STRATEGIC MANAGEMENT 3

by

Wilfred Shayoya

Resourced Strategy Implementation Plan

For Starbucks Corporation

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 TABLE OF CONTENTS
1.1 Introduction...........................................................................................................................1
1.2 Organizational Profile:..........................................................................................................1
1.3 Product..................................................................................................................................2
1.4 Services.................................................................................................................................2
1.5 Vision....................................................................................................................................3
1.6 Mission.................................................................................................................................3
1.7 External Factor Evaluation (EFE) Matrix.............................................................................3
1.8 Competitive Analysis: Porter’s Five Forces Model..............................................................4
1.8.1 Rivalry among existing competitors: High to Moderate...............................................4
1.8.2 Bargaining power of buyers or customers: Moderate to Low Pressure........................5
1.8.3 Bargaining power of suppliers: Low to Moderate Pressure..........................................5
1.8.4 Threat of substitute products or service: High..............................................................5
1.8.5 Threat of new entrants or new entry: Moderate............................................................5
1.9 Competitive Profile Matrix...................................................................................................6
1.10 Internal Environment Analysis.............................................................................................7
1.10.1 Corporate Resources......................................................................................................7
1.10.2 Research and Development...........................................................................................8
1.10.3 Operations management................................................................................................8
1.10.4 Human Resource Management.....................................................................................9
1.10.5 Finance..........................................................................................................................9
1.11 Internal Factor Evaluation (IFE) matrix of Starbucks Corporation....................................11
1.12 Starbucks Coffee and its competitors.................................................................................12
1.13 Starbucks Strategy..............................................................................................................13
1.13.1 Rapid store expansion Strategy...................................................................................13
1.13.2 Product Line................................................................................................................13
1.14 Coffee Purchasing Strategy................................................................................................13
1.15 Employee Training and Re-organisation............................................................................14
1.16 Conclusion..........................................................................................................................15
REFERENCES..............................................................................................................................16

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iii
 RESOURCED STRATEGY IMPLEMENTATION PLAN FOR STARBUCKS
CORPORATION
1.1 Introduction
Starbucks Corporation is largely operates and competes in the retail coffee and snacks store
industry. The first Starbucks store opened in Seattle’s Pike Place Market in 1971. In 1981,
Howard Schultz, recognised a great opportunity and began working with the founder Jerry
Baldwin. Starbucks Corporation has a total of 182,000 employees across 19,767 companies. It
also operates and licenses stores in 62 countries. Their product mix includes roasted and
handcrafted high quality premium, priced coffees, tea, a variety of fresh food items and other
beverages. They also sell different types of coffee, tea products and also license their trademarks
through other channels for example licensed stores, grocery, and national foodservice accounts.
In July 2009, Starbucks began gaining coffee each time a new pot is brewed, instead of gaining
only in the morning. This industry experienced a major slowdown in 2009 because of the
economic crisis and also changing consumer tastes, with the industry revenue in the US
declining 6.6% to $25.9 billion. Before this, the industry had a decade of steady increase.
Starbucks Corporation also markets its products mix with the other brand names within its
portfolio of companies, which include, Tazo, Teavana Seattle’s Best Coffee, and Starbucks VIA,
Starbucks Refreshers, La Boulange, Verismo and Evolution Fresh. Starbucks total revenue was
$14.89 billion in September 2013 (The Economist, 2014).

1.2 Organisational Profile:

 Name of the Company: Starbucks Corporation.
 Founder: Gordon Bowker, Jerry Baldwin, Zev Siegl.
 Date of Established: Starbucks was established in 1971, Pike Place Market, Seattle,
Washington, United States.
 Head Quarter: 2401 Utah Avenue South, Seattle, Washington, U.S.
 CEO: Kevin Johnson.
 Industry: Coffee shop.
 Type: It is Public limited company.
 Number of Stores: 26,696.

