1. Starbucks Strategy Prepared by - Satya Jagannathan KOTHIMANGALAM

2. Agenda Company Analysis SWOT Analysis International Strategy – India – China Q&A

3. Company Analysis Resources, Core Competencies, Value Chain Analysis, Company Performance

4. 3 main ressources : Coffee beans Tea Dairy product Environmental friendly : Farmer Support Centers Promotion of best practices Green coffee purchasing Product Company Analysis – Resources

5. Shops Vehicles Equipments used to create the cup of coffee Physical Company Analysis - Resources

6. 149,000 employees worldwide (112,000 in the US) Knowledge, skills & adaptability Motivated & committed human ressource policies Human Company Analysis - Resources

7. Great value for the company Intangible & immeasurable resources of SBUX Intangible Resources Company Analysis - Ressources

8. VRIS Framework SBUX’s core competencies : Company Analysis – Core Competencies

9. “People First” philosophy Partner benefits plan SBUX in the “100 Best Companies to Work For” list Human Capital Management The “Starbucks experience” $141.1 million in 2011  Multi- channel advertising The Starbucks Card iPhone app Marketing SBUX’s ambience Hiring the best people Customer Service Company Analysis – Core Competencies

10. Integrate resources and core competencies Create a greater value for customers Value Chain Analysis

11. Customization Value Chain Analysis – Supporting Activities

12. Procure the finest coffee bean Ethical sourcing  Ensure long term sustainability of coffee supply  Implement C.A.F.E Practices Value Chain Analysis – Supporting Activities

13. Training program for employees To provide the standards of customer service and product quality Value Chain Analysis – Supporting Activities

14. Inbound logistics  Collaborate with local mills  Exclusively purveyor of Colombia Narino Supremo Value Chain Analysis – Primary Activities

15. Operations  Gas-fired drum roaster  Monitored by technicians, computer screens Value Chain Analysis – Primary Activities

16. Outbound logistics  Customers can buy Starbucks product online Marketing  Word of mouth  Expansion  Atmosphere Value Chain Analysis – Primary Activities

17. Strong performance prior to economic recession Outperformed the global trend of specialist coffee shops Company Performances

18. Company Performance Slow sales growth in 2008, 2009 Share price, profit drop

19. Company Performance Economy bounce back in 2010 Increase consumer spending on food Retail sales growth

20. SWOT ANALYSIS

21. StrengthWeaknesses Huge product variety High retail presence High growth prospects Products recalls Low liquidity US Overdependence OpportunitiesThreats Acquisitions of competitors to boost revenues Identify emerging economies for expansion Saturation of coffee specialty companies Volatility of energy prices and primary commodities SWOT ANALYSIS

22. Starbucks from 1971 to 2012 SWOT - Strengths

25. SWOT - Weaknesses  USA Overdependence

26. SWOT - Opportunities

27. 2012 marks Starbucks entry in India Alliance with TATA

28. SWOT - Threats

30. International Strategy

31. Market saturation in existing markets Slow growth in retail business in US and Europe Europe market not dominated Starbucks International Trends

32. 76% of total business worldwide High dependency on domestic market Saturated retail market US 1000 stores Only 14% market share Slow growth Western Europe US & Western Europe

33. Introducing new Indian and Chinese blends US – Introduce at retail stores  CPG Europe – Partner with CPG giants  retail stores Solution

34. New Markets

35. Viable market 2 nd most populous country: cheap labour Potential consumers in large middle class Booming economic growth Lifestyle savvy, educated young adults 6th largest exporter and producer of high quality coffee INDIA - Factor Conditions

36. Globally adjusted strategy Critical partnership with Tata Group Many existing competitors Existing brand name worldwide  Conclusion: Starbucks may still be poised for success. INDIA - Firm strategy, Structure and Rivalry

37. 6% coffee consumption growth 7% annual growth in GDP per Capita  Disposable income Over half of India is below 25 years of age Coffee drinking culture INDIA - Demand Conditions

38. Well developed related industry TATA Collaboration Largest coffee company in India Large established network for production and distribution INDIA - Related and Supporting Industries

39. JV with Tata, despite 100% FDI Local knowledge and expertise Mode of Entry

40. Large geographic area Markets are distributed and responses may widely vary Sprinkler strategy Location

41. Transnational Strategy  Global efficiency  Local responsiveness Modify to suit Indian taste palette  Sweets are preferred too sweet  Food is usually spicy and vegetarian choices are important Corporate Level Strategy

42. Lack of Starbucks products on supermarket shelves Can increase visibility and boost marketing Can distribute Indian blends worldwide CPG Expansion

43. Retail partnership with India’s Tata Coffee Ltd Open 50 Starbucks cafés across India in 2012, starting in Delhi and Mumbai this summer 50-50 joint venture In India

44. Concerns Entry into Indian market was delayed twice previously due to the country’s bureaucratic system Joint venture disadvantages Competitor Cafe Coffee Day dominated the India market, providing cheaper and same quality coffee

46. Products tailored for Chinese clients New president for China, in the aim to open 1,500 outlets across Chinese mainland by 2015 In China

47. Moon Cakes

48. New market: Starbucks Refreshers Juice bar Alcoholic beverages Go further

49. Q&A