A Global Strategic Analysis of Starbucks Corporation

This report examines the strengths and weaknesses of Starbucks Corporation and provides recommendations on changes that are important for the growth and survival of Starbucks. It includes a brief overview of the company profile, current leadership, strengths, weaknesses, and recommendations. The subject is Strategic Marketing and the course code is not mentioned. The college/university is not mentioned.

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
Table of Contents
CASE STUDY STARBUCKS CORPORATION......................................................................2
OBJECTIVES......................................................................................................................2
COMPANY PROFILE........................................................................................................2
History...............................................................................................................................2
Introduction......................................................................................................................2
Vision.................................................................................................................................2
Mission..............................................................................................................................2
BRIEF OVERVIEW............................................................................................................3
Current leadership...........................................................................................................3
STRENGTHS.......................................................................................................................4
1. Strong Market Position and Global Brand Recognition......................................4
Brand names & portfolio of companies.........................................................................4
2. Human Resource Management...............................................................................4
3. Environmental support efforts...............................................................................6
4. Customer loyalty......................................................................................................7
WEAKNESSES....................................................................................................................8
1. Pricing.......................................................................................................................8
2. Cultural differences.................................................................................................8
3. Ethics.........................................................................................................................9
4. Dependence...............................................................................................................9
5. Expansion problems.................................................................................................9
6. Consumer choices.....................................................................................................9
RECOMMENDATIONS...................................................................................................11
BIBLIOGRAPHY....................................................................................................................13

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
CASE STUDY; STARBUCKS CORPORATION
OBJECTIVES
This report examines the strengths and weaknesses of Starbucks Corporation and provides
recommendations on changes that are important for the growth and survival of Starbucks.
COMPANY PROFILE
History
Starbucks opened in 1971, a single store in Seattle’s historic Pike Place Market. From just a
narrow storefront, Starbucks offered some of the world’s finest fresh-roasted whole bean
coffees.
In 1981, Howard Schultz (Starbucks chairman and chief executive officer) had first walked
into a Starbucks store. From his first cup of Sumatra, Howard was drawn into Starbucks and
joined a year later.
In 1983, Howard traveled to Italy and became captivated with Italian coffee bars. He had a
vision to bring the Italian coffeehouse tradition back to the United States. A place for
conversation and a sense of community. A third place between work and home. He left
Starbucks for a short period of time to start his own coffeehouses and returned in August
1987 to purchase Starbucks with the help of local investors.
Introduction
A global coffee roaster, marketer, retailer and merchandiser of premium whole bean coffee,
teas, beverages, and fresh baked pastries.
Location
2401 Utah Avenue South Seattle, WA 98134 United States
Website
starbucks.com
Vision
Schult had a vision: To create a chain of coffeehouses that would become Americas third
place in between home and work places of Americans where they could relax or be
comfortable enough to make it in their own unique space.
From the beginning, Starbucks set out to be a different kind of company. One that not only
celebrated coffee and the rich tradition, but that also brought a feeling of connection.
Mission
To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a
time.

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
BRIEF OVERVIEW
Current leadership
NAME TITLE COUNTRY
Kevin R Johnson President/CEO USA
Takafumi Minaguchi CEO JAPAN
Belinda Wong CEO CHINA
Rosalind G Brewer "Roz" Chief Operating Officer USA
Clifford Burrows "Cliff" President: Siren Retail USA
John Winchester Culver President: International & Channel Development USA
Tony Matta President: Global Channel Dev USA
Martin Brok President EUROPE
Leo Tsoi COO CHINA
Brady Brewer COO JAPAN
Patrick J Grismer "Pat" Executive VP USA
Scott Harlan Maw Executive VP/CFO USA
Gerri Martin-Flickinger Executive VP/CTO USA
Chris Carr Exec VP/Chief Procurement Office USA
Lucy Lee Helm Exec VP/Chief Partner Officer USA
Matthew Ryan "Matt" Exec VP/Chief Marketing Officer USA
Michael A Conway Exec VP CANADA
Rossann Williams Exec VP: Retail USA
Rachel A Gonzalez Exec VP/Secy/General Counsel USA
Kris Engskov Exec VP/Gen Manager:Business Integration USA
Vivek C Varma Exec VP:Public Affairs USA
Thomas D Shaw "Tom" VP/Investor Relations USA