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  Assets: US$12.45 billion.
 Annual Revenue: US$21.32 billion
 Area Served: Worldwide.
 Total Employees: 238,000 (Approximately)

1.3 Product
Starbucks Corporation is especially famous for different types of coffee. They also provide other
different products. They have some tangible products like coffee, coffee bean, tea, food and cold
drinks (milk, water, juice). They also provide brands like Starbucks Coffee, Seattle’s Best
Coffee, Tonefazione Italia Coffee, Tazo Tea. They produce and sell ready-to-drink and beverage:
Starbucks bottled Frappuccino beverage, Starbucks Discoveries chilled cup coffees, Starbucks
DoubleShot espresso drinks, Starbucks Doubleshot energy and coffee drinks, Seattle’s Best
Coffee Iced Lattes, Tazo bottled iced and juiced, whole bean and ground coffee. Starbucks
locations serve hot and cold drinks, full-and loose-leaf teas including Teavana tea products, and
snacks including items such as chips and crackers; some seasonal offerings to the locality of the
store. Many stores sell pre-packaged food items, hot and cold sandwiches, and drink ware
including mugs and tumblers, select "Starbucks Evenings" locations offer beer, wine, and
appetizers. Starbucks-brand coffee, ice cream, and bottled cold coffee drinks are also sold at
grocery stores (McWilliams and Siegel, 2010).

1.4 Services
Starbucks provides hot and cold drinks while also offering other services provided in coffee
stores. They provide considerable service, relieved atmosphere, well decorated, and also Wi-Fi
connections. Their intangible service is interaction with customers. Starbucks have placement,
coffee stores, supermarket, restaurants and bakeries and online stores for customers. Sometimes
they provide free coffee in determinate period, receipt as coupon, online coupon, cards ,special
offer in website (buy 2 and get 1 free/special discounts) music and seasonal products. Their
product is always fresh, and convenient. They also provide different gift items for customers like
coffee- and tea-brewing equipment-mugs and accessories, packaged goods, music, books and gift

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items. Starbucks Coffee product has variety quality design. Their tea packaging services are so
attractive, and always easy to handle just-in-time (Hayes, 1999).

1.5 Vision
"To inspire and nurture the human spirit--one person, one cup, and one neighborhood at a time."

1.6 Mission
Starbucks mission reflects what Starbucks does to keep its business running.

Components of Starbucks mission

Coffee: It has always been, and will always be, about quality.

Starbucks passion: Together, we embrace diversity to create a place where each of us can be
ourselves.

About stores: It's about enjoyment at the speed of life - sometimes slow and savored, sometimes
faster.

Goals: Starbucks sets new hiring goals, including employing. Starbucks coffee now has a loyal
following, which represents the firm's effectiveness in the “inspire and nurture the human spirit”
aspect. Starbucks wants customers to smell coffee aroma all day long. This change is part of the
company's effort to reinvigorate the "Starbucks experience." Starbucks coffee products actually
helped his firm by creating “unprecedented awareness for the coffee category overall" (Hayes,
1999).

1.7 External Factor Evaluation (EFE) Matrix

The EFE matrix is the strategic tool used to evaluate firm existing strategies, EFE matrix can be
defined as the strategic tool to evaluate external environment or macro environment of the firm
including economic, social, technological, government, political, legal and competitive
information. Assigned to each factor is a weight in the range from 0.00 to 1.00 according to the
importance of the strengths or weakness - the sum of weights must be equal to 1.00. Where, 0=

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the factor is not important and 1= the factor is most influential and critical one. Otherwise rating
refers to indicate how effectively the company’s current conditions respond to the factor. The
assigned ratings are between 1 and 4 to each factor, where 1= the response is poor, 2= the
response is below average, 3= above average, 4= superior. So, by adding all the weighted scores
for each factor we can get help to find total weighted score for the company. Overall evaluation -
resulting weighted ratio evaluates the internal position of the organisation or strategic intent. The
best possible score is 4, the worst is 1. Average values are around 2.5.

