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What are the attractions and disadvantages

of Starbucks Corporation?

Presenter: Chi-Che Yuri Liang

Instructor: Dr. Pi-Ying Teresa Hsu

Date: Nov. 10, 2008

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? (26 Mar, 2008). Starbucks Corporation Company Profile. Datamonitor Business Information Company. Retrieved October 13, 2008, from: http://www.datamonitor.com/companies/company/?pid=E86AFA79-07E1-4115-AA0C-0016416541FE

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Content

I. Introduction

II. Purpose

III. Methods

IV. My opinion

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Wherever we are, we both have an

important ritual for starting most days.

We stop in to a Starbucks store for a cup

of coffee. -Howard Schultz, 2006 Chairman of Starbucks Corporation

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IntroductionMulti-international Corporation

(MNC)

Head Office Starbucks Corporation2401 Utah Avenue SouthSeattleWashington 98134USA

Argentina, Australia, Brazil, Canada, China, Colombia, Denmark, Egypt, France, Germany, Greece, Hong Kong, Indonesia, Ireland, Israel, Japan, …………50 countries↑

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Purposegreen coffee beans

and the coffee-related accessories

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SWOT Analysis

Strengths Weaknesses

a. Strong brand imageb. Wealthy financial performance c. Large scale of operations

a. Weak compliance functionb. Narrow product mixc. Low employee productivity

Opportunities Threats

a. New marketsb. Hear Music Labelc. Growing specialty coffee market

a. Intense competitionb. Volatile coffee pricesc. The Forbidden City

controversy

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Strength-Strong brand image

852008

882007

912006

RankRanking year

The 100 Top Brands 2006-2008 ranking of BusinessWeek and Interbrand an international branding consulting firm.

BEST GLOBAL BRANDS (2008). http://www.interbrand.com/best_global_brands.aspx

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3,607

3,099

2,5762005

Brand value ($m) Ranking year

2006

2007

2008 3,879

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Strength—Wealthy financial performance

28.6% Net profit (after tax)

28.6% Operating profit (gross profit)

24% Sales revenues

[Price (of product) X Quantity Sold]

Growth rateFinancial Performance

The company’s revenues, operating profit and net profit from 2002-2006

Compound Annual Growth Rate (CAGR). http://www.investopedia.com/terms/c/cagr.asp

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11.3% 15.3% Other industries

18%19%Starbucks

Investment Equity

(Stocks)

Companies

Company's average CAGR return on equity and investment during 2002-2006

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Strength—Large scale of operations

over 146,000 people Employees

more than 44 million people.Customers per week

over 13,000 locations in 39 countries Amount of stores

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59.5Diedrich Coffee

7,787Starbucks

Revenue ($m) Companies

225.3Green Mountain Coffee

Roasters (GMCR)

The revenues of Starbucks and two of its competitors in 2006.

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Weakness—Weak compliance function

Starbucks has been involved in several legal proceedings.

The company violated requirements of the *FLSA( Fair Labor Standards Act), a lawsuit was set from June 2004 to August 2007.

*FLSA: a federal labor law of general and nationwide application, including Overtime, Minimum Wages, Child Labor Protections, and the Equal Pay Act.

The company violated the California Labor Code by allowing shift supervisors to receive tips, a lawsuit was set from October 2004 to May 2007.

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Weakness—Narrow product mix

77%

15%

3%

5%beverages

food items

green coffee bean

coffee makingequipment andother merchandise

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Weakness-Low employee productivity

93,330Other industries

average

53,408Starbucks

Revenue($)Companies

The revenue per employee of Starbucks and other industries in 2006

Net profit($)

Diedrich Coffee 84,054

8,299

x

3,870

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Opportunity—New markets

Adobe Acrobat Document

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Opportunity—Hear Music Label

Starbucks and Concord Music Group,

in March 2007.

Hear Music record label

a. All traditional music retail outlets b. Starbucks locations.

a. Improve visibility of Starbucksb. Add stability to its revenues.

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Threat—The Forbidden City controversy

Negative advertisement in recent months (Report publication Date: 26 Mar, 2008)

Be conflicting with the rich Chinese culture of the Forbidden City

May create an impression among the public that the company is culturally numb, which would negatively impact its brand image.

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My research

TopicWhat will MNC modify to meet the satisfaction of diversified culture in different countries?-Take Starbucks in Taichung City as an example.

ParticipantsPeople who have the experience of drinking Starbucks coffee.

Methodology Approximately 300 questionnaire.

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Thanks for your attention!!