NATIONAL ECONOMICS UNIVERSITY

BUSINESS SCHOOL

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OPERATION MANAGEMENT
STARBUCKS COFFEE
Instructor: Vu Thanh Hung
Class: E-BDB 3 – Group 3

Name Student ID

Nguyễn Yến Nhi 11219342

Đỗ Thị Huyền 11219336

Phạm Hoàng Dương 11219332

Nguyễn Ngọc An Thái 11219346

Nguyễn Phương Nga 11214162

Hanoi, April 2023

Table of Contents
 I. Key information about Starbucks Coffee
1. Company name, Vision, Mission
- Company name: Starbucks Corp. is an international retail company and
franchisor specialized in coffee products.
- Vision: "To establish Starbucks as the premier purveyor of the finest coffee in
the world while maintaining our uncompromising principles while we grow."
- Mission: "To inspire and nurture the human spirit – one person, one cup and
one neighborhood at a time."
2. The establishment and growth and development process
- 1971: Starbucks was established in Seattle
- From 1980s to 1990s, expanding rapidly and opening new stores.
- Early 2000s: Starbucks faced some challenges, and the company began to
struggle with declining sales.
- 2010s: focus on innovation and introducing new products and initiatives to
attract customers, such as the introduction of the Starbucks Rewards loyalty
program, mobile ordering, and the launch of new drinks and food items.
- Today: Starbucks has over 30,000 stores in 80 countries and is the largest
coffeehouse chain in the world.
3. Key products and geographic markets and market share
- Key products: espresso, lattes, cappuccinos, and brewed coffee
- Geographic markets: a global presence, with stores in 80 countries. Largest
market is the US: over 15,000 stores, over 4000 stores in China.
- Market share: As of 2022, the largest coffeehouse chain in the world, with a
market share of over 33.7% and current revenue (TTM) is $32.91B.
4. The company's brand name and reputation evaluation …
- A globally recognized brand name: high-quality products and customer service.
- A strong reputation for its commitment to ethical and sustainable practices,
including sourcing coffee beans from responsible farmers and supporting local
communities => trusted and reputable brand among consumers.
- Reputation evaluation, Starbucks has consistently ranked highly in various
brand reputation rankings. For example, in 2021, Starbucks was ranked 25th in
the Forbes World's Most Valuable Brands list, with a brand value of $28.5
billion.

II. Macro environment analysis

5. Demographic:
Starbucks age demographics is typically between 22 and 60, with the average age of
the Starbucks customer being 42 years. Starbucks target demographic includes
students, professionals and employees. It is a popular coffeehouse brand for a wide
swath of the population in the middle to upper classes.
Opportunities:
1. The increasing demand for coffee and other specialty beverages in emerging
markets, particularly in Asia, can provide opportunities for Starbucks to expand
its customer base.
2. The popularity of mobile ordering and delivery services can provide
opportunities for Starbucks to improve its customer experience and increase
convenience.
- Threats:
1. The changing demographic trends, particularly the aging population in
developed countries, may result in a decrease in the demand for coffee and
specialty beverages.
2. The growing trend of healthy eating and drinking may lead to a decrease in
demand for high-calorie coffee drinks and snacks, which could affect
Starbucks' sales.

● Economic:
Starbucks faces the following economic external factors in the remote or macro-
environment:

1. Growth of developing countries (opportunity)

2. Declining unemployment rates in the long term (opportunity)
3. Rising labor cost in coffee suppliers’ countries (threat)

The growth of developing countries and the declining unemployment rates create
opportunities for Starbucks to gain more revenues from various markets around the
world. However, the rising labor cost in developing countries is an external factor that
threatens Starbucks because it increases the company’s spending for ingredients. The
firm sources much of its coffee beans from developing countries.

