Starbucks Corporation

Starbucks Case Study

Starbucks Corporation

I. Introduction

II. Concept

Starbucks is the name of the American company, which owns a range of coffeehouses which sell coffee all over the world. The company is considered to be the greatest monopolist on the market of coffeehouses and has a great number of cafes nearly in every country. The history of Starbucks id quite long and its development resembles the development of most great companies and corporations of any field. Evidently, the first coffee house was opened for quite a low price and gradually Starbucks became famous in the country and all over the world. Today everybody knows and visits Starbucks and enjoys coffee there. About ten years ago Starbucks broadened its menu and started to offer tea, sandwiches and cakes to attract more and more customers.

V. S.W.O.T. (strengths, weakness, threats, opportunities)

Strengths:

-Starbucks is No. 1 specialty coffee retailer of - in terms of market share and market -capitalization. (1997, £4596.6 million and sales growth 20.9%)

-It is a global organisation with 16,000 coffee shops in 15 countries world-wide.

-Strong brand image associated with high quality coffee and excellent customer service - "The Starbucks Experience".

-Extensive store network, 8,500 shops are owned by Starbucks directly. The company franchises and licenses 6,500 shops. It has developed excellent skills in franchise management.

-Due to its specialism in all things coffee - it achieves high buying volumes - scale economies and utilizes international sourcing, some from fair trade suppliers.

-Committed workforce, one of Fortune Top 100 Companies to Work for

Weaknesses:

-Starbucks is a premium brand commanding premium prices. As competitive pressures increase, the company could be undercut by lower price rivals such as McDonalds or Costa Coffee.

-Starbucks is seen as an "American Global", possible perception that big American chains are trampling on national cultures, "Starbucks was trampling on Chinese culture".

-Over-dependency on coffee and coffee related products.

-US based company, focus on the US domestic market.

-Reputation with pressure groups. Criticized for not using more Free trade products.

Threats:

-Possible saturation in the coffee, café market. In the US, 600 underperforming company-owned stores were closed. Consolidation on the high street, growing competition from national brands and new entrants, aggressive