External Analysis of Starbucks 1 Running head: STARBUCKS
External Analysis of Starbucks Nancy Vu MGMT 4340 Strategic Management Dr. Uchenna Nwabueze March 6, 2011
External Analysis of Starbucks 2 Table of Contents
1.0.0. Executive Summary ...............................................................................................................4 2.0.0. Company History ...................................................................................................................5 2.1.0. Background ...........................................................................................................................5 2.2.0. Purpose of this study
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Rivals Anticipated Strategic Moves ....................................................................................35 3.3.3. Summary of Competitive Analysis .....................................................................................38 3.3.4. Key Success Factors ...........................................................................................................39 4.0.0. References ...........................................................................................................................40
External Analysis of Starbucks 4 1.0.0. Executive Summary The Starbucks Corporation is the largest coffee chain in the United States and internationally. To better understand the coffee industry, the purpose of the paper will provide a detailed external analysis on Starbucks’ global operations. Included in the study will be an explanation on Starbucks’ initial founding history followed by its background as well as the purpose of the study. In addition, the paper gives a detailed assessment of the external analysis which consists of six portions. The first portion is the general environment analysis of the coffee industry’s operations and the way it factors in the demographic segment, the economic segment, the political/legal segment, the socio-cultural segment, the technological segment, and the global segment. The second
In the journal article “For the Love of Joe: The Language of Starbucks” (2008), Constance M. Ruzich analyzes the success and rise to popularity of The Starbucks Coffee Company around the globe. The article is written and structured for the general public to read and understand. It is meant to be an informative article and as such, Ruzich makes use of a lot of data and includes citations from a variety of other academic sources. She also uses different ways to measure the popularity of Starbucks, not just the financial aspect, but also in terms of its economic status in a global coffee market, just to
Introduction The two companies that are the subject of this report are Starbucks and Caribou Coffee. Starbucks operated internationally from an early point in its history, opening its 10th store in Vancouver its second market was international, before anybody in the US outside Seattle had heard of Starbucks. Now the company operates around the world. While its coffee business has not generally been built on the basis of acquisitions, it has attempted to complement that business and enter new ones with a variety of acquisitions over the years. Two recent ones were Teavana, a tea shop (Patton, 2012) and Evolution Fresh, a juice chain (Horovitz, 2012). In contrast, Caribou Coffee has remained a regional player, expanding slowly, with no international operations and without any major acquisitions. This paper will compare these two companies in terms of their expansion strategies, especially with respect to mergers and acquisitions.
For Starbucks corporations, this presents an opportunity to grow in the domestic market when currently there are 50% of Americans that drink coffee as well. This percentage also correlates to a 225.2 billion dollar impact in the U.S. Along with growth in coffee shops; the coffee industry had managed to be 1.6% of total gross domestic product in the United States. This opportunity received a weight of .10 in this External Factor Evaluation. This second rating was given a 2 for average.
Many multinational corporations in the coffee industry have succeeded tremendously such as Starbucks. Each of these corporations has strategies that helped them continue to expand to nations of different cultures, ethnicities, governmental practices, and locations.
(3a): What trade-offs has Starbucks made? What different activity choices has it made from its rivals?
Starbucks Corporation is an American company that was founded in 1971 in Seattle, Washington (Starbucks Company Profile, 2014). It operates in 62 countries around the world, serving its specialty coffee products, teas, food items, and other beverages (Starbucks Company Profile, 2014). Additionally, Starbucks Corporation has a multitude of license agreements with other locations where they sell their products, such as grocery stores and national foodservice accounts (Starbucks 2013 10-K Form for FY ended on September 29, 2013). In 2013, Starbucks reported a revenue of over 14 billion dollars (Starbucks 2013 10-K Form for FY ended on September 29, 2013). The success of Starbucks Corporation, however, comes from a carefully planned and well-executed business model. A thorough understanding of the competitive environment for Starbucks Corporation has allowed the company to flourish in an age where the intersection of convenience and quality are of utmost importance. This report will apply the 5-forces model in order to evaluate Starbucks Corporation’s competitive environment and assess its competitiveness in the near term.
Founded in 1985, Starbucks is one of the largest coffeehouse companies in the world with over 16,000 stores in 50 countries. This report evaluates major internal and external factors affecting Starbucks using various analytical techniques. Based on the Starbucks brand in UK, it identifies suitable marketing strategies for Starbucks to expand its business in the UK market within the next two years. In line with the chosen marketing strategies, recommendations for the marketing mix are discussed.
1.0.0. Executive Summary ...................................................................................................................... 5 2.0.0. Company History ................................................................................................................................ 8 2.1.0. Background ....................................................................................................................................... 12 Table 1: Starbucks Revenue Trends 2005-2010
2) Garthwiate, Craig; Busse, Meghan; Brown, Jennifer; Merkley, Greg “Starbucks: A Story of Growth” Harvard Business Publishing, July 2012.
In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.
Starbucks is undoubtedly an international brand. The history of coffee traces back to Ethiopia, Africa, India, Arabia, and Europe, and has been traded abroad since the 11th century. Understanding the demand and widespread market for coffee, Starbucks has triumphantly capitalized both the domestic market, and the varied international markets as well. Possessing about 6,500 retail sites worldwide, Starbucks’ net is spread across thirty countries and has been found as one of the most recognized brands all over the globe in equality to McDonalds and Toyota. This organization’s ability to build an international brand has been unprecedented- particularly since it represents a specialty
This case assignment discusses the history of Starbuck’s accomplishments as they entered the American coffee culture heritage. In 1983, The chairman and CEO Howard Schultz traveled to Italy and had a dream to carry the Italy coffeehouse ritual back to the United States. Schultz was focused on creating an environment meeting company that makes good coffee but also be a social experiment. Starbucks today opened more than 19,000 stores functioning in 62 countries. Starbucks has numerous rewards that globalization has offered and they have significantly benefited from it, while in the coffee industry. Starbucks has a wide-range in marketing strategies to benefit the customers. During the different obstacles that Starbucks has encountered, they must stay reliable in quality and uphold to adjust to different customer values.
The key issues facing this firm were its attempts at massive expansion and creating new value innovation. The need to expand could cause the company to become over exposed and risk its ability to change. New players in the field such as McDonalds pose a new potential threat of competition, though it is unclear if they share the same market. What can Starbucks do to compete with the competition? There are alternative actions Starbucks can take to secure its competitive advantage it has upheld for so long. The one item that truly
Starbucks is one of the world’s leading coffee bars, which has been open since 1971. To survive in the vastly culturally differentiated environment, they had to introduce new products such as teas for the Chinese market. On the other hand, to be able to increase their seasonal sales and gain a competitive advantage in the coffee market, Starbucks have introduced Pumpkin Spiced Lattes which are only sold in the autumn/winter season. To increase their sales during these months even more, they can introduce a
With the development of economic globalization, “fast food” becomes a more and more substantial industry in the business world, which adapts to the pace of people’s life. Each organization spares every effort to stand forward the competition due to the fierce competition. In this article, we focus on the “Starbucks”, a prevailing coffee manufacturer in recent years.