Analysis Starbucks Operational Financial Organisational Marketing Capabilities Marketing Essay

Analysis Starbucks Operational monetary Organisational Marketing Capabilities Marketing EssayThe organisation chosen for the task is Starbucks Corp. and the deal would comp be it with two similar companies, one(a) creation costa drinking chocolate and the other being Caff Nero.The state would set off the frameworks underpinning the competitive position of Starbucks and too would identify and asses the economic and the competitive position of the fuddled.A financial prototype utilize appropriate ratio compendium would also be presented in a spreadsheet format identifying the exertion trends and their impact on the executing of Starbucks vis--vis rib C polish offee and Caff Nero.Both quantitative and qualitative data would be make open so as to depict an insight into Starbucks sustainable mathematical operation and prospects.Analysis of Starbucks operational, financial, organisational and marketing capabilities would be made available finished exercise of PESTEL analysis and Porters 5 forces model.The report would also discuss the issues, the problems, the opportunities and the options available to Starbucks for future day avocation appendage, followed by conclusions to draw to feelher each(prenominal) the variables identified.Recommendations would be provided for the family highlighting the direction it needs to take to ensure furrow gainfulness with comments on the suitability, acceptability and the feasibility of the options made available.INTRODUCTIONThe Starbucks Company was pieceed in Seattle in 1971 by Jerry Baldwin, Gordon Bowker and Zev Seigel with a vision to educate American consumers nearly the fine chocolate drinking experience. In 1987 Howard Schultz took all over the Starbucks Group, he valued to create the Italian espresso bar experience in the States by creating a ad hominem relationship between the guests and their burnt umber.In 1995, the company really took off with the opening of its 676th salt away, an d the expansion schema to Hawaii, Singapore and Japan being very(prenominal) successful. By 2000, 3,300 gunstocks were already in operation and Starbucks had ventured into markets ranging from England to Australia. As gestateing, Starbucks is come in one in the industry, with more than 12,000 shops in more than 35 countries.Just at bottom a couple of years they grew from a small hot chocolate business house to a multi- one thousand zillion dollar player in the long suit deep brown industry by buying only the best java available and providing the mint with an unmatched store experience.The Starbucks mission statement is To inspire and conjure the human spirit one person, one cup and one neighbourhood at a snip. Freshly brewed coffee is the briny intersection offered by Starbucks along with other drinks which include cold and hot teas, cakes and pastries. The Starbucks coffee comes in a many varieties each possessing a different taste, aroma and flavour. diligence TREN DS AND MARKET ANALYSISThe market right now for gourmet coffee business is hot. All the multi-national fast intellectual nourishment chains and street-corner shops want in on the boom. Many big companies be focusing on the release of particular(a)ty bloted coffees and the scenario is heating up. Specialty coffee is one of the fast-breaking growing food profits markets globally. Growth in the coffee industry is continuously peaking, with many tender overseas companies entering the market using policies like special discounts and perks despite the questionable tone of the coffee being used to increase the market sh atomic number 18.A nonable trend seen is that lots a significant increase in gross revenue occurs every time a caf starts to use checked consumables. The consensus is that these coffee drinks would be a semipermanent trend, with focus on elevating the customers taste for a product that they atomic number 18 already familiar with and then leading them to coffe e houses to get it. Many companies are also tinkering with expanding the food menus as strong including an in-store display of fresh cook goods, sandwiches and miscellaneous confectionary items.The modernest trend is the drive-thru coffee stores. Starbucks has many much(prenominal) stores, all of which are seeing continual growth and long lines. some other trend includes customer requests for organic coffees, which has encouraged retailers to move towards the beans growing surround. The array of products offered has never been as wide, as retailers are adding more flavours to whole beans and creating variations to the basics of espresso and steamed milk. The liable(p) retailers shit added iced tea concoctions and coffee shakes to their menus to give awaydo competitors. Most specialty retailers now also retail whole beans and many such stores arouse added coffee grinders, espresso machines and other brewing supplies for add on sales.STARBUCKS ANALYSISThis position of the r eport would analyse the working of the business by application of PESTEL analysis, Porter 5 forces and the BCG