Table 1: EFE of Starbucks corporation-2009

Factors Weight Rating Weighted Score
Opportunities
Expansion in Asia, the Middle East, and Africa
Diversification of product mix
Partnerships or alliances with other firms
Technological advances:
New distribution channels:
Coffee imports are currently duty-free and the quota for purchases is
unlimited.
Brand extension
Coffee is a daily routine for a lot of Americans and many appreciate
convenience.
Threats
Competition from low-cost coffee sellers
Price Volatility in the Global Coffee Market
Independent coffeehouse movements
Strong competition
Developed Countries Economy
Total weight Total weighted score
Source: Luckerson (2014)

Comment: It is clear that the best score is 4 and lowest score is 1. It can therefore be said that if
the company’s situation is to be good, the total weighted score should be above 3.0.

1.8 Competitive Analysis: Porter’s Five Forces Model

1.8.1 Rivalry among existing competitors: High to Moderate
The company growth rate is moderately low that may cause the force of competition among the
companies that is moderately high because of all of them seeking to the market shaper from
recognised firms like Starbucks (Orton-Jones, 2013). It does not have over capacity currently and

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all of those factors contribute to the intensity among rivals to be moderately high and its nearby
competitors also have an important market share, creating considerable pressure on Starbucks.
Looking at the Porters five forces analysis, we can get an aggregate industry analysis that the
strength of forces and the profitability in the retail coffee and snacks industry are Moderate.
1.8.2 Bargaining power of buyers or customers: Moderate to Low Pressure
The corporation offers vertically differentiated products, which make relatively low volume
purchases, of buyer’s and there are no switching costs with high availability of substitute
products, industry leaders like Starbucks prices its product mix in relation to rivals stores with
popular market price elasticity and aggressive best pricing. There are different types of buyers in
this industry and buyer cannot demand price concession and the Consumers have a moderate
feeling in premium coffee retailing as they pay a premium for best quality products.

1.8.3 Bargaining power of suppliers: Low to Moderate Pressure

The suppliers in the industry also present a low threat of competing beside Starbucks by forward
vertical addition, which made low their power. Starbucks Corporation, size and scale, take the
advantage of its suppliers but that will maintains a Fair trade certified coffee below its coffee and
farmer equity program, which gives its suppliers a fair partnership status, Starbucks also forms a
highly significant part of the suppliers business, because of size and scope, which make the
power of the suppliers lower. Given these factors, suppliers pose a moderately low bargaining
power.

1.8.4 Threat of substitute products or service: High

There are different types of reasonable replacement beverages to coffee that are mainly fruit
juices, tea, energy drinks water, etc. But it’s more and more important thing is that industry
leaders alike to Starbucks are currently trying to counter this threat by selling coffee. Consumers
also can make their own home produced coffee with his or her home at low cost like Starbucks.
It is more important that there are no switching costs for the consumers for switching to
substitutes, which makes the threat high.

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1.8.5 Threat of new entrants or new entry: Moderate
There is a moderate threat of new entrants into the industry as the barriers to entry are not high
enough to dishearten new competitors that enter the new market. Locations and price
competition are moderately high, that will create a moderate obstacle to entry at a moderate level
of investment. At a localized level, small coffee shops can compete with the likes of Starbucks
and Dunkin Brands because the industry’s dissemination is moderately high with a monopolistic
competition constitution. The initial investment is not significant for the new entrants as they can
lease tools stores. Starbucks that achieved economies of scale by low cost and also improve
proficiency with an enormous market share. It is more important that there are no switching costs
for the consumers and it’s a competitive industry product quality, its prime real estate locations
that also important but this relatively easy access in the market is usually countered by large
present brands. The incumbent firms for example Starbucks have a larger scale and scope,
yielding them a learning curve advantage and favourable entrance to raw material with the
relationship they build with their suppliers (Groth and Lubin, 2011).

