Presentation Manuscript Starbucks.pdf

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Presentation Manuscript

<i>Name of Members: Nguyen Thi Kim Loan - HS173400</i>

Pham Phuong Chi - HS176044 Quach Thanh Van - HS173421 Le Minh Khue - HS176171 Pham Minh Ngoc - HS170995 Huynh Huong Giang - HS170039

STUDY-Group 5 - IB1708

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1. Overview of the company

2. Starbucks Five Force Analysis

3. SWOT

4. Supply chain strategies of the company

5. Conclusion

Overview of the company

Starbucks is a world-renowned coffee brand. The company's headquarters is locatedin Seattle, Washington, USA.

The first Starbucks coffee shop was established at 2000 Western Avenue in Seattle, Washington, on March 30, 1971 by three individuals: Jerry Baldwin, an English teacher, Zev Siegl, a history teacher, and Gordon Bowker, a writer.

Starbucks offers a range of products including coffee, espresso, cappuccino and latte, frappuccino, tea, and non-coffee beverages. Additionally, Starbucks provides avariety of pastries, bread, sandwiches, snacks, and light food options to accompany the beverages.

Initial founding phase (1971-1981): Starbucks was founded in 1971 in Seattle, Washington, by three friends Howard Schultz, Jerry Baldwin, and Zev Siegl. Initially, the store only sold whole bean coffee and coffee-making equipment.

Formation stages of Starbucks:

- First expansion phase (1982-1986): In 1982, Howard Schultz, a passionate coffee enthusiast, joined Starbucks as a Director of Marketing. He traveled to Italy and was impressed by the coffee consumer culture there, particularly the espresso bars. Schultz convinced Starbucks' leadership to expand the business model and sell espresso coffee in their stores.

- Separation and acquisition phase (1987-1991): In 1984, Howard Schultz left Starbucks to establish his own company called Il Giornale, specialising in espresso coffee. However, in 1987, he bought Starbucks from Baldwin and

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the brand.

- International expansion phase (1992-2000): Starbucks went public on the Nasdaq stock exchange in 1992. From then on, the company continued to expand and opened its first Starbucks store outside of Seattle in 1987, on theNorth American continent. It later expanded to Europe, Asia, Australia, and other regions around the world.

- Expansion and innovation phase (2001-present): Starbucks continued to expand its store network and global growth. They expanded not only in the coffee sector but also in non-coffee beverages and light food offerings. Starbucks also focused on innovation and developing new products, such as Frappuccino and specialty teas, to cater to customer demands and preferences.

- As of now, Starbucks has over 32,000 stores worldwide and is one of the most famous and popular coffee brands globally.

Starbucks Five Force Analysis

Market Internal Competition (Strong Force)

Starbucks Coffee faces strong pressure from competitors. In the Five Forces analysismodel, this force is related to the interplay between competitors and the coffee industry environment.

In this case, the following external factors contributed to strong pressure on Starbucks:

<i>-Large number of cafes and food service companies (strong force):</i>

Starbucks is "strongly" impacted by its large number of coffee shops and foodservice companies.

In fact, Starbucks has many competitors of different sizes, including multinational companies and small local cafes.

For example, Starbucks has to compete directly with competitors such as Costa Coffee, Dunkin' Donuts, Tim Hortons and many other local coffee shop brands. This creates a fiercely competitive environment, with the goal of capturing market share and attracting customers from competitors.

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strategy of its competitors. Because in fact, coffee shops have different business characteristics and strategies.

For example, Blue Bottle Coffee focuses on using pure coffee and special roasting methods, while Tim Hortons focuses on providing fast, affordable food and drinks. Just like Starbucks focuses on providing a diverse menu with special coffees and creating a unique experience space for customers.

<i>-Low cost of switching between cafes (strong force):</i>

Starbucks is under intense competitive pressure due to the low cost of switching between cafes.

Customers have the ability to switch from Starbucks to a competitor easily and inexpensively. Since the coffee market is highly competitive, it is easier for customers to switch from Starbucks to another coffee shop if they have better benefits or value.

For example, if a competitor offers high-quality coffee at a more competitive price, customers can switch to it without much difficulty or price disparity. Therefore, Starbucks must always improve and maintain a competitive advantage to retain customers.

Buyer Bargaining Power (Strong Force)

Starbucks faces strong pressure from the bargaining power of customers or shoppers. In Porter's Five Forces analysis model, this strength is based on the influence of individual customers and their customer groups on the coffee shop business environment.

