Analysis of Starbucks: A Business Development Case Study

This case study examines Starbucks' business performance, providing an overview of its operations, market presence, and financial data. The analysis includes both quantitative data, such as revenue and store growth, and qualitative data, including customer reviews and pricing strategies. The report delves into Starbucks' market capitalization, social media presence, and business model, highlighting its competitive advantages and challenges. Recommendations are provided to improve customer base and service quality. The conclusion summarizes the key findings, emphasizing Starbucks' position as a leading coffee brand.

Case study
1

Table of Contents
Introduction ....................................................................................................................................3
Main body .......................................................................................................................................3
Quantitative data analysis...........................................................................................................3
Qualitative data analysis.............................................................................................................7
Recommendations.....................................................................................................................10
Conclusion.....................................................................................................................................10
References.....................................................................................................................................11
2

Introduction
The purpose of this report is to develop understanding on the service provision in context
to a business organisation. The chosen organisation for this report is Starbucks which is a
American based multinational chain of coffee-houses operating worldwide. The company was
established in 1971 and is headquartered in Seattle, Washington and Kevin Johnson is the CEO
of the company. In the following report, data is collected in context to the services and
performance of the company using both quantitative and qualitative methods of data collection.
The following report evaluates the information collected using both sources and conduct detailed
analysis.
Main body
Quantitative data analysis
Starbucks is a highly influential and affluent global company based in America and it
deals in providing mainly coffee based beverages all around the world. The company operates in
the restaurant and leisure industry and serves the best quality of coffee to consumers at global
level. The organisation presently owns 33,833 stores all over the world in 80 countries which
denotes its high market presence and well established network of operations at a global level. It
employs approximately 383000 personnel in order to cater to requirements of potential
customers. The company owns 15,444 stores in United states indicating that it is a market leader
in coffee industry of US. The market capital of the company accounts for $139.3B which is
indicates that the organisation has abundance of financial resources and maintains a consolidated
image in the market with huge reputation and goodwill (Zaytsev, Dmitriev and Asaturova,
2020).
3

Source: Net revenue of Starbucks worldwide from 2003 to 2021, 2022
From the above graph, it could be interpreted that the revenue of the company has
increased in 2021 to 24.61 billion from 19.16 billion in 2020. this massive shift in revenue is due
to increase in sales of the company in post-pandemic period. The sales of the company was
majorly affected by the consequences of pandemic and as it is shown in the graph that revues of
the organisation had declined in year 2020 due to emergence of COVID-19. The graph shows
significant growth of the Starbucks in terms of revenues as the company constantly devise
growth strategies in order to attain high levels of growth and development. The organisation has
invested brilliantly and strategically in marker development and has opened number of stores in
recent years. Starbucks is constantly enhancing its revenue generation leading towards expansion
to a massive extent as the company has prominently developed new markets all around the
world.
4

Source: Number of Starbucks stores worldwide from 2003 to 2021, 2022
As shown in the above graph, the number of stores has constantly increased with
subsequent years which indicates the company's significant investments in market development.
The company use growth strategy of market development as explained in Ansoff growth matrix
which enabled it to maximise its customer base through increasing reach of the company to
audience in availing goods and services of the organisation (Sawhney, 2018). The above graph
shows the market development of company and it shows that within a year the company has
created various stores in different locations. The company is expanding with great magnitude
with every passing year and is creating new markets to expand its reach to customers and
become a market leader.
5

Source: Starbucks' Growth: A 20-Year Review, 2014
The market capitalization of a company measures the worth of an organisation in the
open market and it shows the perception of investors in relation with making payment for the
stocks of the company. From the above figure, it can be interpreted that the market capital of
Starbucks has been constantly rising with subsequent years with certain fluctuations in between.
The level was shown declined between 2006-2010 which was followed by fast recovery in next
years. The organisation has made significant growth in terms of market capitalization as well and
it denotes high credibility of investors towards the stock of Starbucks (Anson, 2022). This shows
that the company is sustaining its presence in the market while religiously increased its worth in
succeeding years.
6

From the insight gained on social presence of the company, Starbucks has 9.6 million
followers on its Instagram handle which marks its worldwide renowned image. From the above
image, it is interpreted that the organisation is widely popular coffee brand and it is successfully
gaining maximum customer engagement day by day. The official account of Instagram has 1102
posts which shows its active interaction with audience and thus it indicates the growth of
company in terms of digital marketing as well.
Qualitative data analysis
Starbucks deals in providing consumers with a variety of beverages and it focus upon
increasing satisfaction of consumers through providing them fast services. Starbucks is a
influential market leader and its beverages are highly enjoyable by youngsters and is consumed
by individuals in massive number. The company offers a variety of beverages and is very much
liked for its packaging by customers (Khushman, 2019). The cups of the company are designed
uniquely having a mermaid logo and it have space for name of customer on back side. On daily
basis customers at star bucks promotes the brand through posting pictures of the beverages and
showing their names written on the cup. Due to its high brand image, youngsters is highly
indulged in consumption of Starbucks coffee and smoothies.
7

