The major threat that Starbucks faces is competition. One of Starbucks’ weaknesses is an overreliance on the American market. In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended September 29, 2019 (“fiscal 2019”), Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.” Segment Financial Information The chain next year expects to open about 2,000 net new Starbucks stores, which includes about 600 in the United States and about 1,400 in China. According to Thompson and Arsel (2004), Starbucks is renowned for its quality. The company earned $0.75 per share in its first quarter of 2019, which beat the Street's estimate for $0.65/share, Forbes reported, noting that last year Starbucks' holiday sales disappointed investors. Your privacy is extremely important to us. The number of total stores of Starbucks grew higher than 29,300 in 2018 and higher than 30,000 in 2019. He helped to introduce new flavors, tastes, and campaign ideas to enhance business performance. Offering ‘third-place’ experience.Starbucks stores are effectively positioned as a ‘third place’ away from home and work, where people can spend time in a relaxed and comfortable environment with their friends or alone. Discussion Intensive Growth strategies of Starbucks Market Penetration :( existing market, existing products). Because of the successful quarter, Starbucks improved its financial outlook for the year. BCG Matrix in the Marketing strategy of Starbucks – Being one of the renowned coffee brands worldwide with experience of more than 3 decades in the business is helping the company to understand the businesses in the better way & be innovative in the … On the other hand, there is a significant and unexploited market in Europe. The company is yet to exploit the European and African markets fully. The company relies on Arabica beans which are quite expensive. Bakery chain Tous Les Jours to launch new locations in US, FAT Brands expands Singapore footprint with new co-branded store, Luby’s to franchise 13 Fuddruckers stores as part of liquidation plan. Harrison, J., Chang, E., Gauthier, C., Joerchel, T., Nevarez, J., & Wang, M. (2016). 2020. If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Starbucks’ Total Revenue in Q2 2019 was recorded at $6.3 billion, up 4.5% year-on-year. "Starbucks' Strategic Growth for 2016-2019." Starbucks is a renowned coffeehouse brand across the globe. In 1992, Starbucks went public, and within five years, it started to witness exponential growth. The company launched in 1971 as a coffee roaster across from Seattle’s Pike Place Market and it wasn’t until 1984 that they opened their next storefront, but they've grown at an incredible pace ever since. Starbucks. Last year, CEO Kevin Johnson set out a number of strategic priorities to achieve "growth at scale." Starbucks’ performance in the global arena has captivated many international companies. Business Ethics Quarterly, 9(1), 11-29. According to Bussing-Burks (2009), Starbucks has a chance to increase its profit by investing in consumer packaged goods. When he went back to the United States, Schultz introduced the idea of selling espresso to Starbucks’ leadership. Members of the Starbucks leadership team met at the chain’s biennial conference last week to discuss its growth model and coffee brand. Thompson and Arsel (2004) argue that Starbucks has a pool of loyal customers despite selling its products at high prices. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly . The team also discussed progress of its Global Coffee Alliance with Nestlé, a rollout of Starbucks’ At-Home Coffee. Instead, it sold coffee beans. It also started vending instant coffee packets dubbed VIA “Ready Brew” (Harrison et al., 2016). Initially, Starbucks did not specialize in the sale of espresso and brewed coffee. After … It underlines the reason why the company should diversify its products. Starbucks faces stiff competition from two main competitors. Rossi and Allenby (1993) hold, “Price is the only element in the marketing mix that produces revenues” (p. 178). Starbucks lays out full-year growth plans for 2019 Jasmine Lee-Zogbessou 19th December 2018 (Last Updated December 19th, 2018 16:47) Starbucks has announced a long-term growth initiative to expand its store portfolio, same-store sales and delivery services. Starbucks Coffee’s main intensive growth strategy is market penetration. Bussing-Burks (2009) claims, “the company provides customers with the “Starbucks Experience” (p. 19). Thus, an organization must come up with a good pricing strategy. Thus, the company requires coming up with a pricing strategy that caters to all categories of customers. Starbucks acquired Teavana a couple of years ago. (2015) allege that two of Starbuck’s Teavana stores are already doing well. The model helps organizational leaders to come up with strategic options in product diversification. What’s your deadline? Australasian Marketing Journal (AMJ), 18(1), 41-47. Latest report from The company … Notwithstanding the absence of established coffee culture in the European market, Starbucks has an opportunity to expand its business in the region. Not all of Starbucks strategy will be seen by the consumer, however. Measuring the performance of new service development activities. The company makes a substantial profit that enables it to establish new branches and grow its market share. In 1994, the company purchased The Coffee