1.9 Competitive Profile Matrix

Competitive Profile Matrix (CPM) is a strategic management tool which is used to identify a
firm's major competitors and its strengths and weaknesses (Dollinger, 2008). On the basis of this
comparison, the firm can design its strategies. Critical success factors in a CPM include both
internal and external issues. The ratings of CPM refer to strengths and weaknesses, where 4 =
major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness.

Table 2: Competitive Profile Matrix

Starbucks Caribou coffee Gloria Jean's coffee
Critical Success Weight Rating Weighted Score Rating Weighted Score Rating Weighted Score
Factors
Advertising
Product Quality
Price
Competitiveness
Management
Financial Position
Customer Loyalty

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Global Expansion
Employee
Benefits
Customer Service
Total
Comment: The highest possible total weighted score for an organization is 4.0 and the lowest
possible total weighted score is 1.0. It can be said that the company is in very good condition if it
scores 3.0 and above.

1.10 Internal Environment Analysis

1.10.1 Corporate Resources
Marketing: Starbucks Corporation is one of the best coffee company and coffee house chain in
America. They follow various types of marketing strategy to maintaining their corporation. First,
there is need to know about the 4Ps of marketing mix: Product, price, place and promotion
(Orton-Jones, 2013).

Figure 1: 4Ps - The marketing mix

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Different types of marketing strategies are discussed below:

 Different types of quality product – premium quality tea and coffee though price is quite
high than the competitors
 Adjusted prices of its more popular products in an effort to show responsiveness budget
conscious consumer
 Stores are designed to make customer comfortable and make sure to give customers a
friendly meeting place
 They also provide electric outlets and also some stores have wireless access so people
can easily use laptop o MP3 player if they need
 They are able to create ethical brand image throughout the years
 They are using unconventional social media techniques of establishing consumer
connection

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  Less use of traditional methods for marketing
 They basically use their brand image for marketing
 They are very much focused on consumer satisfaction for this they try to create
comfortable environment for customer
 They are also concern about their employees and try to keep them happy and create a
friendly environment for jobs
 Able to crate real or loyal customers
 They have introduced Starbucks card with the hope of strengthening customer loyalty by
improving service
 They used to give information about nutritional information about Starbucks products,
online shop, also have an opportunity to search for jobs

1.10.2 Research and Development

Starbuck’s Research and Development team found that they should have to produce new
products that are both trendy and stable. Their products can be found in convenience stores,
grocery stores, movie theaters, businesses, schools, and even airports. They rely more on image
advertising than traditional advertisement. Because they want to show the customer that they are
not only retail outlet they are also responsible to their communities and employees. Starbucks is
rated by 10 fortunes as one of the best 10 places to work (Orton-Jones, 2013).

1.10.3 Operations management

Starbucks Corporation offers products and café services throughout the world. It sells high
quality whole bean coffees, premium teas and espresso beverage, hot and cold. It is not just their
business, it is their passion. The stores are designed to make customer comfortable. They provide
ethical outlets and wireless access so that customer can use MP3 players or laptop computer.
Starbucks has three reportable operating segments: United States, International and Global
consumer product. They are highly concerned about their quality. They collect the finest coffee
beans, roasting them with great care and improving the lives of people who grow them
(Srivastava, 2014).

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1.10.4 Human Resource Management
Human resource management is one of the most difficult and important work forces for all
management tasks. Starbucks is known to have the best management team and emoployees.
They are all about their partners working in a group. Every partner hired at Starbucks has to
receive at least 24 hours of training in two weeks. The entire employee has to master the star
skills (Srivastava, 2014)..

1.10.5 Finance
Below we find out the ratio of Starbuck’s Corporation based on data and we analyse the 2007 to
2008 financial year. We find out the 10 ratios that are given below (The Economist. (2014).

