectives
 Foster positive customer relationships in order to present an encouraging customer
experience.
 Starbucks continues to promote and support proactive involvement in community, AIDS in
Africa programs, and Fair Trade
 6 Starbucks will expand in worldwide in order for the.
Starbucks not only deliver a comprehensive brand strategy, but the product identity and
package design itself.
 Starbucks conquered the “instant coffee” category. After the new packaging launched, their
sales reach at $100 million in global.
 It was launched in the United States market. Positioning
The main key in order for Starbucks to success is their ability in educating and listening
themselves in their customers need and wants.
 They also provide WI-FI access since some of their customers consists of working
individual and students.

1.7 Service profile

Starbucks is an American company that operates the largest coffeehouse chain and one of the
most recognizable brands in the world. Headquartered in Seattle, Washington, the company
operates more than 35,000 stores across 80 countries.
Starbucks was named after “Starbuck”, a character from the novel “Moby-Dick.” The logo is
meant to reference “the seafaring tradition of the early coffee traders.”
Terry Heckler designed the first Starbucks logo. He based the famous two-tailed siren on a
16th-century Norse woodcut. Old marine books inspired him. Later, Starbucks would

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Company Analysis of Starbucks

embark on a series of logo redesigns, but the iconic siren consistently remained the center of
its logo refreshes.

1.8 Area of operation

Starbucks primarily operates and competes in the retail coffee and snacks store industry.

These four V's of operations management are Volume, Variation, Visibility and Variety.
Including these in your Starbucks operation Management strategy would surely get you
stellar grades.

1.Goods and Services: Require decisions on the characteristics of business processes to

meet the target features and quality of Starbucks products.

2. Quality Management: Ensures that business outputs satisfy Starbucks’ quality standards
and the quality expectations of customers.

3. Process and Capacity Design: contributes to Starbucks’ success. The company’s

operations management standardizes processes for efficiency, as observable in its cafés.

4. Location Strategy: In Starbucks’ operations management for its coffeehouses focuses on

urban centres

5. Layout Design and Strategy: For Starbucks cafés address workflow efficiency. The
strategic decision in this area of operations management focuses on high productivity and

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efficiency in the movement of information and resources, including human resources, such
as baristas.

1.9 ownership pattern

Starbucks is owned by its shareholders, as it is a publicly-traded company. The company has

more than 1,500 institutional shareholders, according to the proxy statement that Starbucks
filed with the SEC on January 7, 2022. This figure clearly shows how well-diversified the
ownership of the company is.

2.0 Competitors

Café Coffee Day, is the top most competitors to Starbuckswhich owned by the holding
company Coffee Day Enterprises Ltd, is already the market leader when it comes to coffee in
India. The self-proclaimed “pioneer of the cafe culture” in India, it has more than 1,500 cafes
in 200 cities and towns across the country, including 191 in Bangalore and 185 in Delhi.

Top 5 Starbucks Competitors & Alternatives

 McDonald's.
 Dunkin' Donuts.
 Tim Hortons.
 McCafé
 Peet's Coffee.
 Lavazza.

2.1 Achievements and awards

Starbucks won 2 awards in 2022 and 1 award in 2021. In 2022, Starbucks won for Best
Company Work-Life Balance and Best Places to Work in Seattle 2022. In 2021, Starbucks
won for Best Places to Work in Seattle 2021. Based on 23,585 ratings and 2,041 participants,
employees at Starbucks are satisfied with their work experience. The overall culture score,
73/100 or B, incorporates employee ratings based on their feedback on the eNPS, Retention,
Gender and more.

CHAPTER :02
FINANCIAL ANALYSIS

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2.1 Financial analysis

Starbucks Corporation reported earnings results for the full year ended October 01, 2023.
For the full year, the company reported revenue was USD 35,975.6 million compared to
USD 32,250.3 million a year ago. Net income was USD 4,124.5 million compared to USD
3,281.6 million a year ago. Diluted earnings per share from continuing operations was USD
3.58 compared to USD 2.83 a year ago.

2.1.1 Balance sheet Rs [in crore]

Assets Oct 2 Oct-2

2022 2023
Currentassets
Cash and cash equivalents 2,462.3 2,128.8
Short term investments 22.6 134.4
Accounts receivable, net 768.8 870.4
Inventories 1,364.0 1,378.5
Prepaid expenses and other current assets 358.1 347.4
Total current assets 5283.4 4,757.9
Long term investments 542.3 1,141.7
Equity and cost investments 481.6 354.5
Property, plant and equipment, net 4919.5 4533.8
Deferred income taxes, net 795.4 885.4
Other long-term assets 362.8 403.4
Other intangible assets 441.4 516.3
Goodwill 1539.2 1719.6
Total assets 14365.6 14312.8
5
Liabilities and equity
Current liabilities:
Accounts payable 782.5 730.6
Accrued liabilities 1934.5 1999.1
Insurance reserves 215.2 246.0
Stored value card liability 1288.5 1171.2
Current portion of long term debt 399.9
Total current liabilities 4220.7 4546.8
Long term debt 3932.6 3185.3
Other long term liabilities 755.3 689.7
Total liabilities 8906.6 8421.8
Shareholders equity:
Common stock[0.001 par value]--- authorised,
2,400.0 shares; issued and outstanding, 1,431.6
and
1,460.5 shares, respectively 1.4 1.5
Additional paid-in capital 41.1 41.4
Retained paid-in capital 5563.2 5949.8
Accumulated other comprehensive loss (155.6) (108.40)
Total shareholders’ equity (5450.4 (5884.0)
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Non-controlling interests 6.9 6.7
Total equity 5457.0 5890.7
Total liabilities and equity 14365.6 14312.5
Company Analysis of Starbucks