Matrix.PESTEL AnalysisPOLITICALTaxation policyHigh taxes levied on farmers in the bean producing countries, would consequently increase the rate at which Starbuck would buy the coffee beans and any such fluctuations in the taxation policy would certainly be passed on to the consumer, who now would thrust to purchase the end item at a higher price.International trade regulations and tariffsTrade issues would affect Starbucks instanter when exporting and importing goods. When the government of the trading untaught trim backs a tariff it would not only reply in an efficiency loss for Starbucks however such large income transfers can also become inconsistent with equity. This purpose slight charge would suck to be borne by the consumers.Government stabilityA change in government policies has a direct impact on the taxation and legislation framework. Also the countries in political turmoil or civil war should be approached with great caution when considering revolutionary ventures. fight lawA reduction in licensing and permit costs in the bean producing countries would begin production costs for farmers. This saving would in repeal be passed on to Starbucks when purchasing beans and finally to the consumers.ECONOMICInterest rankHigh cheer rates would mean putting off the investing and expansion plans of Starbucks, which would result in a few(prenominal)er wampum for the firm. Low interest rates should have the oppo situation effect.Economic GrowthConsumer incomes would fall in periods of negative growth leaving little disposable income impacting the sales for Starbucks. inflation ratesBusiness costs forget rise in measure of inflation which would ultimately have to be borne by the consumer.Competitors pricing warlike pricing from competitors would impact Starbucks pricing that would drive down the profit delimitation as they try to mai ntain their market manage.Exchange ratesIf the bills value falls in a bean supplying country, Starbucks would get more for the equivalent price, when importing the goods. This saving would be passed to the end consumer. cordialPopulation demographicsIdentification of the target population at which Starbuck needs to reckon their products is a significant factor in the business operations. The marketing streak undertaken would focus accordingly. burnt umber is more of a luxury product, so the people with the most amount of disposable income should be targeted.Working PopulationA large number of workers in big cities now go out for lunch and meals. Starbucks can cash this to their favour and promote the shop as a place where people can meet and eat, boosting the sales.LocationA good location which is easily accessible is vital to ensure that the customers catch the shop.TECHNOLOGICALIT developmentStarbucks launched its first-generation e-commerce website in 1998. As a result, sc alability and performance have improved, and the company now has the tools it needs to profile and target customers, analyse site data, and deliver new features to the market in the shortest time possible.New tangibles and processesDevelopments in the technology of coffee making machines and the computers that Starbucks use to run their cash registers will enable their provide to work more quickly and efficiently. This will result in customers being served quicker and create the latent to serve more customers in a day..Rate of technological changeThe pace at which technology is advancing is astounding. Starbucks would need to invest heavily just to stand still in the ever expanding and developing market, and even more so to try to stay ahead of competitors.ENVIRONMENTALPollution problemsStarbucks customers create a lot of waste by disposing off the cup and the contents incorrectly. The material for the cup should be carefully considered to make it as biologically degradable as po ssible.Planning permissionsPlanning permission may not be grant to Starbucks if the construction would harm the environment. The land may be protected.Work establishment in that location are strict laws in most countries pertaining to waste disposition and non-adherence to these could lead to Starbucks being sanctioned, which would affects them financially and also tarnish the reputation of the mark off name.Environmental pressure groupingsStarbucks should be awake(predicate) of the physical and influential berth of groups such as Greenpeace and Friends of the Earth. Any violation of animal or environmental rights by a company is usually followed by a nimble and attention-drawing protest from one of the groups. Brand image and customer bases are very much irreconcilably tarnished repayable to the actions of these groups.LEGALTrade and product restrictionsStarbucks need to be aware of the trade laws in the countries where they have established businesses. They need to ensur e they are not in violation of any such laws. Certain countries impose a tariff that has to be paid when goods are imported/exported so this must(prenominal) be taken into account as swell up.Employment lawseach country has different employment laws, like a limit on the number