Discussion Questions on Starbucks

------- by Group 2
Members:



2.GiveexamplesofdecisionsthatStarbucksmanagers
mightmakeunderconditionsofcertainty.Under
conditionsofrisk.Underconditionsofuncertainty.
Certainty:
WhenStarbucksdecidedto
providetheiremployeesstock
options,themanagersaresure
properpraisewouldenhance
theemployeespassionand
loyalty.

Risk:

Managersmayofferthecoffee-flavoredice-creams
foraseasontotesttheoutcomeandgetinformation
aboutothersimilarstoresexperienceofselling
coffee-flavoredice-creams.Thenbeforemaking
decisions,managerscananalysisandestimatethe
likelihoodofsellingcoffee-flavoredice-creams.
WhenJimDonalddecidedtoopenabout1,800new
storesglobally,itwasundertheriskycondition.
Thoughtherehasbeenatrendofglobalization,it
cantdenythefactthatglobalizationhasits
disadvantages.Expandinginsuchahighspeed,
Starbuckswillfacemanychallenges.

Uncertainty:

TheCompanylaunchedtheStarbucksprepaid
card.Morethan77millionprepaidcardshave
beenactivatedandloadedwithmorethan$1
billion.Managersarenotcertainaboutthe
outcome.Whethertheircustomerswillpaysome
timelaterwhenineconomiccrisis;whether
Starbuckswillbeindebtornot;howmany
customersaretheredissatisfyingthecards.
WhenStarbucksdecidedtogointotheAsian
market,itwasundertheconditionofuncertainty.
Asweallknown,mostAsiansdrinkteainsteadof
coffee.WouldtheyacceptStarbucks?Therewere
manyuncertainties.

4.DiscussthetypesofgrowthstrategiesthatStarbucks
hadused.Bespecific.
Concentration:
itextendeditssuccessatbrandextensionsto
selectglobalmarkets.Ithad11377storesin37
countries.Duringthe30weeksthatendedApril30,
thecompanyopened775newstoresintheUSand
381newstoresoversea.Anditslong-termgoalis
15000inUSand30000storesglobally.
Horizontalintegration:
Starbuckschoosetocombineitscompetitors.It
launcheditsready-to-drinkcoffeedrinkthrougha
jointventurewithPepsi.Inthisway,bothofthem
canreducethelossbroughtbycompetition.This
productwasembracedbycustomersandcreateda
win-wineffect.

Verticalintegration:

Starbuckstriedtogaincontrolofitsinput.They
havedirectcontrolofsuppliersandtheirown
plantsforroastingcoffee.Theysecuretop-notch
coffeebeanstosupplythecompany'sgrowing
needs.Buildingrelationshipswithgrowersand
exporters,checkingonagriculturalconditionsand
cropyields,andsearchingoutvarietiesand
sourcesthatwouldmeetStarbucks'exacting
standardsofqualityandflavor.

6.Whatcompetitiveadvantagesdoyouthink
Starbuckshas?Whatwillithavetodotomaintainthat
competitiveadvantages?
StoreAmbience:
ThesloganofStarbucksstoreswas"Everything
matters.Theycaredabouteverydetailtocreate
awarmcommunityatmosphere.
Thecompanyshouldgotogreatlengthstomake
surethestorefixtures,themerchandisedisplays,
thecolors,theartwork,thebanners,themusic,
andthearomasallblendedtocreateaconsistent,
inviting,stimulatingenvironmentthatevokedthe
romanceofcoffee.

P.S: Advantages are

written in black and
measures are written
in red.

Culture\Philosophy:

Starbuckscreatesthepopularcoffeecultureinthe
world,whichmakesStarbucksbecomean
indispensablepartofourdailylives.Whatsmore,
Starbucksstickstotheirphilosophy-----weare
servingthepeople,notthecoffee.Itguidestheir
employeestoprovidethebestservice.Andtheycall
employeespartners,whichimprovesemployees
passionontheirjobs.
Tomaintaintheirspecialculture,theycanprovide
music,comfychairsoraddsomedetailswhichcan
givecustomersawarmfeelingofcommunityandlet
themgetextravaluefromacoffee.Also,theycan
spendmoretimelisteningtotheiremployeesand
askingfortheiropinionsonthecompanyoperation.

