Case - Starbucks coffee company

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Case - Starbucks coffee company

Komissarova Maria

1. Beginning

To me, the story of Starbucks illustrates the opportunities that capitalism provides for entrepreneur. The first Starbucks shop was opened in 1971 in Seattle. Its registered capital was about eight thousand dollars, back then this money could buy you about four cars. Initially, it was not a coffee shop, but a high-quality coffee beans shop, owned by three partners: the teacher of English - Jerry Baldwin, history - Zev Siegel, and a writer - Gordon Bowker.

The choice of name and logo comes from the love that all three founders shared for literature. Starbuck is a character from the famous novel called "Moby-Dick" and the naked girl with two tails, pictured on the original logo is a siren. Marine style of the store is justified by the fact that the gourmet coffee had to be transported by sea from distant countries.

2. Howard Schultz

Starbucks would not a coffee shop that we know today, if not for an American entrepreneur Howard Schultz. In 1982 he was hired by the company as the Sales Director and Marketer. The key point for the company is probably the Schultz's trip to Milan that happened shortly after his assignment for the position. Famous Italian coffee shops made a serious impression on the businessman - they were very popular and played a role not of a fast food point but rather a place where you can have a good time and meet with people, who are important to you.

From Milan Schulz brought famous in future recipes of espresso, latte and cappuccino, as well as a new business idea - to convert store of coffee beans into a cafe with high-quality coffee and unique atmosphere. But the founders were convinced that coffee is traditionally made home, and rejected his idea.

3. Market growth

Indeed market for specialty coffee was yet to be developed. but that is where Schultz saw a brilliant business opportunity. It was 90s when the demand for high-quality coffee rose. there were several reasons: peoples income grew, specialty food gained popularity, wireless internet allowed people to break free from their offices.

As the market grew Starbucks made sure not to lag behind. they promoted the idea of "the third place", meaning that there are home, work and Starbucks. The place where you meet people you love, concentrate on your job, feel that you belong. Starbucks were up and coming corporation, even though it would take time to capture the global market, buck in America the business went good. As the demand rose the competitors came into play of course. Dunkin' Donuts and McCafe on the one hand, local cafes - on the other.

4. Nowadays

Today Starbucks is not only the largest specialty coffee retailer in the world, but also the «Most Ethical Company of European Coffee Industry» in 2009-2011. The CEO of the company is ranked the «Business Person of the Year 2011» by Fortune magazine. The head office is situated in America, but the company is represented in 66 countries and owns more than 22,5 thousand coffee shops. Just as they were the first of the king and managed to create the national brand around coffee, they are still ahead of their rivals. Even though the economy is giving every business a hard time, the most relevant issue for Starbucks is to prolong or even immortalize the maturity stage of their business.

5. Analysis

Value Chain (need to make decisions on reducing costs, making the process more efficient)

6. Review

Starbucks have managed to develop an outstanding competitive advantage. The number of their strengths are big. They have been putting a lot of thoughts and recourses into expansion into new territories. And under "thought" I mean that every time they enter a new market they adapt their strategy and marketing. Being a global company they manage to compete with local favorite rivals.

For example in China Starbucks focused on tea range and included new products such as Red Bean Frapuccino to suit the taste of new customers. They also oriented their space solutions on the traditions of china: their cafe's in Asia are considerably bigger than those in America, as Chinese people would rather relax and sip a cup of coffee by the table to have a calm evening brake, than grab one and take out in the morning. This shows a great level of product adaptation.

Another canny strategy Starbucks is implementing is the way it captures new clients attention. This is when they bring into play another marketing hook - "swarm" of coffee shops. What they do is - hit new territory hard and open lots of coffee shops in close proximity to one another. This is very clever, because it creates the impression in consumers' minds that the cafe is popular and prestige. Moreover, being surrounded by this coffee stores citizens are bound to walk into.

As of customers, there is another huge step towards the success - creating a Starbucks community around the brand.

On their website "My Starbucks Idea" coffee lovers are encouraged to express their experience, talk about new products, but above all that to put forward proposals and vote for the existing ones. And this is not just a trick to entertain the masses, Starbucks knows to listen. They actually bring most of the popular suggestions into practice.

Sturbucks has been working on partnership with other strong brands like Coca-Cola and lately Tazo to enrich the product line and raise clients awareness. The strategy has a grate potential taking into account the globalization and increase value of information nowadays.

recipe coffee products cost

Recommendations

Price and company structure. If I could give Starbucks a bit of advice I would suggest acquiring a coffee producing companies to have their own raw material. This will help them lower the prices and thus move to strategy cost leadership.