The following external factors contribute to the strong bargaining power of customers for Starbucks:

<i>-Low cost of switching between cafes (strong force):</i>

As noted above, customers easily switch from Starbucks to another coffee shop if they have better benefits or value. This means that, if a competitor offers quality coffee at a more competitive price, customers can easily buy elsewhere without worrying about the price difference.

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beverage alternatives, as customers have greater flexibility and choice when it comes to shopping decisions.

For example, customers can choose to buy food and drinks quickly from vending machines, like vending machine systems. Thanks to the convenienceand speed of service, customers can easily buy drinks and food on the spot without going to the cafe.

Supplier Bargaining Power (Medium Force)

Starbucks Coffee Company faces the moderate force or bargaining power of suppliers. Porter’s Five Forces analysis model considers this power as the influence that suppliers have on the coffeehouse chain business and its industry environment.The following external factors contribute to the moderate bargaining power of suppliers on Starbucks Corporation:

<i>-Moderate size of individual suppliers (moderate force)</i>

With over 23,000 stores worldwide and a high demand for supplies, Starbucksworks with a large number of suppliers all over the world, making them an important factor for the company.

Furthermore, almost all small suppliers are willing to offer favorable terms in order to be associated and become a partner of Starbucks. At the same time, larger suppliers having a greater scale and longer cooperation hold more negotiation power with Starbucks.

<i>-Limited variety of suppliers (moderate force)</i>

The number of suppliers is also very large, so Starbucks has a lot of options. Starbucks may also easily swap from one supplier to another due to the similarities between these providers.

Starbucks also implements development policies directly with coffee growers all over the world (Starbucks has purchased a considerable quantity of the highest grade Vietnamese coffee and is committed to finding more supply of Vietnamese coffee in the long run). This allows the company to have more control over its supply chain. As a result, suppliers are less likely to argue over raw materials prices for Starbucks.

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When there is scarcity, suppliers may have the ability to enforce their requirements, such as raising the price of raw materials, thus strengthening their bargaining power.

For example, in the USA, Starbucks experienced a "temporary supply shortage" for items such as oat milk, caramel, matcha, and so on during Covid 19. Many people have expressed dissatisfaction with any stores in the region that can not provide their favorite drinks. This is extremely damaging to Starbucks' reputation and does not guarantee customer experience.

Pressure from Substitutes (Strong Force)

The strong force or pressure of substitution affects Starbucks Corporation. In the Five Forces analysis model, this threat pertains to the impact of substitute goods or services on the coffee business and its external environment.

The following external factors contribute to the strong threat of substitution against Starbucks:

<i>-High availability of substitute foods and beverages (strong force)</i>

As can be seen, the number of substitutes for Starbucks brand coffee is very high. Customers have several options, including ready-to-drink beverages, and drinks can be purchased from a range of places, including restaurants, vending machines, supermarkets and grocery stores, and internet stores. Another threat is posed by beverage items that people can create at home. Customers will find it easier to select alternate products as a result of this. Furthermore, Starbucks faces competition from pubs and restaurants that offer both a pleasant atmosphere and high-quality items.

<i>-Low switching costs between coffeehouses and substitutes (strong force)</i>

Switching from Starbucks to a substitute does not incur significant switching costs. Customers can easily switch to alternate products if they so wish.

<i>-High affordability of substitute products (strong force)</i>

Many alternatives are less expensive than Starbucks items (Highland, the Coffee House). As a result, alternative products become more competitive.

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Starbucks from substitutes.

Threat of New Entrants (Medium Force)

The moderate force or threat of new entry imposes challenges to Starbucks. In Porter’s Five Forces analysis model, this threat refers to the effect of new players or new entrants in the coffeehouse industry.

In this business case, the following external factors contribute to the moderate threat of new entrants against Starbucks:

<i>-Cost of doing business (moderate force)</i>

This is the cost of establishing and maintaining coffee business operations. For example, operating a small coffee shop is less expensive than establishing a major coffee chain. These little new enterprises can reduce Starbucks' market share but not cause too much pressure for Starbucks.

<i>-Supply chain costs (moderate force)</i>

Small coffee shops have less supply demand and correspondingly lower supply chain costs than large coffee chains like Starbucks.

<i>-High cost of brand development (weak force)</i>

New coffee shops often do not have the resources to develop their brands and compete directly with Starbucks. This helps reduce the threat level from new businesses to replace Starbucks with their own brands.

Although there are some new entrants in the coffee shop industry, the pressure they pose to Starbucks is moderate. Setting up a giant chain store like Starbucks requires a lot of time as well as huge investment in development and brand loyalty. Currently, Starbucks has a loyal customer base with beverage products here based on the quality of its products and infrastructure. New entrants can compete with Starbucks at the local level. However, their probability of success is only moderate or low. These brands can only attract customers by offering lower prices.

Strengths

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stores, enabling efficient sourcing and distribution of products worldwide.Supplier Relationships: The company has strong relationships with coffee bean suppliers, ensuring a steady and reliable supply of high-quality coffee beans.Supplier Relationships: The company has strong relationships with coffee bean suppliers, ensuring a steady and reliable supply of high-quality coffee beans.Technological Innovation: Starbucks leverages technology in its supply chain management processes, such as inventory management systems and mobile ordering apps, improving operational efficiency and customer experience.

Dependency on Coffee Beans: Starbucks heavily relies on coffee beans, making it vulnerable to supply disruptions caused by weather conditions, diseases, or politicalinstability in coffee-producing regions.

Complexity: Starbucks' extensive product line and customization options can lead tocomplexity in managing inventory, procurement, and production across various locations.

Ethical Sourcing Challenges: Ensuring ethical sourcing practices, including fair trade and environmental sustainability, can be challenging due to the complex nature of global supply chains.

Sustainable Sourcing: Embracing sustainable and environmentally friendly supply chain practices can enhance Starbucks' reputation and attract environmentally conscious customers.

Digital Transformation: Leveraging digital technologies like blockchain and IoT can improve supply chain visibility, traceability, and transparency, reducing risks and enhancing efficiency.

Expansion into New Markets: Starbucks can continue expanding its market presenceby entering new countries and regions, which presents opportunities for developing local sourcing networks and partnerships.

Threats

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companies constantly seeking to improve their supply chain management and differentiate themselves.

Price Volatility: Fluctuations in coffee bean prices can impact Starbucks' profitability,especially if they are unable to pass on the cost increases to customers.

Supply Disruptions: Various factors like natural disasters, geopolitical events, or transportation disruptions can disrupt the supply chain, leading to product shortages or delays.

The supply chain strategies of Starbucks

Starbucks is well known for its comprehensive and effective supply chain

management strategies, which help the company ensure the delivery of high-qualityproducts and services to customers while maintaining a sustainable and ethical supply chain.To accomplish this, the company has created a comprehensive supply chain management strategy that includes the following key elements:

Global Sourcing

For raw materials that go into direct production, Starbucks sources coffee beans from a variety of regions around the world, including Latin America, Africa, and Asia-Pacific. This diversification helps to reduce the risks associated with climate change,political instability or other factors that can affect coffee growing regions.

The company has developed close relationships with coffee farmers and suppliers inthese regions to ensure a consistent supply of high quality coffee beans.

To ensure the quality of their products, Starbucks sets high standards and controls quality from the growing stage to processing and distribution. They also regularly evaluate and train their suppliers to ensure compliance. quality requirements.The partners selected by Starbucks are required to comply with the Rainforest Alliance's sustainability standards and obtain certification from the

organization.Starbucks has also created a separate program called Coffee and Farmer Equity (C.A.F.E.) Practices to assess and ensure the compliance of coffee suppliers with sustainability standards.

Supplier Relationships

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makers, ingredient suppliers, equipment and accessory manufacturers, and transporters and logistics.

In its research and development strategy, Starbucks emphasizes on building strong relationships with suppliers. Right from the beginning when choosing a supplier, they have placed great emphasis on choosing reputable and reliable suppliers. Theyconsider criteria such as product quality, supply capacity to meet demand, reasonable price and many other factors. Then, once the right suppliers were selected, Starbucks established a long-term cooperative partnership with them. Instead of just treating suppliers as sellers, Starbucks creates an environment whereboth parties cooperate and share benefits. This includes building trust, respect and fair negotiation in supplier relationships. In addition, Starbucks promotes

information sharing with suppliers to provide them with a comprehensive view of the company's needs and business plans. This helps create a shared understanding of strategy and goals, which in turn facilitates coordination and consensus across the supply chain.

In short, Starbucks creates a good and sustainable partner environment with suppliers through selecting cooperation partners, sharing information, managing quality, and encouraging sustainable development.

Sustainable Development

At a strategic level, Starbucks is focusing not only on delivering high-quality coffee, but also on its overall vision of sustainability and positive environmental impact through supply chain management.

Starbucks aims to build a sustainable supply chain. They have a longstanding commitment to ethical and sustainable coffee production. In recent years, the Company has increased its efforts to produce coffee through regenerative agricultural methods, in order to improve soil health and protect the environment. This may include using sustainable farming methods, conserving water and land, and reducing the use of harmful chemicals in the production process.

Starbucks also seeks and partners with suppliers that are committed to

sustainability, encouraging them to adopt greener standards in their manufacturing operations.Starbucks also supports and partners with suppliers to increase

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