EXECUTIVE SUMMARY

Starbucks’ story began in 1971. Back then it was a roaster and retailer of whole
bean and ground coffee, tea and spices with a single store in Seattle’s Pike Place Market.
Today, Starbuck’s is privileged to connect with millions of customers every day with
exceptional products and more than 24,000 retail stores in 70 countries.
Starbucks’ mission is to inspire and nurture the human spirit – one person, one
cup and one neighborhood at a time. It offers a range of exceptional products that
customers enjoy in stores, at home, and on the go. And these are: Coffee, Handcrafted
Beverages, Merchandise, Fresh Food Consumer Products: Coffee and Tea, Ready-
to-Drink (RTD).
The company was incorporated under the laws of the State of Washington, in
Olympia, Washington, on Nov. 4, 1985 and went public on June 26, 1992 at a price of
$17 per share. Starbucks Corporation's common stock is listed on NASDAQ, under the
trading symbol SBUX.
Committed to serving the finest coffee, creating an exceptional customer
experience, and being a great place to work, the company is honored to be acknowledged
for their efforts. Here are some of their recent awards and recognition. 100% Rating on
the Disability Equality Index, One of the “World’s Most Admired Companies”
(Fortune – 2009-2017), “One of the “World’s Most Ethical Companies” (Ethisphere –
2007-2017), 100% Rating on the Corporate Equality Index (Human Rights Campaign
Foundation – 2015-2017) and One of the “Top 10 Millennial Brands” (Adweek – 2017)

RECENT DEVELOPMENT

Starbucks is always thinking about its customers – the 70 million people around the world
who visit the company’s stores each week. Here are some of the innovative beverages
and products Starbucks and its family of brands introduced in 2014.

1. Teavana® Oprah Chai Tea

Oprah Winfrey personally developed the tea with Teavana’s leading teaologist
Naoko Tsunoda. The distinctive blend of tea features a bold infusion of cinnamon, ginger,
cardamom and cloves, blended with loose-leaf black tea and rooibos. “My daily tea ritual
is a vital part of my morning. Savory and spicy chai, with its deep flavor, has long been a
favorite of mine,” said Winfrey. “When Howard Schultz offered to have me come into the
Starbucks tasting room and create my very own tea blend, I thought that sounded like
such a unique opportunity and fun to the tenth power. To share one of my favorite things
with the rest of the world and support youth education at the same time is truly the perfect
blend."
 A portion of the sales of Teavana® Oprah Chai Tea benefit young leaders.
Starbucks, Oprah and Teavana have contributed nearly $2 million to the Oprah Winfrey
Leadership Academy in the first six months of Teavana® Oprah Chai Tea availability.

2. Teavana® Shaken Iced Tea

These iced teas are vigorously hand shaken ten times to help ensure all the
ingredients are cooled down quickly and mixed perfectly to bring out their distinct flavors.
Blackberry Mojito Tea Lemonade features the thirst-quenching flavors of juicy blackberry,
mint, Teavana® green tea and a splash of lemonade shaken with ice. Peach Green Tea
Lemonade has refreshing sweet peach and ginger notes, Teavana® green tea and a
splash of lemonade shaken with ice. And the Teavana® Shaken Iced Black Tea
Lemonade combines bold layers of three of the finest Teavana® black teas mixed with
lemonade and shaken with ice.

3. Fizzio™ Handcrafted Sodas

Fizzio beverages are individually handcrafted for each customer, featuring three
flavors: Spiced Root Beer; Golden Ginger Ale; Lemon Ale. The Fizzio™ machine is a
breakthrough in carbonation technology with the ability to deliver an unmatched soda
experience. Unlike existing sodas or at-home carbonation options, the machine
carbonates finished beverages, ensuring every ingredient in the beverage receives the
same level of carbonation and maximum flavor. The machine also delivers a customizable
experience with the capability to adjust the amount of “fizz” in each beverage.

4. Digital Tipping, Shake to Pay, Mobile Order and Pay

Starbucks continues to be a leader in the mobile space. In 2014, the company

introduced Digital Tipping, enabling customers to show their appreciation of store partners
by tipping through the Starbucks App for iPhone. To simplify payments, customers can
now bring the barcode of their Starbucks Card front and center at any time, simply by
shaking their mobile device. And, earlier this month, Starbucks launched Mobile Order &
Pay in Portland, Oregon. The company expects to introduce this feature nationally
beginning in 2015. Mobile Order & Pay allows customers to place orders in advance of
their visit and pick them up at their chosen Starbucks® store.