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
STRENGTHS
1. Strong Market Position and Global Brand Recognition
Leading coffee house chains in terms of 2015 sales
(International Trade; Brand value of the 10 most valuable fast food brands worldwide in
2018 (in million U.S. dollars) , 2011-2015)
Coffee House Chain Number of Stores
Starbucks 22,557
McCafe 5,044
Costa Coffee 3,036
Ediya Espresso 1,240
Doutor Coffee Shop 1,108
Coffee Bean & Tea Leaf 925
Caffe Nero 683
Gloria Jeans Coffees 666
Tully’s 605
Caribou Coffee 522
Brand names & portfolio of companies
The company is known for treating its management and employees well, including numerous
benefits and a higher pay rate than the competition offers.
The expanded food offering has provided a way to make Starbucks an attractive spot for
breakfast, lunch, and snacks.
Products of the Highest Quality
They give the highest importance to the quality of their products and avoid standardization of
their quality even for higher production output.
Location and Aesthetic appeal of its Stores
Starbucks has stores in some of the most prime and strategic location across the globe.
2. Human Resource Management
Starbucks is famous for its highly knowledgeable and qualified employees.
Employee reviews
How does management treat their employees?
 They treat us with respect and dignity.
Barista (Current Employee) - Cedar Rapids, IA
 Fair. If current position is not working out for any reasons, management will give you
plenty of chances to relocate within the organization.
Senior Consultant, PSP (Former Employee) - Seattle, WA

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
Does starbucks train new hires?
 I was trained by a very experienced Barista who in 3 months got promoted to a
Supervisor so I was amazed. There's computer training and pamphlets for you to study and go
over that are really helpful. They train you for each position/ have you shadow trustworthy
baristas. The best part is hands on training when they throw you right in, I feel like that's
always the best practice!
(Questions and answers about Starbucks, 2017)
3. Environmental support efforts
 Fuel-efficient equipment
In many of the stores, company is embracing fuel efficient equipment which will reduce the
natural gas consumption.
 Calculating gas emissions
As per their measurement, 81% of the green house gas emission comes from the electricity in
stores and 18% comes from the coffee roasting.
 Partnership with Conservation International and the Environmental Defense Fund
Conservation International (CI)
((CI), n.d.)
“For more than 30 years, Conservation International (CI) has been protecting nature for the
benefit of all.”
Environmental Defense Fund
(Fund, n.d.)
“Nonprofit organization solving big environmental problems in the U.S. and globally.”
Starbucks is a partner of Conservation International and the environmental defense fund.
 Utilizing bio-degradable material
“We are working to shrink our environmental footprint and meet the expectations of our
customers by reducing the waste associated with our business, increasing recycling and
promoting reusable cups.”
(Starbucks, n.d.)
“Back in 2008, it pledged to develop a 100
percent recyclable, biodegradable cup by
2015, and to get one quarter of customers
bringing reusable mugs, but little has changed.
For five years, it held “cup summits” and
consulted experts from Massachusetts Institute
of Technology in an attempt to come up with
a better cup, but then the company officially
retreated in 2013, downgrading its goal for
reusable mugs to a mere 5 percent. Two years
later, a little over 1 percent of customers bring
their own mugs.”
“Starbucks’ former director of environmental
affairs, Jim Hannah, said, “The cup is our no.
1 environmental liability,” but it could also
make the company a number 1 environmental
leader. It has the potential to revolutionize the takeout food industry, should it desire to,
which remains to be seen. Customer pressure, however, can only help.”

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
(Martinko, 2017)
4. Customer loyalty
Online shop, locator, delivery service, mobile app, loyalty card to make the process easier for
the customers to purchase coffees of their choice from the Starbucks brand.
(Whitten, 2018)
Through an investment partnership with Square, Starbucks has made significant investments
in technology to support their “Starbucks App’ in both apple and android platforms.
Starbucks has its loyalty card which has motivated customers to make more frequent visits.
It’s been working to grow the number of people who use its loyalty program and mobile app.
In the last quarter, these customers accounted for 39% of sales at company-owned stores in
the U.S., according to Starbucks.
(McKelvey, 1982)
Use of various new and innovative technology leads to improvement in services. There are
various agricultural and biotech development which are being used to minimize the labour
cost and time.

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
WEAKNESSES
Although Starbucks differs from their competitors in that they offer premium product, in
times of financial difficulty customers prefer to avoid the premium products.
 On May 29 Starbucks announced it would slow its aggressive growth and close 150
stores in 2019, citing poor sales to overcrowding of locations.
(Andrew, 2018)
 Starbucks shares drop on weak sales forecast, plans to close more than 150 stores next
year
(Whitten, 2018)
 Starbucks plans to close more than 150 company-owned stores next year and
decelerate the number of licensed store openings.
The company is now throwing more support behind its refreshment category which includes
Teavana branded iced teas and Refreshers.
Starbucks also may be seeing more competition from fast-food chains that are heavily
pushing value menus -- McDonald’s Corp. recently began advertising cappuccino, mocha and
macchiato coffees for just $2. And the java giant has fewer wide open spaces to expand into,
now that coffee culture -- and other chains -- have spread to most of the world.
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1. Pricing
Starbucks pricing is high and is often criticised for that reason when there are other coffee
retailers out there that offer much lower prices for a comparable quality product.
2. Cultural differences
 It is viewed as an American brand that offers no real diversity in its stores around the
world to recognise local cultural tastes.
 Starbucks coffee culture may not widely accepted in some countries as part of their
international expansion strategy.

