...Chelsi Fry I. Strategic Profile and Case Analysis PurposeIt is believed that Starbucks is not meeting our customers’ expectations in the area of customer satisfaction. It seems that some of the main concerns with customer satisfaction is improvements to our service and speed-of-service. When customers were asked the question, “Starbucks cares primarily about making money”, the answer “yes” went from 53% in 2000 to 61% in 2001. It became apparent that maybe we aren’t focusing on the right things if our customers believe we are only about making money. We’ve lost the connection between satisfying our customers and growing the business. | II. Situation Analysis - There are four types of individual analysis that must be conducted before any strategy can be considered for combating lower customer satisfaction rates. Furthermore, an analysis of these aspects may reveal a different strategic direction that should be taken. The four areas that will be analyzed to complete the situation analysis are the general environment, the competitive environment, an internal analysis, and an industry analysis. | General environmental analysisIs the company’s general demographics shifting? Starbucks’ market research team discovered that our customer base was evolving. There have been newer customers that are younger, less educated, and in a lower income bracket than most of our usual customers. However, our affluent, well-educated, white collar female between the ages of...
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...Starbucks Case Analysis September 13, 2012 Mike Behrns, Jessica Niese, Jennifer Dadlow, Scott Ryan, Ketan Patel Part 1. Annual Value and Customer Lifetime Value The annual value of each type of customer (exhibit 1) has been calculated by multiplying the number of visits to Starbucks per month times twelve (months/year) times the average customer life in years – thus yielding the annual values of unsatisfied customers, satisfied customers, and highly satisfied customers of $181.58, $209.50 and $381.89, respectively. In determining cost of capital (exhibit 2), we first considered the cost of debt, which was 7.47% in 2001 and 5.97% in 2002. The historical rate of inflation may be used, which is 3.3%, to assign a risk premium to the cost of debt, therefore the assumption may be made that cost of capital is 10% (actual WACC for Starbucks in 2002 was 13.57%). Net Profit Margin (exhibit 3) can be calculated by taking Net Income over Net Total Revenue for the year 2002. The 2002 Net Profit Margin is used to understand how the revenues from the sale of goods contributed to Net Income (incremental income). The NPV calculations for Revenue and incremental income are discounted back to 2002. In calculating the NPV of Revenue and incremental income (exhibit 4), the assumption may be made that Starbucks’ annual discount rate is 10% (the assumed cost of capital). The average customer life values are presented in tenths of years (i.e. 4.4 years), therefore a periodic discount rate needed...
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...Starbucks: Case Analysis | An in depth analysis of The Starbucks Corporation | Prestige Worldwide | Executive Summary Starbucks Corporation has been brewing and selling specialty coffee, espresso based drinks, and other novelty items since there conception in 1971. CEO and President, Howard Shultz, has been leading and driving Starbucks to be the world’s best coffeehouse since he joined the company in 1982 as a director of retail and marketing. After becoming CEO in 1987, Shultz has driven Starbucks to be a tycoon in the specialty coffee industry with a large competitive advantage. Some of the problems that face Starbucks are their limited product line, highly priced menu, and speed of service. Also Starbucks had expanded globally an in the United States over the past years but has been forced to close down a large number of stores due to the lack of demand for specialty coffee in certain places. Companies like Dunkin Donuts and McDonalds also offer a larger variety of food at a lot cheaper of a price compared to Starbucks. All of these factors together can be harmful to the future of Starbucks if nothing is done about it. Starbucks has time and the power to take this information and implement successful strategies to reverse these paths they are heading down. First by implementing a value menu Starbucks can gain back the people that do not want to spend too much money on their morning cup of coffee. McDonalds stated “4 dollars for a cup of coffee is dumb” and...
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...Starbucks Delivering Customer Service The 40 million dollar question Case Description Since 1971, Starbucks Coffee Company has been committed to sourcing and roasting the highest quality Arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee across the universe. Through its commitment to excellence they bring a unique experience to coffee drinking. In 2002, Starbucks faced a challenging task when looking at customer research data that suggested – among other things – that the speed of delivery lagged behind industry standards, and the company’s vice president of administration came up with a plan to invest $40 million into adding more staff to all shops across America. Would this be the right thing to do? Suggestions 1. Assuming that Starbucks should increase their labor hours by adding more staff in all existing coffee shops, and by doing this expecting faster speed of service and hence higher returns is not the right assumption. a. Need for geographic breakdown of data: The data we have in the area of customer satisfaction is an aggregate data for the whole of the United States. Management probably would be wise looking at this data in a detailed breakdown per (at least) separate States and Counties. It might be that the customer satisfaction figures are fine in some business units and the investment for labor would not help sales in some shops at all. b. Change in assumptions:...
