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Starbucks Analysis
Starbucks Analysis
1 Action Plan
2 External Analysis
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
1 ACTION PLAN
To come up with strategies for the Away-from market, At-home market and the Chinese market, we
conducted PEST analysis and understood Starbucks’s pain-points in the US coffee market.
1 Week
Key 1 Analyze US coffee market and 2 Strategy ideation according to the
Milestone Starbucks’s strength and pain-points internal /external analysis
Key > External Factor Analysis > Hypothesis Verification
Activities – How big is the market and how much will it grow? – What type of customers consume Starbucks coffee, and what
type do they prefer?
– Who are the key players and what are their success factors?
– What would happen if price or quality shifts in the At-home
– What are key issues that affect players?
market?
– Should Starbucks maintain its original business model in China?
> Starbucks Analysis
– How are the value chain and revenue model composed? > Strategies Establishment
– What are the reasons for Starbucks’s revenue down-turn? – What are ways to survive within intense competition in the
Away-from-home market?
> Market Segmentation – How should Starbucks enhance quality of the products in the
At-home market?
– What are ways to survive within intense competition in the
Away-from-home market? – Who are new customer segments to target and what new
channels are available in the At-home market?
– What is Starbucks’s position in the At-home market?
– What are the ideal ways to expand in the Chinese market?
– What are the ideal ways to expand in the Chinese market?
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
2 EXTERNAL ANLYSIS
Several external threats pose opportunities & challenges to the growth of the global coffee Industry.
88.4 93.2
83.1 U.S. 11,000
80
75 74 Brazil 7,318
Germany 6,852
Japan 6,069
Italy 4,730
Rising global Restraints on
U.K. 1,805 U.S. Economic
tension foreign owned Increasing price
China 2,133 enterprise Downturn due
between China of coffee beans
and the U.S. by China to inflation
2019 2020 2021 2022 2023 2024(e)
[Source] Statista
Starbucks faces challenge to defend its leader position in the Away-From-Home market,
while trying to increase its brand recognition in At-Home market.
Away-From-Home At-Home
Starbucks Status Quo Starbucks Status Quo
Quality
• Market Leader • Low level of market control
• Focuses on premium coffee - Market Leader in only Ready-To-Drink market
drinks with customization • Struggles to meet different market needs & beat diverse competitors
options
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
3 INTERNAL ANALYSIS
Starbucks must revitalize revenue growth and flourish in the Chinese Market.
Financial Overview Operating Segments Product Segments
Revenues
Starbucks Number of Stores and Revenue 18% Away At Home
40000 40 From Channel
North International Channel Home Development
30000 30 America Development
10%
Revenue Beverage Single Serve
20000 20 72%
70% 24% 6%
Food Packaged
10000 10 Coffee Beans
Stores NA China Other Intl. • 36,000 Stores Ready to
17,295 18,416
0 0 48% 52% • 74% Beverage
Drink
2016 2017 2018 2019 2020 2021 2022 • 6.67%
The international segment is emerging as a significant • 22% Food
CAGR in
Stores Net Revenue revenue stream with help from China • 4% Other past 5 yr.
(mn, USD)
Rising Operating Expenses Expansion to China
27,860
24,573
22,728
21,137
22,278 Starbucks Chinese Stores
• First Expansion into China in form of ‘East China’ JV
17,462
18,643 1999
• JV with Uni-President Enterprises Corporation & President 9000E
Chain Store Corporation
(E) CAGR 14.35%
2023 • 6019 Stores open and planning for 9000 stores by 2025
Same store sales are falling, causing slow down
in revenues. All the while, costs are rising. • 220 mn USD Investment planned for DX Center
5E
1
2
20
20
20
20
20
20
20
2
20
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
#
3 VALUE
Value Chain
CHAIN
Costs are increasing whilst marketing and sales are digitalizing for better experiential convenience.