2.1.2 Profit and loss Rs. (in Crores)

Item 2022 2023
Sales/revenue 32.23B 35.95B
Sales growth 10.91% 11.55
Cost of goods sold (COGS) incl.D&A 25.92B 28.14B
COGS growth 15.39% 8.55%
COGS excluding D&A 22.89B 26.698B
Depreciation & amortization Expense 3.03B 1.435B
Gross income 6.31B 7.8282B
Gross income growth -4.39% 23.88%
Gross profit margin 21.74%
SG&A Expense 2.03B 2.44B
SGA growth 5.14% 20.14%
Research & development
Other SG&A 2.03B 2.44B
Other operating expenses
Unusual expenses 63.81M 63.81M
EBIT after unusual expense 4.3B 5.31B
Non-operating income / expense 194.9M 344M
Non-operating interest income
Equity in affiliates (pretax) 234.1M 298.4M
Interest expense 4097.2 551M
M
Interest expense growth 0.08% 10.82%
Gross interest expense 497.2M 551M
Interest capitalised
Pretax income growth 4.23B 5.4B
Pretax margin 15.03%
Income tax 948.5M 1.28B
Income tax-current domestic 641.6M 914.1M
Income tax-current foreign 283.8M 422.4M
Income tax-deffered domestic 103.1M 116.2M
Income tax deffered foreign (80M) (175.5M)
Income tax credit
Equity in affiliates
Other after tax income(expense)
Consolidated net income 3.28B 4.12B
Minority interest expense 1.8M 200K
Net income 3.28B 4.12B

2.1.3 Cash Flow Statement

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Starbucks cash flow operating activities for the twelve months ending September 30,2023
was 12.415m. A 5.88% decline year. Starbucks annual cash flow from operating activities for
2022 was 4.397m, a 26.58% decline from 2021.
Starbucks free cash flow yield for fiscal years ending September 2018 to 2022 averaged 3.9
starbucks’s operated at median free cash flow yield of 3.5% from fiscal years ending
September 2018 to 2022. Looking back at the last 5 year, starbucks’s free cash flow yield
peacked in September 2019 at 9.9%.
Item 2019 2020 2021 2022 2023
Net operating 5.05B 1.6B 5.99B 4.4B
activities 6.01B
Net investing (1.01B) (443.9M) (432M) (377.9M)
activities (610.5M)
Net financing (10.06B) 1.71B (3.65B) (5.64B)
activities (2.99B)
Net cash flow 16.12B 447.21B 441.64B 387.94B
619.5

2.1.4 Ratio analysis

Annual data 2023 2022 2021 2019
Current ratio 0.7669 1.1969 1.0626 0.9165
Long term Debt/Capital 2.9675 1.6401 2.1369 2.2624
Debt/Equity ratio -1.7294 -2.7502 -2.0961 -1.7922
Gross margin 68.0084 69.9294 67.2202 67.8335
Operating margin 14.3186 69.9294 67.2808 67.8335
EBIT margin 14.3186 69.9294 67.2808 67.8335
EBITDA margin 19.0609 22.0099 13.0321 20.8506
Pre-tax profit margin 13.1221 18.4336 3.9472 13.5775
Net profit margin 10.1754 14.4502 3.9472 13.5775
Asset turnover 1.1527 0.9257 0.8006 1.3792
Inventory turnover ratio 4.7401 5.4484 4.96 5.5753
Receivable turnover 27.4354 30.9155 26.6221 30.1508
Days sales in receivables 13.304 11.8064 13.7104 12.1058
ROE-return on equity -37.7459 -79.0347 -11.856 -57.689
Return on tangible equity -27.0504 -44.9629 -7.7389 -34.2226
ROA-return on asset 11.7355 13.3799 3.148 18.7028
value
ROI-return on investment 74.2649 50.5914 13.4792 72.8242
Book value per share -7.5779 -4.5038 -6.6474 -5.26
Operating cash flow per -1.2563 3.7 -2.7406 -4.4674
share
Free cash flow per share -16057 3.7154 -2.531 -4.5152

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Key financial ratios

Starbucks (SBUX) is a major player in the retail industry. An analysis of the company
should include financial ratios that are most relevant to the company's financial standing
and its industry. The company tends to relay heavily operating leases, which represent
Starbucks' off-balance-sheet obligations. Also, an analysis of the company's financial
effectiveness must take into account Starbucks' financial leverages since the company has a
substantial amount of debt on its balance sheet

2.1.5 Market analysis

Starbucks is a multinational coffee chain that originated in the US.

