Mba 580 Competitive Strategic Advantage

Starbucks Corporation Strategic Plan

Executive Summary

Starbucks Coffee Company was founded in 1971, when it opened its first location in Seattle’s Pike Place Market. It operated as the solitary Starbucks outlet until 1984 and became the world’s leading retailer, roaster and brand of specialty coffee with coffeehouses in North America, Middle East, Latin America and the Pacific Rim.

• Starbucks use market development and product development strategy that allows them to practice a form of concentrated growth by identifying new uses for existing products, new demographically and geographically defined products.

• Starbucks conducted joint ventures approach to increase globalization and recognize future success.

In 1992, Starbucks became Public Traded Company that issues stocks to the public and also formed a joint venture with Sazaby, Inc. In 1996, Starbucks and Dreyer's Ice Cream introduced Starbucks Ice Cream and became the number one brand of coffee ice cream in the US. Starbucks also formed the North American Coffee Partnership with the Pepsi-Cola Co, which began selling Starbucks Frappuccino blended beverage. Starbucks acquired Tazo, a Portland, Oregon-based tea company and Hear Music, a San Francisco-based music company.

Starbucks entered into a licensing agreement with Albertson's, Inc and TransFair USA to market that sell Fair Trade Certified coffee and introduced Commitment to Origins coffee range. In 2001, Starbucks introduced coffee-sourcing guidelines developed in partnership with The Center for Environmental Leadership in Business. Starbucks began to offer high-speed wireless Internet access in stores and it launched its high-speed wireless Internet service branded T-Mobile Hotspot in more than 1,200 Starbucks stores. It expanded this service to 2,700 outlets in 2003. Starbucks began to publish an annual Corporate Social Responsibility Annual Report. It also entered RTD coffee with Starbucks DoubleShot and expanded its coffee accessories and brewing range. It also signed a licensing agreement with TransFair Canada to bring Fair Trade coffee to more than 270 retail locations in Canada.

• Attracting and retaining the partners: Starbucks believe their commitment to CSR that leads to higher than usual levels of satisfaction and engagement among the partners.

• Customer loyalty: Starbucks also believe customer loyalty has been a driving force behind Starbucks phenomenal growth and long-term success.

• Reducing operating costs: Many environmental measures such as energy-efficient equipment convey long-term environmental and cost-saving benefits.

• Strengthening supply chain: to have a sustainable business, they need a reliable and responsible supplier base that can keep pace with their growth.

Starbucks introduced its Coffee and Farmer Equity Practices or CAFE Practices guidelines regarding global coffee buying, intended to safeguard future coffee supplies and support farmers, their communities and the environment. It also focused on waste reduction, with year-round discounts for customers using reusable tumblers and the installation of energy-efficient lighting and water-efficient rinsers. Starbucks’s main objective is to establish Starbucks as the most recognized and respected brand in the world. To achieve this, the company plans to continue to rapidly expand its outlets, to grow retail sales of its bottled drinks and ice cream and introduce new products and expand distribution channels. Starbucks places considerable effort on benefiting the communities where it sources coffee. This involves improving the lives of people who produce coffee and tea and protecting and maintaining their natural environment. It therefore offers a Commitment to Origins coffee range and has a partnership with Conservation International.

There are several strengths for the Starbucks Coffee Company that has a strategic use of their core competencies, a diverse coffee line, a commitment to community, power brand, global presence, leading player in fresh coffee beans and strategic new venture initiatives. They also have a few weaknesses involved in their business. They have reliance on US market, licensing international operations and an expensive pricing strategy. There are a few political/legal issues in Starbucks that include product definition, labeling, health choices regarding caffeine and coffee, custom regulations and trade policies. It is important to study an area before opening a new store to make sure that the culture or income of the area can afford specialty coffee. There are a few internal issues that are important for Starbucks to make sure they handle them properly such as global expansion, technology and systems,