Current Ratio
Current Ratio = Current Assets / Current liabilities
2008 = 1748000/2189700 = 0.79
2007 = 1696487/2155566 = 0.78
Quick Ratio
Quick Ratio = (Current Assets- Inventories)/Current liabilities
2008 = (1748000 – 692800) / 2189700 = 0.48
2007 = 1696487 – 691658 / 2155566 = 0.46
Debt-to-Total-Assets Ratio
Debt-to-Total-Assets Ratio=Total debt/Total assets
2008 = 3181700 / 5672600 = 0.56
2007 = 3059761 / 5343878 = 0.57
Debt-to-Equity Ratio
Debt-to-Equity Ratio=Total debt/Total stockholders’ equity

2008 = 3181700 / 2490900 = 1.27

2007 = 3059761 / 2284117 = 1.33
Total Assets Turnover
Total Assets Turnover= Sales/Total assets
2008 = 10383000 / 5672600 = 1.83

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 2007 = 9411497/ 5343878 = 1.76
Operating Profit Margin
Operating Profit Margin= Earnings before interest and taxes (EBIT)/Sales
2008 = 512900 / 10383000 = 0.049
2007 = 1056364/ 9411497 = 0.112
Net Profit Margin
Net Profit Margin= Net income/Sales
2008 = 315500 / 10383000 = 3.03%
2007 = 672638/ 9411497 = 7.14%
Return on Total Assets (ROA)
Return on Total Assets (ROA) = Net income/Total assets
2008 = 315500 / 5672600 = 5.56%
2007 = 672638/ 5343878= 12.58%
Return on Equity (ROE)
Return on Stockholders’ Equity (ROE) = Net income/Total stockholders ’equity
2008 = 315500 / 2490900 = 12.6%
2007 = 672638/ 2284117= 29.4%
Earnings per Share (EPS)
Earnings per Share (EPS) = Net income/Number of shares of common stock outstanding
2008 = 315500 / 700 = 450.71%
2007 = 672638/ 738 = 911.43%

1.11 Internal Factor Evaluation (IFE) matrix of Starbucks Corporation

Internal Factor Evaluation shows the weakness and strengths calculation of the Starbucks
Corporation (Hayes, 1999).

Table 3: Internal Factor Evaluation

Factors Weight Rating Weighted Score
Strength
Strong brand image
Extensive global supply chain
Diversified business
Diversification of production

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Alliances with other firms
Weakness
Higher price points
Generalized standards for most products
Imitable Products
Total weight
Comment: Here, the weighted score of Starbucks Corporation is supposed to be presented
between 1- 4. The average score above 2.5 will indicate a strong internal position.

Starbucks Problems
 Starbucks stock has sold off as result of a miss on same store growth metric- yet that
misses the big picture of growth that lies ahead of Starbucks.
 Due its consistent growth and seller business model, investors are willing to overpay for
this stock, making buying opportunities rare.
 Ironically, the shortfall in results was caused by the company not being able to meet
customer demand- a nice problem to have and very much solvable.

 The early adopters who valued the club-like atmosphere of relaxing over a quality cup of
coffee found themselves in a minority.
 Price. The price is no different to other coffee shops. I wouldn't have minded paying an
extra 20p for better coffee and better environment.

 Opening new stores and launching a blizzard of new products create only superficial
growth.
 Starbucks introduced many new products to broaden its appeal.

1.12 Starbucks Coffee and its competitors

Coffee is one of the world’s most popular beverages. Some claim it is the most widely consumed
liquid in the world aside from water. There is a lot of coffee company in the world but Starbucks
Corporation has been the most successful coffee chain in the past few decades for their
aggressive expansion strategies to push out much of its focused on creating a dense, competition,
network of stores all around America, and also new locations all around the world. Starbucks
began 30 years ago with one store and has experienced phenomenal growth and success. It has

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grown into the largest coffee house company in the world with 16,120 stores in 94 countries such
as in Australia, Canada, China, Puerto Rico, etc (Luckerson, 2014).