The company had differentiated itself from other coffee brands by specialising in
provision of darkly roasted coffee (Business Model of Starbucks – How does Starbucks make
money?, 2021). The organisation make use of espresso machines for the purpose of making to
ensure safety and high satisfaction of its employees. The major key partners and stakeholders of
the company are coffee growers and coffee machine makers. It works with traders and exporters
in order to provide customers with top-notch quality of coffee based beverages. The business
model of the company is associated with a network of company-operated stores and licensed
stores in order to sell its commodities.
8

Starbucks follow the pricing strategy of value based prices and it maximise its profits by
charging more for its value that it creates for the customer. The prices of the beverages differs
due to their flavours and taste and the level of utility that it offers to customers. The organisation
mostly attempts at increasing its prices as throughout the years as it has already established a
wide base of loyal customers who are brand conscious and are high income level individuals
enjoying taste and services of Starbucks (How Starbucks uses pricing strategy for profit
maximization, 2021). Moreover, they are indulged in consumption of the organisation's produce
because of its high reputation and goodwill. The organisation is a premium brand and thus
charge best prices for serving individuals with top notch quality. However, the pricing strategy
of the Starbucks implies consumers to perceive it as very expensive brand which is not
affordable to various income level groups.
The organisation also offers various discounts and exiting offers at its various stores and
promote such schemes on online website of the company. The marketing strategy of the
company is revolved around effective promotion through digital media and online websites. The
organisation is widely available on social media channels and thus it focus upon maximising
engagement with customers through interacting with them on regular basis. It make wide range
of information available on online sources such as Instagram, Facebook, company website etc.
which allow individuals to know more about the company and its services as well as prices.
Customer reviews
9

From the above reviews, it can be interpreted that customers has written some negative
reviews on staff services of the organisation which denotes that employees need to work on
improving their services in relation with offering correct orders.
Recommendations
On the basis of above analysis, it is recommended for the company to change its pricing
strategy which is suited for various income groups in order to improve its customer base. The
company is recommended to improve its services in relation with consumer reviews on matching
demands of the customers. The organisation is recommended to pay attention to feedback of
consumers and ensures they are reverting and taking proper actions as a response to the reviews.
The company is suggested to make better relations with its consumers through paying attention
on their issues regarding services and prices.
Conclusion
From the above report, it has been concluded that Starbucks is a popular coffee brand and
it mainly deals in providing customers with wide range of beverages. The growth and
performance of the company was evaluated using both qualitative and quantitative data which
shows the current position and services of the organisation.
10

References
Books and journals
Anson, M., 2022. Diversification—A Free Starbucks Cup of Coffee?. The Journal of Portfolio
Management.
Khushman, A., 2019. An Evaluation of Entrepreneurial Activities and Growth Strategies–The
Case of Starbucks Coffee House. Available at SSRN 3594916.
Sawhney, M., 2018. Starbucks: Driving Growth Through New Dining Occasions. Kellogg
School of Management Cases.
Zaytsev, A., Dmitriev, N. and Asaturova, Y., 2020, September. Developing innovative activity
management tools as a way to increase the market capitalization of an industrial
enterprise. In European Conference on Innovation and Entrepreneurship(pp. 702-XIV).
Academic Conferences International Limited.
Online
Net revenue of Starbucks worldwide from 2003 to 2021, 2022. [Online]. Available through:
<https://www.statista.com/statistics/266466/net-revenue-of-the-starbucks-corporation-
worldwide/>
Number of Starbucks stores worldwide from 2003 to 2021, 2022. [Online]. Available through:
<https://www.statista.com/statistics/266465/number-of-starbucks-stores-worldwide/>
Starbucks' Growth: A 20-Year Review, 2014. [Online]. Available through:
<https://seekingalpha.com/article/2153683-starbucks-growth-a-20-year-review>
How Starbucks uses pricing strategy for profit maximization, 2021. [Online]. Available through:
<https://www.priceintelligently.com/blog/bid/184451/how-starbucks-uses-pricing-
strategy-for-profit-maximization>
Business Model of Starbucks – How does Starbucks make money?, 2021. [Online]. Available
through: <https://www.marketing91.com/business-model-of-starbucks/>
11