Connection, acquiring exclusive rights to prepare and sell “Frappuccino” drinks. Currently, the company targets high-income earners. Starbucks has been in the coffee business for an extended period. Three areas that are critical to Starbucks’ strategic plan are the global expansion, product diversification, and pricing strategy. The company depends heavily on the American market. As people’s income continues to rise, new markets will possibly emerge. And they are offering different types of products like Coffee, tea, meals, coffee makers etc. We utilize security vendors that protect and Therefore, Starbucks can quickly expand its market coverage by partnering with multinational corporations. IvyPanda. However, the administration did not buy into his idea forcing Schultz to resign and open his coffee shop. "Starbucks' Strategic Growth for 2016-2019." Besides, it plans to introduce its tea brand in India. A Bayesian approach to estimating household parameters. Moreover, Starbucks should come up with a pricing strategy that can help it to target customers with different levels of disposable income. Thus, it is hard for Starbucks to anticipate its profits. The company should review its strategic plan to enable it to invest in product diversification and global expansion. Total net revenue for the third quarter rose 8.1 percent to 6.82 billion U.S. dollars. Bussing-Burks (2009) claims that growth in foreign markets may not help Starbucks to counterbalance losses incurred in the American Market. Storey and Kelly (2010) hold that it is imperative to use the right metrics to determine the success of a strategic plan. The three companies compete to dominate the coffee market. The company has also enhanced its marketing strategies. One of the theories that underscore the significance of product diversification is the Ansoff matrix. Thus, Starbucks cannot continue to rely on this market. Browse over 50,000 other reports on our store. To prepare my report I have chosen Starbucks. (2016) maintain that the corporation bought Evolution Fresh (a juice company) in 2011 enabling it to venture into sales of fresh juice. Variations in coffee prices have affected Starbucks’ performance. Patterson, P., Scott, J., & Uncles, M. (2010). Changes in weather conditions have affected the production of coffee in countries like Brazil. They prefer to build the brand by promoting the drinks cup-by-cup with customers. Previously, McDonald’s was renowned for the sale of fast foods. According to Bussing-Burks (2009), it reached a point where Starbucks could open a coffee shop each weekday. This industry experienced a major slowdown in 2009 due to the economic crisis and changing consumer tastes, with the industry revenue in the US declining 6.6% to $25.9 billion. ⏰ Let's see if we can help you! Technologies LLC, a company registered in Wyoming, USA. Starbucks faces stiff competition from McDonald’s and Dunkin’ Donuts. The Service Industry Journal, 21(2), 71-90. The company locates its outlets in strategic locations, thus reaching many customers. Starbucks's digital initiatives are helping to fuel its expansion. Thus, for an organization to exploit the world market, it has to anticipate and counter the moves that its opponents make. Focus on expansion in developing markets is one of the smart strategies which are helping in speed up the growth in revenues of the company. This term paper on Starbucks’ Strategic Growth for 2016-2019 was written and submitted by your fellow student. 1. According to Thompson and Arsel (2004), Starbucks has a strong brand. Starbucks expects to offer delivery from nearly a quarter of its US company-operated stores in 2019. Starbucks chief executive Kevin Johnson said: “Coffee is one of the fastest growing beverage categories globally and our over 350,000 partners around the world who wear the green apron are now serving 100 million customer occasions a week. August 23, 2020. https://ivypanda.com/essays/starbucks-strategic-growth-for-2016-2019/. Rossi, P., & Allenby, G. (1993). On a journey to Italy, “Schultz sampled a delicious coffee and relished the refine café culture” (Bussing-Burks, 2009, p. 3). Announces launch of Starbucks Delivers to nearly a quarter of U.S. company-operated stores with Uber Eats, beginning in 2019; Expands Starbucks Delivers in … August 23, 2020. https://ivypanda.com/essays/starbucks-strategic-growth-for-2016-2019/. The Psychology of Innovation, 31(3), 631-642. Top photo: At the Starbucks store at 81st and Broadway in New York City, and at every store around the world, cutting-edge innovation powers a deceptively simple everyday scene. The prices of Arabica beans are quite unpredictable. "Starbucks' Strategic Growth for 2016-2019." The Bayesian decision theory holds that an effective pricing strategy helps to boost the competitive advantage of an organization (Rossi & Allenby, 1993). Starbucks announcement that it will close 600 stores in the US is a long-overdue admission that there are limits to growth. They are McDonald’s and Dunkin’ Donuts. “We reaffirmed our FY19 guidance and outlined our ongoing growth model. Currently, numerous companies have invested in the coffee business. Expansion of the world market would not be helpful unless Starbucks does not play by the rules of other competitors. The company requires strategizing on how to capture the European, African, and Middle East markets. Lemus et al. The American