Coffee and Starbucks Free Essays

What was Howard Schultz’s original strategic vision for Starbucks? Is his 2010 strategic vision for Starbucks. Has Starbuck’s strategy evolved as the strategic vision has evolved? Howard Schultz’s first strategic vision for Starbucks was the fortunate result of a company trip to Milan, Italy to attend an international housewares show. On this trip, he visited various espresso bars and was able to recognize how the customers in these bars were usually enjoying the ambiance and atmosphere of the bar with a freshly-brewed espresso, latte, or another delectable coffee treat, in hand, that was sold from the bar. We will write a custom essay sample on Coffee and Starbucks or any similar topic only for you Order Now Howard felt Starbucks should align their initial business model with that of the numerous espresso bars he visited while in Malian-through transforming Starbucks from an exclusive retailer of its coffee products, to providing and serving their coffee products in-house to their consumers with an expanded product line (lattes, espresso’s, etc. ) in tow. In addition to the espresso bar vision for Starbucks, during his interview process with Starbucks, Howard expressed to the three original owners of Starbucks that he felt Starbucks has the potential to successfully expand beyond the metropolitan area of Seattle, a vision not seen nor shared by the owners at the time. As assumed, the current vision set in place for Starbucks has changed since the original one was envisioned in the spring of 1983. The current strategy for Starbucks no longer concerns adding simply a new service within their stores but revolves around increasing their sustainability, increasing corporate responsibility, being the undisputed coffee leader in the worldwide marketplace, expanding their global presence, and creating innovative growth platforms, just to name a few of the more recent visions for Starbucks. As with any great leader who sets in place a vision for their company, Howard Schultz’s vision for Starbucks is truly dynamic, and will be manipulated whenever conditions in the marketplace (i. e. economic, consumer demands, business opportunities etc. ) dictate the vision to be altered for the success and better of the company. 5. What â€Å"values† does Starbucks have? How well do they connect to the strategy and to the manner in which the company conducts its business? On their supplier-side, too many businesses today are focused on procuring the lowest priced goods for increasing their profit margins. Starbucks would rather ensure their coffee growers are being compensated fairly and well enough to support their families in their trade. Starbucks also assists their suppliers (â€Å"coffee-growers) in being able to grow high quality coffee beans, and ensure their coffee growers are consistently meeting the company’s stringent environmental responsibility. What drives Starbucks to do that? Starbucks possesses a number of values (beliefs) that demand fair-compensation for their coffee-growers (either through Starbucks directly or through an intermediate), a belief that all their consumers should have their demands met (through Starbucks â€Å"Just Say Yes† policy†), and trait of managing their growth (as opposed to an almost unmanaged and aggressive growth strategy executed under Starbuck’s former CEO, Jim Donald). The aforementioned values for their coffee-growers complements Starbucks current corporate and social responsibilities as a whole for ensuring the livelihood of their suppliers (the coffee-growers). In addition, with the current push by Starbucks to increase their number of LEED stores in the United States, their vision of becoming more sustainable and environmentally conscious is being realized with each and every LEED-certified store opening. In terms of the manner Starbucks practices their business, their business practices and visions do not fall in line with the more common United States business practices and visions currently seen in the marketplace (such as the push to become the â€Å"Low Cost Provider† for consumers). As demonstrated and stated, Starbucks practices their business differently than most global businesses do, through ensuring supplier financial sustainability (for their coffee-growers) coupled with unrivaled purchasing standards for their coffee beans, to also ensuring customer satisfaction remains high by consistently adding new features and benefits for their consumers to benefit from and increase their value derived from being a consumer with Starbucks. Recent benefits Starbucks has given to their customers are as follows: -Free Wi-Fi usage in all their United States location. Discounts on coffee products for providing your own coffee cup to the barista (thus being more mutually environmental conscious and responsible) . – Providing various â€Å"paid† websites to their customers free of charge on Starbucks Wi-Fi network; such as access to WSJ. com, the website for the Wall Street Journal, and also other exclusive content Starbucks Chairman Howard Shultz talks to the †¦ Starbucks Chairman Howard Shultz talks to the media at the Vancouver Waterfront Station location, celebrating 20 years of Starbucks in British