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
3. Ethics
 It is criticized for not using more free trade products and being more thoughtful about
corporate social responsibility, including poor efforts about being environmentally
sound, poor treatment of suppliers from emerging countries, and tax evasion charges.
This negative publicity positions Starbucks as an unethical company in many respects.
4. Dependence
 It is still heavily dependent on consumers' love of coffee as other consumers who do
not drink coffee will not necessarily come in the store for a snack or sandwich.
(Starbucks SWOT Analysis , n.d.)
5. Expansion problems
 Through aggressive expansion as a result of overcrowding in the market, leads to self
cannibalization and diminishes long term growth targets of Starbucks. This is
happening especially in the United States.
 In line with self-cannibalization of the US market, Starbucks generates a huge
percentage of their total revenue from the US and this makes it very sensitive to
prospects of the US economy and growth.
(Geereddy)
6. Consumer choices
 Starbucks frappuccinos sales have sunk over time as customers choose health over the
highly aesthetically pleasing themed coffee drinks.
 On May 29 in Miami, Florida. The store said Frappuccino sales have declined this
year due to customer focus on health and wellness.
 “The average shot of espresso contains approximately 64 milligrams of caffeine. And
Starbucks lists a single shot of espresso at 75 milligrams of caffeine.”
(Martin, Coffee vs. cold brew vs. espresso: Which has the most caffeine? , 2016)
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6.1 Starbucks themed Frappuccinos
Unicorn Zombie Christmas tree Witch’s brew

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
Starbucks' blended Frappuccino beverages, which were once a major driver of sales growth
for the company, are no longer resonating with customers. In 2015, Frappuccinos were 14
percent of Starbucks revenue. However, Frappuccino sales are down 3% and now account for
only 11% of the company's revenue.
6.2 Frappuchino product reviews from customers
We tried Starbucks' new Unicorn Frappuccino
“The bright purple drink with a blue swirl is instantly eye-catching.
Even with the tart undertones, the drink was sickeningly sweet. I managed to finish a quarter
of each Frappuccino, and I immediately began spiraling into a sugar high — my hands were
shaking as I wrote this article.”
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The scariest part of the Witch’s Brew Starbucks Frappuccino? The taste.
“Instead of being streaked throughout, the chia seeds all fall to the bottom pretty quickly,
which gives it a thin layer of gray sediment. It tastes like a melted creamsicle with a hex that
tricks people into drinking it, but instead of turning into a toad they just feel like one - slightly
bloated.”
“It's so sweet that it makes my teeth hurt. Maybe that's the point, and they'll all fall out.”
“It’s been more than an hour since I had this drink, and there is still a lingering aftertaste.
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TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
RECOMMENDATIONS
As Starbucks market research data reflected a problem in fulfilling customer expectations as
expected by customers themselves so this negatively affected customer satisfaction rating.
Hence recommendations to improve the customer satisfaction further at Starbucks are:
 To fix the service gap amid Starbucks scores on prime attributes and customer
expectations that affected customer satisfaction the main attribute that was determined
for improvement of services so as to deliver more value to customers was based
specifically on speed of service. So to respond to this problem Starbucks needed to
speed up their hand crafted coffee making process which could be attained through
effectiveness of employees or partners. Though the partners of Starbucks are quite
efficient in handling multiple tasks but as per established process for each type of
coffee making that needs to be followed there are several level of steps. This adds up
when customers demand customization of their coffees which adds up to more time
over standard process thus meaning delay for other orders and customers. So even
after several process were automated to save time for partners but Starbucks
customers still feel customer expectations are low in terms of speed of services. So to
improve it is essential to incentivize each partner so that they can challenge
themselves to meet speed need to be delivered each order. This can be done by
allowing each partner extra labor charges which would add to their earning per share.
This plan of additional labor expenses will help to deliver customer oriented
expectations and desired satisfaction so such expenses will be equivalent to
investment for positive returns.
 Another problem identified was lack of strategic marketing decisions at Starbucks
irrespective of fact that it is world’s most efficacious organizations based on
marketing. As Starbucks did not had a separate marketing group and CMO who
would head all marketing decisions so this was a concern. Because at Starbucks
marketing appeared everywhere and each was engaged in collaborative efforts which
often meant that due to absence of specific department in Starbucks structure a
defined market and customer related pattern based on research activities sometimes
got overlooked which could have been averted. So based on this it is recommended
that Starbucks have a separate division of marketing in their organizational structure
that would religiously measure trends and impacts of collective market data so that
insights from these could be used timely to drive strategic decisions making by
looking at big picture rather than making marketing efforts based on assumptions.
This change would be considerable to develop plans and strategies in alignment with
market research and customer behavior or change patterns to make decisions and
utilization of resources more evidence and data based.
 Starbucks also needed to change their brand identity from being everywhere to being
special place to enjoy coffee, hang up with friends specifically focusing on young
generation demographic needs of social, free spirited places to relax and talk with
friends over a cup of coffee or other beverages. So Starbucks needs to be more
appealing to young than being a mainstream coffee place to encourage more visits and
better customer satisfaction with enhanced customer engagement. Like for instance,
Starbucks can focus on improving socialization experiences at their stores to attract
youngsters with various music concerts or live events in stores. Also Starbucks can
focus relaxed surrounding and coffee smell that would remind customers about home
ambience and community. Designs can be localized in stores so that customers can

