Name: Faizan Ahmed

Reg no: 46217

Course: HUMAN RESOURCE THEORY & PRACTICE
Session: Thursday, 6:30 pm to 9:30 pm

INTRODUCTION TO STARBUCKS
The Starbucks Company was originated in Seattle in 1971 by Jerry Baldwin,
Gordon Bowker and Zev Seigel with a dream to educate American consumers
about the fine coffee drinking experience. In 1987 Howard Schultz seized over
the Starbucks Group, he wanted to make the Italian espresso bar experience in
America by creating a personal relationship between the customers and their
coffee. Just within a couple of years they raised from a small coffee business
house to a multi-million-dollar player in the industry by purchasing only the
best coffee presented and providing the people with a supreme store
experience. Starbucks is number one in the speciality coffee industry, with more
than 12,000 shops in more than 35 countries.

The Starbucks mission statement is “To inspire and nurture the human spirit one person, one cup and one
neighbourhood at a time.”

Freshly brewed coffee is the main product presented by Starbucks along with other drinks which contain
cold and hot teas, cakes and pastries. The Starbucks coffee arises in a many variety each having a different
taste, aroma and flavour.

Starbucks is also one of the most globally cognisant corporations in the world.  In 2006 Starbucks gave
$36.1 million in cash and products, volunteered 383,000 hours in local communities, required growers to
use severe environmental guidelines, used 20% renewable energy in stores, and actively used in almost
80% of stores in US and Canada. Starbucks has recognised itself as the coffee leader in the world and has
done so on a socially and environmentally conscious platform.

STRATEGIES OF STARBUCKS
 Developing the market

Starbucks has established the market for specialty coffee industry for America. In this setting, Starbucks
has shaped brand awareness and demand for coffee stores between American population. This is
permitted by better market penetration through suitable store locations and consistent services offered all
through the world.
  Diversification strategy

To advance higher market share, Starbucks has providing a differentiated product mix. To move forward
Starbucks formed new product linked with beverage business. This strategy supports Starbucks to raise
both on the base of the operations and overall quantity of services. They have established unique products
and at the same time developed companies like Ethos water. The product differentiation has been its
essential capability all through since its initiation.

 Growing the Number of Stores

Not only is Starbucks absorbed on expanding its footmark, but also varying its store mix. Instead of
opening more dine-in restaurants, the coffee giant is focused on drive-thrus in the outer ends of urban and
suburban areas. In addition, Starbucks is opening up express stores which basically function as walk-thrus
in New York, Boston, and Seattle. This strategy is expected at increasing the company’s store penetration.
Though, a force that may counter the incremental growth from the new store openings is cannibalization.
That supposed, Starbucks remains confident that it will see a minimum 5% similar sales growth in the U.S.

 Design

When Starbucks increase its actions to a new country. Starbucks studies the behaviour and culture of the
people of that particular area in conniving their outlets in that country. They design the stores in such a
manner that gives a sense of resemblance to the local crowd and at the same time does not attitude a
threat to their traditions and culture.

For example, when Starbucks extended its operations to China and India, they considered the outlets with
more space and sitting capacity as people of India and China like to relax and talk over a cup of tea as
related to the west, where people drink coffee on the go. It involved free Wi-Fi and coworking
opportunities in their outlets in China and India. The outlets are also internally designed with local art,
handicrafts, artifacts, etc. The first Starbucks store in Pune has a lot of Copper artifacts that mirror the rich
history of that place.  
  Creating New Customer Occasions

Lunch hours, for the company, have been the fastest growing day part for a number of years now. This was
motivated by better food offering, more fresh food items around bistro boxes and sandwiches, and
strength in its tea platform. Also, Starbucks is beginning nitro cold brew in 500 stores by the end of
December. All of this is expected at alluring a greater number of customers to its stores, by offering fresh
and innovative food and beverage choices.

SWOT ANALYSIS OF STARBUCKS

Strength Weakness

 Innovation.  Low Employee Satisfaction.

 Fast Store Openings.  US-focused Organisation.
 Strong Financials.  Small Product Mix.

Opportunities Threats

 Investment in New Markets.  Increasing Competition.

 New Store Openings.  Change in Customer Perception.
 Increasing Speciality Coffee Market.  Change in Economic Environment.

CHALLENGES AND HUDDLES FACED BY STARBUCKS

The main challenge that Starbucks is commerce with is the present financial crisis in the world economy
imposing them to call ends of many stores around the world.

Similarly, the difficult growth strategy followed by Starbucks can take a toll on the firm’s brand image. As
businesses raise there can be a tendency to focus too deeply on increasing production and locations, and
less attention on quality and brand image. In my opinion Starbucks needs to stay with its morals and ethics
that have made it successful.

Another challenge that Starbucks is dealing with is competitors. There are many coffee shops all over the
world and being able to stand out to make customers is important. Their main competitors are Dunkin
Donuts, McDonald’s, and Nestle in the US and brands like Costa Coffee and Caffe Nero in the UK, the two
main markets for Starbucks.
It is important that for Starbucks to identify their competitors and what they are presently doing, know
their competitor’s plans to overcome their huddles. Make their product more innovative than other
computer’s product to satisfy customer.

Increasing Prices of Its Products

Starbucks has been leveraging its consumer faithfulness and lack of elasticity among its consumers by
continuously passing on rises in costs, due to incomes and coffee prices, to its customers. As a result, in the
period between 2014-2016 we have seen four price rambles on its products, two of which were in 2016
alone. The rise in prices has been mainly pointed at protecting the company’s working margins. In the
financial year ended September 2016,

Starbucks should consider tradition, culture, and alternative products of the country while pricing its
products. And considering all these factors it should choose for realistic pricing. And manage price among
all the products.