• All coffee importing, roasting, packaging, and global Heavy Friendly Star system
Investment workers in rewarding
distribution of coffee are controlled directly ‘Green loyal Company
into Store Various
Online
design Aprons’ customers & Licensed
1.5 bn USD Sales Retail Shops
Annual 800 mn USD • Drive-thru
Spending • Nestle Global Alliance
in Logistics • O2O & Delivery
Structure • Pepsi Co. Collaboration
2022 187% ↑ 2030 No. 1 Customer Loyalty in Coffee Industry
• Mobile Ordering
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
4 FRAMEWORK
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
5 STRATEGY 1
To deal with increased needs for food and enlarge revenue, Starbucks should implement these strategies.
18.1% 3.50
18.0%
Profit
17.4% ×1.6 Total Profit
16.2%
Promotion 1.00
3.50
=
Revenue of
15.3% 40% Plan 4.00
Beverage
1.00
25% Only
1.50
[Source] Herald Economics Beverage Food &
Only Beverage
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
Additional
Food +
28 55 151 Menu
Starbucks should create signature food Salads and soups served in Korean
Starbucks not only lacks in diversity within existing items,
items utilizing its existing brand market would increase competitive edge
it also lacks key meal menus such as salads and soups.
With increased needs for cold drinks and younger customer base, Starbucks should diversify its beverages.
(2003) (2023)
• Spring
Focus on Divide summer • Draw in more users
• Summer
Seasonal menu of Starbucks
has been about the same
5 •
•
Fall
Holidays
cold drinks
like
season and
release new menu
• Additional trial
period for future
throughout the years Frappuccino various times regular menu
• Winter
For pricing control, it can hold base prices and increase customization prices.
For customer experience, it can have delivery service with rewards system.
Pricing Control Customer Experience
“Modifiers” generate $1
billion in “high-margin” Delivery Service with Rewards System
revenue every year
60%
Customized
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
6 STRATEGY 2
• Suitable for customers who require • Suitable for customers who look for
premium coffee experience convenience and common taste
Only one de-caffeine product
• Requires high quality of coffee beans • Able to use Medium quality coffee beans
in Starbucks coffee beans line
Starbucks should increase its market share by making more compatible coffee pods with other companies
and introducing eco-friendly coffee pods.
Keurig Green…
Previous collaborations Additional
Private Label leading to increase in partnership
profitability
Starbucks with
platform
Dunkin'
producers
Folgers' Number of capsule coffee
machines expected to
0% 10% 20% 30% increase at a CAGR of
4.5% during 2023-2031
[Source] Statista Find new partnership to make more compatible coffee pods with other coffee brands
New
Customer
Segment
Need to expand to new
Aluminium Compostable PBT Plastic customer segment who look
Nestle making paper-based
[Source] Allied Market Research for eco-friendly products
2022 2032 compostable coffee pods
High rate of increase in the expected market size of compostable coffee capsules
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
7 STRATEGY 3
To address the saturated Chinese cafe market, Starbucks can expand to brunch boutique shop with a healthy,
experiential and lifestyle concept.
Mc cafe
Starbucks 60% of sales are
50% made by loyal 2022
Food and Coffee market in 1st, 2nd cities in China
customers : Enabled by utilizing
existing food supply chains
aiming target
* Customer Segmentation
Locations (vibrant, youthful)
Leveraging brand recognition, Starbucks can enter the brunch boutique market
in China, reflecting customers’ preferred lifestyle experiences Personalized data Reward system Lifestyle brunch
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
1 Action Plan
AGENDA
2 External Analysis
3 Internal Analysis
4 Framework
5 Strategy 1
6 Strategy 2
7 Strategy 3
8 Executive Summary
COPYRIGHT 2023. SBABUSINESSSTRATEGYTEAM. ALL RIGHTS RESERVED
8 EXECUTIVE SUMMARY
Starbucks can recover revenue growth by the provided strategies in 3 different by increasing ARPC and
better fulfilling customer preferences.
1 Away-from-Home Market
• Menu diversification
• Price control with customization
Intense • Enhancing customer experience Increased ARPC Enhanced
US Inflation Competition customer experience
2 At-Home Market
• Packaged coffee beans market
: New channel development
Lacking • Single platform market Increased
Low Quality : New customer targeting New user influx
Customers market share