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...mkt 3000 | Starbucks | Delivering Customer Satisfaction Case Analysis | | Nathan Hood | 9/30/2013 | 1. What explains the Starbucks success story? The success Starbucks saw in the early 1990’s is a result of Howard Schultz’s vision for the company. Schultz’s goal was not primarily about the coffee itself; it was about creating an experience around drinking coffee in a Starbucks store. He wanted to create a “third-place” for those whose lives were centered on home and work. In creating this experience, Schultz focused much of his attention and resources on customer satisfaction, which lead to Starbucks’ quick success. There were a few key elements of the Starbuck’s value proposition that led to its success; coffee quality, customer service, and atmosphere. In the early 1990’s part of Starbucks’ strategy was to serve what it felt was the “highest-quality coffee in the world.” To do this they controlled the three major parts of the supply-chain; purchasing beans, roasting, and distribution. This enabled the company to keep full control of quality of its products and services. The next part of their strategy was to provide the highest standard of customer service. Starbucks partners (the term used to refer to employees), upon being hired, underwent training in the areas of “hard-” and “soft skills.” “Soft skills” are skills that allow partners to connect with the customer, by establishing eye contact, smiling and remembering their names if they were regulars....
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...loyal to starbucks through Loyalty programs, with a majority of 63% saying they would return just for the rewards program (Horn, 2013) * Digital storefront promotion for teas proved to be successful (Laird, 2011) * Partnership with evergreen encourages Canadians to “go green” (Starbucks Encourages Canadians to Pledge to do some Green, 2010) * Partnership with AT&T Inc. to include free and paid wireless internet coffee shops in the united states (Associated press, 2008) * Partnership with Bell Canada to include free wireless internet in over 650 locations in Canada (Laird, 2008) * Leads specialist coffee shop sales in most countries (Starbucks Corp. (food), 2012) Weaknesses * Share price fell by 43% due to commercializing the business (Passikoff, 2008) * Price senstaive customers choosing other places to get their coffee (Starbucks Corp. (food), 2012) * Overall weak performance in the UK (Starbucks Corp. (food), 2012) * Starbucks cut back on new store openings in the United states (Janet, 2007) * Risky TV camping (Kang, 2007) * Competition from McDonald’s and Dunkin Donuts caused profits to decline in the United States (Lynn, 2008) * Overpriced coffee causes consumers to not purchase during recession. (Bryson, 2009) Threats * Fast food places moving into the coffee market segment provides a threat for Starbucks (Starbucks Corp. (food), 2012) * Starbucks holds 0.7% of market share for coffee (Starbucks Corp. (food)...
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...Based on the case information and my personal experiences five things that I have learned about Starbucks is as follows. Starbucks became a fortune 500 company in 2003 with over 6000 stores nationwide and in 2008 they had more than 16,000 stores across the nation. This massive expansion into the coffee marketplace was successful for the company however, with so many locations across the country people did not feel that a Starbucks coffee was as special as they once were to consumers. People started to see Starbucks as more of a fast food chain restaurant and with other restaurant chains such as McDonald’s started to focus more on coffee related products they lost consumer focus. Starbucks is most known for selling coffee but they do offer a wide variety of other food related items as well. Starbucks is currently in over 61 countries and territories including Africa, South America, Asia and Europe. Since 1987 Starbucks has opened an average of two new stores per day. One thing that I dislike about Starbucks is the price of their beverages. Starbucks coffee and other goods are overpriced compared to other restaurants that sell similar products such as Tim Hortons. With the high cost of their coffee and other items I believe that they are only targeting a select group of consumers that are willing to spend 3 dollars on a cup of coffee. Another reason that I dislike Starbucks is for their menu. I am not a regular customer to Starbucks and when I do go I often feel confused...
