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The key to Starbucks’ success
The key to Starbucks’ success
The key to Starbucks’ success
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Although there are several specialized coffee players in the market today, one cannot overlook the magnitude of success and grandeur that Starbucks has achieved over the past many years. Its fast-growing coffee house along with tea and sandwich restaurant chain now makes it a dazzling investment idea.
More than just coffee
The company’s founder and CEO, Howard Schultz, has been successful in creating Starbucks into something that we didn’t really know we needed until we had it. He has meticulously crafted a brand for the company that adds a psychological value to its offerings. Thereby, when you buy a cup of coffee at Starbucks, you buy an experience. The somewhat quiet, not-so-rushed atmosphere along with dimmed ambience and friendly staff found at Starbucks’ stores add a feel-good factor to your purchase. As a result, people are willing to pay a premium for coffee at Starbucks even if McDonald’s were running a promotion offering free coffee. The premium prices translate to superior margins for its investors.
Quality with difference
The key to its success lies not only in the quality of its products but also the ability to differentiate itself from the competition. With Starbucks, it has always been about quality. The company manages stringent quality control measures for sourcing the finest coffee beans, roasting processes as well as customer service and ancillary products. Furthermore, differentiation is key to market control and Starbucks is unquestioningly the most differentiated specialized coffee brands in the world. From the design of its coffee shops to the music played to the types of products offered, everything has a touch of uniqueness.
Innovation
Starbucks is amongst the most innovative names in the industry. ...
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...per share for the third-fiscal quarter and $2.59-$2.67 per share for current fiscal. Also, one could expect Starbucks to raise its expansion projections for the year, considering it had nearly achieved a third of its annual target in the Q1 itself.
Bottom line
Starbucks is a dominant coffee house with enormous potential ahead. With forward estimates or store targets well within reach, and backed by its quality premium products, constant innovation, international expansions and solid fundamentals, it certainly deserves a spot in your portfolio. Moreover, the stock has corrected sharply of late, down by more than 14%, and with results due next week, it forms a strong buying opportunity. In my view, the company should outperform the boarder market in both short- and long-term. Recommended trade: long Starbucks at $70.40 and cover it with put strike $67.50 for $1.05.
Starbucks Financial Analysis Company Overview Starbucks is the world’s largest specialty coffee retailer, with more than 16,000 retail outlets in more than 35 countries. Starbucks owns more than 8,500 of its outlets, while licensees and franchisees operate more than 6,500 units worldwide, primarily in shopping centers and airports. The outlets offer coffee drinks and food items such as pastries and confections, as well as roasted beans, coffee accessories, teas and a line of compact discs. The company also owns the Seattle's Best Coffee and Torrefazione Italia coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products.
Starbucks primary business is that of selling high premium coffee. They have been able to cater a specific product to a specific demographic. Specialization allows for the Starbucks company to deliver great quality and continue to maintain their customer base. Although there is a great amount of coffee flavors the coffee bean is still the constant ingredient in the great tasting coffee.
Starbucks Coffee, Tea, and Spice opened its first store in April 1971 in the Pike Place Market in Seattle, by owners who had a passion for dark-roasted coffee that was popular in Europe, but hard to find in the U.S. (Harrison et al., 2005; Venkatraman & Nelson, 2008). The company’s mission was to provide Seattle with the best access to dark-roasted coffee, and sought to educated customers about the product. As a matter of customer education and acceptance of the product, Starbucks grew and expanded into the successful domestic market it is today. Much of this success can be attributed to a focus on the total customer experience and s...
There have been some distinguished controllable and uncontrollable elements Starbucks has encountered when entering global markets. The strategies of any company’s goals are vital to its success. This is one area Starbucks has excelled in, just as McDonald’s has in recent years. Starbucks has paralleled its branding with the actions found at any Starbucks across the world. They have an excellent company vision, which they stick to, which in turn assists their brand image. Starbucks’ image has been achieved not only through this and their massive global entrance, but through their ability to provide honest quality service.
In addition to being best-known supplier of the finest coffee and promising only the highest quality products, Starbucks emphasizes firm values, provides guidelines to enhance employee self-esteem. This is to ensure continued customer satisfaction. Moreover, diversity has become a priority to providing an inviting environment to all consumers. Starbucks continues to abide by a strict, slow growth policy in which they set out to dominate a market before moving on to expand, thus history has shown this strategy to be successful for Starbucks, making them one the fastest growing companies nationwide.