● Political:
Starbucks must address the following legal external factors in its remote or macro-
environment:

1. Product safety regulations (opportunity)

 2. Developing GMO regulations (opportunity and threat)
3. Increasing employment regulations (opportunity and threat)

Starbucks has opportunities to improve its business performance by satisfying product

safety regulations, improving its supply chain to address regulations on ingredients
from GMOs, and improving employment regulations, especially in developing
countries. These external factors also threaten Starbucks Coffee’s access to the labor
market and competitively priced coffee beans. However, the company can implement
new strategies to improve human resource management to mitigate these threats.

● Sociocultural:
Starbucks must address the following sociocultural external factors in its
macro-environment:

1. Growing coffee culture (opportunity)

2. Growing middle class (opportunity)
3. Increasing health consciousness (opportunity)
4. Independent coffeehouse movements (threat)

Starbucks has opportunities to increase its revenues based on increasing demand for
specialty coffee, which is due to the growing coffee culture and growing middle-class
populations around the world. Also, the company can widen its array of more
healthful products to attract health-conscious consumers to its coffeehouse. Despite
these opportunities, Starbucks faces threats linked to independent coffeehouse
movements, which are sociocultural movements that favor small independent coffee
houses instead of large multinational chains.

● Technological
Starbucks experiences the following technological external factors in the remote or
macro-environment:

1. Increasing adoption of mobile technology for online purchases (opportunity)

2. Technology transfers to coffee farmers (opportunity)
3. Rising availability of specialty coffee machines for home use (threat)
Starbucks has opportunities to improve its mobile apps and linked services to gain
more revenues through mobile purchases. The company can also improve its supply
chain efficiency based on recent technologies that coffee farmers use. However, the
rising availability of home-use specialty coffee machines threatens Starbucks by
increasing the availability of substitutes to the company’s products.

● Physical environment
Starbucks faces the following environmental external factors in its remote or macro-
environment:

1. Increasing availability and adoption of sustainable processes in businesses

(opportunity)
2. Growing access to responsibly sourced materials or ingredients (opportunity)
3. Rising support for environmentally friendly products (opportunity)

The increasing availability of sustainable business processes is a trend that gives

Starbucks the opportunity to enhance its sustainability standards and implementations.
This enhancement can strengthen the company’s brand image and attract more
customers to its foods and beverages. The corporation can continue to improve its
existing responsible sourcing policies. Moreover, Starbucks can innovate to make its
products more environment-friendly. For example, the company can increase the use
of recyclable materials for packaging food products and other merchandise.

● Global Segment
Starbucks' global segment includes its operations outside of the United States, with
over 10,000 stores in more than 80 countries. Some strengths of the global segment
include
● Adaptation to local markets
● Sustainability and ethical sourcing:
● Growth opportunities

- Opportunities:
1. Starbucks has the opportunity to expand its global presence by entering new
markets and opening new stores in existing markets.
2. The increasing demand for specialty coffee and tea in emerging markets
presents significant growth opportunities for Starbucks.
- Threats:
1. Global economic uncertainty and currency fluctuations can impact Starbucks'
revenues and profits.
2. The increasing competition from local and international coffee chains and other
beverage companies can threaten Starbucks' market share and profitability