 Starbucks targets high-income, educated customers who are willing to pay more for
premium coffee.
 The company adopts an innovative and adaptive global marketing strategy centred around
4 marketing mix elements - price, product, promotion and place.
 Starbucks always places quality and customer value first. This has allowed it to set a high
price and enjoy a premium brand image.
 There are some negative aspects to Starbucks marketing strategy such as premium pricing
deterring price-conscious individuals, high internalisation costs and the over-saturated food
and beverage market.

It is crucial to be aware and understand the environment in which a company is operating in

order to implement their strategies successfully. The Micro environment can be analysed
using a SWOT analysis and further completed with a Macro environment study by doing a
PEST analysis.

A table of Starbucks SWOT analysis can be found in Appendix 1, as explained by The

Economist (2009), this analysis is very subjective and can only provide a certain background
to Starbucks. In this case, the environment analysis must focus on the external factors since
internal factors are rather analysed in the

Product management andproduct life cycle.

By using the Product Life Cycle curve, product management understands which products
they are selling and are therefore able to determine their value. It is the product
management's job to transmit these product traits to the customer in order to create value. At
Starbucks the core product is a hot or cold beverage, the tangible product is tea or coffee, the
augmented product is the tangible good in combination with the personalised friendly service
and the potential product could be the evolution of the product portfolio towards other
beverages such as alcoholic drinks. Represented on the PLC graph, Starbucks'

Product life cycle of Starbucks tea & coffee

According to “Product Life Cycle”, Starbucks has gone through development stage,
introduction stage, and growth stage and finally its situation is root into maturity stage

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Company Analysis of Starbucks

The product life cycle is the progression of a product through 5 distinct stages—
development, introduction, growth, maturity, and decline. The concept was developed by
German economist Theodore Levitt, who published his Product Life Cycle model in the
Harvard Business Review in 1965.

While coffee sales are acquired and are at a maturity stage (could be considered as tuxedos
products), Starbucks must still make an effort on the brand management for tea and discover
a way to develop the evening alcohol sales.

The products are the starting point to creating value for customers; if they are high quality
products that are differentiated from other companies, the customer will remember this and
forge his or her idea of the brand. Once these product attributes are determined, brand equity
comes into place to communicate and confirm the company's values.

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Company Analysis of Starbucks

CHAPTER :03
MANAGEMENT AND LEADERSHIP
Name Designation
Laxman Narasimhan CEO
Howard schulz Chairman 3.1.Leaders
hip of Richard Allison Executive director Starbucks
Lori Digulla Managing director
Starbucks has managed
Mellody Hobson Lead independent
through a number of
director
ways, to successfully
Andy Campion Independent director
implement the main
Emmykan Independent director
principles of servant
Kelly Bengston Senior vice-president
leadership internally. The
leadership Executive vice- of this style is a
strong Scott keller president head- philosophy that
seems to Research and support the
business development model of the
company under study.

3.2 Organizational structure

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Functional hierarchy

Functional hierarchy refers to the grouping of departments according to business functions.

Examples include the human resource and marketing departments.

Product-based divisions

Starbucks also has several product-based divisions. These encompass divisions for coffee,
merchandise, and baked goods to name a few.They also include divisions for the numerous
brands operating under the Starbucks banner, including Evolution Fresh juices and Teavana
bottled teas.

Geographic divisions

With a presence in 70 countries, optimizing the structure of geographic divisions is vital for
Starbucks

3.3 Corporate governance

As part of the Starbucks mission we are committed to maintaining our uncompromising principles
while we grow.

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Company Analysis of Starbucks

In this regard, our Board of Directors has adopted governance principles, committee charters
and policies to lead Starbucks governance practices. Currently, our board has 8 directors, a
substantial majority of whom meet all of the independence requirements of NASDAQ® and
the U.S. Securities and Exchange Commission.

Starbucks follows a matrix organizational structure with a combination of vertical and

horizontal structures. It is characterized by multiple overlapping chains of command and
divisions.

Starbucks has several key areas within their social responsibility and sustainability
initiatives. These include: Ethical sourcing of coffee, tea and cocoa. Environmental
stewardship and reducing the company's carbon footprin

3.4 Decision making

1. Goods and Services
require decisions on the characteristics of business processes to meet the target features and
quality of Starbucks products. This decision area of operations management affects other
areas of the coffeehouse business. For example, the specifications of Starbucks’ roasted
coffee beans establish the cost and quality limits and requirements in corresponding
production operations. The coffee company’s emphasis on premium value and premium
design means that production operations and productivity measures involve small margins of
error to support high quality and value.
2. Quality Management
ensures that business outputs satisfy Starbucks’ quality standards and the quality
expectations of customers. Decisions in this area of the coffee company’s operations
management aim for policies and processes that meet these standards and expectations. For
example, Starbucks sources its coffee beans from farmers who comply with the company’s
quality standards. The firm also prefers to buy from farmers certified under the Coffee and
Farmer Equity program.
3. Process and Capacity Design
contributes to Starbucks’ success. The company’s operations management standardizes
processes for efficiency, as observable in its cafés. Also, the firm optimizes capacity
utilization to meet fluctuations in demand for coffee and food products. For example,
processes at the company’s stores are flexible to adjust personnel to spikes in demand during
peak hours. In this decision area of operations management, strategic planning at Starbucks
aims to maximize productivity and cost-effectiveness through efficiency of workflows and
processes.
4. Location Strategy in Starbucks’ operations management for its coffeehouses focuses on
urban centers. Most of the company’s locations are in densely populated areas where demand
for coffee products is typically high. In some markets, the company uses strategic clustering
of cafés in the same area to gain market share and drive competitors away. Strategic
effectiveness in this decision area of operations management comes with a suitable
marketing strategy to ensure the profitability of these cafés.

