starbucks global quest in 2008: is the best yet to come?

STARBUCKS COFFEE

Antoine MarionBayou JulieHazet CharlesHéberlé CamilleHelson Yohann

“We aren’t in the coffee business, serving people. We are in the people business, serving coffee”, Howard Schultz (2004)

Problem Statement

Starbucks Global Quest in 2006:

Is the best yet to come?

1. Starbucks’ overview

2. Business model

3. Internal and external analysis

4. Recommendations

Summary

Starbucks’ overview

20,366 stores in 61 countries

Largest coffeehouse company in the world

Founded in 1971

1

Business model

High quality products

Customer’s experience

Added value in stores

High attendance location

Take away culture

Customer willingness to pay:

HIGH

HIGH MARGIN PRODUCTS

2

INTERNAL & EXTERNAL ANALYSIS

3

PestelOpportunities Threats

Political • International government trade regulation & tariffs

• Foreign politic

Economic • F&B demand• International market

• Crisis• Competition• Rents and wage rates• Exchange rate and taxation

Social • Health consciouness• Cultural differences

Technological • Self serving machines• Bio technologies /

agricultural development

• Competitor’s distribution lines

Environmental • CSR

Legal • Environmental regulations• F&B industry regulation

MAIN FACTOR: EXTERNAL & SUSTAINABLE TRADE 4

Porter

HIGH COMPETITIVE / ATTRACTIVE MARKET

Competitive rivalry

+++

Substitute

products

-

Customers

++

New entrants

+++

Suppliers

++

COMPETITIVE RIVALRY- Intercept customers- Price competition- Independents

SUPPLIERS- Volatility of prices- Export quotas

SUBSTITUTES- Snacks- Soft drinks

CUSTOMERS- Price sensitive

(financial crisis)- Loyalty

NEW ENTRANTS- Low barriers- Social media

5

SWOTStrengths

• Loyalty• Image

Weaknesses

• Communication• Expensive products

Opportunities

• International market• Fair Trade

Quality products Customers’ awareness

Threats

• Competition• Customer’s purchasing

power

Quality experience Orientation of customers’ choice

OPPORTUNITIES FOR INTERNATIONAL EXPANSION 6

Mapping

+

+

Brand image

Price

PREMIUM PRODUCTS 7

Key success factors

Management Brand management Geographic coverage Sustainable management

of employees

Quality Quality control Good coffee knowledge

8

Corporate Strategy 1 market Several

products

Strategy (until 2006)

Diversification by acquisition

Rapid Store expansion + focus on location

by joint venture by partnership

9

CSR Strategy

• Fair Trade• A « great place to work »• Conservation International partnership (1998)• The starbucks foundation (1997)

« We've always believed that businesses can - and should - have a positive impact on the communities they serve. »

10

Financial analysis

2000 2001 2002 2003 2004 20050

1

2

3

4

5

6

7

8

9

Net Margin Income (%)

2005$3 million in long-term debt$1,8 billion in net investment$193 million long term liabilities

Healthy situation

How to continue in this way?

11

OUR RECOMMENDATIONS

12

Two Alternative strategies

World expansion

• Continue domestic expansion

• Worldwide expansion: Huge opportunities in BRIC

Customers’ Experience

• Improve stores’ atmosphere

• Enhance « Third place » concept

13

Decision gridCritical Issue Weight World

expansioncustomer’s experience

Brand and reputation

0.4 4 10

Competitive advantage

0.3 6 9

Financial impact 0.2 4 6

Ease of setting up

0.1 3 5

TOTAL 1 4,5 8,4

FOCUS ON CUSTOMER’S EXPERIENCE14

Customer’s experience Strategy

• Continuity of innovation in the coffee business

• Customer Relationship Management

• Adaptation to local markets

• Collector products

CHALLENGE THE STATUS QUO 15

…THE BEST YET TO COME!

16

With this strategy…

Thank you for your attention!

Any questions?