Market:

First,Starbuckshasalargeconsumegroupfor
coffee.Anditsucceededinmovingoutintomore
mainstreammarketsbycooperatingwithPepsi,then
moreandmorenewproductsenterthebeverage
empire.AlsoStarbuckshadaspecialtysalesgroup
thatprovideditscoffeeproductstorestaurants,
airlines,hotels,universitiesandsoon.
Togainmoremarketshare,theycanusegrowth
strategiesandadapttothechangingenvironment.
SinceMc.cafefromMcDonaldshasattractedmore
andmorecustomersbyitslowprice.Starbuckshas
totakemeasurestofightbackbycombiningthe
priceandqualityatthesametime.Maybetheycan
usedifferentiationstrategiesandemphasizesthey
providethebestservice.

HR:

Starbucksdoesagoodjobinemployeetraining.For
example,Starbucks'vicepresidentforHRsaid:"We
wantpassionatepeoplewholovecoffeeandenjoy
whatthey'redoing."Whatsmore,everybaristaina
Starbucksstorekeepstheclosestcontactwith
customers,sotheygivemuchfeedbackinformationto
guidethecompany.Ithinkitistreasurerecoursefor
thecompanythateveryonecanplayanimportantpart
nomatterwhatlevelhisjobis.
ToimproveStarbucksemployeesability,theyneedto
trainbothbaristasandmanagers.Theyshouldtraina
baristaineverydetail.Forexample,howmany
secondsshouldbeanespressomadein?Theyshould
teachbaristastototrytheirbesttomeettheirspecial
needtomakecustomersfeelheisaVIP.Alsothey
shouldencouragebaristasbecomecustomersfriends
throughcommunication.Thentheyshouldtrain
managersespeciallyinmakingstrategiesandhowto
buildagoodrelationshipbetweenhisemployees.

Brand\publicimage:
Itenlargesitspartinmovies,
artarea.Whenpeopletalk
aboutStarbucks,theywill
mentionitasagoodplacefor
boththemusicloversand
coffeelovers.AndTheyprotect
therainforests.Ittakesits
responsibilityinprotectingthe
environmentwhichcanbuildit
agoodsocialimage.
Tobuildabetterimage,they
cancooperatewithFairTrade
whichisanorganization
benefitspovertygroupandthe
environment.Inthisway,they
canmakemoneyinagreen
wayanddifferitfromother
brands.

Quality:
Starbuckskeepsthereputationthattheyservethebest
coffeeintheworld.
Theyhavetokeepitsqualityandsticktoitsmission.
Theycanusetheverticalstrategy-----gainmorecontrol
ontheirinputchoosingthebestcoffeebeans.Itcan
involveineveryprocedureofproducingacupofcoffee
tomakesureitspuritybysettingdetailedstandards.
Equipment:
StarbucksprovideWifinetconnectionandmoreand
morebusinesspeoplecanenjoyacoffeewhentheyare
dealingwithbusiness.
Theyhavetodokeeptheserviceforcustomersand
providemorehigh-techconditionsforpeople.Especially
inChina,manycoffeestoresdontprovidethehigh-tech
service.ThiswillbeagoodchanceforStarbucks.

8Whatcompaniesmightbegoodbenchmarksfor
Starbucks?Why?Whatcompaniesmightwantto
benchmarkStarbucks?Why?
1)Costa
Product:
ThethemeofCosta,fromthebrandlogo,the
colorschemeofthepremises,totheentirefeelof
ourbusinessiswarmtones&relaxingcolors.
Place:
Afterthoroughresearch,andcompetitiveanalysis
theperfectlocationsintermsofexposure,
accessibilityandcompetitiveedgehavebeen
acquired.
Theinventoryandeasytransportfacilitieshave
alsobeenapartofthedecidingfactorswhile
choosingtheappropriatelocale.
Reference:
FinancialTimes:Costatopstableofcoffeeoutlets(2007)
http://www.allegra.co.uk/pdf-files/2007-05-28-ft.pdf
http://ivythesis.typepad.com/term_paper_topics/costa_coffee_shop/

