Starbucks Coffee: Business Strategy and Value Drivers
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Added on 2023/04/11
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This presentation explores the effectiveness of Starbucks' business strategy and value drivers in the coffee industry. It covers their history, geographic presence, environmental responsibility, marketing, production channels, manufacturing, technological development, customer service, profit pools, and positioning strategies.
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Starbucks Coffee
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Introduction •Starbucks corporation is being considered as one of the popular American coffee house chain, with the operating value of US$4.135 billion in 2017 (Starbucks.com.au 2019).In order to describe the effectiveness of business strategy and value drivers of Starbucks, in the coffee industry, the research has been conducted. •Starbucks history:In the year 1971, Starbucks was founded by three partners Gordon Bowker , Zev Siegl and Jerry Baldwin. •Geographic presence:Starbucks operates 62 countries across the world with the total numbers of 20000 stores (Starbucks.com.au 2019). •Environmental responsibility:A greener plan for 10000 environmentally friendly stores has been introduced by Starbucks. Starbucks has contribution on World Wildlife Fund and SCS Global Services (Starbucks.com.au 2019).
Marketi ng Advertis ing Loyalty Program s Coffee Produce rs Product develop ment Focus groups Recipe Procurement Agencie s Owned Chann els Legal HRTraining Wifi Apps Manufac turing coffee cups Store Fitters Real Estate Finance Loan Program s Product packagi ng Techn ologic al innova tion Teavana Seattle’s Best Coffee Evolutio n Fresh Starbuc ks owned data centre CUSTO MERS SERVIC E Recyclin g Waste Land Fill & Compost Transpo rt Compani es Latin America Africa Asia Third party DC Manufac turing
Continue…Marketing •Social media plays an important role in the marketing and sales operations in Starbucks •Different advertising as well as social media campaigns have been introduced. •Loyalty program has also been introduced by Starbucks Coffee production channel •After completion of the legal licensing processes, procurement process being conducted. Product development •In case of developing new product in the market, product recipe is being introduced in the market. •Single wall coffee cups has been introduced by the company for make the recycling process easier •Based on the needs of target customers, product packaging is being done so that large numbers of customer attention can be grabbed. Manufacturing •Asia, Africa and Latin America are the main source of raw materials •Maintaining uninterrupted coffee beans supply chain can •After collecting the manufacturing products, these are being send to the third parties through transporting channels
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Continue.. Technological development •Wifi and Apps facilities are being provided for making the standard service process Human resource •Ensuring standard customer service, training and development program have been introduced. Loan program •Financial backup has been taken for store fitters, from the real estate. Owned channels •Starbucks has different owned channels such asown data centre, Teavana, holiday cups, Seattle’s Best Coffee. Customer service regarding waste management •In order to mange the waste, strong product recycling process has been introduced by the company. •In case of not breaking the organic waste landfills and giant composing system have been introduced by Starbucks.
Continue.. The profit pool map of Starbucks is being generated based on Café •20000 stores •Earned near about $6.3 billion Merchandise •Holiday cups Consumer products •Starbucks-branded apparel •coffee machine •gear and gifts
Profit pools of Starbucks •Café: Coffee selling stores plays an important role for driving the profitability rate for Starbucks. Analyzing the business from last few years, it has been identified that Starbucks has earned near about $6.3 billion from its stores in the year 2018. •Merchandise: The benefits of Starbucks has been derived from the holiday cups due to its terrific marketing and public relation. •Consumerproducts:Starbuckscoffeegearisthepopularcoffee source for affordable, Starbucks-branded apparel, uniform wear, gear and gifts (Starbucks.com.au 2019). By introducing the packed coffee beans with its logo high profit has been gained by the company. By continuing this, it can be said that coffee machine of Starbucks has also brought huge changes in its profit pools.
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Continue.. Based on the value chain activities’ revenue, the profit pool mapisbeingcompared.TheprofitpoolofStarbucksis beinggeneratedbasedonthefunding,servicingand acquisitionactivities(Gupta,NagpalandMalik2018). Based on the comparison of previous year financial report, the profit distribution can be properly examined.
Positioning map of Starbucks Low Price High price Low QualityHigh quality
Strategies for maximizing positioning Based on the analysis of competitors position, Starbucks has adopted different strategies. Such as •By distinguishing its products from the competitors has helped Starbucks to give its products a great strategic advantage (Ramaswamy and Ozcan 2016) •Targeting premium customers by providing standard quality of products (Starbucks.com.au 2019) •Premium pricing strategy is being followed by Starbucks for boosting its profits so that the customers feel free to pay more
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Continue.. In order to gain strong position in the market, it is very important for understanding both the strength and weaknesses of the competitors. In case of Starbucks, understanding the needs of the customers effective promotional strategies have been adopted by Starbucks.
Conclusion In this study, it can be concluded that based on the analysis, with standard quality of products and strong infrastructure Starbuckshasbecomeoneofthepopularcoffeeselling organizations in the Australian market. Its unique pricing strategy and efficiency has played an influential for driving its high profitability rate.By understanding different profit generating pools, it can be said that café, merchandise and consumer products are playing essential role for driving its profitability rate.
Reference list and bibliography Gupta, P., Nagpal, A. and Malik, D., 2018. Starbucks: global brand in emerging markets.Emerald Emerging Markets Case Studies,8(4), pp.1-22. Ramaswamy, V. and Ozcan, K., 2016. Brand value co-creation in a digitalized world: An integrative framework and research implications.International Journal of Research in Marketing,33(1), pp.93-106. Samper, L., Giovannucci, D. and Marques Vieira, L., 2017. The powerful role of intangibles in the coffee value chain.Economic research paper, (39). Starbucks.com.au 2019. retrieved from: https://www.starbucks.com.au/Home.php [Accessed on 23rd March, 2019]
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