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...What factors accounted for the extra-ordinary success of Starbucks in the early 1990s? 1. by 1992 Starbucks had 140 stores and was competing against small scale coffee 2. Starbucks went public in 1992 which helped them raise 25 million, allowing expansions to continue. 3. Almost no spending in marketing 4. Controlled supply chain – enforcing standard quality 5. Focused on service and the partners 6. Created ambiences with universal appeal 7. Company operated stores, not franchises which usually lack on quality standards 8. Location location and location! 9. Branched and started serving other products ( sodas, pastries, juices etc…) 10. Distributed through other channels – food service, domestic retail, partnerships, online and mail. 11. Taking care of the partners ( health insurance and stock options, promoting from within) Many factors accounted for the extra-ordinary success of Starbucks in the early 1990’s. Starbucks owns nearly one-third of America’s coffee bars, which is more than its next five biggest competitors combined. Almost all of Starbucks’ locations in North America are company-owned stores located in high-traffic, high-visibility settings such as retail centers, office buildings, and university campuses. This made Starbucks a very convenient coffee bar because of the many different locations. Starbucks also worked to add more depth to their product in the coffee shops. In addition to selling whole-bean coffees, these stores sold rich-brewed coffees...
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...Roshan Thapa MGT 495-02 Starbucks Background/Problem statement Starbucks Corporation, an American company was founded in Seattle, WA. Starbucks is a premier roaster, marketer and retailer of specialty coffee around world. Starbucks has about 200,000 employees across 17,000 Starbucks –branded cafes in 40 countries. Starbucks had total revenue of $14.89 billion as of September 2013. The strategic issue of Starbucks is to attempts for massive expansion and creating a new value innovation. Porter’s Five Forces Model 1. Rivalry (High) * Many competitors in the market. * Saturated market as it is in maturity phase of life cycle. 2. Risk of Entry (Low) * High experience and scale needed. * Only few competitors have met economies of scale and operational efficiencies 3. Threats of substitutes (High) * Low switching cost. * Can be easily replaced by energy drinks. 4. Bargaining power of suppliers (Moderate) * Large percentage of any individual supplier’s sales. * Large number of alternative sources in market. 5. Bargaining powers of buyers (High) * There are not as many suppliers of equipment’s such as coffee machines as there are for coffee beans. * Low switching cost for buyers. Integration From the Porter’s Five Force it is clear that energy drinks can easily replace Starbucks, therefore Starbucks should build up the growth opportunities in products such as Tea, Fresh Juice, and energy drinks along the same...
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...Services Marketing Case Submission 1: Starbucks Case By Narwaria Vishesh | 61502170 1. Is Starbucks a product or a service? * Starbucks is a perfect example of service industry, their service comprises of selling a product-fine quality coffee. Following characteristics classify Starbucks into a Service company: a. Intangibility: Their service of making coffee cannot be inventoried. Also it cannot be patented. Their products are not readily available. b. Heterogeneity: Service delivery of Starbucks is strongly dependent on the interactions of their customers and employees. They provide customized coffee as per customers taste requirements. Same product might be different in taste for two different customers. c. Simultaneous Production and Consumption: For Starbucks mass-production is not possible. Also customers consume the coffee just after its production. Employees play a major role in good quality service delivery. Perception of one customer might influence other customers. d. Perishability: It is very difficult to synchronize the supply and demand for service delivery. For e.g. There might lot of rush during breakfast time of evening time and meeting customers demand might be difficult for that store employees. Once a coffee is made, it cannot be resold to other customer. In addition to above characteristics, Starbucks can be classified into service because of the 3 additional P’s in its marketing mix: a. People: All human actors...
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...Starbucks Structure Case Study ??? Class Name ??? Instructor Name August 11, 2012 Introduction The Starbucks company is a business organization located nation wide that specializes in specialty coffee drinks along with a menu of select food products with an in facility dining area and a drive through. This paper will create a job description and job specification for a Starbucks employee to include different job requirements of employees and apply job specification concepts from the textbook to this case. This paper will also suggest a form of departmentalization that Starbucks should use and whether the form should be changed in stores offering food products and lunch with reasons for why or why not. Additionally this paper will address when the company began to experience financial problems whether the leadership should have tried to centralize power and decision-making or decentralize the operation. Finally this paper will discuss what form of organizational configuration best fits Starbucks. Starbucks Job Description In an effort to build a successful job description and increase the awareness of the requirements of the positions being filled, there must be an understanding of how to create effective job descriptions in order to get quality personnel. "A job description is a formal list of tasks and duties that is used…(as)…part of the recruiting process…" (textbook author's last name, date of publication, pg. 61). Following this is an example of a possible...
