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STARBUCKS: CASE
STUDY
OPERATIONS & COMPETITIVE STRATEGIES
1
Presented To:
Presented By:
1.Sabina Irfan-364
2.Hafza Mateen-3100
3.Nazish Inam-398
4.Sadia Butt-355
5.Amina Khan-376
Presented To:
Mr. Waseem-Ur-Rehman
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Contents
 About Starbucks
Vision/ Mission
Timeline
Products
 Starbucks’ Strategies
o Operations Strategies
Inventory, Process Strategy
o Marketing/ Global
Strategy
SWOT Analysis
oCompetitive Strategy
Competitive Profile Matrix
Financial Analysis
Situation Analysis
BCG Matrix
 Conclusions
Current Situation
Future Recommendations
 Presented By:  Contents:
1.Sabeena Irfan-364
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Starbucks Case Study: Operations and Competitive Strategies
Starbucks Case Study: Operations and Competitive Strategies
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Starbucks Case Study: Operations and Competitive Strategies
HISTORY
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Founders/CEO…
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
 First Starbucks opened in Seattle Washington
March 30, 1971 by: Jerry Baldwin-English
Teacher, Gordon Bowker-Writer & Zev Siegh –
History Teacher
 Entrepreneur Howard Schultz joined the
company in 1982 as Director of Retail
Operations and Marketing & introduced idea
of selling beverages & in 2008 returns as CEO
and began the transformation of company
History
History
11/21/18
PRODUCTS
Coffee:
Medium Roast
Flavored Coffee
Seasonal Favorites
Handcrafted
Beverages:
Fresh-brewed
coffee
Fresh Food Items:
 Baked pastries
 Sandwiches
 Salads
Ice Cream:
Product Diversification
IT IS NOT JUST COFFEE, IT IS STARBUCKS
COFFEE
 Presented By:  Contents:
2.Hafsa Mateen-3100
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
STRATEGIES
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Starbucks Case Study: Operations and Competitive Strategies
Starbucks Case Study: Operations and Competitive Strategies
Starbucks Case Study: Operations and Competitive Strategies
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Starbucks Case Study: Operations and Competitive Strategies
Starbucks Case Study: Operations and Competitive Strategies
Starbucks Case Study: Operations and Competitive Strategies
 Presented By:  Contents:
3.Nazish Inam-398
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
SWOT Analysis
Internal factors
External
factors
 Strengths
 Weaknesses
 Opportunities
 Threats
SWOT AnalysisSWOT Analysis
Strengths Weaknesses
• Market leader in coffee market
• Strong supply chain management
• Strong brand image
• Access to high quality Arabia coffee
beans
• Exceptional service quality
• Strong intellectual property & R & D
capabilities
• No. 19 in Forbes’ The World’s Most
Innovative Companies
• Employee management-
Approx.13,000 employees
• Consistently strong financial and
operating performance
• Lack of internal focus
• Need more of a wide spread customer
base
• Product Pricing- higher as compared
to competitors
• Stores can become crowded at times
• Increasing Number of competitors
• High operating cost
• Business profits are highly dependent
on coffee product
• Imported roasted coffee
26
27
Opportunities Threats
• Extend supplier range
• High growth rates in emerging markets
( like India, China, Brazil )
• Increased product offerings
• Expansion of retail operations
• Co-branding with other food
manufactures
• New market opportunities
internationally ( like Europe & Latin
America )
• Rising prices of coffee beans and dairy
products
• High Bargaining power of suppliers
• Increasing competition from local
competitors & new entrants in
emerging markets
• Saturated market in developed
economies
• Increasing Price Sensitivity of customers
SWOT AnalysisSWOT Analysis
Starbucks Case Study: Operations and Competitive Strategies
Starbucks Case Study: Operations and Competitive Strategies
Starbucks Case Study: Operations and Competitive Strategies
 Presented By:  Contents:
4.Sadia Butt-355
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Porter’s Five Force Competitive Strategy Model
32
Starbucks Case Study: Operations and Competitive Strategies
Competitive Analysis
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Market Share Comparison Between 2011 & 2013
35
2011
2013
Competitive Profile Matrix
Competitive Profile Matrix
37
Key Factor Starbucks McDonalds Dunkin’
Advertising
(4 – 3 – 3)
•1.37% of total
revenues
•Brand marketing,
Social media &
internet
•2.8% of total revenues
•Traditional media
•5% of gross retail sales
•Mobile application
Product Quality
(4 – 2 – 3)
highest quality of
coffee through its
onsite brewing and
smelling
Utilizes automated
brewing with less
smelling
CMLs deliver products high
quality products
Customer service
(4 – 3 – 3)
Third place concept
Exceptional Customer
service
Extended operating
hours and over 5,400
restaurants are open 24
hours.