Schultz, Howard, and Joanne Gordon. Onward: How Starbucks Fought for Its Life Without Losing Its Soul. New York: Rodale, 2011. N. pag. Print.
Emphasis on quality, Starbucks Experience, brand image, and important suppliers to dispute lower price contributions to competitors hence increasing profits
Starbucks is currently the industry leader in specialty coffee. They purchased more high quality coffee beans than anyone else in the world and keep in good standings with the producers to ensure they get the best beans. Getting the best beans is only the first part, Starbucks also has a “closed loop system” that protects the beans from oxygen immediately after roasting to the time of packaging. They did this through their invention of a one-way valve which let the natural gasses escape but keeping oxygen out. This gave them the unique ability to ensure freshness and extended the shelf life to 26 weeks. Starbucks isn’t only about the coffee, it’s also about a place where people can escape to enjoy music, reflect, read, or just chat. It is a total coffee experience. The retail outlet has been responsible for much of Starbucks growth and has contributed substantially to their brand equity.
Starbucks is a front-runner in the coffee market of today. They are known for their delicious coffee drinks and teas, but they are also known for their high prices. Yet, Starbucks is still one of the top coffee distributors in America. According to USA TODAY, “some 30 million customers visit Starbucks nationwide each week, shelling out $3.50 – $4.00 per trip, on average”. They continue to explain how “Starbucks makes it seem so normal to pay this price for a cup of coffee”. With their prices already on the more expensive side, people will now be pulling an extra eleven cents out of their pocket for their famous cup of joe. It doesn’t seem like a lot now, but eventually that extra change will add up. Why does Starbucks need to raise their ALREADY high prices?
Founded in 1971 at Seattle’s Pike Place Market, Starbucks Coffee, Tea and Spices, as it was originally called, has been “brewing-up” its famous blends in over 43 countries, including the United States. Now called Starbucks Coffee Company, business isn’t just about the coffee and tea anymore. Starbucks has its own line of bottled water, handcrafted beverages, fresh food, entertainment, merchandise and a Starbucks Card. The company has received numerous awards for their outstanding business practices. Fortune Magazine has ranked them as one of “The Best 100 Companies to Work For” in 1998, 2000, 2002, and 2008 (Starbucks, 2008). The Starbucks Experience provides consumers and the general public a direct line a of business communication. From friendly baristas to press releases from CEO Howard Schultz, Starbucks keeps its “partners” informed.
Starbucks is an international coffee house and it was created in 1971 when they opened the first store in Seattle, Newcastle. Currently, they own 21,000 stores in 65 different countries of the world, and their passion for the great coffee, excellent service and community interaction exceeds cultures and languages (Starbucks, 2014). This company is the number 1 brand coffeehouse chain in the world due to the best roaster, marketer and seller of speciality coffee. Its main slogan: “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time” (Jurevicius, 2013).
With clear core values towards providing quality coffee, the best service, and atmosphere, Starbucks has enjoyed great success since it was founded 30 years ago. The company has being doing very well for last 11 years with 5% or more store sales increase, even with the rest economy still reeling from the post-9/11 recession. However recent research, conducted to Starbucks, have showed some concerns regarding company’s problem meeting customers’ expectations.
The strategic vision that Howard Schultz had for Starbucks was "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow". This s...
Starbucks should use some strategies to continue its success in growing sales and profitability. Generic strategy of being the best-cost provider and grand strategies which are product development and market...
When I saw this discussion, I couldn’t help but think of Starbucks and the impact they’ve made throughout their 45 years of establishment. I worked with them for about 7 years and saw how unique they were from your everyday coffee and latte spots. A retail company with thousands of coffee shops in the US as well as in other countries, this particular retailer has been able to catch the eyes of all ages as well as locations throughout the world. For example, today college students utilize Starbucks locations to study rather than go to a nearby library. Starbucks is also known for its best coffee and espresso drinks (Latte or Frappuccino) and with one of its delicious espresso 's any student or just a person stopping in to enjoy its lounge area where there is free Wi-Fi is awesome! Starbucks lifecycle has made a 360 turn around and been revamped twice to accommodated the growing market. Customizing their brand to fit more in with everything and not just one thing. By doing this they’ve created multiple product lifecycles within their own lifecycle as a corporate company.