Columbia. (Photo credit: Wikipedia) 7. What is your assessment of Starbucks? I feel Starbucks possesses a great moral compass in the field of business and excels at creating and executing strategic plans for their business that are dynamic, relevant, and complements their core values–thus I would rate Starbucks highly in my assessment. Starbucks, as mentioned before, is one of the few companies to ensure their suppliers (â€Å"coffee-growers) are receiving fair compensation. Furthermore, Starbucks has effectively taken on various corporate and environmental responsibilities at once through striving vigorously to purchase only ethically sourced coffee beans by 2015 for their coffee beans supply, and investing $20 million towards farmer loan commitments that will ultimately promote coffee grower’s crop yield, quality, and environmental standards, thus a mutual benefit to be had by both parties. In terms of a financial assessment, from 2009 Fiscal Year’s net profit of $390. 8 million to the $1,383. 80 net income earned in Fiscal Year 2012 (growth of over 350%!). It is safe to say, Starbucks financial strategy of increasing bottom line production through increasing the value of their products and services offered and sustained to their customers worked out perfectly for them. Starbucks has also decreased their debt to asset ratio by 11% from Fiscal Year ending 2010 to 2012 (. 424 to . 378 respectively). Clearly, a focus to clean one’s balance sheet with less debt and more activity is a strategy many businesses share in wishing they could accomplish but few truly accomplish it; with ease, Starbucks was able to do so effectively and considerably. All and all, as stated within this assessment and numerous times within this blog, Starbucks is a company to be hailed for due to their passion and determination to become even more sustainable with each passing day, being excellent corporate citizens, setting in place various plans that will extensively benefit their stakeholders in a sustainable manner, and promoting their financial and environmental position through creating a coffee â€Å"utopia† for the world to benefit from. How to cite Coffee and Starbucks, Papers Coffee and Starbucks Free Essays 1 A. What is Starbucks’ â€Å"product† †¢Starbucks’ product is a casual experience in a comfortable atmosphere where the customer can enjoy a premium cup of coffee and a newspaper or relaxing conversation with friends. B. We will write a custom essay sample on Coffee and Starbucks or any similar topic only for you Order Now What is their â€Å"core product† and what are the â€Å"auxiliary features† and benefits? †¢The core product is a premium cup of coffee. The auxiliary features include the well-educated baristas that can help select the right cup of coffee and help customers learn how to reproduce the experience at home or the office with fresh coffee bean or grounds they can purchase in store. Along with the coffees available there are also Tazo teas, hand crafted espresso and blended drinks a little something for every taste. To go with the drink of your choice you can also enjoy a fresh pastry or a sandwich while listening to music or utilizing the free Wi-Fi to complete the experience. C. What is their â€Å"unique selling proposition† and how do consumers view it now? †¢Starbucks’ unique selling position was offering a high quality coffee for a premium price, while providing a place to relax other than work, home or going to the bar. With their comfortable seating areas and internet access they branded themselves as your â€Å"third place†. Customers bought into it but now that they have started to get more streamlined their stock is falling because they are losing a little bit of that selling position. As the stores get a little less comfortable and become a little more like an assembly line, customers are starting to see it more like a commodity rather than something special. 2. A. Are McDonald’s and Starbucks direct competitors? Yes. While they don’t offer the same quality of food or coffee, McDonalds has put a lot of emphasis on the quality of their coffee and have been able to increase their sales and profits. With the introduction of their McCafe line of coffee drinks McDonalds is looking to take a share of the market from Starbucks. B. What advantages does McDonald’s have in competing with Starbucks for coffee sales? †¢McDonald’s coffee has a very good reputation as a good cup of coffee. While it is not on par with the gourmet coffee and specialties that Starbucks has to offer it is a much cheaper alternative and with the large selection of menu items it can market to a much broader base of customers. For example parents with small children will be drawn to McDonald’s for their coffee because of what they can offer the children that Starbucks can’t. Another advantage is the speed at which McDonald’s can serve customers. Since the coffee and food they serve is less customized they are able to get people in and out at a much faster pace even with the implementation of the drive thru at Starbucks. . A. What changes in society (at the time of the case) helped Starbucks to be successful? †¢There was a steady increase in the number of coffee drinkers in the US in the mid-90s. That combined with the trend of consumers to drink more and more coffee out of the home has increased sales in the entire market. While a large increase of this coffee consum ption was among those that drink coffee at work, the benefit to Starbucks is that they are getting the coffee from somewhere other than the workplace. Along with the increase in consumption consumers have trended to being more and more environmentally conscious. So the focuses on environmentally friendly ways of doing business have helped to keep them in favor with the customers. B. How are these changes related to their target market? †¢Coffee drinkers ranging from 25-29 increased their out of home coffee consumption from 42% to 66% while in the same year 30-59 years old increased from 33 to 46%. 