5. Starbucks Mobile Truck

A pilot mobile service debuted on three college campuses this fall, offering a menu
of drinks and food nearly identical to what customers would find in their neighborhood
Starbucks stores. The Starbucks mobile truck can move to various locations on campus
throughout the day, making it convenient for students and faculty to grab a snack or
beverage. The mobile truck, which complements Starbucks cafes currently located across
campus, is a licensed store operated through Aramark and is a natural extension of the
long-standing partnership between the two companies.

6. Evolution Fresh™ Smoothies

Two new smoothies created exclusively for Whole Foods Market – the Cold-
Pressed Organic Splendid Carrot, and Cold-Pressed Organic Avocado Greens – are
among the new products introduced in 2014. For those who are seeking products that
support their health and wellness goals, Evolution Fresh also added these cold-pressed
green juices: Coconut Water and Greens is a refreshing and hydrating juice blending
coconut water with cool cucumber, leafy greens, and a splash of sweet pineapple;
Smooth Greens is a green vegetable and fruit juice blending cool cucumber and leafy
greens with pineapple, apple, and mint for a soft and smooth finish; Organic Sweet
Greens and Ginger is a refreshing green juice blending a medley of green vegetables and
crisp apple, finished with a squeeze of lemon and a spicy ginger kick. It’s a 100 percent
organic offering and a twist on a consumer favorite.

7. Single-Origin Coffees in Grocery Stores

Single-origin coffees – beans sourced from one country, a region within a country,
or sometimes even just a single estate or farm – offer customers an opportunity to explore
distinctive coffees from around the world. In September, the Starbucks Consumer
Packaged Goods (CPG) team brought coffees from each of the three major coffee
growing regions to U.S. grocery stores: Starbucks® Guatemala Laguna de Ayarza Single-
Origin Coffee; Starbucks® Rwanda Rift Valley Single-Origin Coffee; Starbucks® Timor
Mount Ramelau Single-Origin Coffee.

8. Iced Coffees Brewed to Personalize at Home

Inspired by the handcrafted iced coffee Starbucks baristas create in stores, the
company introduced Starbucks® Iced Coffee – Brewed to Personalize. These beverages
found in the chilled section of grocery stores are the perfect way for customers to enjoy
the Starbucks Experience at home. Made from 100 percent Starbucks® arabica coffee
beans and ranging from 10 to 60 calories per 8 fl. oz. serving, customers can have these
options: Starbucks® Lightly Sweetened for flavor Iced Coffee Beverage; Starbucks®
Unsweetened Iced Coffee Beverage; Starbucks® Caramel Iced Coffee Beverage.

9. Starbucks® Chestnut Praline Latte

Starbucks introduced its first new holiday beverage in five years. The Chestnut
Praline Latte is a blend of fresh espresso and flavors of caramelized chestnuts, with
freshly steamed milk, topped with whipped cream and spiced praline crumbs. In the fall
of 2012, Starbucks Global Beverage Innovation team began to explore new flavors for
holiday beverages. Amy Dilger, a Starbucks research and development manager, had a
hand in creating Chestnut Praline Latte. “I am a pastry chef by training, and I was inspired
by my time working at restaurants and hotels in Europe and experiencing what European
Christmas markets had to offer," Dilger said.

10. Starbucks For Life

Through the years, customers have asked how they could purchase “Starbucks
For Life.” It has never been a possibility until this year when Starbucks launched a contest
to give 14 lucky customers that ultimate prize. After swiping a Starbucks® Card or paying
with a mobile device (between now and January 5, 2015) customers receive a receipt
with a unique sweepstakes code that can be entered online at starbucks.com/play for a
chance to win instant prizes. That includes the chance of winning Starbucks for Life, with
estimated value of $54,000 U.S. The prize comes with a piece of Starbucks history – a
10K hammered gold, and will be engraved with the winner’s name. A total of 10 Ultimate
Starbucks Cards will be available to win in the U.S., three in Canada, and one in the U.K.,
making it the most exclusive Starbucks Card ever made.

CULTURE OF INCLUSION

Starbucks Coffee Company’s organizational culture is one of the most distinct

characteristics of the firm. A company’s organizational culture widely influences
employees and business performance. In Starbucks Coffee’s case, the company’s
organizational culture permeates all aspects of its business. However, Starbucks cafés
are where the company’s organizational culture is most easily observable. The way café
employees work with each other and how they interact with customers are indicators of
Starbucks Coffee’s organizational culture. The warm and friendly ambiance in these cafés
is part of the company’s distinction from competitors. Starbucks has an organizational
culture that relates with the company’s strategies for successful brand development and
global expansion.