market is already saturated. Nine years later, Starbucks grew into one of the major coffee roasters in Washington (Bussing-Burks, 2009). (2015) posit that the corporation reports over seven million mobile transactions every week. Before this, the industry had a decade of growth consistent. Thompson, C., & Arsel, Z. Currently, a majority of Starbucks’ outlets do well in the market. Starbucks faces stiff competition from McDonald’s and Dunkin’ Donuts. Besides, the company’s logo is easy to discern and captivates new and return clients. (2020) 'Starbucks' Strategic Growth for 2016-2019'. The company is now expecting same-store sales near the top end of its fiscal 2019 forecast of 3 to 4 percent growth and raised its earnings forecast to between 2.80 and 2.82 U.S. dollars per share. Starbucks sells its products at premium prices. Lemus, Feigenblatt, Orta, and Rivero (2015) allege that all conditions in the world market appear to support the corporation. In 2010, Starbucks introduced to wine and beer in some outlets in the United States. The company has more than 30,000 stores in 80 countries worldwide as of June 2019, and is expected to maintain a strong growth momentum. According to Lemus et al. Thus, it is vulnerable to slow growth in the case of an economic crisis in the United States. The advertisement ends until they drink the coffee, reducing the chances to attract valuable customers. Storey, C., & Kelly, D. (2010). Starbucks reiterates 12 percent or greater non-GAAP EPS growth target and commitment to return $15 billion to shareholders through the next three years. We will write a custom Term Paper on Starbucks’ Strategic Growth for 2016-2019 specifically for you for only $16.05 $11/page. Copyright © 2020 - IvyPanda is a trading name of Edustream The management of Starbucks should look for ways to exploit this market. 23 August. Thus, it has vast experience in the sector. The biggest share of its profit comes from the United States. Thus, Starbucks may experience slow growth in the case of an economic crisis in the United States. Game theory can help Starbucks formulate strategic behaviors that can assist it to change the rules that govern the global market. Starbucks specializes in a range of goods. Besides, the company can invest in product diversification. The rationale for choosing a pricing strategy is because it can enable Starbucks to exploit consumers with different levels of disposable income. To remedy this, Starbucks has shifted its strategy to include more cold beverages like teas, Starbucks Refreshers energy drinks and cold-brew coffee. IvyPanda. (2016), the three companies use diverse strategies to reach target customers. How Starbucks’ growth nearly destroyed the business, until one man saved its skin. Lemus, E., Feigenblatt, O., Orta, M., & Rivero, O. According to Bussing-Burks (2009), Starbucks invested in the production and sale of a “skinny” line of beverages in 2008. (2020, August 23). Currently, the corporation has establishments in over forty countries. Despite the company having a good strategic growth plan, a lot needs to be done to cushion it from the threats associated with competition and price volatility. The database is updated daily, so anyone can easily find a relevant essay example. Even though the current pricing strategy cushions the company from severe price movements, it prevents Starbucks from exploiting a big market. Currently, Starbucks uses a hedge as a pricing strategy to cushion itself from severe price movements. IvyPanda. In the case of Starbucks, the success of the strategic plan can be determined based on the company’s strategic objectives. Its business model is also a core strength of the brand. The company introduced to the market low-calorie products. ensure the integrity of our platform while keeping your private information safe. Despite the variations in coffee production, the future of Starbucks looks promising. 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The Starbucks go-to strategy was to bring the already established product in different cultural and geographical space into the new market — the coffee-culture deprived United States. Today, the corporation has over 23,768 stores across the globe (Bussing-Burks, 2009). For instance, evaluation of the company’s cash flow, revenue, and profit for the next three years would tell if the strategic plan is a success. Other products include Starbucks Verismo and the infamous espresso. The company uses an efficient pricing strategy to cushion it from the competition. In the largest shareholder meeting in company history, Starbucks celebrates transformative year in fiscal 2018, highlighted by double digit growth in topline revenue of $24.7 billion, up 10% over the prior year; reaffirms ongoing growth algorithm of consolidated revenue growth of 7% to 9% and non-GAAP earnings per share growth of at least 10%. One would use financial metrics to ascertain the success of the strategic plan. Starbucks plans to grow its global market. In July 2019, Starbucks announced "monetary second from last quarter total compensation of $1.37 billion, or $1.12 per share, up from $852.5 million, or 61 pennies for each offer, a year sooner." Post-pandemic predictions: new issue of just-food out now! Starbucks is optimizing its U.S. store portfolio at a more rapid pace in FY19, including shifting new company-operated store growth to underpenetrated markets, slowing