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Company Analysis of Starbucks

5. Layout Design and Strategy

for Starbucks cafés address workflow efficiency. The strategic decision in this area of
operations management focuses on high productivity and efficiency in the movement of
information and resources, including human resources, such as baristas. This layout strategy
maximizes Starbucks coffeehouse space utilization with emphasis on premium customer
experience, which involves higher prices for a more spacious dining (or drinking)
environment. In this decision area of
operations management, the company uses customer experience and premium branding to
guide layout design and strategy.
6. Human Resources and Job Design
have the objective of maintaining stable human resources to support Starbucks’ operational
needs. At coffeehouses, the company has teams of baristas. In other parts of the organization,
Starbucks has functional positions, like inventory management positions and marketing
positions. This decision area of operations management considers human resource
management challenges in international business, such as workforce development despite
competition with other large food-service firms in the labour market
7. Supply Chain Management
focuses on maintaining adequate supply that matches Starbucks’ needs, while accounting for
trends in the market. With this strategic objective, operations managers apply diversification
in the supply chain for coffee and other ingredients and materials. A diverse set of suppliers
ensures a stable supply of coffee beans from farmers in different countries.
8. Inventory Management
It is linked to Starbucks’ supply chain management. The critical decision in this area of
operations management focuses on maintaining the adequate availability and movement of
inventory to support the coffee company’s production requirements. At restaurants, inventory
management involves manual monitoring combined with information technology to support
managers and baristas.
9. Scheduling
It has the objective of implementing and maintaining schedules that match market demand
and Starbucks’ resources, processes, operating capacity, and productivity. In this decision
area of operations management, the company applies a combination of fixed and flexible
schedules for personnel at corporate offices, coffeehouses, and other facilities. Also,
automation is widely used to make scheduling processes efficient and comprehensive,
accounting for different market conditions affecting Starbucks locations.
10. Maintenance
Maintenance concerns the availability of resources and operating capacities to support the
coffeehouse chain. The strategic objective in this decision area of operations management is
to achieve and maintain the high reliability of Starbucks’ resources and capacities, such as
for ingredient production processes. The company uses teams of employees and third-party
service providers for maintaining facilities and equipment, like machines used for roasting

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coffee beans. Also, in this area of operations management, Starbucks maintains its human
resource capacity through training programs and retention strategies.

CHAPTER : 04
SWOT ANALYSIS
4.1 SWOT analysis
Starbucks is a leading coffee chain with a global presence and strong brand recognition. The
company was founded in 1971 in Seattle, Washington, and has since grown to become one
of the most recognized and respected coffee brands in the world. The Starbucks SWOT
analysis is a useful tool for evaluating the strengths, weaknesses, opportunities, and threats
facing the company. starbucks has a long history of innovation, including the introduction of
the coffee bar concept and the development of new products such as the Frappuccino. The
company is also committed to sustainability, with a focus on sourcing high-quality coffee
beans and reducing its environmental impact.

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4.2 Strengths
1. Strong brand recognition

Strong brand recognition is a key strength for Starbucks. The company has a solid reputation
for quality and customer service, making it one of the most recognizable and renowned
coffee brands in the world. This strong brand recognition has helped Starbucks establish a
loyal customer base and differentiate itself from competitors.

Strong brand recognition is a key asset for Starbucks and helps to drive sales and support the
company’s growth.

2. Innovative business model

Starbucks has a long history of innovation, including the introduction of the coffee bar
concept and the development of new products such as the Frappuccino. This focus on
innovation has helped Starbucks stay ahead of the competition and maintain its position as a
leader in the coffee industry.

Innovation is also essential for meeting the changing needs and preferences of customers. By
continually introducing new products and improving its operations, Starbucks can better
meet the evolving needs of its customer base and remain relevant in a fast-changing market.
This can help to drive sales and support the company’s growth.

3. Commitment to sustainability

Starbucks places a high priority on sustainability, and it has put in place several initiatives to
lessen its impact on the environment and support sustainable agriculture. For example,
Starbucks has set a goal to become resource positive, meaning that it will give back more
resources to the planet than it uses.

This commitment to sustainability has several benefits for Starbucks. First, it helps to reduce
the company’s environmental impact, which can improve its reputation and appeal to
socially conscious consumers. It can also help Starbucks to reduce its costs, as sustainable
practices can lead to more efficient operations. Additionally, a commitment to sustainability
can help Starbucks to attract and retain top talent, as many employees are attracted to
c6ompanies that prioritize social and environmental responsibility.