4. A. What are the â€Å"strategic marketing factors† that help to account for Starbucks’ long-term success in developing brand equity? The environment that they offered was one of the big factors that lead to their ongoing success. While there are more and more cafe styled coffee houses coming into the market at this time the idea was very unique and helped to differentiate them in the market. The high quality product and unique sizing of their products also set them apart. Rather than using the standard small med and large names they used unique identifies that helped make their products stand out in memory. Before they came around your options for coffee outside the home were very limited and the ability to get such high quality even at a premium price was a welcome feature in the market place. For the longest time they were really the only player in the space and that niche afforded them very rapid growth and early successes that help fuel even more growth as they expanded worldwide. 5. A. What are the advantages of the Starbucks Card to the company? †¢The most obvious advantage of the card to Starbucks is the guaranteed income. Once people load money on the card it can only be spent at a Starbucks location. It also makes tracking customer purchasing habits and preferences readily available. Then there is the case of the forgotten or lost cards that never get used that equate to pure profit. One last advantage is that with the card they have also created a secondary market for sales by placing the cards in stores like Giant Eagle where people that wouldn’t come into the stores can buy the cards as a gift. B. What are the advantages of the Starbucks Card to the customers? The consumer can control their spending with the card. By loading the card with the amount they allocate for coffee they can track their spending more effectively than before when just purchasing with cash or a random card. While there is no discount associated with the card it does give the consumer some protection when they register the card online. If the card is ever lost or stolen they can report it and a new card will be issued with the same balance and the existing card voided. 6. A. Evaluate Chairman Schultz’ global strategy. Is it â€Å"good† or â€Å"bad? † †¢The global strategy is â€Å"good†. You can build a lot of customer loyalty by taking care of your employees. If your employees are happy and well trained they will provide a much better experience for the customer. Starbucks mission and direction has a solid base in the customer experience as much as the quality of the coffee. So making sure the employees are trained well and very knowledgeable about all things coffee enables them to take the experience past just when the customer is in the store. Educating the customer on how to get the best cup of coffee at home as well will provide you a regular customer for not only their coffee at the office but also the grounds for home. †¢In addition the image they are able to betray as a company that cares about the community and the environment will help build customer loyalty. The fact that they not only work to be environmentally conscious themselves but also work with partners and suppliers to share the information and work together to buy, sell and use environmentally friendly products. B. What recommendations do you have to improve Starbucks’ competitive position domestically? †¢Starbucks needs to stick to what got them here in the first place. Don’t try to become another fast food establishment. Customers that are coming to one of their stores will respect the time it takes to get a high quality cup of coffee. Take that time to cross sell the customer on coffee beans and other goods for the home. While offering food to the customer is a natural evolution for Starbucks it is important that they put as much time and effort into providing high quality food as they do coffee. If they keep the high quality of coffee but serve a lesser food the lesser image will be what is remembered. On the same lines make sure that if you are going to provide places for the customer to sit and enjoy their coffee stick with the comfortable seating that invites the customer to relax and stay awhile. You will not only bring them back time and time again you will encourage them to spend more time in the store every time they visit and therefore increase the opportunities to sell more products. How to cite Coffee and Starbucks, Papers