licensed store growth, and increasing the closure of underperforming company-operated stores in its most densely penetrated markets to approximately 150 in FY19 from a historical average of up to 50 annually. Starbucks’ strong brand coupled with experience in the coffee business has helped it to exploit the global market. Consequently, the company sells its products at premium prices. Additional reporting by Deborah Bach. Starbucks business strategy is based on the following four pillars: 1. As part of its growth strategy, Starbucks plans to build 300 new stores in Japan over the next three years, an initiative that will bring the store count to 1,700 across the market. Howard Schultz’s task was to closely observe how Italians treat the product and figure out a way to bring it home with minor changes. The current expansion strategy indicates that Starbucks is doing well in the global market. According to Patterson, Scott, and Uncles (2010), the coffee business is extremely aggressive regarding quality, price, convenience, and services. The American market is currently saturated. Storey and Kelly (2010) hold that Starbucks can boost its performance by investing in consumer packaged products as well as global expansion. Visit GlobalData Store, Wireless Charging Technology for Restaurants, Cafés and Hotels, 19th December 2018 (Last Updated December 19th, 2018 16:47). All photos courtesy of Starbucks. This term paper on Starbucks’ Strategic Growth for 2016-2019 was written and submitted by your fellow student. Starbucks is an American global Coffee company based in Seattle, Washington. According to Lemus et al. Starbucks has the potential to increase its profits by leveraging the global market. In the market expansion grid or Ansoff Matrix, this strategy supports the company’s intensive growth by maximizing revenues from existing markets, using the same or existing food and beverage products. Also Starbucks inadequate marketing strategy on advertising is a hindrance in the business growth opportunities. professional specifically for you? Starbucks depends on client flexible spending. "Starbucks' Strategic Growth for 2016-2019." If you continue to use this site we will assume that you are happy with it. Oxford: Greenwood Press. Starbucks' Strategic Growth for 2016-2019. The corporation is in the process of reinventing the global tea category (Lemus et al., 2015). The experience inspired him, and he decided to diversify Starbucks products. An organization can determine the success of a strategic plan by measuring the progress of an enterprise. As a result, Starbucks cannot continue to rely on coffee alone. Starbucks’ products are of outstanding value, steady across the globe, and uphold environmental standards. The corporation has already embarked on an innovative program to boost the performance of Teavana. On the other hand, Starbucks leverages verbal communication. Unfortunately, your browser is too old to work on this site. Currently, the level of coffee production has declined. Starbucks is a popular coffee house chain with numerous establishments across the globe. Growth in stores: It increased its number of stores from 1,886 to 31,256 between 1998 and 2019. Starbucks runs its business through company-operated and licensed stores. … Starbucks chief financial officer Patrick Grismer said: “As the undisputed category leader globally, Starbucks is well positioned to drive meaningful growth at scale, with more focus and discipline. Starbucks Corporation: Leading innovation in the 21st century. Starbucks gave fiscal-year 2020 guidance of 3% to 4% global comparable store sales growth. Lemus et al. August 23, 2020. https://ivypanda.com/essays/starbucks-strategic-growth-for-2016-2019/. You can use them for inspiration, an insight into a particular topic, a handy source of reference, or even just as a template of a certain type of paper. Starbucks primarily operates and competes in the retail coffee and snacks store industry. Despite Starbucks having a good strategic growth plan, a lot needs to be done to help it exploit the world market and mitigate risks associated with competition and price volatility. The first Starbucks outlet was opened in Seattle. Exporting a North American Concept to Asia: Starbucks in China. (2004). Thus, adjustments in macroeconomic conditions may affect the company’s performance. By the end of 2019, the company expects to expand Starbucks Delivers to 3,000 stores. Need a custom Term Paper sample written from scratch by … Starbuck’s ambition is to become the leader in the global coffee market. Consequently, it has been difficult for restaurants to source coffee. The company also sells tea. For a company to exploit the global market, it requires understanding the moves that other key players take. This year, the firm expects to open 500 stores in China. It contains thousands of paper examples on a wide variety of topics, all donated by helpful students. The transformative Global Coffee Alliance with Nestlé will be accretive to non-GAAP EPS in FY20 and FY21, helping to deliver expected growth of at least 13% annually for those two years.”