International Business Management Le 15/01/2023

Groupe D

Starbucks

AUGER Amandine AUGEREAU Alexandre BEAUMONT Juliette BESSON Anne-Catherine BORDERIEUX Rachel
 How the company was started ?

Starbucks is an American company, the largest coffeehouse chain in the word. Its headquarters
are in Seattle and Washington. Starbucks was found by Gordon Bowker, Zev Siegl and Jerry
Baldwin. Those three had one thing in common: They all loved coffee and tea. They invested
an open the first store in 1971 in Seattle and named it “Starbucks” after the first mate in the
iconic novel Moby Dick. The major inspiration of the founders of Starbucks was a coffee-
roasting entrepreneur, Alfred Peet. Peet was a Dutch immigrant who had begun importing fine
arabica coffees into the United States during the 1950s. Peet’s success encouraged the
Starbucks founders to base their business model on selling high-quality coffee beans and
equipment, and Peet’s became the initial supplier of green coffee beans to Starbucks. Then,
Baldwin and Bowker experimented with Alfred Peet some techniques to create their own
blends and flavours.

The original Starbucks’ stores were much different from today; they originally only sold coffee
beans. It wasn’t until they opened their fifth store in 1982 on University Way that they only
began selling brewed coffee. Howard Schultz, a New York marketer, was also brought in that
year. He convinced the group to add the famous espresso bars that make Starbucks so iconic
in 1983. Finally, in 1987, the original members sold their shares to a group of investors. After
the purchase, rapid growth was seen. By 1990, Starbucks had opened 30 stores, and by 1992,
they had 53.

How it became international?

The initial success of the franchise showed in America proved potential for global conquest.
They first expanded throughout the United States and then to Canada. After going public and
growing further, they began to explore opportunities outside of North America. They initially
began by sweeping through Canada, China, Japan, Taiwan, Britain, and many others. These
markets all showed potential, and Starbucks made sure to always stay ahead with new
innovations.

The supply chain system of company

The supply chain management is essential for all companies; it is an integral part of the
economic model. For the best supply chain management, there are 2 resources. One is
tangible, like Starbucks spread stores and distribution centers. The other type is intangible
resources with the recognized brand name. Starbucks is working to have a more sustainable
supply chain management. The supply chain management strategy needs 3 pillars: strategic,
service, and finance. Strategic with the product development with like which products are
deemed innovative and what are their perspectives lifecycles. Then, we have customers with
the identification of the target market. We have the manufacturing to determine which
infrastructure is required. We have also the suppliers, there are here to determine the price,
the quality etc. Finally, we have the logistics. It is an important part of the supply chain because
it determines how Starbucks can transport and distribute its products. For the second point,
the service, there are the inventory, policies, and the planning with the customer satisfaction
for example, or the planning of the area of sales. And for the third point, we have all the
financial part with the distribution network costs, the warehouse and distribution centers
operational costs, the transportation costs, and the procurement costs.

The marketing plan of company

The name of the company you may not know the name "starbucks" has a great meaning and
was not chosen at random. Starbucks is named after a character from the novel Moby Dick.
One of the officers of the Pequod, Captain Ahab's whaler, is indeed named Starbuck. It was the
name of Pequod that was initially chosen, before one of the 3 founders opposed it and the
second choice, Starbuck, was retained.

The logo Starbucks is inspired by a 15th century Scandinavian woodcut, a mermaid with long
hair, bare chest, holding her double tail. It is particularly inspired by the mermaid of
Romanesque art, symbolizing lust. When Schultz bought the company, he decided to modify
the logo, notably changing the color from brown to bottle green. The hair is shortened in order
to hide the chest and avoid “shocking” the public targeted by the company in its development
strategy

Starbucks is what you might call a "third place" and that's how the brand likes to characterize
itself. The third place is a place after home and work, where you can meet with friends or to
work, read a book while obviously drinking a good coffee and a pastry. This is the ambition of
Starbucks and this is what it has succeeded in creating, in particular by working on the
architecture of its restaurants with comfortable armchairs and large tables to be able to work
there serenely. The place is intended to be warm, family-friendly and pleasant so that you can
stay there as long as possible.

Who are their target customers ?

The consumer target of Starbucks includes students, young workers and employees and
"intellectual" professions such as entrepreneurs. Starbucks has an image that evokes that
consuming at Starbucks means identifying with a young, urban, and trendy way of life. This is
highlighted by the sale of quality coffee, roasted on site in a tasting environment highly sought
after by the design of the premises, and the experience given.
 Who are the main competitors ?

From the end of 90’s, marketing campaign is the more efficient for the publicity.

Starbucks have two main competitors with MacDonald’s with his McCoffee, Dunkin Donuts,
Costa coffee, and Tim Hortons. Between all these companies, it is the war with marketing
campaigns.

What are the current challenges ?

