Profile - Exeter



STARBUCKS

Profile

Starbucks Corporation is a retail organization sells drinks such as Italian-style espresso beverages, cold blended beverages and premium teas, fresh food like sandwiches and pastries. It also offers Coffee-related equipment. The company has bands such as Starbucks, Tazo, Seattle’s Best Coffee, Torrefazione Italia and Starbucks VIA.

Starbucks operates in the US, the Asia Pacific region, Greater China (China, Hong Kong, Macau and Taiwan), the Europe Middle East Africa (EMEA) region, and Latin America(Datamonitor, 2010).

Headquartered in Seattle, Washington, the company employs about 142,000 people in FY2009. At September 2009, Starbucks owned 8,832 company stores and 7,803 licensed retail stores all over the world. The largest international markets according to the number of retail stores are Canada, Japan and the UK. Starbucks coffees and teas have been sold in 39,000 grocery and warehouse club stores, most of which can be found in the US and 5,500 in globe markets.

Origins and Key Developments

The first Starbucks coffee shop was opened in 1971 and the location was in Seattle's Pike Place .

The 1980s saw a huge development of Starbucks. In 1982, Starbucks started to sell coffee to restaurants and coffee bars. After that, the company changed its name to Starbucks Corporation and expanded in Chicago and Vancouver.

Starbucks became the first private US company providing stock option program which also can be taken by the part-time woker in 1991. The company's IPO took place in the following year, on the NASDAQ National Stock Market with the trading symbol of SBUX.

Starbucks opened its first store in Japan in 1996. Two year later, the company signed a agreement with Kraft Foods and introduced Tazo, a tea company in Portland, Ore.

The company kept on expanding the global market in early 2004 through opening the first branch in Paris. Later this year, Starbucks signed a agreement to open Seattle's Best Coffee cafes in more than 400 books and music stores and fully owned Hawaii Coffee partners stores in 2006.

Starbucks got a great success in expanding between 2006 and 2007. The company acquired 60 coffee stores in Beijing and Tianjin, China from H&Q and some other shareholders such as High Grown Investment Group in 2006. In the next year, the company and its European partner opened the first Starbucks store in Bucharest. A new Ready-To-Drink Coffee beverage also has been launched in South Korea at the same year. Also in this year, Starbucks was asked to pay California baristas more than $100 million for violation of the California Labor Code.

During mid 2008, Starbucks and SSP, a leading company which provided coffee and food for travelers in Europe, formed a strategic partnership in order to open more than 150 stores of Starbucks in travel channels in key market of Europe by FY2011.

In order to entry the instant coffee market in Asia, the company started to sell VIA coffee in Japan in April 2010.

SWOT Analysis

Starbucks has three main strengths according to Datamonitor(2010). The first strength is the Wide range of coffee-products. The company sells a wide choice of coffee beverages, teas and food items, what is more, it has over 16,000 stores worldwide. As a result, the company can launch any product through the retail operations to the customer all over the world. Secondly, Starbucks can enhance product quality because of its strong research and development team. In FY2009, a new ready brew coffee which called VIA has been launched by the company in according to capture a great share of $21 billion global instant coffee market. This kind of instant coffee is made with a US patent-pending microgrind technology to contain coffee's best taste, quality and freshness. Starbucks spent more than $20 million in three years from FY2007 to FY2009 on research and development not only in the product investments, but also in the selling channels. The last but not the least, Starbucks has operations in more than 50 countries and relationships with a significant number of large companies such as Kraft, the largest food and beverage company in the US.

The main weakness of Starbucks is the product recalling problem which affect margins and brand image. In FY2009, the Consumer Product Safety Commission asked Starbucks to recall 530,000 grinders and more than 12,000 glass water bottles. At the same year, the company also recalled few of its food products which containing peanut butter from its stores in the US. These problems may hurt the value of the brand and decrease the demand for company's products.

There are two opportunities for the future, first is to increase the shares of Europe’s ready-to-drink coffee market. The ready-to-drink coffee market(RTD) market in Europe has a value of $550 million. Starbucks signed a agreement with Arla Foods company in FY2010, which may help the company enrich its experience in the ready-to-drink(RTD) coffee market. In addition, Starbucks has already entried into the instant coffee market in Japan by launching the VIA coffee. The company will sell VIA coffee through its 870 stores in Japan where 67% of coffee sold is instant and the value of the market is worth more than $5 billion.

The main threats that Starbucks is facing are the increasing minimum wages and health consciousness among the American. The company's largest market is the US, where the health consciousness is increasing everyday. The products of Starbucks contain caffeine, sugar and other active compounds, which is become the dairy concerns of the American.

Evaluation

Because of the economic climate , the company got revenues of $9,774.6 million in FY2009, which decreased 5.9% as compared with FY2008. Despite this there is evidence that Starbucks is likely to keep growing in the future. First of all, there is a sign of recovery in the European market as an average growth in the eurozone was 1% in the fist quarter of 2010(BBC News, 2010). Nevertheless, Starbucks entries into the RTD coffee market in Europe and the instant coffee market in Japan, the value of which can be more than $550 million.

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