of hours an employee can work per week, varying levels of minimum wage and so forth Starbucks should be aware of such factors when considering business expansion.Health and Safety regulationsBy not maintaining high standards they would be liable for damages if found in violation as it is a legal requirement for them to enable that their staff and customers are safe when they are in their stores.Land useStarbucks have to a stampe by the laws of the induceing authorities when constructing shops or altering purchased sites and if found in violation of land rules, it can be panalised by the topical anaesthetic authorities.PORTER 5 FORCES ANALYSIS1. COMPETITIVE RIVALRYStarbucks is the leading retailer, roaster and brand of specialty coffee in the world. Major competitors include costa coffee, Caff Nero, Seattles beat Coffee and secondary coffee providers such as McDonalds, Burger King and Dunkin Donuts. The opposition is nowhere near to Starbucks volume of operations and sales.Consumption of coffee is not dependent on the price of the product but also on the differentiation between each product and several value adding variables such as the type of customer services, brand, brand recognition and image of the company. Hence, Starbucks is not majorly sensitive to movements of other firms in this segment.2. THREAT OF NEW ENTRANTSStarbuck is the world attracter in its industry and has controlled access to distribution channels. Starbucks have exhibited this control over distribution channels by setting guidelines for their suppliers to follow. Starbucks is also constantly innovating and masking strong product differentiation to hamper the possibility of new entrants.However, the inlet barrier for the industry is relatively low and any big firm where capital is not a problem could be a authorisation entrant. Some of the more current and on-going curses of new entrants include fast food chains such as McDonalds, Burger King and Dunkin Donuts which can become a major problem in the near future.3. BARGAINING POWER OF BUYERSA big affright to Starbucks is the absence of fault costs in the speciality coffee industry, customers face no switching costs in switching from Starbucks to costa Coffee or Caff Nero for a cup of coffee. Another threat to Starbucks is that their customers have the ability to brew their own coffee. Starbucks has tried to counter this threat by offering Preferred Office Coffee Providers as well as directions on how to make the perfect cup of Starbucks coffee at home, called the Four Fundamentals of Coffee. The perfect cup of Starbucks Coffee includes, of course, Starbucks ingredientsAlso with new entrants and competitors such as McDonalds who c laim to offer premium roast coffee of reasonable quality for glower price, it is ready that Starbucks customers have some talk terms index in the industry.4. BARGAINING POWER OF SUPPLIERSCoffee is the worlds second largest traded commodity. due south and Central America produce the majority of coffee traded in the world. Starbucks depends upon both outside brokers and direct contact with exporters for the supply of premium coffee beans.The quality of coffee beans sought by Starbucks is very high, proving to be a potential threat to the company. Only suppliers who can meet Starbucks coffee standards will be able to supply the giant company. The supplying industry only has few firms which can deliver the quality giving them considerable bargaining powers.However, Starbucks counters this due to its massive size and being the primary buyer and also because of the immensity of Starbucks business to any individual supplier as it would account for a large percentage of the total supp liers sales, thus reducing the bargaining power of suppliers.THE THREAT OF SUBSTITUTIONSubstitute products are the products that can pose as a trade-off for the product being offered by a company. In the specialty coffee industry, substitute products can be soft drinks, tea, power drinks, fruit juices and other caffeinated drinks.Here innovation would play a wide role. To counter this Starbucks have given their menus a complete revamp and have differentiated so many of their products which are now part of the main product line. The menu includes motley teas, hot and cold coffee, baked goods and various confectionary items.The only true direct substitute for specialty coffee would be the basic coffee, which is of lower quality than specialty and as such does not present any threat.STARBUCKS FINANCIAL ANALYSISThis part of the report would highlight the financial position of Starbucks using the annual reports and omnibus(prenominal) ratio analysis for the financial years 2008, 2009 and 2010 which are enclosed in the appendix.2008In pecuniary 2008, Starbucks experienced declining store sales in its stores, primarily due to lower customer traffic. The weaker traffic was caused due to number of on-going factors in the global parsimony such as the higher costs of gas and food, rising levels of unemployment and personal debt along with reduced access to consumer credit.In financial year 2008, store sales declined