Starbucks Corporation

1. Aim of the report

The aim of this report is to perform an internal and external audit for the company. Within the internal audit, we will have the analysis of the value chain, plus the identification of the core competencies of the company. The external audit will be based on the Microenvironment and Macroenvironment of the company. A SWOT analysis as a TOWS Matrix will be used.

1.2. Scope of the Report

The report will be covering the Starbucks Coffee Company which includes Starbucks Coffee Europe and Starbucks Coffee International.

2. Executive Summary

Starbucks is the leader in the coffee retailing market, with purchasing and roasting top quality coffee beans. It has created a well respected brand with a dynamic image. The top quality coffee it offers, contributes to the “Starbucks Experience” that makes the company differentiating from its competitors. In order to understand the reasons behind Starbucks’ success we have to perform both internal and external analysis of the corporation.

Within the slow growing market of coffee, where competition is tremendous, new firms trying to enter the low barrier market constantly. The corporation is affected by Political, Economic, Social and technological factors within its marcoenvironment and the competition that already exists, the powers of buyers and suppliers play a major role in the business’ market growth.

In order for the company to stay at the top, it has to maintain its innovative skills and continue offering new differentiated products, invest in its partners and in its ethical values towards the environment.

3. Company Overview

Starbucks Coffee Company was founded in 1971, opening its first store in Seattle’s Pike Place Market. Today Starbucks is seen as a specialty coffee retailer with more than 14,000 stores in 41 countries worldwide. It has around 8,179 company owned stores and further 6,217 licensed ones (www.starbucks.com). In 1992, Starbucks completed its initial public offering on the NASDAQ National Market.

Starbucks purchases and roasts whole bean coffee, selling them with Italian style espresso beverages, variety of pastries, sandwiches, coffee related accessories and equipment, in line with Starbucks entertainment.

3.1 Mission statement/ Vision

“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow”(www.starbucks.com)

3.1.2 Environmental mission statement

“Starbucks is committed to a role of environmental leadership in all facets of our business”(www.starbucks.com)

3.2 Strategy

In order to establish themselves, as the most recognized and respected brand, Starbucks plans to continue its rapid expansion of its retail operation, pursuing opportunities to promote its brand through innovation and development of new distribution channels.

3.3 Market and Products

Starbucks is a company aimed at the mass market covering all ages; its stores may be found in urban and suburban areas worldwide. It offers a wide range of products; Coffee, handcrafted beverages, merchandise, fresh food, Starbucks entertainment and Global Consumer products. Its branded portfolio includes; Starbucks Entertainment, Starbucks Hear Music, Tazo, Ethos Water, Seattle’s Best Coffee and Torrefazione Italia Coffee. (APPENDIX I)

Starbucks has created a new strategic group within its industry. By differentiating themselves, from what their competitors offer, have been able to create their unique and well established brand among their customers. Starbucks has leaned towards the Functional Emotional Orientation, providing its costumers with an emotional experience rather than just a cup of coffee, offering the “Starbucks Experience”.

4. Internal Analysis

Coffee is the soul of the company. Starbucks is committed to purchasing the highest quality coffee by paying premium prices for it; so that their customers can enjoy the very best. (APPENDIX IV)

4.1 Value chain

Starbucks has secured its growth, by working closely with its suppliers to ensure a sustainable supply of high quality coffee. People from the company, travel around the world, in search for top quality coffee beans and to strengthen their relationship with farmers and exporters. The company focused on the sustainability of the supply by forming the I* Practices with the Conservation International. I Practices are a set of guidelines addressing coffee quality, social and environmental responsibility and financial transparency.

Starbucks has created a very dynamic value chain. The close relationship with the farmers which ensures the long-term supply of high quality coffee beans is the initial part in the whole process. Their coffee comes from Latin America and Africa/Arabia. They are sourcing their products in an ethical manner. Then the roasting of the coffee is done specifically in the Company’s own facilities. The art of roasting the coffee beans is one of the main ingredients in their recipe for success. As the process of roasting has finished their products will end up in the company’s owned or licensed stores. Starbucks adapts to their customers tastes offering a great variety of coffees. Their “partners”, employees are those who add additional value to the whole chain. They are the ones that have contact with the customers and are responsible for delivering the whole “Starbucks Experience” to the customer.

Starbucks does not market their products through advertisement but prefers the mouth-to-mouth way. They are investing in the relationships with their customers, who visit the stores daily. This makes their advertising more credible and emotional.

4.2 Core Competencies

Their core competencies derive from the value that their company adds to the supply chain. It relates to the company’s particular areas of skill that best contribute to its ability to compete. Starbucks has the unique ability to motivate people. It is