In the last few years, Starbucks has entered into a battle, fighting Dunkin' Donuts and
McDonald's for the top position as coffee king. Customer desire and preference greatly influence
the fight, so each company is fighting to expand menu options and physical store locations to
reach and better serve a greater customer base and draw consumers away from the competition,
not only Dunkin Donuts, McDonald’s but also, Caribou, Peet's Coffee, Krispy Kreme Doughnuts
etc. Starbucks main competitors are quick-service restaurants and specialty coffee shops. There
are an abundant amount of competitors in the specialty coffee beverage industry. The company
believes that its customers choose among retailers primarily on the basis of product service,
service, price, and convenience. Starbucks, in recent times, has experienced drastic direct
competition from large US competitors from quick-service restaurants (Dollinger, 2008).

Dunkin Donuts is known for their doughnuts and coffee. Over the years, Dunkin has introduced
new products such as bagels, muffins, breakfast sandwiches. In order to compete with the lunch
crowd, Dunkin expanded their product menu to include pizzas and sandwiches. In order to
compete with the specialty coffee houses, Dunkin expanded their coffee offerings to include
flavored coffees, lattes, collates, flavoured hot chocolate and teas. McDonalds has a larger
customer demographic than Starbucks. While Starbucks is the leader in the specialty
coffeehouse market, McDonalds is becoming an emerging competitor when it first upgraded its
coffee in 2006. McDonald’s coffee sales increased 15% in 2006, and plans to grow coffee sales
with the plan to install coffee bars in all 14,000 U.S. locations. The McDonald's new specialty
drinks which are now in about half of the company's nearly 14,000 US stores, already have a
following among some former Starbucks customers. Starbucks is a leading company around the
globe. Starbucks used very simple strategy, "connecting links between treating employees with
dignity and respect and producing good product and services." That was the major factor that
differentiated Starbucks from others and bringing the success to Starbucks (Srivastava, 2014).

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1.13 Starbucks Strategy
1.13.1 Rapid store expansion Strategy
Starbucks initially focused on the domestic US market; in 1996 the company opened its first
store outside the US (Orton-Jones, 2013). Since then, Starbucks international footprint has
expanded to 11266 stores located in three main markets, the America, which includes Canada,
Latin America and the US, China and Asia Pacific and Middle East and Africa. The domestic
market still represents more than half of all Starbucks stores. California with 1863 locations has
more stores than any other state. Starbucks operates two types of stores, one is company-
operated and other is licensed. Currently, the store count is almost equally distributed between
these two types-51 percent of stores are company-operated and the other 49 percent are licensed.

1.13.2 Product Line

Starbucks create product lines as a marketing strategy to capture sales of consumers already
buying the brand. The operating principle is that consumers are more likely to respond positively
to brands they know and love and are willing to buy the new products based on their positive
experience with the brand.

1.14 Coffee Purchasing Strategy

They know their success as a company is linked to the success of the thousands of farmers who
grow their coffee. That’s why they are working to ensure a long-term supply of high-quality
coffee purchasing practices and by investing in farmers and their communities, They have found
that they can serve a great cup of coffee while helping to improve the lives of farmers and
protecting the planet.

1.15 Employee Training and Re-organisation

New partners are never given the opportunity to make mistakes when they are new to their job.
They are always with a store manager or a learning coach as they learn the ropes. Starbucks
follows a Tell, Show, Do process. Tell is what baristas learn in the training. Show is when the
learning coach shows them exactly how to do something and Do is when the barista does the
action with the coach watching to assist, train and praise.

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Culture of Starbuck Corporation
Starbucks Coffee Company's organizational culture is one of the most distinct characteristics of
the firm.

