Coffee and Starbucks Essay Example for Free

Coffee and Starbucks Essay Abstract Starbucks opened its first location in Seattles Pike Place Market in 1971. Now Chairman Howard Schultz joined Starbucks in 1982 as Director of Marketing. Schultz visited Italy and noticed the popularity of espresso bars there. He thought this would be a great idea in the Seattle area and convinced Starbucks to open a coffee shop in downtown. Schultz founded his own coffee company and acquired Starbucks name and assets from its founders in 1987. The company had just 17 stores but would soon grow quickly and went public in 1992. Starbucks popularity soared as it opened coffee shops within Barnes and Noble bookstores. It also provided coffee for United Airlines and shops in Starwood hotels. The companys focus on quality and commitment to social causes and the community have made it one of the worlds most admired businesses. Starbucks made the cutting-edge step of having its second Corporate Social Responsibility Annual Report verified by an outside auditor, so readers can be assured the facts and figures it presents are accurate. One of the revealing statistics in the report is that Starbucks purchased 74 percent of its green coffee at outright negotiated prices, independent of depressed commodity prices in 2002, up from just 12 percent in 2001. Starbucks also paid an average of $1. 20 per pound at a time when coffee was trading on the commodity market for $. 40 to $. 50 per pound. The end result: higher income for farmers, which translates to a better quality of life for farmers. Introduction: Starbucks began 36 years ago as a single store in Seattles Pikes Place Market, and today is the worlds leading retailer, roaster and brand of specialty coffee. The company has experienced extraordinary growth: its number of stores has more than doubled in the past ten years, with close to 6,000 coffeehouses in over 27 international markets. More than 19 million customers visit a Starbucks coffeehouse each week. When Starbucks considered its ambitious expansion plans for Europe, the Middle East and Africa, executives knew that the location they chose for their new roasting plant and support centre would be critical to their success. In fact, the decision was so important that the company spent close to three years looking at various sites across Europe and the International market. Main discussion: 1. Starbucks product’s competitive priorities As we know the competitive priorities is operating advantages that a firm’s processes must possess to outperform its competitors. In this part, we are going to define each possible competitive priorities of Starbucks for operation process as cost, quality, time and flexibility †¢Cost: Market indicators show a potential trouble for the entire coffee industry as a whole, namely the rising cost of coffee beans and farmer’s tendency to switch to other profitable crops. First, rising cost means lower profit margins. Second, the fact that farmers are switching to more lucrative crops such as vegetables, fruits, and even illegal crops foreshadows the scarce supply of coffee beans. Hopefully Starbucks’ competitive prices for its coffee subcontractors are lucrative enough to retain and deter its suppliers away from abandoning the coffee production. Economic trends should not influence. Starbucks pricing strategy greatly, because gourmet coffee, or any other coffee, is measured on quality and availability, and not so much on price. Furthermore, in times of economic downturn, the business is actually performing better, since people are fixated on the idea that if we cannot afford something as grandeur as a new car, then at least we would treat ourselves to a nice cup of coffee. Hence, economic trends should not greatly influence the performance of coffee sales. †¢Quality -high performance design for quality control, Starbucks has a specialized process for roasting the perfect coffee bean. It is implemented with the roaster determining by sight, smell, hearing, and computer, if the beans are perfectly done. Additionally, the colour of the beans is tested in an Agtron blood-cell analyzer. If the sample is deemed imperfect in any of these processes, the whole batch is discarded. Starbucks’ departmental systems are organized into functional and production divisions such as Supply Chain Operations, Human Resources, Accounting, etc Starbucks employs approximately 15,000 individuals to operate its retail stores and regional offices, and 1,600 individuals to work on administrative, sales, real estate, direct response, roasting, and warehousing operations. -consistent quality: measurement of quality products and services that keep customer’s retention. Its competitive strategy is to rapidly expand to a market and dominate it completely before moving on. In the process, it hopes that these rapid expansions would create a higher barrier to entry, discourage competitors from expanding, and eventually acquires weak competitors who wants to exit. †¢Time: three competitive priorities deal with time fast delivery time, on-time delivery and development speed. -fast delivery time: starbucks saves costumers’ time by offering self-service to the costumers. -On-time, delivery by processing orders in efficient time, which guarantees no costumer delay on service. -development speed starbucks’ consumers have tried its product, but not through advertisement, but through promotions such as gifts introducing new products to the market. †¢Flexibility: the customization of starbucks has the ability to satisfy the unique needs of costumers by changing products and services designs. Starbucks volume flexibility is accelerating the rate of production quickly to handle large fluctuation in demand because of the unique service to the costumers. 2. Starbucks critical analysis, services and manufacturing strategies In order to identify the critical analysis of the company services and manufacturing strategies we will start analysing the corporate strategy as it follows: †¢Goals The Companys goal is to establish Starbucks as the most recognized and respected brand in the world. To achieve this goal, the Company plans to continue to rapidly expand its retail operations, grow its specialty sales and other operations, and selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products and the development of new distribution channels. , as well as: -Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards to the purchasing, roasting and fresh delivery of our coffee. Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success. †¢Core competencies: starbucks considers the unique resources and strengths when formulating strategy as workforce, facilities, market and financial, and system and technology as they follow: †¢ Culture and employees who support values and missions of the organization, who have a stake in the performance of the company. ? Market domination in the U. S, allowing economies of scale, creating high barrier to entry, and impeding competitors’ growth incentive. ? Sufficient return on equity, which means proper management of company’s resources †¢Low supplier’s and customer’s power, and low influence from economic trends †¢Quality product and customer service, established brand name Environmental responses ?Economics Trends – Market indicators shows a potential trouble for the entire coffee industry as a whole, namely the rising cost of coffee beans and farmer’s tendency to switch to other profitable crops. First, rising.