STARBUCKS

Starbucks Strategic Analysis

Starbucks Strategic Analysis

Introduction

Starbucks Corporation (Starbucks or ''the company'') is a premier roaster, marketer and retailer of specialty coffee. The company operates in over 55 countries across North America, Asia Pacific, the Europe Middle East Africa (EMEA) region, and Latin America. Starbucks is headquartered in Seattle, Washington and employs 149,000 people (Schultz, 2007, 11).

The company recorded revenues of $11,700.4 million during the financial year ended October 2011 (FY2011), an increase of 9.3% over FY2010. The increase in net revenues was due to an increase in company-operated retail revenues during the year. The operating profit of the company was $1,728.5 million in FY2011, an increase of 21.8% over FY2010. The net profit was $1,245.7 million in FY2011, an increase of 31.7% over FY2010.

Business Description

Starbucks is a global coffee retail chain that specializes in coffee and other related beverages. The company purchases, roasts and sells high-quality whole bean coffees along with handcrafted coffee and tea beverages and a variety of fresh food items, through its more than 17,000 retail stores in over 55 countries. The company also sells a variety of coffee and tea products and licenses its trademarks through other channels such as licensed stores, grocery and national foodservice accounts. Some of the key brands under which the company offers its products include Starbucks, Tazo Tea, Seattle's Best Coffee and Starbucks VIA Ready Brew.

Starbucks operates through four business segments: the US, international, global consumer products group (CPG) and other.

The US segment runs company-operated stores and licensed stores within the US. The international segment operates company-operated stores, licensed stores, as well as foodservice stores primarily across Canada and the UK. The CPG segment includes packaged coffee and tea, Starbucks VIA Ready Brew and other branded products sold worldwide through channels such as grocery stores, warehouse clubs and convenience stores, and US foodservice accounts. The other segment includes Seattle's Best Coffee operating segment and Digital Ventures business and unallocated corporate expenses that pertain to corporate administrative functions that support the company's operating segments.

In terms of revenue generation, the company has four channels: company-operated stores, licensed stores, consumer packaged goods and foodservice operations.

SWOT Analysis

Strengths

Starbucks operates in the highly competitive foodservice retail space that demands consistent delivery of quality service to either retain existing customers or to attract new ones. Apart from selling its world-renowned coffee blends in a variety of flavours, the company is focused on providing a coffee-drinking experience to its in-store customers. In the past several years, the company has been focusing on meeting its customers' instated demands by offering various value-added services such as, entertainment on premises.

Starbucks offers free, instant and unlimited Wife connectivity at all its company-owned stores across the US and Canada. Customers, who come for a drink or a snack, are encouraged to spend more time inside the store through free access to internet and the Starbucks Digital Network - a news and entertainment web portal offered in association with Yahoo.com. The Starbucks Digital Network also offers free access to subscription editions of various premium news resources, such ...