Starbucks has faced significant labor issues in 2022, with management coming up against
growing unionization efforts by employees. The first store unionized in late 2021 and more
than 250 stores have unionized since then. Outgoing CEO Howard Schultz has broadly opposed
unionization by SBUX workers. With SBUX's significant presence in China, the country’s
progress in dealing with the rapid spread of COVID could materially impact Starbucks
performance.

With the COVID crisis over, starbucks needs to regain its level of excellence as well as its
customers lost during this crisis. This clientele having worked for nearly a year and a half at
home and having become accustomed to their own workspace and their home coffee is
difficult to find. However, according to the figures for the year 2022 from starbucks, the
company is in the process of raising its figures significantly. The year 2023 is therefore off to a
good start because the company's curve is increasing and is almost at the same level of sales
as at the start of 2020 (the year when companies stopped due to COVID).

What strategies they must adopt for future growth ?

One of the voices being developed at Starbucks today is artificial intelligence.

With more than 31,000 stores worldwide, Starbucks does not intend to develop digital to the
detriment of its physical network. On the contrary, according to its CEO Kevin Johnson,
speaking at NRF 2020, digital must improve the customer experience at the point of sale.

For the manager, mobile is the opportunity for physical brands to extend their relationships
with customers through digital. However, he assures us, these uses must not come at the
expense of the in-store experience, presented as the strength of the brand.

In the mobile sector, Starbucks is testing ordering from its mobile application in the United
States, allowing customers to then collect their products directly from the selected store. At
the same time, Starbucks is looking to improve the in-store experience. The CEO considers that
the future of retail combines digital products and physical stores with the aim of creating a
"destination for the customer." The use of artificial intelligence explored by Starbucks is part
of this logic. Through the "Deep Brew" program, the brand wants to automate certain manual
tasks, such as inventory, and thus allow employees to devote more time to customers. Several
artificial intelligence projects are under development, including a language recognition system
allowing automatic voice control to be taken during the exchange between the server and the
client.

How they attract new customers ?

The DNA of Starbucks lies above all in the importance of putting the consumer at the center of
its strategy. And it begins when the costumer takes a coffee: the barista asks him his first name
to note it on his cup. The consumer then feels considered by the brand and he feels unique.
It’s a super effective way to build attachment. Starbucks seeks through this strategy to create
an ultra personalized customer relationship to generate engagement and enthusiastic public
speaking in stores and above all, on social networks. In particular, she took the experiment to
create a My Starbucks Idea suggestion website that allows anyone to submit an idea for
improvement for the brand. One way to give voice to consumer actors and to promote them.

Surprisingly, Starbucks communicates very little on traditional channels. No posters, no

television or press. Yet it is the world's number one coffee shop chain. If the brand happens in
this sleight of hand, it is thanks to its community strategy and digital loyalty. In fact, the
customer is the center of attention, especially on the brand's social networks: 37 million fans
on Facebook, 17.4 million followers on Instagram, 11.4 million followers on Twitter. But it is
not only by bringing together millions of people on its networks that the brand succeeds in its
community bet. It is by using an ultra relevant social strategy that she succeeds in retaining her
consumers and engaging them, especially on Instagram. At each stage of publication, at each
speaking point, the consumer is included and is at the center of the universe. These are the
values of sharing and family that dominate the editorial line of Starbucks. Values inherent to
consumers which are found in what the brand conveys. And the magic is that most of the
content shared by Starbucks is created by the community. It’s mostly photos and videos of fans
that are shared on social media, creating a snowball effect and getting more and more people
to join in on the craze.
 How Starbucks company embed technology in their system ?

Starbucks focus on experience rather than just serving beverages. So the technological
innovations they use in their corporation grow around this.
That means that Starbucks doesn’t intend to replace human employees and automate its
supply chain. In their vision, the actual making, handling, and delivery of products are to always
be done by human employees so that human connections thrive in Starbucks shops.

Some of the modern tech fields that Starbucks puts to good use includes

Artificial Intelligence
Big Data
Cloud Computing
Blockchain
Machine Learning

One of the most important technologies utilized by Starbucks across just about everything is
Big Data. Data working with other technologies is at the center of a lot of innovation by
Starbucks.

Here are three examples when Starbucks uses technology, and it’s for the best.

Personalized Recommendations Powered by Machine Learning

Using data science to drive business has been implemented through the years since 2017
through Starbucks’ Digital Flywheel program which was focused on four pillars: rewards,
personalization, payment, and order.

Drive-Thru Experience

Drive-thru ordering has gained in popularity even more since the pandemic closed down many
restaurants and eat-in spaces. As of the first quarter of 2021 drive-thru orders from Starbucks
had increased more than 10% from what it was before the pandemic.

Trace Your Cup to the Source

Starbucks has long been committed to the ethical sourcing of its products and materials.
Technology lets customers trace each bag of beans across the supply chain right to the source.
Digital real-time traceability allows consumers to know where their coffee came from, and is
beneficial for farmers.

Thanks !