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
connect and explore theatrical feel inside each store which would give them more
enriched feel to be at home away from home. This visible appeal will attract
customer’s engagement and improve their satisfaction.

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
EXHIBIT 10: Importance rankings of key attributes in creating customer satisfaction
Starbucks could lower prices to attract more customers.
As the exhibit shows, 65% is linked to customer satisfaction. If they lowered the prices,
customers could be more satisfied.
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TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING

TOPIC: A GLOBAL STRATEGIC ANALYSIS OF STARBUCKS CORPORATION
COURSE: STRATEGIC MARKETING
BIBLIOGRAPHY
(CI), C. I. (n.d.). About us. Retrieved from Conservation International (CI):
https://www.conservation.org/about/Pages/default.aspx
Andrew, S. (2018, June 21st). Starbucks ceo: sales are down because people are too healthy
to buy frappuccinos. Retrieved from Newsweek:
https://www.newsweek.com/starbucks-sales-stocks-drop-frappuccino-customers-are-
too-healthy-990033
Fund, E. D. (n.d.). About us. Retrieved from Environmental Defense Fund:
https://www.edf.org/
Geereddy, N. (n.d.). Strategic analysis of starbucks corporation. Retrieved from
https://scholar.harvard.edu/files/nithingeereddy/files/starbucks_case_analysis.pdf
International Trade; Brand value of the 10 most valuable fast food brands worldwide in 2018
(in million U.S. dollars) . (2011-2015). Retrieved from Statista; market and consumer
data: https://www.statista.com/statistics/273057/value-of-the-most-valuable-fast-food-
brands-worldwide/
Martin, T. (2016, October 25th). Coffee vs. cold brew vs. espresso: Which has the most
caffeine? . Retrieved from CNET: https://www.cnet.com/how-to/coffee-vs-cold-brew-
vs-espresso-which-has-the-most-caffeine/
Martin, T. (2016, October 25th). Coffee vs. cold brew vs. espresso: Which has the most
caffeine? . Retrieved from CNET: https://www.cnet.com/how-to/coffee-vs-cold-brew-
vs-espresso-which-has-the-most-caffeine/
Martinko, K. (2017, June 16th). Starbucks cups are not recyclable, which means 4 billion go
to landfill each year . Retrieved from TREEHUGGER:
https://www.treehugger.com/corporate-responsibility/starbucks-cups-are-not-
recyclable-which-means-4-billion-cups-end-landfill-each-year.html
Questions and answers about Starbucks. (2017, September 12th). Retrieved from INDEED:
https://www.indeed.com/cmp/Starbucks/faq/how-does-management-treat-their-
employees?quid=1bpruclslaqhr916
Starbucks. (n.d.). Starbucks Corporate Social Responsibility. Retrieved from Starbucks:
https://www.starbucks.com/responsibility/environment/recycling
Starbucks SWOT Analysis . (n.d.). Retrieved from Business Teacher:
https://businessteacher.org.uk/swot/starbucks.php
Whitten, S. (2018, June 19th). Starbucks shares drop on weak sales forecast, plans to close
more than 150 stores next year . Retrieved from CNBC International Business and
Financial News Network: https://www.cnbc.com/2018/06/19/starbucks-shares-fall-3-
percent-as-coffee-chain-scales-back-story-growth-sees-1-percent-global-same-stores-
growth-in-third-quarter.html