Re-designed coffee
houses.
Creating a more desirable
place for fast-casual
eating.
Global expansion
(3 – 4 – 4)
More than 18,000
stores in approx. 62
countries worldwide
13,000 are in the North
America.
1,900 restaurants across
19 countries, 3,300 in
Japan
Over 1,600 McCafé
locations
3,173 restaurants in 31
countries.
Financial position (3 – 4 – 3)
Starbucks Financial Analysis
39
Ratio 2012 2013 Comments
Liquidity
Acid-Test
Current Ratio
1.3
1.9
0.8
1.02
•Starbucks liquidity position was satisfactory
to meet short term obligations
•Decrease in FY/Y 2013 compared to 2012
Gearing
Debt-Equity Ratio 0,59 1.6 Increase due to long term debt financing
Profitability
O.P Margin
EPS
15%
$1.79
16.5%
$2.26
Operating margin improved over the year
EPS increased in 2013
 Presented By:  Contents:
5.Amina Khan-376
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
BCG Matrix
41
BCG Matrix
Boston Matrix shows the cash cows as the regular Starbucks
line of Coffee’s, Latte’s and Frappuccino’s found at nearly
every location. These are stable products that account for the
bulk of sales.
A potential star is the International locations, which hold less
financial risk and open doors for innovation and stability.
 Question marks are the recently added VIA instant coffee to
be expanding to grocery stores and convenient stores.
Current products like this such as the dog, pre-bottle
Frappuccino’s account for a tiny fraction of sales. Another
question mark is the oft forgotten sub-brand Seattle’s Best. The
company will be revamping this brand and its future is
unknown.
42
Conclusions
(Current Situation & Future Recommendations)
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
Current Situation
Starbucks success is achieved through a few factors.
 Outstanding Quality of the coffee brewed & excellent service provided at the
stores
 Joint venture with the producers of espresso machines to include Starbucks
products into the packaging.
 Increase market share by selectively opening stores in new and existing markets
(including China and India) as well as increasing revenues in the existing stores.
 Has launched a massive retrenchment strategy to save the company by closing
unprofitable stores in U.S, Australia & other regions.
 Acquisition or control of coffee bean and dairy product producers to support
supply chain management
 Creating more new products, I think their strength lies in their brand
44
Future Recommendations
Based on the assessment ,SWOT and strategy analysis, the following key strategies can be
recommended to Starbucks:
45
Future Recommendations
Based on the assessment ,SWOT, and strategy analysis, the following key strategies can be
recommended to Starbucks:
46
Future Recommendations
Based on the assessment ,SWOT and strategy analysis, the following key strategies can be
recommended to Starbucks:
47
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE

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Starbucks Case Study: Operations and Competitive Strategies

  • 1. STARBUCKS: CASE STUDY OPERATIONS & COMPETITIVE STRATEGIES 1
  • 2. Presented To: Presented By: 1.Sabina Irfan-364 2.Hafza Mateen-3100 3.Nazish Inam-398 4.Sadia Butt-355 5.Amina Khan-376 Presented To: Mr. Waseem-Ur-Rehman IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 3. Contents  About Starbucks Vision/ Mission Timeline Products  Starbucks’ Strategies o Operations Strategies Inventory, Process Strategy o Marketing/ Global Strategy SWOT Analysis oCompetitive Strategy Competitive Profile Matrix Financial Analysis Situation Analysis BCG Matrix  Conclusions Current Situation Future Recommendations
  • 4.  Presented By:  Contents: 1.Sabeena Irfan-364 IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 7. IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 9. HISTORY IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 10. Founders/CEO… IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE  First Starbucks opened in Seattle Washington March 30, 1971 by: Jerry Baldwin-English Teacher, Gordon Bowker-Writer & Zev Siegh – History Teacher  Entrepreneur Howard Schultz joined the company in 1982 as Director of Retail Operations and Marketing & introduced idea of selling beverages & in 2008 returns as CEO and began the transformation of company
  • 13. 11/21/18 PRODUCTS Coffee: Medium Roast Flavored Coffee Seasonal Favorites Handcrafted Beverages: Fresh-brewed coffee Fresh Food Items:  Baked pastries  Sandwiches  Salads Ice Cream:
  • 14. Product Diversification IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 15.  Presented By:  Contents: 2.Hafsa Mateen-3100 IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 16. STRATEGIES IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 20. IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 24.  Presented By:  Contents: 3.Nazish Inam-398 IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 25. SWOT Analysis Internal factors External factors  Strengths  Weaknesses  Opportunities  Threats
