Starbucks Case Analysis

Starbuck’s Case Analysis

Overview

Starbucks is a $5.3 million yearly sales company primarily in the Specialty Eatery Industry. They are the number one specialty coffee retailer in the world and ranked number 372 in Forbes 500 companies. Starbucks currently has stores in 35 countries and have managed to build in their brand loyalty having customers that consume their products in average 18 times a month. Coffee is the second most traded commodity in the world and specifically specialty coffee is a $9 billion industry.

Porter’s Five Forces Model

- Supplier Power: The bargaining power of suppliers is very low. Coffee is the second most traded commodity in the world and any coffee producer wants to supply its product to big, secure, and stable companies such as Starbucks.

- Barriers to Entry: It is extremely hard for new companies to enter the market because the barriers of entry are high. Starbucks is the leaders in the market and is hard to break into this industry at the same level. There might be local specialty coffee shops but they can not be compared to the size of a company such as Starbucks.

- Buyer Power: Buyer bargaining power is high given that there is relatively no switching cost.

- Threat of Substitutes: Threat from substitutes is high. Because of the shift to a healthier lifestyle and the endless possibilities substitute products represent a big threat.

Basic Competitive Strategy

Starbucks Coffee uses a differentiated strategy. They have positioned their product as an affordable luxury. They not only sell top quality, fresh coffee but they also focus on selling to their customers the experience and the concept of a coffee bar. Starbucks strategically chooses its store locations and longs to offer much than just coffee. Not only they provide an upscale atmosphere but they also offer merchandise. In their marketing strategy Starbucks also includes seasonal products such as Christmas, Halloween and Easter related drinks and merchandise.

Starbucks strategy aims to hire the most talented people in order to offer highest standards of quality and offer a memorable experience each time you have any of their products. Other than maintaining the best quality on their coffee and non coffee products Starbucks pays close attention to their relationships with each and every one involved in the processes. Starbucks is a customer service oriented and with its entrepreneurial spirit keeps growing globally and each time reaching more and more markets through partnerships and key locations. Starbucks not only offers a pleasant experience but it offers customers a lifestyle which the support by playing relaxing music, having well trained, informed and educated employees, offering a great social place to meet or a convenient place to have a coffee.

Starbucks in order to maintain its high quality not only works directly with their suppliers but also sampling the coffee to test for quality, using computerized roasting for consistent quality, using vacuum sealed one-way valve bags to ensure freshness, and limiting shelf life to ensure freshness and in turn also being customer-service oriented.

As far as growth and locations, Starbucks wants to be the largest and most well-known name in the coffee business. Starbucks uses a design team for flexibly in the shape of their locations as well as working with real-estate managers in order to find ideal locations which they cluster in order to achieve their growth goals.

Recommendations

Starbucks’ own dot.com site where customers can purchase directly from their website. It is important to emphasize that their products should be