S.Bucks
Starbucks Corporation is a Seattle, Washington based coffee company. Its main core business is to roast and sell whole bean coffee and coffee drinks through its retail outlets spread across USA and other major developed countries in Europe, Middle East and Asia. Schultz started the company in 1985, named Giornale. He got the business concept of retail coffee bars, while on a visit to Italy. He found Italians were adherent coffee lovers and loved to relax and discuss in coffee bars. He felt Americans would also prefer a premium cup of coffee if offered in a relaxing environment and spend some time in the coffee bars. America was one of the largest consumers of coffee in the world after Italy, Germany and Japan. His idea did not find much acceptance among his partners in Starbucks Corporation, where he was working as VP marketing. Starbucks Corporation was established in 1971 in Seattle, and was mainly in the business of selling roast bean coffee. Majority of the coffee sellers in America were selling the cheap quality coffee unlike the premium and expensive roast bean coffee sold in Italy and Japan. Schultz was of the opinion that Americans would pay for a premium cup o
2 Threats: Some of the major threats in the external environment for the business operations of Starbucks are as follows:Ø Consumers prefer to purchase various brands of instant coffee from departmental stores and supermarkets rather than travel all the way to the retail outlets of Starbucks for roasted bean coffee. 1 External Environment Analysis: Starbucks operates in a highly competitive market that is saturated with a number of coffee bars. Consumers would prefer a premium cup of coffee priced competitively compared to alcoholic beverages. Ø It has little advertisements and promotion strategies compared to its competitors. Second factor is the threat of potential entrants. The roasters are trained and promoted from the company and are extensively trained in the art. Ø It does not follow any differentiation strategy to differentiate its product and services compared to other competitors in the market. Today, there are more than 5,000 stores in 26 countries, and they have more than 55,000 partners (employees) worldwide. Starbucks Corporation offers many substitution of Starbuck' coffee including soft drinks, beer, milk, bottled water, juices, powdered drinks, wine, distilled spirits. For instance a consumer would prefer a soft drink or a cold or chilled drink during summer, rather than a hot brew coffee. Ø A functional matrix organization structure of Starbucks helps in quick reorganization and a motivated workforce has little resistance to change. 0 Starbucks' Objectives: Coffee consumption in America has been stable, while specialty coffee has increased its market share to 30% in 1999, up from 17% in 1988.
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