4. Strong customer loyalty

Starbucks has strong customer loyalty due to the high quality of its products and services.
The company is known for its commitment to using high-quality, ethically sourced
ingredients and brewing techniques that result in a consistently excellent cup of coffee.
Starbucks also has a wide range of menu items, including food, beverages, and baked goods,
which allows it to appeal to a diverse customer base. In addition, Starbucks has a strong
presence in many locations, making it convenient for customers to access its products and
services.

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4.3 Weaknesses
1. Major dependence on a single product line (coffee)

One of Starbucks’ weaknesses is its major dependence on a single product line: coffee.
While the company does offer a variety of other products, such as tea, smoothies, and food
items, coffee is the primary focus of the business and the main source of its revenue. This
dependence on a single product line can be seen as a weakness because it leaves the
company vulnerable to fluctuations in demand for coffee and changes in consumer
preferences.

If there were a significant decline in demand for coffee or a shift in consumer preferences
towards alternative beverages, it could hurt Starbucks’ financial performance. On the other
hand, if coffee demand remains strong and consumer preferences remain favourable, this
dependence may not necessarily be a weakness.

2. Intense competition in the coffee industry

Another weakness of Starbucks is the intense competition it faces in the coffee industry. The
coffee industry is highly competitive, with a large number of players, both large and small,
vying for market share. Starbucks faces competition from a variety of sources, including
other specialty coffee chains, independent coffee shops, and even fast food restaurants and
convenience stores that sell coffee.

The company also faces competition from emerging players, such as specialty coffee
roasters, and new entrants into the market. This intense competition can make it challenging
for Starbucks to maintain its market position and can put pressure on the company to
continually innovate and differentiate itself to remain competitive. In addition, intense
competition can lead to price wars and other forms of price competition, which can impact
the company’s margins and profitability.

3. Limited international expansion in some markets

Starbucks has a strong global presence, with over 30,000 stores in more than 80 markets
around the world. However, the company’s expansion into certain markets has been limited.

For example, Starbucks has struggled to gain a foothold in certain countries, such as India,
where it has faced challenges related to local competition and cultural differences. In these
markets, Starbucks may be unable to achieve the same level of market share and profitability
as it has in other countries. To overcome this weakness, Starbucks may need to tailor its
business strategy to better meet the needs and preferences of consumers in these markets or
consider alternative expansion strategies, such as partnerships or acquisitions.

4. Potential negative impact of commodity price fluctuations

Starbucks is vulnerable to the potential negative impact of commodity price fluctuations,

particularly when it comes to the raw materials used to produce its products. Coffee, in

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particular, is a commodity that is subject to price fluctuations due to a variety of factors,

including weather conditions, disease outbreaks, and global economic conditions. If the price
of coffee were to significantly increase, it could hurt Starbucks’ profitability and financial
performance.

Similarly, if the price of other raw materials, such as dairy products or sugar, were to
increase, it could also impact the company’s margins. Starbucks has taken steps to mitigate
this risk, such as implementing pricing strategies, such as price increases or surcharges, to
offset commodity price increases and implementing sourcing and risk management practices
to diversify its supply chain. However, commodity price fluctuations can still pose a risk to
the company’s financial performance.

4.4 Opportunities

1. Expanding into new markets

Starbucks needs to keep growing and diversifying its business, and one way to do that is to
move into new markets. The company has a strong presence in the US, but there are still
many markets where it does not have a significant presence or where it has struggled to gain
a foothold.

For instance, Starbucks has a limited presence in certain regions, such as Africa and the
Middle East, and has faced challenges in certain countries, such as India. Expanding into
these markets could provide significant growth opportunities for the company, as well as
help mitigate the risks associated with relying on a single market or region for a significant
portion of its revenue.

2. Partnerships and collaborations with other companies or brands

Partnerships and collaborations with other companies or brands can provide a number of
opportunities for Starbucks. These partnerships can allow the company to access new
markets, customer segments, or distribution channels, as well as leverage the resources,
expertise, and brand equity of its partners.

Starbucks has formed partnerships with companies in various industries, such as music (like
Spotify), technology, and fashion, which have allowed it to reach new audiences and create
new experiences for its customers.

3. Adopt Price Differentiation

Adopting price differentiation as an opportunity could allow Starbucks to better meet the
needs and preferences of its customers, as well as increase its revenue and profitability. For
example, Starbucks could implement price differentiation by introducing different product
tiers like premium and regular options or by offering discounts to certain customer segments,
such as students or seniors.

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Price differentiation could also allow Starbucks to better align its prices with the perceived
value of its products and services and better compete with other players in the market.

4. Introducing new products

This is a key opportunity for Starbucks to continue to innovate and meet the changing needs
and preferences of its customers. The company has a strong track record of introducing
successful new products, such as its seasonal drinks, such as the Pumpkin Spice Latte, and
its line of ready-to-drink beverages. By continuing to introduce new products, Starbucks can
keep its menu fresh and appealing to customers and stay ahead of trends in the market. New
products can also help the company reach new customer segments and expand into new
categories, such as by expanding its plant-based menu options or healthier options.

