starbucks - success in a cup (2009)
DESCRIPTION
ESL 408 ProjectTRANSCRIPT
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STARBUCKS !SUCCESS IN A CUP
LEE MIN
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INTRODUCTION
§ Top Coffee Retailer in the World • 15,000 stores in more than 35 countries • US$11,411 million in revenue [2007]
• Sales increase 20% a year
• 30 million customers visiting each week
§ High Returns • 1992: Investment of $10,000 in first public offering
• 2007: Receive $650,000
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§ History • 1982: Howard Schutz joined
Starbucks in Seattle, Washington
• 1984: Struck Italian’s concept of “espresso” culture
• 1987: First cafe-concept store of Starbucks in Seattle
• 1992: Listed in Nasdeq [17 to 165 stores in 5 years]
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FACTORS ATTRIBUTING TO SUCCESS
1. Customization & Variety of Drinks
2. Best Practices in Human Resource
3. Placing Strategy
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§ Handcrafted Drink • Handcrafted by friendly baristas • Extensive choice of 30 blends & single-origin coffee
CUSTOMIZATION OF PRODUCTS
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§ Personalized Cup
• Chic and easy Lingo
» E.g. Iced Venti Java Chip Frappuccino, with whip
• Customized cup in 7 easy steps
Ordering a Drink in 7 easy Steps: 1. Hot or Iced Drink? 2. Size 3. Drink Beverage 4. Wet or Dry 5. Number of Espresso
Shots 6. Type of Milk 7. Extra DirecLons
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• Within 4 main categories: Beverages [77%]
Food items [15%]
Whole coffee beans [4%]
Coffee making equipment & Others [4%]
77%
15% 4%
4%
Starbucks: Retail Sales Beverages
Food items
Whole Beans Coffees
Coffee making equipment and others
§ Product Offerings Available in Retail Stores
WIDE VARIETY OF PRODUCTS
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CDs
Books
§ Other Products Available in Retail Stores
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• Joint Ventures with other organizations
- Pepsi Co Inc
- Dreyers Grand Ice cream
§ Product Offerings in Convenience Stores
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DIVERSE DISTRIBUTION OF PRODUCTS
§ Products and Services Available to both consumer markets & Corporate Organizations:
• Airlines - Supplies coffee & tea to United Airlines’ 75 million passengers
• Office Coffee
- Provides coffee to thousands of company in US
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§ 7th on “Forbes List of 100 Best Companies to Work for, in 2007”
BEST PRACTICES IN HUMAN RESOURCE
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§ Wide Range of Benefits • Privileges included in program:
- Paid holidays
- Health care benefits
- Optional employee stock ownership program
§ Mission Review Committee • Employees are able to raise concern over issues that are
not in line with mission statement
- Eg: Insufficient paid leaves was brought up, and management responded immediately with extended 2 weeks leave
GENEROUS BENEFITS PROGRAM
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§ Competitive advantage for Starbucks • Employee turnover rate that is 120% less than industry average
• Employees were encouraged to stay on to maintain service standard
“One of the reasons that Starbucks employees are often so pleasant and helpful is that Starbucks is a great company to work for. It takes cares of employees and treat us with respect… We’re encouraged to have a good time while we are at work, and that makes a huge difference in the atmosphere we create for customers.”
Starbucks partner, Joy Wilson
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§ Training programs provided are fully-paid and consisting of:
• Upon commencement of work
- Coffee Masters Program – Encouraged to be real coffee experts
- Re-training provided
TRAINING PROGRAMS PROVIDED
• Before working in Starbucks
- “Therapy-like” training program
- Consist of knowledge and skills of the art of coffee brewing, coffee’s history
- Known as baristas for upon completion
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§ Materials provided to employees • Coffee Passport
- Green booklet with 104 pages
- Consist of all information on coffee farming, roasting, product offerings
- Expected to understand all information within first 3 months of work
• “Find your Favorite Drink” booklet - Consist of coffee brewing lingos and product offerings
- Baristas required to taste the different product offerings offered , and recommend heir favourite customers
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• The Green Apron Book - Consist of the mission statement and core values to remind employees
- It is mainly to encourage employees to practice the 5 ways of being:
1. Be Welcoming
2. Be Genuine
3. Be Knowledgeable
4. Be Considerate
5. Be Involved
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§ The “Everywhere” strategy
“Blanket an area completely, even if the stores cannibalize one another's business. A new store will often capture about 30% of the sales of a nearby Starbucks, but the company considers that a good thing: The Starbucks-everywhere approach cuts down on delivery and management costs, shortens customer lines at individual stores, and increases foot traffic for all the stores in an area.”
Fortune Magazine
EXPANSION STRATEGY
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STRATEGIC LOCATIONS § Starbucks are strategically located in high traffic
areas with high visibility:
• Location being the 1st Criteria accessed in Overseas Ventures
- Locations are accessed by 3 criteria- Demographics, Branding potential's, Financials
- Sites are ranked from A to D before chosen
• Vital Success Factor
- Customers were able to stop at a Starbucks easily
- Having a Starbucks in an area is an indication that an area has arrived
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CONDUCIVE ENVIRONMENT § Starbucks retail outlets have an inviting atmosphere:
• Attention to every Detail
- Management aim to “offer everyone a sense of belonging”
- Pay special attention to every single detail in store environment
• Customize Design for Individual Store
- A team of in-house designer and architects
- Sites are ranked from A to D before chosen
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CONCLUSION § Starbucks have been successful and will continue to
grow in the future.
• Aspired Long-term Goal by 2012
- Tripling annual sales to $2.3 billion
- Continuous expansion from 15,000 to 40,00 store worldwide
• Suggestion to Aid Growth
- More collaborations to produce more convenience food products
- Increase sales of other products such as CDs, books
- Continue projecting Starbucks as a way of lifestyle, instead of just “ another” cafe