Features of Starbucks Coffee’s Organizational Culture

Starbucks Coffee’s organizational culture has a number of key characteristics. The

combination of these characteristics is unique to the firm. The company describes its
organizational culture as a culture of belonging, inclusion and diversity. In this regard, the
main features of Starbucks’ organizational culture are:

Servant Leadership. Starbucks has a servant leadership approach, which

significantly characterizes the company’s organizational culture. In this approach,
leaders, managers and supervisors emphasize support for subordinates to ensure that
everyone grows in the company. This feature of Starbucks’ organizational culture
translates to the employees-first approach. The company highlights the importance of
caring for employees. Former Starbucks President Howard Behar developed this feature
of the firm’s organizational culture because he believed that employees who are cared
for are the ones who care about customers.

Relationship-driven Approach. Starbucks also has an organizational culture that

supports warm and friendly relationships. For instance, at Starbucks cafés, baristas
exhibit warm friendly bonds with each other. This feature of the company’s organizational
culture extends to customers, who are also treated with warmth. Through emphasis on
relationships, Starbucks develops the coffee culture that drives consumer demand for the
company’s specialty coffee products.

Collaboration and Communication. The organizational culture of Starbucks

encourages collaborative efforts through effective communication. At the cafés, baristas
clearly communicate with each other to fulfill orders. Also, they collaborate as teams to
make the order fulfillment process efficient. Thus, Starbucks’ organizational culture
supports efficiency in business processes, which contributes to quality of service,
customer experience, and business cost-effectiveness.

Openness. Openness is another major characteristic of Starbucks Coffee’s

organizational culture. Initially, employees had a culture of fear to speak up to their
superiors. To address this issue, former Starbucks President Behar introduced open
forums to encourage employees to ask questions and communicate with superiors. A
culture of openness developed. Through this feature of its organizational culture,
Starbucks empowers employees and facilitates innovation.

Inclusion and Diversity. Starbucks has an anti-discrimination policy that shapes

its organizational culture. This policy prohibits any form of discrimination based on
gender, race, ethnicity, sexual orientation, religion, age, cultural backgrounds, life
experiences, thoughts and ideas. Through this feature of the organizational culture,
Starbucks facilitates sharing and rapport among employees, as well as innovation based
on diverse ideas. This aspect of the company’s organizational culture also makes
customers feel welcome at Starbucks cafés.

KEY ISSUES

A. STATEMENT OF PROBLEM

COMMODATION OF THE STARBUCKS EXPERIENCE

 No relationship between the customer and baristas
 Customers no longer have the in-store experience
 Loss of the coffee aroma
 Loss of warm feeling in the store
 INCREASING COMPETITION

 Rapid increase of other specialty coffee retailers (ex. Mcdo, dunkin

donuts, caribou coffee)

POOR OPERATION

 Mismanagement of supply chain and lack of discipline

ECONOMIC DECLINE

 Rescission

RAPID EXPANSION

 Lack of control over store increase

 Inexperienced Baristas
 Poor store locations
 Loss of focus on core values

OBJECTIVES

 A lot of Starbuck’s objectives focus around 3 main goals, ethical

sourcing, environmental stewardship, and community involvement.
 In Starbucks the objectives they make are focused on helping inspire
their employees as well as their customers. In a company like Starbucks
their customers are very important in helping their business continue and
grow.
 The objectives help satisfy the customer’s needs and as well inspire the
customers to do better in their own community. It helps customers
understand what Starbucks does and attract customers to keep coming
back to their store.
 The objectives are the driving force for employees to keep working, it’s
what helps keep them motivated to keep growing and reaching for higher
achievements. With Starbucks as they grow, they take their objectives
along with them and embrace new challenges.
 The objectives aspire the workers to keep working and inspire them to
work harder in the future.
 The objectives are a way to encourage ways to improve and set goals
for Starbucks, they help define the purpose and aims of Starbucks.
  The objectives help balance not only what is important to the customers
but also to the employees, it helps keep a strong bond between
employees in the company.

SWOT ANALYSIS

Strengths

Starbucks must be doing something right if they manage to take home billions of dollars
every year, after expenses. What’s more, the profits seem to keep growing from year to
year [3]! Here are some of their greatest strengths:

 Quality, profitability and ethicality: Starbucks have established themselves as

a premium coffeehouse chain, despite their huge worldwide presence comparable
to that of most fast food chains. Their products are of excellent quality, seemingly
environmentally friendly, and relatively consistent between locations. As a result,
they can afford to charge customers high prices, which most people are willing to
pay. Not only does this mean large profits, but also has them globally recognised
as one of the best coffee shop chains.
 Efficiency and reinvestment strategy: Most of the profits that this company
makes go straight back into expanding the business. This is evident in the ever-
increasing number of locations that Starbucks boasts [4]. It’s clear that this
corporation has a well-planned growth strategy, which seems to be working well
for them.
 Employee treatment: Starbucks is known for treating its hundreds of thousands
of employees very well, and has previously been listed as one of Fortune’s Top
100 Places to Work For.