4.5 Threat
1. Competition from other coffee chains and independent coffee shops

Starbucks faces competition from a variety of sources, including other coffee chains and
independent coffee shops. These rivals may provide similar products and services to
Starbucks, which could make it challenging for the business to stand out from the
competition and hold onto its market share. Competition from other coffee chains and
independent coffee shops can impact Starbucks’ market share, customer traffic, and
profitability, and can also put pressure on the company to continually innovate and improve
its offerings in order to remain competitive.

2. Changes in consumer preferences or trends

If there is a shift in consumer preferences toward healthier or more sustainable products, it

could impact the demand for certain Starbucks products or put pressure on the company to
adapt its offerings to meet these changing preferences. Also, if there are changes in
consumer trends, such as a shift towards online or mobile ordering, it could impact the way
Starbucks does business and require the company to adapt its operations in order to remain
competitive.

3. Economic downturns or market instability

Economic downturns or market instability can be a threat to Starbucks, as they can impact
consumer spending and the demand for the company’s products and services. During times
of economic uncertainty or recession, consumers may be more cautious about their spending
and may choose to patronize lower-priced options or cut back on discretionary purchases,
such as coffee or food items. Market instability can also impact the cost of raw materials or
other inputs used to produce Starbucks products, which can impact the company’s margins
and profitability.

4. Supply chain disruptions or sourcing challenges

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Starbucks faces a risk when there are interruptions in its supply chain or sourcing
difficulties, since these might have an effect on the price and availability of the raw materials
and other inputs utilized in the production of its products. Disruptions in the supply chain,
such as transportation delays or natural disasters, can impact the availability of certain
ingredients or materials, which can, in turn, impact the company’s production and
profitability. The cost and dependability of the company’s supply chain may also be affected
by sourcing difficulties, such as a lack of access to suppliers that can ful-fill the company’s
quality and sustainability standards.

CHAPTER NO:05
SUMMARY OF FINDING,
SUGGESTIONS AND CONCLUSION
5.1 Findings

One of the world’s most iconic brands – Starbucks. Founded in 1971 in the city of Seattle,
USA, the brand has changed the way the world drinks coffee outside home and work.
Starbucks has been responsible for creating the concept of a third place between home and
work where people can relax, enjoy a cup of coffee and experience the inviting ambience. It
is often said that Starbucks taught America how to drink coffee and is now continuously
teaching the world.

The global expansion of Starbucks has been rapid and strategic. It opened its first
international store in Tokyo in 1996, entered UK in 1998 and opened its first Latin American
store in Mexico City in 2002. The footprint of the brand increased to cover Russia in 2007
and it opened its first store in Ho Chi Minh City, Vietnam in 2013. In February 2014, it
entered Brunei, the 15th market in the Asia Pacific Region and the 64th market globally for
the company. In 2015, it opened stores in Panama and reached the milestone of achieving
99% of ethically sourced coffee. The company has more than 30,000 stores in 80 countries
worldwide as of June 2019, and is expected to maintain a strong growth momentum.

On 3 April 2017, Starbucks’s former CEO Howard Schultz passed the leadership baton
to Kevin Johnson, who will be the president and CEO moving forward. Kevin Johnson
served the company in its board of directors since 2009 and has been the COO of Starbucks
since 2015. Since Kevin Johnson took over as CEO, the company has successfully executed
on its strategic plans, including innovation in coffee, elevated food options and innovation in
premium craft iced teas.

Key factors in Starbucks' success include its commitment to quality coffee beans, customer-
focused approach, and strategic expansion. It also embraced corporate social responsibility,
and environmental sustainability. The global coffee giant has been able to build a loyal
customer base and drives consistent growth.

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Company Analysis of Starbucks

Handcrafted Beverages: Fresh-brewed coffee, hot and iced espresso beverages,

Frappuccino® coffee and non-coffee blended beverages, Starbucks Refreshers, smoothies
and Tazo teas.
Brand strategy
Branding has been one of the pivotal elements of Starbucks strategy over many years. The
company has invested significantly in creating a standardised look and feel of its stores,
merchandise and food and drinks. The Starbucks Siren logo is one of the most recognisable
logos in the world. The global expansion strategy has a key objective of recreating the
Starbucks experience in every new country the company enters. This essentially results in a
similar kind of experience in its stores, whether it is located in New York, New Mexico,
Moscow, Tokyo or Shanghai. The brand strategy, as mentioned before, focuses in detail on
the experience the store creates. This has always been the cornerstone of the company’s
philosophy and values. In the United

