Starbucks vs. Douwe Egberta

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Starbucks vs. Douwe Egberts
or
Two strategic approaches within the same industry context

Universiteit Maastricht
Faculty of Economics and Business Administration
Maastricht, March 14th 2006
Conze, CE.; Cuijpers, R.; Peinemann, ANB
ID number: i283819; i346748; i265071
Study: International Business; International Business Economics Course code: 3013BE – Strategic Management
Group number: 4
Subgroup: 2
Tutor name: B. Blumberg
Writing Assignment: Team Report

Index

1. Introduction…………………………………………………………………..…..3

2. Strategic Process: Strategic Change…………………………………………..….4
3. Strategic Content: Business Level Strategy…………………………………..….5

4. Strategic Content: Network Level Strategy………………………………….. ....7
5. Starbucks Performance……………………………………………………..……9

6. Comparison Douwe Egberts/ Starbucks strategy………………………………10

7. Conclusion……………………………………………………………………...11

8. References…………………………………………………………………..….12

9. Appendix…………………………………………………………………….....14

Introduction:
"Over second and third cups flow matters of high finance, high state, common gossip, and low comedy. Coffee is a social binder, a warmer of tongues, a soberer of minds, a stimulant of wit, a foiler of sleep if you want it so. From roadside mugs to the classic demi-tasse, it is the perfect democrat" (Quotegarden). With over 400 billion cups consumed annually, coffee ranks second in the list of the world's most popular beverages, right behind water (Wikipedia). Thousands of companies are operating in this billion-dollar industry. Dealing with this fierce competition puts pressure on companies operating in the coffee industry to run their business effectively and efficiently and gain a sustainable competitive advantage by meeting and exceeding customers' expectations. One of the firms operating in the coffee industry is the United-States-based company Starbucks. It experiences an incredible growth in the last decades. Starbucks is founded in 1971 in Seattle and openes its first location in Seattle's Pike Place Market. Named after the first mate in Herman Melville's Moby Dick, the firm is the world's leading retailer, roaster and brand of specialty coffee with coffeehouses in America, Europe, Middle East, and the Pacific Rim. Worldwide, approximately 35 million customers visit a Starbucks coffeehouse each week (Starbucks b). Douwe Egberts Coffee Systems is one of the companies competing with Starbucks. The originally Dutch company is one of the most important coffee roasters and a main supplier of accessories and coffee systems for the workplace. The company is blending, roasting and brewing the highest quality coffee. It is founded in 1753 in a town called Joure in the Netherlands. During its first two centuries, Douwe Egberts steadily builds a top position in coffee, tea and tobacco in the Netherlands. Since the 1950s onwards, the firm quickly expands on the international scene. The growth process accelerates after the company joines with the United-States-based Sara Lee Corporation in 1977. Today, Douwe Egberts is the second largest coffee roaster in the world, supplying coffee systems to over 40 countries and having subsidiaries in Europe, the United States, and Australia (Douwe Egberts). On the one hand Douwe Egberts develops and offers a range of unique coffee systems for the out-of-home market and on the other hand the company sells its excellent coffee flavor in supermarkets all over the world. The problem statement of the paper is "Which strategy does Starbucks use in order to outperform their competitors in the coffee industry?" First of all, the strategy process Starbucks applied since the foundation of the company in 1971 is described. The way how Starbucks implemented strategic change is discussed. Secondly, the paper deals with characteristics of Starbucks' strategy content throughout the years, namely its business level strategy, and network level strategy. The paper focuses especially on how Starbucks performed...
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