a margin of 8%. Consolidated run income was $503.9 jillion in pecuniary 2008, and operating margin for the year was 4.9% compared with 11.2% in the foregoing year. Approximately 260 basis points of the decrease in operating margin was a result of restructuring charges, primarily related to the significant US store closures.EPS for financial 2008 was $0.43, compared to EPS of $0.87 per share earned in the prior year. Restructuring charges and costs associated with the execution of the variety agenda squeeze EPS by approximately $0.28 per share in fiscal 2008.2009Fiscal 2009 was a challenging year for Starbucks. The difficult economic environment had strained consumer discretionary spending in the US and multinationally, which negatively impacted company revenues, store sales, operating income and operating margins.Starbucks responded by creating a business model that was less reliant on high revenue growth to drive profitability. The primary initiatives of the schema included rationalizing the global company operated store portfolio and reducing the cost anatomical structure, plot of ground renewing the focus on service excellence.Starbucks closed down approximately 1000 stores. Initiatives targeting reductions in the cost structure in fiscal 2009 proceeded as planned, with full year costs of $580 million removed from the cost structure.The company maintained a solid financial foundation, with no short term debt outstanding at the end of fiscal 2009 and with cash and liquid investments totalling more than $650 million. The solid financial position and go along strong cash flow generation provided Starbucks with the financial flexibility to accomplish its restructuring efforts.2010In fiscal 2010, revenues change magnitude to a record $10.7 billion. Operating income increased by $857 million from scal 2009 to $1.4 billion. The full-year operating margin of 13.3 % represented the highest full-year consolidated operating margin in Starbucks history. Fiscal 2010 ended with the highest full-year comparable store sales growth that Starbucks have seen in the recent past, while the earnings per share also grew more than double from scal 2009.BENCHMARKING WITH COSTA COFFEE AND CAFF NEROStarbucks is a US chain whereas both Costa Coffee and Caff Nero were established in the UK. Costa Coffee was setup in London in 1971 by Bruno and Sergio Costa and acquired by Whitbread PLC in 1995. Caff Nero was established by Gerry Ford in 1997 in the UK.The comparison would be carried out using the financial information of the trine firms which is available in the appendix. The comparison would majorly be based on the UK market.There are 1,175 Costa Coffee shops in Britain as compared to 731 of Starbucks and 440 of Caff Nero. A comprehensive business analysis of Starbucks has already been supplied in the above report this part would focus on the business analysis of Caff Nero and Costa Coffee respectively followed by a coherent conclusion of the findings.Costa Coffee fit to the financial data available operating profit grew by 59.5% to 36.2million 312 net new stores were acquired or opened and like for like sales increased by 5.5. Costa operates in 25 countries and is now the number two international coffee shop operator with 1,600 stores 1,069in the UK and 531 overseas. Sales performance improved strongly across the year, confirming the brands resilience, even in a recessionary environment.Caff NeroThe groups 60% equity is held by the Ford family, the rest 30% by a private equity firm Paladin a nd 10% with the management. Caff Nero has recently completed a successful 140m refinancing in a bid to fund the businesss future growth ambitions.The business, which has 500 outlets in the UK and internationally and has registered 54 consecutive quarters of positive like-for-like growth, is forecast to sire 31m in earnings before interest, tax, depreciation and amortisation (EBITDA) for the 12 months to May 2011. Revenue for the same period is forecast to reach 171m, an increase of 11% on the preceding(prenominal) year. The new financial structure would provide the Group with a financial platform to support its growth ambitions and expansion plans both in the UK and internationally.Nero has a lot of ups including strong brand positioning, intensive marketing campaigns and a clear differentiation point. However, there are some weaknesses, one of them being wish of experience in going international, thus some problems could arise while penetrating foreign markets.Though both the co mpanies Costa and Nero are well established in the UK market, Starbucks is the industry leader in the world and is a major competition to them in the UK. Financial turnover of the Starbucks Group is so massive that it provides them with all the capital requirements to innovate and differentiate their product from the 2 competitors it already has established a sizeable market share in the UK, but still needs to take over Costa Coffee which it should be able to do in the near future, looking at the financial figures provided and the international global strategy adopted by the