States, where the company estimates that majority of its stores will become drive through, it
has embraced stunningly appealing design principles to create stores out of unused shipping
containers. Interiors of stores are continuously spruced up through clever and artistically
appealing ways of using definite materials, lighting arrangements etc. In its international
stores, the strategy is around localising some of the store elements but still staying true to the
Starbucks experience.
The first strong indication that Starbucks is planning to move its focus beyond coffee and
into other beverages and food products was when the company logo was redesigned in 2011
to remove the words “coffee” and “Starbucks”. This logo is in use till date and is one of the
most visual and recognisable elements of the company.
The company’s brand strategy has kept pace with time and has evolved to take advantage
of new and emerging customer engagement platforms. The company operates a website
called ideas.starbucks.com, where customers can leave ideas for the company to expand and
improve its products and customer experience, improve engagement with the community and
enhance social responsibility. This is akin to the emerging methodology of “crowd-sourcing”
in the field of innovation.
The brand has a sizable social media and digital presence, which has received renewed
focus in recent years. This has been driven by the need to better engage with customers and
also be visible on platforms where target or future customers spend time online. The brand
has an active Facebook page, a Twitter account, Instagram page, a Google+ community, a
Pinterest page and a video channel on YouTube. In 2015, Starbucks collaborated with
Duracell Powermat to roll out wireless charging in its UK stores, thereby adding to the
customer experience and bringing digital innovation into its stores.
5.2 Suggestions

Starbucks unveils plan to add 17,000 locations by 2030, cut $3 billion in costs. Starbucks
said Thursday it plans to add about 17,000 locations by 2030 and to cut costs by $3 billion.
The announcement marks the latest stage in the company's broader “reinvention” strategy,
which was laid out by former CEO Howard Schultz

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1. A re-invigoration of “Just Say Yes” and “Exceed the expectations of your

customers”. Preserve the Starbucks Experience: What separates Starbucks from its
competition is the relationship it has with its customers. In Starbucks’ own research, the
experience between the customer and the barista is the largest reason why customers keep
coming back. The experience is more important than the actual drink, in some cases. During
the December 4th, Starbucks biennial investor relations conference, Matt Ryan (Global Chief
Strategy Officer) said that Starbucks brand love is driven 47% by the customer – partner
relationship, 26% from coffee love, and the remainder the brand reputation and brand
goodwill. There’s been an alarming trend of “just say no.” I can give examples, but I don’t
want to write a book. The real reputation of the brand is what people say about it once
they’ve walked out the front door.
2. Increase the length of time that brand new baristas spend in training. New Starbucks
partners experience near trial by fire. They learn very little about corporate
history, MyStarbucksRewards, the Starbucks experience, or even coffee and espresso
beverages. Memorizing beverage recipes is critical but there needs to be much more. In my
conversations with baristas, I’ve learned that usually by day three to day five, new partners
are
on the floor, on the register or on bar. Most partners tells me that there isn’t even a module
on MyStarbucksRewards, yet it’s now a significant portion of transactions. If you want to
create an “elevated” Starbucks experience, you’ll have to elevate the training. The current 21
to 25 hours of training isn’t quite enough.
3. Make time for coffee education including coffee seminars including customers. There
isn’t enough time for coffee education and most customers never experience a tasting inside
a store. One way to spread enthusiasm for the whole bean coffee wall is to share that love of
coffee with customers. A person knows a subject matter well when they can teach it to
others: it would be fun to create a customer coffee master program! (I would volunteer to be
the first customer coffee master!) MyStarbucksIdea.com threads like this one show that
there’s an untapped passion for coffee among customers. Fundamentally though, there
should be time for partners to work through their coffee passports.
4. Weed out partners who just don’t care or have a bad attitude, regardless of their
seniority. Nobody is entitled to a job. Success is earned. With more than 100,000 people
donning the Green Apron everyday, no doubt, there are a very small percentage who
disparage the Starbucks experience and just don’t care. You can’t hire 100,000 people and
have all super stars. In the mix, there is bound to be a small percentage who roll their eyes at
everything, act entitled and care about only their cute self, don’t care about drink quality, and
much more. It may be difficult to weed these people out, but it would do some good. You
want to have a beautiful garden? You really do have to do some weeding. Again, I recognize
that may only be a tiny percentage of partners, but there will be a few bad apples out there.

5. Increase the amount of pay that the most tenured Starbucks baristas get. Starbucks
should find some way to compensate that most valuable, long-term baristas. The current
compensation scheme means that new partners may be getting hired in at close to what
senior partners make. Pay caps cause this to happen. Not sure of the answer here, but the
problem is adequately summarized in this petition:

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Company Analysis of Starbucks

6. Add more non-coverage time: I’ve heard this sentiment from partners often – “I would
like to see specifically scheduled non-coverage time for education/training, coffee tastings,
cleaning, and connecting partners with store managers. When I was first hired I sat down
with my SM at least once a week and we connected over a cup of coffee. I think there is
value in constantly assessing morale and performance.”

7. Bring back some kind of secret shopper. The current surveys simply don’t capture
enough and there is value in an unexpected customer feedback with a guideline for certain
standards. Or, another option would be to include an open-ended comment area on the
surveys. The current surveys don’t have any way for a customer to leave a general comment
about the store.

8. Fix the refill policy. The number one search engine query that gets people to Starbucks
Melody relates to the refill policy. The current refill policy again puts baristas in the position
of being mini-sheriffs. The default should be “just say yes” but there’s a better answer:
Starbucks shouldn’t create this uncomfortable situation where baristas are asked to police
customer refills. It should be tied to the Starbucks card. There ought to be someone to lift
this tension from the registers: it’s not good for customers are baristas to have arguments that
“that’s not a refill” when really it is, or vice versa. I’m not married to any particular result
but the refill policy should be automatically tied to the card only.

