Starbucks: the keys to creating value
Starbucks is probably one of the biggest names in the coffee business and they have a clear mission. Their mission is to inspire and nurture the human spirit: one person, one cup and one neighborhood at a time (Starbucks, 2011). Therefore the enterprise value of Starbucks is divided in two main parts. They want to offer the best quality coffee and they want to create a unique customer experience. The value of quality is offered by serving great Starbucks coffee made from the best coffee beans, roasted with great care. Only the best coffee is good enough. The value of experience is given by the unique Starbucks coffeehouses. Starbucks calls it their ‘coffeehouse music and Wi-Fi community’. Every coffeehouse is placed in a special selected environment to create the unique Starbucks feeling. In their coffeehouses they give the customer coffee, but also everything that goes with it: good books, great music and free Wi-Fi access. All this brings people together and is related to Starbucks’ mission.
Companies are using three keys drivers to create their enterprise value. The first driver is the profit margin. Starbucks targets a higher-income segment of young and college-educated adults, a group that tends toward higher luxury-consumption levels (Wikiinvest, 2010). This focus allows the company to maintain high profit margins. These higher prices are needed to finance the expensive buildings where most Starbucks shops are located. In turn, the location is indispensible for the creation of a great coffeehouse experience. The second driver of value creation is sales growth. To boost sales Starbucks offers free Wi-Fi to its’ customers, hoping to attract more people in the off-peak moments resulting in a higher profit (Starbucks, 2011). Here we question how the strategy of client retention (off-peak) influences the throughput of customers in peak hours. In peak hours we suggest that Starbucks focuses more on the coffee quality...
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