Starbucks: Case Study Analysis: Strategic Management

STRATEGIC MANAGEMENT
CASE ANALYSIS

STARBUCKS COFFEE COMPANY: THE INDIAN DILEMMA

SUBMITTED BY:

AMAN AHMED ANSARI
BS 393410

I. CURRENT SITUATION

• Current Performance

 Profitable financials
 The best specialty coffee retailer in the world
 Starbucks serves more than 40million customers per week with 85% derived from retail itself
 There is a constant and continued increase in sales margins
 Had over 11000 stores in 36 countries and employed over 10000 individuals with 7600 retail stores in US (as of 2006)

• Strategic Posture

 Mission

 “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” – 2013
 Through this mission statement Starbucks hopes to nourish and maintain

 Therefore it relies heavily on effective training of its staff and employees
• Corporate Resources

 Marketing

 Starbucks benefits from an extremely loyal customer base
 It doesn’t not believe in advertisements and chooses to rely upon word of mouth promotions
 To enforce this, it locates its outlets on busy streets, malls, retail and grocery stores
 The downside of this is that Starbucks often opens too many outlets in a concentrated area thereby damaging itself

 Finance

 With minor setbacks in the Japan market the company is still highly profitable with weekly customers up to 40 million
 The company possess the capital to enter and capture new markets

 R&D

 Starbucks is constantly tweaking its menus to cater to different markets and cultures across the world
 The company invests highly in development of its employees
 Starbucks has been working on methods to reduce sugar and fat contents in its coffee to deliver the same signature taste without compromising on quality

 Operations

 Starbucks is the number gourmet coffee provider in US and is emerging as the best in its Asian markets as well
 It signed an agreement with Tata in 2004 to source quality coffee

 An extremely loyal customer base
 Unique culture that enables and empowers employees
 Focuses on quality and is opposed to the concept of franchising
 Focuses on environmental sustainability
 One of the most successful brands of the world

 Weaknesses

 Some customers oppose the high calories in their menus
 Prices are slightly higher than their competitors
 It follows a strict no smoking policy worldwide and in some cultures this is opposed such as China and Japan
 In certain cases locating outlets too close to each other

 Opportunities

 Growing coffee culture around the world
 Expansion to India which is the 4th largest economy in the world
 Young people and middle class individuals are emerging as coffee drinkers
 India has one of the largest population of people that fit into this demographic
 Low labor cost

 Threats

 Easy access for competitors in India
 Due to this, market is becoming highly competitive
 Growth of domestic coffee providers may create difficulties
 Increasing obesity rates may reduce market demand
 Foreign investors may face difficulties in ownership and may have to deal with government involvement

• Review of Current Mission and