9. Increase the awareness of the great things Starbucks does for local communities:
Many partners and customers don’t know that Starbucks encourages local volunteering and
anyone can find a community service project via the Starbucks Community Service website.
Even fewer partners and customers are aware of “Community Stores” that share their profits
with local non-profits. Bring awareness of these good things!

10. Slow down the rate of new licensed stores. Licensed stores are much harder to regulate
in terms of brand standards.

That’s my list of ten things. Feel free to make a suggestion in the comments. I will decline to
approve (or delete) comments that bash anyone, are just snark, or do not add to the
conversation in a meaningful way.

5.3 Conclusion

Starbucks is an effective model of a well-managed company that understands its customers

and needs. The company has gradually grown from a local coffee shop to an international
brand that is dedicated to offering luxury and convenience to its customers. The
conclusion should be brief and introspective. Unlike a research paper, the conclusion in a
case analysis paper does not include a summary of key findings and their significance, a
statement about how the study contributed to existing knowledge, or indicate opportunities
for future research.
To be successful in its international growth and expansion strategy, Starbucks needs to
have a strong innovation mind-set and the ability to locally customise its product offer and
positioning of its stores. The brand has taken rapid strides towards implementing an
organisational wide innovation strategy by investing in new technology, redesigning store
layouts and investing in new concept stores.

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Company Analysis of Starbucks

In addition to improving the customer experience, which has always been the primary
focus area of the company, the future innovation focus areas increasingly need to be around
the product offering.

The company, without doubt, is a successful global marketer with significant experience in
entering and establishing themselves in new markets. But as it expands and grows, it needs
to reassess constantly and keep its ears close to the ground to understand consumer
preferences. Innovation and operational efficiency would be the bedrock for Starbucks to
continue to gain success internationally and also in existing markets.

Last but not the least, it needs to evolve and elevate the customer experience of drinking
coffee in its stores continuously. This is important because customers get educated very
quickly in today’s inter-connected world and their levels of expectation around basic and
hygiene customer experience is constantly being elevated. So, a brand experience that is
superlative today may just become a regular one tomorrow. Starbucks has to stay on top of
this curve to be continuously competitive and differentiated in the eyes of the customer

LEARNING EXPERIENCE

Starbucks as a global largest coffeehouse chain American company which operating in

72 countries and have 31,256 stores in worldwide (Starbucks stores: U.S. and international |
Statista, 2020). Starbucks was established in 1971 by three businessmen which are history
teacher named Zev Siegl, a English teacher named Jerry Baldwin, and a writer named
Gordon Bowker because they all have a same passion which is love to have a fresh tea and
coffee. After that in 1971, they borrowed some money and invested to open establish their
first store which named as Starbucks in Seattle which is planning to serving excellent coffee
beans and providing fresh roasted beans and mean to accomplish retail extension, item
advancement, and offer support quality as long as possible. On the 1981, Howard Schultz
joined Starbucks as the head of advertising and retail operations. Then, Starbucks starts
giving their espresso to coffee bars and some fine restaurants and Howard raises the
possibility of café culture in Seattle after he come back from Italy (Starbuck, n.d.). Soon,
Starbucks started growing their business by expanding up to 4 stores in Seattle and compete
with other competitors by providing high quality roasted beans. In 1995, Starbucks already
had opened up to 667 stores in North America and proceeding to expand its store to Japan as
the first location for different countries. In 1996, they started to expand their business to

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Company Analysis of Starbucks

Singapore and Philippines. In 2000s, Starbucks already expand their business to most Asia
countries and they are expanding to Europe, Latin America countries and today Starbucks
has become world largest coffeehouse chain company

I personally really like Starbucks but not only because of its products, but because of its
special DNA and approach to customers and its employees.

So why is this company so special and what is its unique DNA?

It all starts from relationships — a brand’s success is the sum of all its relationships. It
includes the relationship with customers, with employees, with suppliers and more Think
about the number of routines a person has. Drinking coffee at the same place at the same
time each morning and speaking with the same employee is one of them – and this really
creates a special relationship between the customers and the company.

Howard tells that every time that he sees someone with a competitor’s cup of coffee, he
asks himself what he can do in order to gain this person trust and loyalty. Everything is super
personal. Everything now is more challenging because the technology has changed the
nature of relationships. That’s why you can’t measure success based only on “dry” data and
figures. You have to learn the nature of those relationships deeply.

BIBLIOGRAPHY

https://en.wikipedia.org/wiki/Starbucks

https://www.starbucks.com/about-us/

https://www.scribd.com/doc/59931348/Introduction-to-Starbucks-Coffee-1

https://in.investing.com/equities/starbucks-corp-financial-summary

https://stories.starbucks.com/leadership

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Company Analysis of Starbucks

https://www.edrawmax.com/article/starbucks-swot-analysis.html

https://martinroll.com/resources/articles/strategy/secret-starbucks-brand-success/

https://ivypanda.com/essays/starbucks-marketing-analysis/

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