group which seems very promising.ISSUES FACING STARBUCKSThe major challenge that Starbucks is dealing with is the current financial crisis in the world economy forcing them to call closures of many stores around the world.Another challenge that Starbucks is dealing with is competitors. There are numerous coffee shops all over the world and being able to stand out to generate customers is principal(prenominal). Their main competitors are Dunkin Donuts, McDonalds, and Nestle in the US and brands like Costa Coffee and Caff Nero in the UK, the two major markets for Starbucks. It is important that for Starbucks to know their competitors and what they are currently doing.Also Starbuck coffees are priced higher than other market competitors because of Starbucks only purchasing the highest quality coffee beans for their product, thus increasing the price of the drink. As Starbucks have many competitors, this can be a potential advantage to for such competitors.Also Starbucks inadequate marketing strategy on advertising is a hindrance in the business growth opportunities. They prefer to build the brand by promoting the drinks cup-by-cup with customers. The advertisement ends until they drink the coffee, reducing the chances to attract invaluable customers.Starbucks also does not emphasize on distributing their products to supermarket because of being concerned with the quality of the coffee if t he coffees were packaged into plastic bags.Also the rigorous expansion strategy followed by Starbucks can take a toll on the firms brand image. As corporations grow there can be a tilt to focus too heavily on increasing output and locations, and less focus on quality and brand image. Starbucks needs to stay with its determine and ideals that have made it successful.Also Starbucks policy of not franchising can be a cause of concern for the firm. Advantages of Starbucks franchising would be to open hundreds of new stores with less risk to the company, and make profits in doing so. In addition Starbucks would have less research and development costs because the franchisee would have greater familiarity of the local market in terms of demographics, psychographics, geographic, and local/state/country regulations.RECCOMENDATIONS AND CONCLUSIONStarbucks has to effectively pursue a Focus-Based Strategy in coalition with differentiation and cost leadership based strategy. Being a lower c ost store will increase the difference between Starbucks and provide it with a competitive edge. At present, Starbucks competitors are attempting to specialize in the coffee business, therefore Starbucks must pursue focus strategy to increase its strength.Starbucks must reduce their product price by producing a new product of coffee using cheaper beans or can come out with special discounts and promotions to reduce cost, thus increasing sales enabling Starbucks to enter new low cost markets and increase profitability. Also needs to focus on building alliances in new markets/countries to reduce management focus and utility from the local and experience curves.Should focus on advertising the brand with internet services for users to access, do road shows, hand out brochures etc. so that consumers become more aware of the brands strong international front man and brand name. Market penetration and market development will help increase the sales. Access unexplored distribution chann els like making available packaged Starbucks coffee for consumers by displaying it nationwide in various convenience and shopping stores and not only Starbucks stores.Starbucks must adopt reduplicate policies of Product Development and Product-Market Diversification to counter the stiff competition in international markets. It is important to understand this in the product development pattern as they would need to focus solely on making their subsisting products better. The company can demonstrate product and market diversification through research and development coupled with creativity and innovation. Product differentiation has prove an excellent defence against threats such as bargaining power of buyers. ontogeny new products will offset such potential risks.A strategy should be formulated to tackle the competition by entering into agreements, long-term contracts, with the food service companies that they are competing against. This way their coffee would be interchange at these outlets and they would gain access to new markets and increase sales while decreasing competition.Starbucks should tarry to be a first mover into markets with new products and ideas. Being a first mover of new products into new international markets will be an excellent way for Starbucks to build customer trueness and uphold its image as an innovative company.Starbucks should continue to locate their operations in high traffic areas, high visibility areas. The company should continue to take excellent care in picking locations. It is extremely important that Starbucks international stores reflect uniqueness in their location and layout. Having locations in a variety of locations will ensure large market exposure.