. At that time, he served as the leader of the marketing department. The rationale for selecting product diversification as a strategic plan is its capacity to cushion a business from potential risks. The coffeehouse chain laid out its targets for full-year 2019 (FY19), including consolidated revenue growth of 7% to 9% and non-GAAP earnings per share growth of 10%. Starbucks can exploit the European and African markets. The company should embark on a strategic plan to diversify its products. IvyPanda. Journal of Marketing Research, 30(2), 171-182. A year later, it introduced baked products and salads. Schultz was responsible for marketing the company. Starbucks is a famous American coffeehouse chain that was established in 1971. It indicates that the company is in the course of realizing its dream. Peet’s Coffee motivated two teachers and a writer to establish the first Starbucks coffee shop. Lead Starbucks Just Announced a Shocking Shift in Strategy That Will Affect Every Coffee Drinker This is a complete change from everything Starbucks seemed to be going for. Bussing-Burks, M. (2009). How the local competition defeated a global brand: The case of Starbucks. Additionally, it helps an enterprise to boost its competitive advantage. Besides, selling instant coffee, the company should invest in the sales of home-brewing machines and branded coffee pods. Starbucks encounters stiff competition from companies like McDonald’s and Dunkin’ Donuts. Currently, the company sells coconut milk, handcrafted soda, and refresher beverages. The coffee business succeeded in leading to Schultz purchasing Starbucks. For full functionality of this site it is necessary to enable JavaScript. The company's rewards program saw its active members in the U.S. jump 14% year over … The organization's fairly estimated worth of $110.2 billion expanded by 41% in the mid of 2019. Earnings per share in 2020 are expected to be in a range of $2.84 to $2.89. The company expects to increase its global sales and portfolio by 1% each year and recently launched delivery pilots in Miami with Uber Eats. Solomon, R. (1999). This partnership will make Starbucks the only brand outside of Nestlé to have branded products produced and packaged by Nestlé on the Nespresso and Dolce Gusto systems. As the demand for coffee continues to rise, Starbucks expects to experience stiff competition not only from McDonald’s and Dunkin’ Donuts but also from other upcoming restaurants. (2015), many multinational corporations have expressed their desire to work in partnership with Starbucks. Game theory as a model for business and business ethics. Numerous forces contribute to Starbucks’ excellent performance in the world market. This is IvyPanda's free database of academic paper samples. Retrieved from https://ivypanda.com/essays/starbucks-strategic-growth-for-2016-2019/. Currently, customers can order and pay for products via mobile applications. Thus, Starbucks may lose a significant market share if it is unable to get a regular supply of coffee beans. A small adverse adjustment in coffee prices may have devastating impacts on Starbucks. The company positions itself as a brand that meets the needs of all American clients. Starbucks anticipates changing people’s lives globally. The company has also invested in technology to enable it to reach many customers. Starbucks Corporation (NASDAQ: SBUX) started off its fiscal 2016 on a strong note, as it reported comparable store sales growth in all its reporting segments. IvyPanda. The company does not do well in the European market despite the availability of potential clients with a high degree of disposable income. His primary objective was to expand Starbucks to reach the global market. The current chief executive officer (Schultz) joined the corporation in 1982. The primary strengths of Starbucks include strong brand, experience in the coffee business, and an active reinvestment plan. According to Harrison et al. Besides, overreliance on the American market puts the company’s business at risk. The target of the global market is essential to the company’s strategic plan as it would cushion it in the case of an economic crisis in the American market (Patterson et al., 2010). The leadership team and I believe Starbucks is better positioned than ever for continued success.”. Cornell Hospitality Quarterly, 46(2), 275-283. Starbucks sells numerous products to reinforce its position in the global market. Harrison et al. Learn about the latest innovations and imagine new ways to create solutions at Build 2019. Starbucks has announced a long-term growth initiative to expand its store portfolio, same-store sales and delivery services. (2015). IvyPanda, 23 Aug. 2020, ivypanda.com/essays/starbucks-strategic-growth-for-2016-2019/. Dunkin’ Donuts is renowned for using traditional forms of advertisement. It contributes to the company’s performance. The Starbucks brandscape and consumers’ (anticorporate) experiences of glocalization. Hence, the company should use its financial strength and long time experience to open stores in nations that do not have Starbucks. In 2019, O., Orta, and refresher beverages case of an economic crisis in the course of its... The retail coffee and snacks store industry current pricing strategy is based on the American market traditional! Partnership with Starbucks his primary objective was to expand its business through company-operated and licensed stores team. Its position in the case of Starbucks market Penetration: ( existing market, existing products.... Product diversification as a strategic plan can be determined based on the other hand, Starbucks announced! 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