  • 26. SWOT AnalysisSWOT Analysis Strengths Weaknesses • Market leader in coffee market • Strong supply chain management • Strong brand image • Access to high quality Arabia coffee beans • Exceptional service quality • Strong intellectual property & R & D capabilities • No. 19 in Forbes’ The World’s Most Innovative Companies • Employee management- Approx.13,000 employees • Consistently strong financial and operating performance • Lack of internal focus • Need more of a wide spread customer base • Product Pricing- higher as compared to competitors • Stores can become crowded at times • Increasing Number of competitors • High operating cost • Business profits are highly dependent on coffee product • Imported roasted coffee 26
  • 27. 27 Opportunities Threats • Extend supplier range • High growth rates in emerging markets ( like India, China, Brazil ) • Increased product offerings • Expansion of retail operations • Co-branding with other food manufactures • New market opportunities internationally ( like Europe & Latin America ) • Rising prices of coffee beans and dairy products • High Bargaining power of suppliers • Increasing competition from local competitors & new entrants in emerging markets • Saturated market in developed economies • Increasing Price Sensitivity of customers SWOT AnalysisSWOT Analysis
  • 31.  Presented By:  Contents: 4.Sadia Butt-355 IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 32. Porter’s Five Force Competitive Strategy Model 32
  • 34. Competitive Analysis IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 35. Market Share Comparison Between 2011 & 2013 35 2011 2013
  • 37. Competitive Profile Matrix 37 Key Factor Starbucks McDonalds Dunkin’ Advertising (4 – 3 – 3) •1.37% of total revenues •Brand marketing, Social media & internet •2.8% of total revenues •Traditional media •5% of gross retail sales •Mobile application Product Quality (4 – 2 – 3) highest quality of coffee through its onsite brewing and smelling Utilizes automated brewing with less smelling CMLs deliver products high quality products Customer service (4 – 3 – 3) Third place concept Exceptional Customer service Extended operating hours and over 5,400 restaurants are open 24 hours. Re-designed coffee houses. Creating a more desirable place for fast-casual eating. Global expansion (3 – 4 – 4) More than 18,000 stores in approx. 62 countries worldwide 13,000 are in the North America. 1,900 restaurants across 19 countries, 3,300 in Japan Over 1,600 McCafé locations 3,173 restaurants in 31 countries.
  • 38. Financial position (3 – 4 – 3)
  • 39. Starbucks Financial Analysis 39 Ratio 2012 2013 Comments Liquidity Acid-Test Current Ratio 1.3 1.9 0.8 1.02 •Starbucks liquidity position was satisfactory to meet short term obligations •Decrease in FY/Y 2013 compared to 2012 Gearing Debt-Equity Ratio 0,59 1.6 Increase due to long term debt financing Profitability O.P Margin EPS 15% $1.79 16.5% $2.26 Operating margin improved over the year EPS increased in 2013
  • 40.  Presented By:  Contents: 5.Amina Khan-376 IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 42. BCG Matrix Boston Matrix shows the cash cows as the regular Starbucks line of Coffee’s, Latte’s and Frappuccino’s found at nearly every location. These are stable products that account for the bulk of sales. A potential star is the International locations, which hold less financial risk and open doors for innovation and stability.  Question marks are the recently added VIA instant coffee to be expanding to grocery stores and convenient stores. Current products like this such as the dog, pre-bottle Frappuccino’s account for a tiny fraction of sales. Another question mark is the oft forgotten sub-brand Seattle’s Best. The company will be revamping this brand and its future is unknown. 42
  • 43. Conclusions (Current Situation & Future Recommendations) IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
  • 44. Current Situation Starbucks success is achieved through a few factors.  Outstanding Quality of the coffee brewed & excellent service provided at the stores  Joint venture with the producers of espresso machines to include Starbucks products into the packaging.  Increase market share by selectively opening stores in new and existing markets (including China and India) as well as increasing revenues in the existing stores.  Has launched a massive retrenchment strategy to save the company by closing unprofitable stores in U.S, Australia & other regions.  Acquisition or control of coffee bean and dairy product producers to support supply chain management  Creating more new products, I think their strength lies in their brand 44
  • 45. Future Recommendations Based on the assessment ,SWOT and strategy analysis, the following key strategies can be recommended to Starbucks: 45
  • 46. Future Recommendations Based on the assessment ,SWOT, and strategy analysis, the following key strategies can be recommended to Starbucks: 46
  • 47. Future Recommendations Based on the assessment ,SWOT and strategy analysis, the following key strategies can be recommended to Starbucks: 47
  • 48. IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE