Starbucks Coffee Company in the 21st Century

Executive Summary
“If Starbucks is one full text twenty chapters of books just but turn to chapter three for the moment.” commented by Howard Schultz.
Starbucks Coffee was established in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker in Seattle. Since 1982 Howard Schultz became the market and retailing department managers Starbucks had the huge changed at the coffee market. Four years later, he bought the Starbucks.
Since Starbucks Company is listed, the record of the sales amount is improving by 20% annually. Even when economic depression, the state of retail business is very bad, the volume of the flow of passengers of Starbucks cafe still keeps 6% for every year. The more peculiar one is, Starbucks hardly advertises, the enterprise planning of marketing is pitiably little too, the expenses that it uses for the advertisement only accounts for percent of its annual income.
During 1989 to 1999, Starbucks has already opened a lot of branches all over the world, its mispronounced character of green bottom, sea maid who wore crown have already become the person who has liked coffee in the whole world to know very well. Starbucks expands by way of frank camp, not advertising either, but the income exceeds the sum of the stock market incomes of big companies such as Pepsi Cola, coca-cola, Microsoft, etc. Report “vigorous new brand and retailer most” a lot of finance and economics magazine too, the sea maid indicate that swims over to all parts of the world, create the legends of global enterprises.
However, the fail of Starbucks had been seen for the past few years. Due to the rapid extended and ignored its organized systems. At the end of the report, we had listed few suggestions for Starbucks which would feet the next decades and survive with the shock of Chinese Culture.

Table of contents

1. Corporate Mission 4
1.1 Relations of staff 4
1.2 Customer’s relation 4
1.3 Supplier’s relation 4
1.4 Relation of cooperating trader 5
2. Industry structure 5
2.1 Market orientation 5
2.2 The commercial circles chooses 6
2.3 Tactics of site selection 7
2.3.1 Procedure of site selection 7
2.3.2 Site selection standard 8
2.3.3 Feasibility analysis 9
3. SWOT analysis 10
Strengths: 10
Weaknesses 11
Opportunities 11
Threats 12
4. Core competencies and competitive advantage 13
5. Strategy recommendations 19
6. Potential fallout 21
7. Bibliography: 22









1. Corporate Mission
“The relation theory “is Starbucks’ key values; important equally with curing the high-quality coffee bean. Key values of Starbucks run through company business all the time, such key values origin and around on interpersonal “relation“.

The relation assets of Starbucks include four respects:
1.1 Relations of staff
Success of Starbucks benefits from attention in “the relation theory “mainly relationship with staff. Starbucks, no matter which market is entered, all never advertise on the media, and totally rely on the staff to do marketing. The each inter-dynamic between staff and consumer are the greatest decisive factor of Starbucks’ brand impression. The staff will influence consumers’ quality, if the staff has low morale. So use expenditure of advertisement for change welfare and training to use for staff actually Starbucks. Starbucks creates the environment and encourages staff improving oneself, exchange and cooperation still through the valid reward policy. Because all staff has an option, they are called as “the cooperative partner “. Starbucks plans to train loyal staff with “the relations of staff “, and the staff have just served out the highly loyal customer, this is Starbucks real advantage.
1.2 Customer’s relation
As market competition being fierce day by day, the concern about customer’s relation of enterprises intensifies sharply. So Starbucks regards customer’s relation as a kind of assets of the company, has established good “the relation “ and become the strategic core of Starbucks with the customer.
1.3 Supplier’s relation
To any enterprise, the relation with supplier is essential and especially key goods and supplier of the additional service. Starbucks consumes a large number of manpower, material resources, financial resources to develop a supplier, so hope to keep the relation steady in a long-term, it is but not only the simple supervision price to cooperate and control prices actively. As to Starbucks, the supplier is just like the staff; need to cost a lot of fund and training them.
1.4 Relation of cooperating trader
In order to make customers experience the service of Starbucks in more places, besides branch of Starbucks, Starbucks through and airport, bookstore, hotel, department store, etc. whether cooperation come sell products. The assets management of the cooperation of Starbucks still displays in the relation with house owner. Starbucks pays great attention to the relation with owner to manage, is devoted to creating the win-win way of running a shop with the owner together.

2. Industry structure
In the coffee chain trade of the world, Starbucks has become the goal that everybody studies and imitates. Starbucks can have such behavior, benefits from its accurate market orientation, original commercial circles and location of shop to choose the tactics, and design the distinctive shop.

2.1 Market orientation
Starbucks position oneself independent family, work “the third space” beyond being, market of its goal is that one group pays attention to enjoying, lying fallow, advocating the middle class of knowledge, urban white collar.

Correspond with market orientation, Starbucks always appears in the metropolitan flourishing shopping center, it is “the luxury goods which the majority can afford to bear “that its price makes a reservation, inherit” work hard, the value that enjoyed and lived actively” is advocated. Because the coffee drink is its products of main profit, for the commercial ability to guarantee coffee of Starbucks, it has been never disconnected that the glamour that Starbucks is devoted to the main drink is built; this makes it get consumer's more favors than the competitor.

In Starbucks, while people buy coffee who buys a kind of very important things at the same time as well; An experience, a life style.

2.2 The commercial circles chooses
The choice of the commercial circles is concerning the range, level, scale of the shop, number of the cost of investment of cafe consumers, retrieving aspect questions such as the quantity of benefit and branch, etc. Hence Starbucks when selecting where one stays commercial circles, have two plant, click, want it and management variety, price of cafe, fit up scale, grade link up, confirm the place to run a shop; Second, understand with the local conditions and customs and agreeing with of the life style, consider local population parameter and other parameter synthetically, predict, select area a future one expansionary. In addition, will investigate the competition capability of the same trade or business and determine the focal point of management finally.

As to Starbucks, choose to be a key to its rapid development in success of the commercial circles, because people can not often patronize the insufficient or too far cafe of a “the convenience” absolutely, so, Starbucks runs a shop only in the quintessence location of urban area intensively, until letting competitors have no space getting involved at all.

2.3 Tactics of site selection
The place is primary factor managed in coffee chain store. Selecting site correctly of the chain store, not only it’s prerequisite to success, but also realize standardization of chain operation, simplifies, specialized precondition and foundation. Starbucks can obtain so brilliant achievement; can not separate instead of the successful site selection tactics. Site selection tactics of Starbucks include procedure of selecting site.

Site selection tactics of Starbucks include: procedure of selecting site, select site standard and feasibility analysis:

2.3.1 Procedure of site selection
The affirmation of the position to running a shop specifically of Starbucks, have a set of independent procedure of oneself. First of all, Starbucks will choose from the commerce which raise the body architecturally, is unified by the owner and hired out but not sold to the outside, this is first-selection of Starbucks. Because the trade company hired out wholly, is usually large-scale commercial facilities, they will have localization of the whole, until what kind of conduct to the requirement of trade company it will be each stage (train, develop, extend and mature period), there is very detailed planning, this facilitates propaganda popularization of Starbucks. Secondly, Starbucks will choose the large-scale show surface externally which is the first layer of positions at the front, as a result had shown, the convenience increase letting customers enter and leave in such a position.

2.3.2 Site selection standard
Starbucks has special real estate, structure, building and designs the team, have a group of specialized realtor, designer and artist, specially offer for Starbucks shop of the whole world and select site and design guidance.

 Can strengthen the brand image:
Starbucks poses as masterpiece coffee so run a shop in the position and insist on according with the location of masterpieces, as if the financial building or World Trade Center is the good place to run a shop.

 The sufficient flow of the people:
Starbucks hopes to offer another place very clear and bringing consumer's attention directly on the cafe most, the more important thing is to measure one's own target consumer's flow of the people, elect the location suitable most from it.

 The properties of commercial circles are good:
Judge the properties of commercial circles, then compare with the commercial circles that Starbucks has done one to predict relevantly.

 Rely on the good neighbour:
Coffee retail business is one of the industries of paying attention to the atmosphere of sales field most, consumer's consumption is absolutely not merely a cup of coffee, whom they value experiencing the atmosphere while consuming coffee. It is not enough that this kind of feeling depends on hotel owner's own environment designs only, need cooperation of environmental style of neighbor border. So Starbucks, while choosing the location of shop, should consider the neighbour, the good neighbour can make a show of power each other.

2.3.3 Feasibility analysis
Accurate feasibility is analyzed, is the key that Starbucks runs a shop and succeeds. In the feasible analysis report of Starbucks, include such contents:
 The analysis of the place:
Analyze the future development of the whole place. Besides analyzing the advantage of the place, consider coming in the contingent inferior position. The only development of the competition situation to future analyzes, carry on the assessment with some relevant uncertain factors.
 The detailed financial affairs are analyzed:
The financial affairs of Starbucks are analyzed, not only make fixed cost analysis but also make the cost analysis of flow ability.

For every place, Starbucks will consider within one's own planning:
Starbucks does a plan every five years, locks general development position and reason. Furthermore, Starbucks have independent expansion department responsible for, select some matters, choice, investigation, design, and instrument the shop.

3. SWOT analysis
Strengths:
Deep brand leader, whole world heavy coffee chain store most that favor knowing how, collocating fittings sell
1. The brain drain rate is low
2. Brand awareness is high
3. Issue of frequent visitor's certificate
4. The products are diversified
5. The straight camp sells
6. Combine the peripheral products
7. Know-how of the parent company

Starbucks Company is a very lucrative organization, in 2004, it charges over 5,000,000,000 dollars to gather together the camp over 600,000,000 dollars and company. This it is one global coffee brand that set up in one reputation good product and service. This company is a respect employer's values, its workforce. Deserve the statement with very strong ethical values and ethical mission of the organization as follows, Starbucks is devoted to a role's environmental leader's business in each aspect of enterprise.

Weaknesses
On sale throughout color too serious and selling and costing an arm and a leg, not setting up and sucking Yan district
1. The seats are insufficient in the shop
2. Branch's misdistributions
3. The commodity price is on the high side
4. The money of right is high
5. Backward undertaking

New product development and creativity are Starbucks' good reputation. However, they are still very fragile, easy possibility; its innovation may waver as time goes on. This organization has a strong existence, over 3/4 are set up and competed on the domestic market in U.S.A. People often argue, they need to seek a country of investment combination, in order to propagate the risk on the business. This organization is to depend on a main competition advantage, coffee of the retail business. Unless so it can make by them the slow, in order to dispersing to departments other, should necessary problem.

Opportunities
Making the best of the large figure of chain store gives play to the advantage of the large-scale production to enter into an alliance with tactics
1. The living standard is improved
2. Hide the great business opportunity
3. Concept of the third space
4. Set up e-commerce
5. Open-up of the overseas investment market
6. The exhibition shop is fast

Starbucks is very good at utilizing the opportunity. In 2004, company this create one CD cook, record, serve, in their California Santa Monica (California of U.S.A.) ,Coffee house and Hewlett-Packard, which place is the customer in, creates one's own music CD. New products and service can be in their coffee house at the retail price, such as implementing the fair trade products. This company has an opportunity to expand its global business. The country of the area is beginning to appear for new coffee of market such as along India and the Pacific Ocean. Food and beverage of common brand and other manufacturer, and the franchises of brand, other goods and service of the manufacturers of Israel are all potential.

Threats
Tall tree catches the wind, market of coffee has already become ripe, substitutes have been numerous and easy to imitate
1. The traditional compounding type of bake house, management of the chain coffee house
2. It is low to enter the obstacle
3. Health consciousness resumes

Who knows that in the future, if will increase to buy coffee on the market, staying and agreeing and customer, the beverage of another type or recreation activity, will replace coffee? It is numerous that success of Starbucks enables and enters the market

4. Core competencies and competitive advantage
4.1 chain operation and management
Success of Starbucks has attracted a lot of investors to demand to cooperate by way of shop allied. Develop in adopting the straight camp's chain inside Starbucks, emerge and dispute in or franchise operation development.

Generally speaking, the way of chains can be divided three kinds different chains: Straight camp's chain, voluntary chain, chain of licensing.

However Starbucks insist on going in the straight camp of the companies foreign all the time, do not all need the shop allied in the whole world.

For over 30 years, Starbucks has insisted on going in the straight camp of the company all the time externally, does not need the shop allied in the whole world. If the mode allied that Starbucks adopts “traffic the right of joining“ like a lot of leaders is expanded, its development speed is certain to be much quicker than now, but unfavorable to the control on quality of Starbucks. For example Starbucks for offer customer best coffee, never stingy to scrap supplies. But if join right open, it is very difficult to require the boss of each shop allied insists on increasing the cost and scrapping. Meanwhile, joining development will encounter all sorts of risks, for example expand blindly, cause the operation level of the whole system to be different, take shape - The shop sustaining economic losses in large batches, reduce Starbucks' brand value finally. In addition, Starbucks must also possess very strong legal affairs handling capacity, with should to with various legal questions of producing of joining etc. So, in order to prevent Starbucks' brand from receiving the unnecessary interference, Starbucks determines not to open right of joining.

Outwardly, in these kinds of cooperative ways of Starbucks and enterprises from all parts of the world, it is the same as joining type of operation that it does not take shares, authorize management way completely. However, Starbucks is in one country or one area such as Singapore, Beijing (authorize and manage Starbucks on the market of North China of China) Wait, look for a more strong big company to carry on authorized cooperation, it is not the same category with the usually said joining chain.

The advantage of straight camp's development is very obvious, but there is sizable limitation. The quantity wants the restriction of the scale raised funds to run a shop, development speed will be generally developed slowly in franchise operation. In addition, it is entered that some monopoly areas are very difficult, such as airport etc.. So, Starbucks has adopted the flexible tactics, on the basis of insisting on the principle that the frank camp develops into the main fact, develop a small amount of franchise operation shops too. In 1991, Starbucks authorized Murray special company of the airport of Hal, Ou of Chicago to manage Starbucks cafe for the first time, all took the mode allied at several airports and some campuses from then on.

In addition, take flexible investment and cooperative way in market situation still on the basis of the all parts of the world of Starbucks.
Generally speaking, the stock right that Starbucks general headquarters holds in a certain area is the larger in proportion, mean the more important to it the market of this place is. In addition, Starbucks has also made the strict choice cooperator's standard, comprises, for example, the cooperator's reputation, control ability of quality, with training the staff with the standard of Starbucks.

The development way in China's Mainland of Starbucks is comparatively flexible too. In fact, Starbucks has taken the authorized way in the area in China's Mainland, the person who licenses area invests money in developing the straight camp's shop oneself, itself is straight camp and a kind of association of mode allied. It is exactly such flexible investment tactics and cooperative way, make Starbucks group while having an optimistic view of the Chinese market, strengthen investment, increase shareholding ratio to 50%. This has indicated U.S.A. is to the attention of this area, there will be more input in the future.

4.2 Standard homework
The standard and meaning the high efficiency in unison is the key content of the modern chain's operation and management. Under the operating systems of standard and unity, each chain store carries on homework and management according to the unified standard; realize the normal and best benefit. The chain should combine management of the materials, qualitative analysis with managing live, make a set of standardized homework norms. Everybody guard norm rigidly, could can't control factor bring minimum down to, can also prevent personal fault from cause damages to whole enterprise at the same time.

A word like this spreads in IT industry: "It is a winner who makes the standard whom." Intel has created the standard of the IT industry; Starbucks has created the standard of the coffee trade. This old trade, there was not a standard in the past, not merely there is a standard of coffee now, even water, temperature, milk and cup, Starbucks has all redesigned, standardize it.

Starbucks lets people think coffee has sagacity, very romantic thing. It redesigns the machine which is made coffee, then coffee rubs and makes, cooks different, there are new standards.
The standard of Starbucks involves operating and managing the different fields, not merely including coffee bean is cured and the staff serves, still display it in their strict standard for selection to the coffee bean.

The coffee raw materials chosen carefully send coffee of Starbucks to cure the room in time, accept curing and mixing of the experienced operator according to the strict standard, is put into the freshness protection package and transported to the chain store of Starbucks or whole seller's handed subsequently.

The freshness protection package is specially designed by Starbucks, prevent air and moisture from entering in order to keep the products fresh, Starbucks stipulates to this strictly: Once open the freshness protection package, the coffee bean among them must be sold within seven days out, otherwise pour out.
In every Starbucks, each staff must remember, give customer " perfect coffee " Starbucks thick to contract coffee, the machine is with the high pressure, high temperature (generally from 18 seconds to 23 seconds) Go out of a cup of coffee, send to customer within ten seconds. If has not reached this standard, coffee should pour out, can be regarded as the running cost. Starbucks, in order to let the customer smell once entering the shop coffee is fragrant, but not destroyed by other smell, can't smoke in the shop, the staff go to work even perfume can't use the time.

The standard of Starbucks still embodies in their very nitpicking coffee bean, from variety to form of the producing area, particle, etc., every link has a strict standard; Starbucks has not been allowed not judging strictly by the expert definitely. Coffee bean last market, judge it cost coffee to judge 100,000 cup more than every year expert it’s the coffees. Comment with cup France choose coffee bean, determine perfect intensity of curing, make to have flavour can at all release alone every coffee.

In addition, Starbucks has made the strict cooperator has chosen accurately: The cooperator's reputation, commitments to quality, with training the staff with the standard of Starbucks.

4.3 Communicate and manage
In Starbucks, have communicated into the focal points of coffee chain management and administration in an all-round way, its concrete content includes the communication with the staff, with the customer's communication and with three respects of the supplier's communication.

With the staff's communication
The open way of communication is a part of Starbucks' principle. In Starbucks, disclose the forum to open for several times in one year, tells the staff the major issue that the company happens recently, explain the financial situation, allow the staff to question to senior administration and supervision authorities, bring new information to administration and supervision authorities at the same time. In addition, the company publishes to the staff and writes letters regularly, these letters are usually questions about company's development; there are employee welfare and shareholder's scheme too.

In order to make the staff of the enthusiastic work have an opportunity to put forward one's own good idea, improve the work of the company in time, the manager of Starbucks Company comes and goes and holds employee's discussion between each city every whole season, collect and advise, discuss from working environment to various questions on sale throughout the tactics. People propose various queries, discuss the thing that they care about, criticize and praise at the meeting, or only state one's views on how to take on the management.

With the customer's communication
Starbucks thinks their products are not merely coffee, and the experience of the cafe. For experience to strengthen customer, Starbucks pay attention to especially communication of customer. One of its main competitive strategies, but exchange with the customer in the cafe, every waiter should accept a series of to train, for instance basically sell skill, coffee ABC, coffee making skill, etc. Starbucks requires every waiter to expect the customer's demand.

With the supplier's communication
Confirm cooperation, of both sides representative conference meet three once 4 in first year, do strategic business to assess every half a year or one year later. The more strategic products or strategic region is, the more frequent top personnel got involved. Later, Starbucks will also send the supplier for year of cooperation of two and evaluate the report, the content involves being in many aspects, including the supplier's output, needing the improved place, etc.. In addition, both sides will also develop and frequently keep in touch on production efficiency, raising the quality, new product. For example: How to improve the competence of supplying after the supplier, how to control the expenditure rationally by supplying, will also appraise to the happy intensity of mutual cooperation finally, both sides all need improved place, etc. after pointing out.

5. Strategy recommendations
By the marketing analysis of four C:
 Customer
Clear, lock particular consumption group, product except diversification, incorporate local life at the same time, let the customer feel cordial and is familiar with, can meet customer's demands.
 Convenience
Starbucks all sets up the retail sales in a dozen countries of the whole world, only the retail sales has already spread to every area of throwing etc. at present in Taiwan, but prove its convenience consumed.
 Cost
Though the price hits the high price, basically most consumers can all consume the products enjoyed.
 Communication
The inter-dynamic relation between paying much attention to and guest, the service is intimate and good. In addition, use and experience marketing and let the customer assert the products, and then produce the acceptance, sense of ownership.

Hence, Starbucks have these weakness points:
(1) The price is a little bit high
Though in many aspects good than other terms of house, so respect of price high to can be regarded as naturally even a bit. How much but difference to lie in high and high, some are the customer who is consumed ethnicity of par after all; it is very possible because of the level to the price, and transfer to other hotel owner's sale. It will have resulted in losing one group of consumers.
(2) Application of science and technology
Have already created the cafe with scale now, certainly will add much more from hand this way, but manpower is limited, if use and come to assist the staff more on science and technology, perhaps at efficiency add the result divided so, probably shrink by one in cost too.
(3) The exposing rate of advertisement is extremely low
Though Starbucks regards staff as a way of marketing, can understand the customer's demand and establish good relation even more, but the range that can propagate is limited after all, so lack some persons and does not know Starbucks, so a lot of most customers consuming for the first time consume via relatives and friends' introduction, so should strengthen the exposing rate of advertisement of Starbucks, expand market share and encourage adopting the action of buying.

6. Potential fallout
As Starbucks extend rapidly, the standard of management would be ignored which includes: consumers’ abilities, employees’ qualifications, and the 25 seconds of coffeemaker.

Brand and Fashion were the reason of Starbucks’ success. And it stood with high standard insisted. In fact, as we studied how successful of Starbucks. There were 600 shops closed and more then 12,000 people layoff in USA 2006.
The reason would not only the economics but also the loss of fresh.

As the mention above: prices, spread by employees and advertisement. Furthermore, the culture shock will be the mainly issue of the next decades.
In China, we have both well known the abilities of consumers. Starbucks won’t be longer existed if they could not change the tactic of straight camp's chain.

There are some suggestions for Starbucks that would maintain its leader position of coffee market:
1. Keep the qualifications of employees’ training
2. Cost down every unnecessary out bone.
3. Maintain the profits and benefits for “bean stock” and stock holders.
4. Face to Chinese Culture; to set up a tactic system.
That is the older aphorism “use Chinese to face Chinese culture”.
Believe or not, Starbucks still have the good reputation and finance. Intensify its strong points to cover the threats. Or disappear in next decades.

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