Starbucks 1996 Case Study

Essay text:

Competitively, Starbucks had a clear stronghold on all facets: • Sourcing (diversified portfolio of high quality exporters/close relationships with those exporters) • Packaging (unique vacuum sealed package, ensuring a higher degree of freshness than competition) • Supply Chain Operations (best transportation rates in the industry/ SCO serving four business units in order to eliminate redundancy and maximize efficiency) • Retail Sales (primary growth vehicle/adoption of brand essence/experience by customer) • Employees / Baristas (overall, most highly trained and knowledgeable in the industry) • Merchandising (only carrying the highest quality coffee-making equipment and accessories) • Disciplined Real-Estate approach (tremendous flexibility and innovative “store clustering” concept maximizing market share in given areas and building regional reputation) • Specialty Sales (partnerships existed with many different companies providing Starbucks with revenue growth potential and increased name recognition) • New Ventures (Dreyer’s Ice Cream, bottled Frappuccino product w/ Pepsi, and penetration into the grocery channel) • Mail Order (Encore DM program boosted sales by increasing transaction size, and introducing customers to a wide range of company products) • Financial (Starbuck’s stock price and EPS had been rapidly increasing over the past five years) • Marketing (brand equity primarily generated by retail business- Starbucks is not just coffee, it’s a place, an experience) Starbucks must decide how it should leverage its core competencies against various growth opportunities: Key consumer drivers of Starbucks success: 1) Health consciousness 2) Social experience/socializing (“The Starbucks Experience”) 3) Affordable luxuries 4) Awareness • Introduction of Starbucks Coffee at McDonalds- Starbucks should beware of diluting the brand...