Weaknesses

Like every company, Starbucks does have some weaknesses. The most important are:

 High price point: While their high price point was a strength in the previous
paragraph, it is also a weakness. The hefty price tags on some of their products
(starting even with their most basic coffee options) deter plenty of customers
who might otherwise make
 Starbucks a part of their daily lives. While their premium quality and good ethical
values might be attractive, some just don’t have that much money to spend on a
cup of coffee.
 A lack of overly unique products: While Starbucks might be known for their
frappucinos, pumpkin spice lattes, and big chocolate chip cookies, they don’t
exactly have the most unique market. Plenty of other coffee shops, chains or
otherwise, provide similar products and only lose out to Starbucks’ big name.
Opportunities

This multinational coffee chain does have several opportunities for the future, though,
which are as follows:

 Global expansion: While Starbucks does have many coffeehouses across the
globe, most of them are located within the US [5]. There are plenty of regions
where profitably branching out is a possibility, including India, Central Europe, and
some regions in Africa.
 Introducing new products and co-branding: Starbucks products would be
welcomed in supermarkets across the world, something which has already begun.
Selling their own branded products in stores other than their own would be a great
way to maximise the value of their big reputation. They also have the opportunity
to team up with other companies and co-brand — imagine the introduction of
Starbucks products in McDonald’s Restaurants (something which will quite
possibly never happen)!

Threats

As a company, Starbucks does have a few threats which need addressing if they want to
keep growing and remain the world’s leading coffeehouse chain. They are as follows:

 Fierce competition from cheaper alternatives: Dunkin’ Donuts and McDonald’s

are two other huge multinational companies which directly compete with some of
the products that Starbucks sells. While these companies don’t pride themselves
entirely on their coffees and teas, they offer products of a similar quality for a
fraction of Starbucks’ prices. Who can tell what consumer forces will favour in the
future?
 A specific market: Starbucks’ success can be partially attributed to the popularity
of coffees, teas and convenient snacks in today’s society. If consumers were to
shift away from these products (perhaps one day relying on caffeine pills instead
of caffeinated beverages), it would leave Starbucks struggling to stay afloat. They
are also very prone to feeling the effects of rises in coffee, tea, and dairy product
prices.

Alternative Courses of Actions

Starbucks has maintained a competitive advantage since uniquely creating its

reputation in coffee industry, bringing quality and bistro-style classes to customers.
Competitors have an opposing curve which could be a threat but their lack of volume
and brand recognition limits them from competition. Starbucks must focus in its core
competencies and must make more customizations allowing users to create new flavors
and drinks above and beyond the options they have now. Users could go online
Starbucks interface and have complete control to create their own drink, order online,
find the nearest Starbucks and receive directions. Users could post their favorite drink
combination and others could vote on it. Also involved in user experience could be
mobile apps, putting in drink orders, finder etc. to enhance the Starbucks brand in the
new digital camera and to create a blue ocean for the coffee experience.
Starbucks must create new concept store design, like its competitors, Seattle. It must
also create more efficient channel to reach its customers and bring products to market
more cost efficient. Use technology to improve customer communication; social network
and digital media. Starbucks must also consider the health of its customers, offer new
products with wholegrain and take out artificial trans-fat, high-fructose corn syrup,
artificial flavors and dyes.
The change in leadership has led to the partial transformation of the entity
towards a better future. First by refocusing on the strategy to expand in a controlled
manner, the entity closed some of its operations in the U.S thus enabling it achieve cost
efficiency. Secondly the organization has embarked on innovative approaches which
include better technology based methods of engaging customers and Starbuck card that
allows customers to get services with minimum delays. Finally the organization pursuit
of ethical and environmentally friendlier ways of doing business has endeared it to more
customers and helped it to bring back its loyal customers.
Starbucks can also attract new investors to improve customer experience including
better service, and quality of beverages. Starbucks must enforce new guideline in which
the baristas may told to slow down.

Strategy recommendations
New distribution channel in drive-thru stores
Package instant coffee in stores, grocery store, discount store
New business partner to compete with chain Fast-food (McDonald), such as Burger
King (Hungry Jack), Subway
Provide more variety of products, menus; meals, warm food or even equipment,
accessories and coffee making machine in some large space store
Considering the advertising and promotion to reach target customers.
Research and Development: increase or focused more in survey and research to find
out new innovation or differentiation from existing customers and potential customers
Consider the option of franchising.