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CUEGIS Notes for Starbucks Company background Starbucks, an American company founded in 1971 in Seattle, USA, is a premier roaster, marketer and retailer of specialty coffee around world. Starbucks has about 182,000 employees in more than 27,000 stores out of the world. Starbuck's aim: providing best and finest quality of coffee to the customers over the world. Starbuck's mission statement: to top seller in finest quality of coffee but keeping in view of uncompromising principles while the company growing and wants more profit.

Change Change is driving forces and restraining forces! creates change in a business so that they can!move forward and remain competitive. In 2011, Starbucks was able to target new customers (non-coffee drinkers) with new products through the acquisition of Evolution Fresh. In addition, acquiring Evolution Fresh enabled Starbucks cater for customers who preferred healthy drinks and salads to its core product. Evolution Fresh has been very successful with some of its bars enjoying annual sales of over $1 million. While this change will help Starbucks to establish itself in the fruit juice market, it is an industry which is already saturated, which also illustrates the risks of this growth strategy. However, the acquisition has paid off for shareholders, who have seen share value improve significantly since 2011. Regarding its beverage menu, when Starbucks entered the Chinese market, the company had to change it. Starbucks focused on its core products and while doing so, Starbucks in China introduced the green tea flavored latte in order to meet the preferences of Chinese customers. Due to this product focused strategy, Chinese customers quickly developed a taste for Starbucks and its coffees, which has been essential to it gaining brand awareness in China. However, perhaps due to the lack of market research, some products such as the Spicy Macchiato were not highly appreciated in China.

Culture Culture is the norms of an organization, a country, or other social grouping. Culture! shapes the values, beliefs, and customs of people. The price of Starbucks products would also be influenced by the cultures in the differing countries. Germany is considered a MEDC compared to Malaysia, for example. In Germany, due to consistent high quality of life, many people drink coffee and dine at cafes as it has become a lifestyle and social norm. Coffee is seen as a staple in Western culture, and the majority of people in Germany grab a coffee on the way to work. This allows Starbucks to set the prices of its products relatively high as there is a high demand for coffee products. However Malaysia has many competing local drinks such as Bubble Tea so there is a lesser demand for coffee drinks as it is also more commonly seen in Western cultures. Starbucks would be able to break even if they used competitive pricing and priced products at slightly lower than competitors to increase sales. However, Malaysia is becoming more modern and also attracts tourists therefore Starbucks may still survive. Furthermore, the price of a Starbucks drink is slightly lower in China compared to the USA. Still, it represents a premium drink for the average Chinese customer. Culturally, consuming a foreign branded product, such as Starbucks coffee, is a status symbol for the Chinese. This also attracts Chinese customers who want to experience Western culture. However, the premium prices also mean that unlike American culture where the average person

consumes coffee with relatively ease, far fewer people in China are able to enjoy a Starbucks coffee. Starbucks and its relaxed environment: Customers are free to stay without being asked to buy another cup of coffee. This business model was quite unique when it first came to China. Starbucks is still seen in many provinces of China as ‘new’ and trendy, which has often resulted in positive word of mouth promotion via WeChat’s hundreds of millions of users. However, the American style of customer service is not always appreciated in China as customers are expected to go to the cashier to pay and order, whereas in Chinese teashops they are personally served at the table with the menu. This strategy left many Chinese customers with an unexpected and sometimes unwanted experience, which lead to some negative word-of-mouth. This strategy was not favoured in the short term, but as Starbucks has become better established, Chinese customers have warmed to the Western practice.

Ethics Ethics are the! socially accepted moral principles that guide decision making, based on the collective belief of what is right and what is wrong. Starbucks uses cocoa beans obtained only from workers who are paid at least the minimum wage and are not children. They promote this on all of their products to maintain a socially responsible brand image.

Globalization Globalization is worldwide!movement toward economic,!financial,!trade and!communications!integration Starbucks targeted the niche in the market which allowed it to easily globalize and spread its risks. In 2003, Starbucks quickly expanded into foreign markets and began to evolve into the world-wide company we know today. Countries began experiencing the “Starbucks Effect,” which is the continuous emergence of new competitors with superior business models that force businesses to reconsider the viability of what they’ve always done. Globalization has impacts on all other CUEGIS.

Innovation Innovation generally refers to! changing or creating more effective processes, products and ideas, and can increase the likelihood of a business succeeding. Mobile Order & Pay This allows Starbucks customers to order in advance via an app and pick up their order from their chosen location, thus eliminating queues and making coffee-to-go even more convenient. Payments are made through the Starbucks loyalty card, which creates operational efficiency as it reduces credit card costs and rewards the customer. The technology frees up more employees towards production and enables faster execution of orders. MyRewardsIdea This was created as a crowd sourcing community website in 2008 to collect ideas, suggestions and feedback from customers. Other users comment and vote on the ideas, and Starbucks informs them once they have launched. Starbucks also pilots its most innovative ideas across three stores in Seattle which Schultz describes as the company’s “laboratory.” The notion of selling alcohol was first tested here.

Strategy Strategy is!devising!plans to achieve the long-term goals!of an organization. One of the key strategy that Starbucks followed is that of product differentiation offering differentiators such as premium product mix, locations, coffee beverages reputation and supreme customer service that translated to building a premium valued brand which is costly to imitate for competitors. Starbucks has also followed a shrewd strategy of strategic alliance and making smart acquisitions. Starbucks didn’t follow franchising model and operated company oriented stores and joint ventures in international markets. Starbucks has made some key acquisitions such as Teavana, Bay Breads, Evolution Fresh etc. to use the product diversification strategy. Starbucks acquisition strategy, has been horizontal, product and market extensions acquisitions. Alliances and Joint ventures strategy: In 1995, Starbucks invested $1.5 Million and established a new company in the name of Starbucks coffee International, only for the expansion of the international business specific in Asian Region. Strategy was licensing to local retailers and stores keepers and sell coffee to them after them they sold to customers in this way starbucks only gained licensing fees and royalties on revenues. Starbucks strictly ensured that all stores following same formula of starbucks. Starbucks Competitive Advantage strategy: In this strategy Starbucks Focused on Differentiation .in this way always focused and preferences to on serve niche customers than rivals. Starbucks have very important and unique capabilities to serve target buyers from segmentation. Starbucks very profitable and have very good and extra ordinary resources and capabilities to serve niche buyers. Starbucks Global Market Mix Strategy: There is no change in retail system and operates in same way throughout the world where Starbucks have its businesses. Advertisement of Starbucks product play very important role and have strong instrument in the success of business. The important thing of advertisement of Starbucks is that that advertisement change by country to country according to their trend, culture, customs etc means there is no standardization of advertisement so in this way Starbucks Advertisement is more effective.

References: https://www.reddit.com/r/IBO/comments/635cc5/group_3_business_cuegis_essay_help/ h t t p s : / / w w w . g o o g l e . t g / u r l ? sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ved=0ahUKEwi8hrWH7cTaAhVKBcAK HRzdAEYQFghRMAY&url=https%3A%2F%2Fscholar.harvard.edu%2Ffiles%2Fnithingeereddy%2Ffiles% 2Fstarbucks_case_analysis.pdf&usg=AOvVaw0bwsy8oycuVQfzYdgggvgO https://www.ogilvy.com/topics/tech-innovation/5-shots-of-innovation-from-starbucks/ http://siulaw.typepad.com/international_ip_policy/2011/09/the-globalization-of-starbucksand-its-effect-on-the-world-to-be-presented-ryan-hart.html...