Case analysis for Extended Case – Starbucks
Global. Starbucks is a global recognized brand specialised in roasting, marketing and retailing coffee. Is listed on NASDAQ and operates 8,661 licensed stores globally across 61 countries.
Is operating on a global basis. The company has licensed stores across 61 countries.
Industry Value Chain:
Coffee-bean farming -> Bean processing and selection -> International trade -> Roasting and blending -> Logistics & distribution -> Storefront / Retailing -> Sales to end customer.
Starbucks is the only company in the industry that sources its own high-quality green coffee beans, paying a premium price for both the quality and ethical sourcing of the beans.
Key product of Starbucks:
Key product is the coffee and coffee products (Top quality, fresh-roasted, whole bean coffee) that is on sale in the licensed stores but the company is strongly committed to educating its customers to appreciate the qualities of fine coffees and Starbucks seen its operations as a “service” business that offered customers an experience rather than just the opportunity to buy a cup of coffee.
Target upper-middle class, white collar customers.
Industry life cycle:
Mature but still growing.
Drinking habit: 65% drink coffee during breakfast, 30% in between meals and 5% drink with meals other than breakfast.
Industry trend: 85% of coffee drinkers make their own coffee at home. Coffee machines are forecast to expand by 6M units annually by 2017, driven by coffee in “pod” format, which is set to overtake traditional filter coffee models.
Expansion in home-brew market has potential to impact the revenues of coffee shops as fewer consumers buy coffee in shops in favour of making their own beverages.
Strong growth. Starbucks planning to expand to 1,500 stores in China by 2015.
Main coffee products in the market are instant coffee and fresh brewed coffee sold in...