III. Industry Environmental Analysis

- Buyers: Key buyers for Starbucks include individual consumers, as well
as corporate clients such as hotels and airlines. The bargaining power of
buyers is moderate to high, as customers have several options for coffee
and other beverages. However, Starbucks' strong brand reputation and
loyalty programs can reduce the bargaining power of buyers.
Opportunities for Starbucks include using its brand reputation and
loyalty programs to increase customer retention and exploring new
market segments, such as corporate clients.
- Suppliers: Key suppliers for Starbucks include coffee growers, dairy
suppliers, and suppliers of other food and beverage items. The
bargaining power of suppliers is relatively low, as there are many
suppliers in the market. However, climate change and other factors can
impact the availability and cost of raw materials. Opportunities for
Starbucks include building strong relationships with suppliers and
exploring sustainable sourcing options to reduce risks associated with
supply chain disruptions.
- Competitors: Key competitors for Starbucks include other coffee shops,
such as Dunkin', Costa Coffee, Tim Hortons, and independent coffee
shops; fast food chains, and convenience stores. The competition is
high, with many players in the market offering similar products.
However, Starbucks has a strong brand reputation, a wide range of
products, and a strong presence in many countries. Opportunities for
Starbucks include differentiating its products and expanding into new
markets.
- Substitutes: Substitutes for Starbucks products include other beverages,
such as tea and soda, as well as snacks and food items. The threat of
substitutes is moderate, as consumers have many options for beverages
and snacks. However, Starbucks' brand reputation and customer loyalty
can reduce the threat of substitutes. Opportunities for Starbucks include
expanding its product offerings to include more food and snack options,
as well as promoting the health benefits of coffee and tea.
 - Potential Entrants: Potential entrants to the coffee shop market include
new coffee shops, as well as established chains from other countries.
The threat of new entrants is moderate, as it can be expensive to enter
the market and build a strong brand reputation. However, Starbucks'
position as a market leader and its wide geographic presence can deter
potential entrants. Opportunities for Starbucks include continuing to
build its brand reputation and expanding its market share through
acquisitions and partnerships.

- Opportunities:
1. Expansion into new markets, such as emerging economies, can provide
growth opportunities for Starbucks.
2. The increasing popularity of specialty coffee and tea products can help
Starbucks diversify its product offerings and attract new customers.
3. The growing trend of healthy eating and drinking can be an opportunity
for Starbucks to expand its healthy menu options.
- Threats:
1. Intense competition from established and emerging coffee chains, as
well as fast-food chains and convenience stores, can threaten Starbucks'
market share.
2. Changes in consumer preferences and trends can affect Starbucks' sales
and profitability.
3. The price sensitivity of consumers may impact Starbucks' pricing
strategy, which could affect the company's revenue and profits.

IV. Finalize

1. Economic Environment:
- Opportunities: Increasing consumer spending in developing economies =>
opportunity for Starbucks to expand its presence; The rise of middle-class
consumers=> more likely to purchase specialty coffee; The availability of low-
cost capital=> to finance expansion plans.
- Threats: Economic downturns and recession=> reduce consumer spending and
lead to lower sales; Fluctuating exchange rates=>impact Starbucks' profits.
2. Technological Environment:
- Opportunities: The adoption of mobile and digital technologies=> enhance the
customer experience and increase sales; The development of sustainable and eco-
friendly technologies => reduce Starbucks' environmental impact and attract
environmentally conscious consumers.
- Threats: The risk of cyberattacks and data breaches => damage the brand and lead
to financial losses; The rapid pace of technological change => difficult to keep up
with competitors.
3. Socio-Cultural Environment:
- Opportunities: Growing awareness and demand for healthier food and beverage
options => opportunity for Starbucks to expand its offerings; Increasing interest in
fair trade and ethical sourcing => aligns with Starbucks' values and can attract
socially conscious consumers.
- Threats: Changing consumer preferences and tastes => lead to a decline in sales if
Starbucks does not adapt; Social and cultural differences in different markets,
which can pose challenges for Starbucks' expansion plans.
4. Political/Legal Environment:
- Opportunities: The adoption of policies and regulations that promote sustainability
and environmental protection, which aligns with Starbucks' values; The
availability of government incentives and support for small businesses => expand
its presence.
- Threats: Political instability and conflicts in different markets => can disrupt
Starbucks' operations and affect its profitability; The risk of lawsuits and legal
disputes => damage the brand and lead to financial losses.
5. Competitive Environment:
- Opportunities: Starbucks has the opportunity to expand its product offerings and
differentiate itself from competitors. The growth of specialty coffee and tea
markets => provides opportunities for Starbucks to increase market share.
- Threats: Intense competition from local and international coffee chains and other
beverage companies => threaten Starbucks' market share and profitability;
Changing consumer preferences and trends => lead to a decline in sales if
Starbucks does not adapt.