2)CocaCola
Duringthe1970s,Coke'sbrandstrategyisonly
followingothers.Cokelostthepriority,sothatit
lostthemarketshare.Cokejustwaitandseewhat
wouldhappenbeforethe1980s,whilePepsitook
amountofinnovationtosatisfymarket,which
causeCokefailedinsupermarketsales.Asweall
knowthatStarbucksisfamousforinnovation
strategies,itisquitesuitableforCocaColato
learn.
Reference:Dr.R.NicholasGerlichscoursematerial.Copyright@
Dr.Gerlich

Nestl
ItseemsthatNestldoesntkeepaclose
relationshipwithitscustomers.AndStarbucksdid
well.Baristasbecamefamiliarwithregular
customers,learningtheirnamesandtheirfavorite
drinks.Nestlshouldkeepacloserelationship
withitscustomersandmeettheirspecialneeds.
Reference:http://www.nestleusa.com/

10.DescribeHowardasastrategicleader.
Identifytheorganization'smission:Hesaid:To
establishStarbucksasthepremierpurveyorofthe
finestcoffeeintheworld.Hedevotedhimselfto
createawarmcommunityforcustomers.Heset
whatthelong-termgoalisandwhatstandardtheir
coffeeshouldreachsothateveryonecanknow
histask.
DoSWOTAnalysis:Takeexternalanalysisfor
example.Howardfoundoutthatthecafelife
neverreallyexistedinU.S.andthoughtitmight
beanopportunityandagoodtimetocreate
Starbucks'coffeeculture.

FormulateStrategies:Howardusedgrowth
strategy,qualitystrategy,differentiationstrategy
andcustomerservicestrategywhichleadstothe
largestcompetitiveadvantage.Inaddition,he
thoughtitwastimetolookforwaystomove
Starbucksoutintomoremainstreammarkets.And
also,itcooperateswithPepsitoincreasetheir
marketshare.
Implementingstrategies:Howardmotivatespeople
inhisownway;hehasaspecialtalenttomotivate
othersandmakeothersbelieveinhisthoughts,
usinginterpersonalcommunication.Howard's
successofconductinghisideasofnewstylecoffee
storelikeStarbucksinearlyyearsreliedonhis
effectiveimplementingstrategies.
Evaluatingresults:Howardalwaysassessesthe
strategiesandthenthinksaboutwhetherchanges
areneeded.Success----Moresimilarwaysto
enlargehiscompany,likemusicandmoviecase.
Failure----change,suchas,closeditsTorrefazione
Italiacafeswhennotmeetingtheirgoalset.

12.DoabriefSWOTanalysisofStarbucks.
Reference:

http://www.boyar.cn/article/2010/01/23/267440.15
.shtml
GeorgeGarza,ThehistoryofStarbucks
http://www.catalogs.com/info/food/the-history-of-
starbucks.html
Starbucks:AbriefhistoryofStarbucks(2009)
http://starbucks.co.uk/en-
GB/_About+Starbucks/History+of+Starbucks.htm

Strength
Itisafamousglobalcoffee
brandstandforhigherproduct
varietyandquality
Providesatisfiedserves
Havethewelltrained
employeesandrespectsthem
Wellknownforstrongethical
valuesandsocialresponsibility
Weakness
Highpriceproductsthatitcant
acceptedbytheordinary
ThestrongpresenceintheUSA
willinfluentitseffectonglobal
Expansionissofastthatitmay
notsurethequality
Opportunities
Co-brandingwithother
manufacturersoffoodanddrink,
thattheyprovidenewproducts,
e.g.tea,ice-cream.
Thecompanyhasthe
opportunitytoexpanditsglobal
operations,tomakeanew
market.
Threats
FacingGlobalcrisisand
financialresources.
Manycompetitorshave
benchmarkStarbuckswhich
increasingthecompetitionin
coffeeindustry,soifStarbucks
dontkeepcreating,itwillreplace
byothers
Theproductscostisincreasing