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...Starbucks Coffee Company: Transformation and Renewal - Case Study Analysis 1. Starbucks’ decline was highly attributed to its rapid growth in the early 2000s. The accelerated number of stores being built created a number of problems including the saturation the Starbucks Experience it so highly valued as well as a drop in sales due to competition with existing Starbucks stores in any given area. This same-store sales being taken from one another gave Starbucks the feeling of “cannibalism” from within its own company. The desire to achieve high efficiency and reach financial goals led to the dilution of Starbucks’ ability to maintain its differentiation strategy through its most valuable resource, its reputation. The company lost control of its merchant narrative and its intimacy with its customers. Starbucks successful journey in becoming the market leader in the young sector is a result of Starbucks’ resources including its reputation, brand, financial resources, its highly organized and efficient senior leadership team, and differentiated product offering. These available resources Starbucks owns allowed them to give its customers a product and an experience not easily found or imitable elsewhere. It gained a loyal following that continues to grow today and has been seen to be the biggest contributors to Starbucks success today in maintaining its position as the largest specialty coffee retailer in the world. Starbucks’ capabilities include its ability to grow and...
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...Introduction Founded in 1971, Starbucks is the leading roaster and retailer of specialty coffee in the world. Operating in over 50 countries, the company strives to maintain its reputation as one of the most recognized brands in the world. In addition to rich-brewed coffees, Starbucks caters to a wide range of customers by offering a variety of other beverages, complementary food items, and beverage related accessories. These products can be enjoyed in a store location that offers its customers a sense of comfort and belonging. Apart from providing exceptional quality, Starbucks is dedicated to community and environmental initiatives. In this memorandum, we will explore these strategies using the Value Chain Analysis method and Porter’s Analysis method. Needs-based positioning Starbucks differentiates itself from competitors using the needs-based positioning that is introduced in the article “What is Strategy” by Michael E. Porter. Starbucks provides various products and services to meet the needs of the diverse segments of consumers that walk into the doors of Starbucks. Starbucks is able to offer a variety of beverages ranging from Tazo teas, to the numerous hand-crafted coffee choices, as well as delicious Frappuccino and fruit blended smoothies. The customers do not feel limited when it comes to their varying drink preferences and are at ease that their needs will be met not only with their beverages but with the many food choices that Starbucks provides. The organization...
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...yisStarbucks Case Analysis: I. Problem Identification and Decision To Be Made Starbuck’s main decision needing to be made is to determine whether they should allocate $40 million to extra labor in order to better satisfy their customers. Starbuck’s believes that they have created a recession proof product; however, recent marketing research determined that is not the case. Customer satisfaction has been steadily declining and their customer’s perceptions on what determines excellent customer service has changed in recent years. This change in customer perceptions is due in part to the fact that their customer base has shifted to a younger, less educated clientele that hold different attitudes toward Starbucks than the previous customer base. The lack of marketing organization within Starbucks is surprising. They currently have no chief marketing officer and their marketing department functions as 3 different groups: analytical marketing research group, new product development group, and a promotional development marketing group. This has created a major problem for Starbucks because, as stated in the case, “We tend to be great at measuring things, at collecting market data, but we are not very disciplined when it comes to using this data to drive decision making.” This is a problem because although they have a vast amount of data about their customers, they don’t know how to turn it into money. One of the most obvious problems that I see with Starbucks is the amount...
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...ARCTIC MINING CONSULTANTS Case Synopsis Arctic Mining Consultants is a mining company that deals with mineral exploration. In this case study, the project given is staking 15 claims in Eagle Lake, Alaska. The project Manager was Tom Parker, who has a wide experience and specialized knowledge in all nontechnical aspects of mineral exploration. He is a geological field technician and field coordinator for Arctic Mining Consultants. He assigned his previous field assistants John Talbot, Greg Boyce and Brian Millar to help him complete the project. The job required them to stake at least 7 lengths each day in order to be completed on time. However, the whole team has became very tense and agitated, especially Tom Parker, as the deadline was just around the corner and there’s still many to be finished within the limited time. The problem became worse with the way Tom managed and treated his team. The only motivation to the team was the $300 bonuses promised by the company when the job is done on time, otherwise, they might wished to give up already. This happened because working as a field assistant and in long-working hours only giving them low wages, which is considered unreasonable compared to what they have to do. During the eight hard days, everything had actually proved the strengths and weaknesses of each of the team members, including Tom. Case analysis symptoms 1) What symptom(s) exist in this case to suggest that something has gone wrong? The symptom(s) to suggest...
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