The Idea Behind the Starbucks Experience E-Book

Nadine Pahl

• Herausgeber: GRIN Verlag
• Sprache: Englisch

Veröffentlichungsjahr: 2009

Beschreibung

Research Paper (undergraduate) from the year 2008 in the subject Business economics - Operations Research, grade: 1,0, University of Applied Sciences Berlin, course: International Entrepreneurship, language: English, abstract: 1971, when the ‘Starbucks experience’ begun, Starbucks was just a small coffee shop in Seattle, USA. Today, Starbucks, named after the first mate in Herman Melville’s Moby Dick, is the world’s leading retailer, roaster and brand of specialty coffee with millions of customer visits per week at stores in North America, Europe, Middle East, Latin America and the Pacific Rim. Thus,within not more than three decades, Starbucks’ offering of distinctive blend of quality coffee, neighbourly camaraderie and a unique coffeehouse culture combined with an aggressive growth strategy helped it to become the most famous specialty coffee shop chain in the world and a global company: In 2007, it run more than 15,000 stores worldwide by employing more than 172,000 people. But in the same year 2007 - despite revenues of USD 9.4 billion - Starbucks had to report a first-ever decline in same-store sales. As early as the mid-1990s, analysts had been predicting that Starbucks could not sustain such strong growth, especially in same-store sales. For more than 10 years, Starbucks had consistently beaten these expectations. By 2007, however, Starbucks unprecedented size, combined with the uncertainty of the economy,had placed the company in a new competitive game. As a result, in early 2008, Starbucks announced a series of initiatives to cope with the new challenges and to prepare for a successful future – all of them based on renewing the focus on customer experience and slowing down expansion. But what constitutes the Starbucks strategy that has been that successful in the past? What were the main drives of the considerably growth of the Starbucks business? And is the Starbucks strategy flexible enough to adapt to the current challenging market conditions? After the introduction of the Starbucks business in terms of vision, mission and history, this assignment focuses on answering these questions by analysing Starbucks’ strategy and its key drivers of success in chapter 2. This analysis is done with the model of the ‘strategic diamond’ that is introduced in the beginning of chapter 2 as working basis. The assignment ends a comprehensive analysis of the challenges Starbucks is facing today and how it prepares to successful handle them.

Leseprobe

Table of Content

List of Abbreviations

1 Overview

1.1 Introduction

1.2 The Starbucks Business - Vision, Mission and History

2.1 The Idea Behind the Strategic Diamond

2.2 Arenas - Where Starbucks is Active

2.3 Vehicles - How Starbucks Gets to the Business Arenas.

2.4 Differentiators - How Starbucks Wins in the Marketplace

2.5 Staging - Starbucks’s Speed and Sequence of Moves

3 Conclusion

3.1 Challenges Starbucks is Facing Today

3.2 How Starbucks Prepares for a Successful Future

Page 1

Fachhochschule für Ökonomie und Management

The Main Elements of Starbuck’s Strategic Diamond

Page 3

List of Abbreviations

% Per cent

CPG Consumer Product Group

e.g.Latin,exempli gratia (for example)

et al.Latin,et alii (and others)

FY Fiscal Year

ibid.Latin,ibidem (at the same place)

IPO Initial Public Offering

p. Page

U.S. United States (of America)

USA United States of America

USD United States Dollar

Page 4

III The Idea Behind the Starbucks Experience The Main Elements of Starbuck’s Strategy Diamond List of Figures Figure 1 Storefront of One of the First Starbucks Stores ................................. 3 Figure 2 The Five Major Elements of Strategy ................................................. 5 Figure 3 Starbucks Retail Sales Mix by Product Type for the FY 2007 ........... 7 Figure 4 Starbucks Hazelnut Hot Chocolate, Caramel Frappuccino® and Tazo® Chai Tea Latte ...................................................................................... 8 Figure 5 House Blend and Organic Shade Grown Mexico by Starbucks Coffee ............................................................................................................... 8 Figure 6 Now Playing at Starbucks - Choice of Music to Buy. ........................ 9 Figure 7 Choice of Books Currently Sold by Starbucks ................................... 9 Figure 8 Starbucks Revenue Components for the FY 2007 ........................... 13 Figure 9 Importance Rankings of Key Attributes in Starbucks Creating Customer Satisfaction .................................................................................... 15 Figure 10 Starbucks Expansion 1987 - 2007 ................................................. 21 Figure 11 Starbucks Financial Performance 2000-2007 ................................ 24 Figure 12 Starbucks Operation Result for FY 2007 Compared To 2006 ....... 24 Figure 13 Starbucks Strategic Diamond ......................................................... 27 Figure 14 Internet Presence www.mystarbucksidea.force.com ..................... 35 Figure 15 Starbucks Card Rewards ............................................................... 36 List of Figures Nadine Pahl

Page 5

1 Overview

1.1 Introduction

1971, when the ‘Starbucksexperience’begun, Starbucks was just a small coffee shop in Seattle, USA. Today, Starbucks, named after the first mate in Herman Melville’s Moby Dick, is the world’s leading retailer, roaster and brand of specialty coffee with millions of customer visits per week at stores in North America, Europe, Middle East, Latin America and the Pacific Rim.1Thus, within not more than three decades, Starbucks’ offering of distinctive blend of quality coffee, neighbourly camaraderie and a unique coffeehouse culture combined with an aggressive growth strategy helped it to become the most famous specialty coffee shop chain in the world and a global company: In 2007, it run more than 15,000 stores worldwide by employing more than 172,000 people.2

But in the same year 2007 - despite revenues of USD 9.4 billion - Starbucks had to report a first-ever decline in same-store sales.3As early as the mid-1990s, analysts had been predicting that Starbucks could not sustain such strong growth, especially in same-store sales. For more than 10 years, Starbucks had consistently beaten these expectations. By 2007, however, Starbucks unprecedented size, combined with the uncertainty of the economy, had placed the company in a new competitive game. As a result, in early 2008, Starbucks announced a series of initiatives to cope with the new challenges and to prepare for a successful future - all of them based on renewing the focus on customer experience and slowing down expansion.

But what constitutes the Starbucks strategy that has been that successful in the past? What were the main drives of the considerably growth of the Starbucks business? And is the Starbucks strategy flexible enough to adapt to the current challenging market conditions?

After the introduction of the Starbucks business in terms of vision, mission and history, this assignment focuses on answering these questions by analys-

1Seewww.starbucks.com, 11.11.2008.

2See Koehn et al. (2008), p. 14.

3Ibid., p. 17.