Table 4: Starbucks Corporation - Analysis Summary

Internal Strategic forces
Strengths
Brand Identity Maintenance of Company brand even without vigorous marketing.
Quality Endless global search for quality.
Variety Offering many options and customization.
Locations Ubiquitous distribution of its set up is one of the company’s main goals.
Convenience Viability of new products depends inconvenience.
Store Ambiance Store Ambiance was important foundation stone of Starbucks and continues in its
locations.
Ethics Becomes a leader in ethics with the practice of fair trade
Weaknesses
Overexposure Setting up business in countless locations and by which becoming overexposed as a
result losing the uniqueness.
Too many products Continuous addition of products, some loses its value, and they are risky business.
Risky investment in Expanding locations with costly investment like USA in relation to other international
more locations locations.
External Factor Analysis Summary (EFAS)
Customization Introduction of new product-“frappacino”in Canada.
International Markets Maximizing efforts internationally, to increase stability.
On-the-Go Lifestyle Through instant coffee and other products to be in groceries and convenience stores.
Partnerships Partnering with more locations including NYSE.
Weaknesses- Threats
Direct Competition Direct competition from Pets and Coffee Bean increasing. Lack of marketing
Recession Recession reduced customers’ willingness to spend. So, there is a greater risk in
investment.
Strategic factors
Brand Identity Brand Identity is extremely important factor for the company in long terms.
Convenience Convenience made the baseline of the company and has continued to maintain their
advantage.
International Markets Global Markets offer lower risk investment and innovation opportunities.
Cheaper Alternatives Cheaper Alternatives like McDonalds threaten the convenience factor.
Source: Adapted from literature review
A company's organisational culture widely influences employees and business performance.
Starbuck Coffee's organisational culture has a number of key characteristics. The combination of
these characteristics is unique to the firm. The company describes its organisational culture as a
culture of belonging, inclusion, and diversity. In this regard, the main features of Starbucks'
organisational culture are:

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  Servant Leadership ("employees first")
 Relationship - driven approach
 Collaboration and communication
 Openness
 Inclusion and diversity

Recommendation: Starbucks has continuously used the approach of using joint venture partners
to enter new market since the company begins. It is a strategy that successfully worked for them
and they should continue to use it entering in India. It is effective and efficient and should be
used until it shows sign of no longer being successful.

1.16 Conclusion
Starbucks had much market power in the coffee industry. They were attracting their customers
by an experience of an upscale coffee shop with a neighborhood feel. But in the present time,
their prices have increased and that’s why demand is decreasing. Customers now-a-days do not
want to spend their limited income on premium coffees that they can get from any of their
competitors, like Dunkin’ and, McDonalds. Starbucks has projected does not hold true as the
income effect and added popularity of their competitors began monopolizing the premium coffee
market. This proves that the price of coffee is elastic and if prices are high than the demand for
the good will decrease. Many other factors have also reasons for losing its brand appeal. Now
People are beginning to realise that they have alternatives to purchasing Starbucks coffee and
still sample the luxurious blend by brewing it at home themselves. Customers are not interested
to follow the hype supported by the Starbucks name and are becoming more price/value oriented.
If they want to a major player in the coffee shop market, Starbucks must reinvent themselves
with the changing lifestyles, tastes, cheap price and a new strategic plan.

REFERENCES
Hayes, J. (1999). Starbucks’ Diverse Product Mix and New Café Concept Create New MIS
Challenges. Nation’s Restaurant News, 33(2), 32–36.

The Economist. (2014). From Baristas to BA-ristas. The Economist.

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McWilliams, A., & Siegel, D.S. (2010). Creating and Capturing Value: Strategic Corporate
Social Responsibility, Resource-Based Theory, and Sustainable Competitive Advantage. Journal
of Management, 37(5), 1480–1495.

Luckerson, V. (2014). These Are All the Awesome Benefits Starbucks Baristas Get. Time.

Pfeffer, J. (1994). Competitive Advantage through People. California Management Review,

36(2), 9–28.

Groth, A. and Lubin, G. (2011). 11 Things Starbucks Does Better Than Almost Any Competitor.
Business Insider.

Groth, A. and Lubin, G. (2011). 11 Things Starbucks Does better than almost any Competitor.
Business Insider.

Orton-Jones, C. (2013). Why is Starbucks so Successful? Real Business.

Dollinger, M. (2008). Starbucks, “The Third Place”, and Creating the Ultimate Customer
Experience. FastCompany

Srivastava, P. (2014). Indian Retail Coffee Market: The Good, the Bad and the Ugly. The
Economic Times.

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