Starbucks Strategy Analysis

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Starbucks strategy analysis

Introduction

The purpose of this analysis is to evaluate the Industry’s features and the company’s strategy. The main analysis in this project is external analysis and internal analysis. External analysis is contain of strategy group, five forces, partial SWOT, PESTEL, Industry life cycle and Internal analysis is contain of market segmentation, CSFS, partial SWOT, generic strategy, Resources and Core competency, the Boston matrix, the Ansoff matrix and financial analysis. At last the recommendation part will indicate the company’s future prospects.

Company Overview

Starbucks has established in1971 by three partners in Seattle, Washington by initially fund of just $9.050 (Thompson, JR & Strickland, 1999) It has known through its high price but best quality, innovative products and accessible location and the Coffee Industry leader in the market. Most of its product is consist of high quality instant coffee & tea, coffee and tea gourmet, cakes and etc. Starbucks had been inspired by Italian style café after 1983 through it’s CEO manager, Howard Shultz. The first store outside U.S opened in Japan in 1996 and followed in U.K. Base on a report in 2011, it has 18,887 stored in 55 countries, while 12,500 stores are domestic. (Wikipedia.org/Starbucks) The market share of Starbucks in U.S is 32.6 % in 2011, whereas, it’s closest threat, which is ‘Dunkin Donuts’, has 16.1% of U.S market share. (Quora.com) The current mission of Starbucks is “ to inspire the human spirit by one person, one cup and one neighborhood at the time”. (Starbucks.com)

Company external analysis

The external analysis simply concentrates on the Industry analysis not company. It will consist of Strategy Group, PESTEL analysis, Industry life cycle, 5 Forces and Partial SWOT.

Strategy Group

Starbucks is the leader of best quality coffee in Beverage Industry and is the number one coffee company in the world. Starbucks started its mission from the very fist days for accomplishing its long-term strategy, which is providing the best quality coffee and fulfill the moral trade and services. The current direction of Starbucks is “to inspire the human spirit by one person, one cup and one neighborhood at a time”. The main Starbucks products are containing high quality coffee and tea and its complementary. Indeed, it sells some snacks and juice in its stores as well. But all people know it as a coffee and tea producer. Meanwhile, it prefer not to deal with other products like a whole meal cause it will loss their concentration on hot drinks. Starbucks is reputable because of its leadership in best quality coffee among beverage firms and also has known as one the world’s most ethical companies. (Starbucks.com.2010) Therefore, Starbucks always try to maintain as a best coffee producer in competition with other companies. Starbucks always try to satisfy consumers by fulfill their needs. For instance, selling their products in grocery stores for people who do no have enough time to spend in its café or do not have close access to it. Brand is the main precious resource of Starbucks. Everybody knows it as a best quality coffee. Thus, it tries to maintain its brand and goodwill as well as before. Indeed, making every customer a loyal customer is one its slogans, whereas, it cleared that good service and keeping customer happy is one its main strategy.

Industry life cycle

In introduction period, normally coffee products were expensive for buyers. Hence, the sale rate was too low. Plus the advertising cost was not comparable to nowadays advertisement cost. There were also some barriers for easy and fast distribution. Overall, that was a low profit age for coffee industry In growth stage time, the price was also high but the demand of buying coffee was increasing significantly. Therefore, the profit was increasing between 1990 till 2000. Indeed, that was the brand power age in maturity stage....
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