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Title: Sturbucks in U.S, Japan, China


1
Going global fast
  • Starbucks Coffee

2
Group One Members
3
Presentation Contents
  • Company Profile
  • Company Performance
  • SWOT Industry PEST Analysis
  • Profile of USA, Japan, and China Operations
  • Conclusion
  • QA

4
Company Profile
  • Starbucks Corporation engages in the purchase,
    roasting, and sale of whole bean coffees
    worldwide. It offers brewed coffees,
    Italian-style espresso beverages, cold blended
    beverages, various food items, and a selection of
    premium teas, as well as beverage-related
    merchandise and equipment, through its retail
    stores. In addition, Starbucks Corporation
    produces and sells ready-to-drink beverages,
    which include bottled beverages, espresso drinks,
    chilled cup coffees, and ice creams. Its brand
    portfolio includes Starbucks, Seattles Best
    Coffee, Tazo, Frappuccino, Starbucks DoubleShot,
    Starbucks Discoveries, Starbucks super-premium
    Tazo Tea, and Starbucks super-premium. As of
    September 27, 2009, the company operated 8,800
    retail stores. Starbucks Corporation was founded
    in 1985 and is based in Seattle, Washington.

5
5 year stock performance
6
SWOT Analysis
7
Strengths
  • Well-recognized Brand
  • Having made public since 1982, The Starbucks
    coffee brand is the most well recognized coffee
    brand in the world. With its strong brand
    awareness from its consumer, Starbucks coffee
    even has its own loyal consumers.
  • Branches Everywhere
  • The expansion of so-called blanketing the area
    with stores proven to be succeeded and has made
    this coffee shop ubiquitous and has increased the
    level of satisfaction of its consumers.

8
Strengths
  • Attractive, Comfortable and Entertaining Stores
  • Well-equipped with comfortable chairs, wireless
    internet connections, and even selection of
    music, make Starbucks as one of the coziest
    hangout place for having a discussion with
    friends, searching for inspiration a and even
    rendezvous spot.
  • Innovative Ways to Attract Consumers
  • Innovations on its products including Technology
    Innovations, ex Starbucks Express, new varieties
    of coffee and pastries each month and also have a
    special service such as the ability to burn your
    own music CD from the sample online music you
    hear in the counter.

9
Weaknesses
  • Expensive Price
  • Being positioned as a premium coffee brand, an
    average price of a cup of Starbucks coffee is
    considerably expensive. 3 for a cup of coffee
    will make its price-sensitive buyer will look for
    other brand that is less cheaper but offer the
    same value (ex Coffee Bean Tea Leaf, 85
    degree).
  • High Employee Turnover
  • Nowadays, working in Starbucks has not been the
    greatest experience ever again. Since the pay of
    the workers doesnt come close with the daily
    workload they have to handle. This thing will
    also affecting on Starbucks reputation. With
    their premium brand positioning, they supposed to
    have delivered its employee a better salary.

10
Opportunities
  • Strong brand image in customer mind about
    coffeeshop
  • Fastest global brand Best Global Brand ( 90th
    place in 100 Global Brand Rank 2009 )

11
Opportunities
12
Opportunities
  • Operates 1,200 stores build overseas plenty
    room to grow the business
  • Opening stores in Vienna, Zurich, Madrid, Berlin,
    Jakarta, Mexico, Puerto Rico - new opportunities
    to expanding to other countries and new target
    market

13
Threats
  • Target of terrorism, as a symbol of free-market
    capitalism.
  • Self cannibalism because so many stores close
    together
  • Experience saturated and mature market
  • in U.S
  • Growing competition in rival coffee chain.
  • Demographic shift baby boomer 90 to future
    consumers

14
Industry pest analysis
15
Industry PEST Analysis
  • Political Influences
  • Relationships between coffee producing nations
    and US
  • State Local government controls
  • Economic Influences
  • Constant demand for food and beverages
  • Changes in disposable income could influence
    purchase levels
  • Social Influences
  • Consumer preferences could shift from coffee to
    other beverages
  • Technological Influences
  • Use of technology can improve operational
    efficiencies

16
Usa
  • Regional Operations Profile

17
USA Operations
  • Starbucks Corporation is an international
    coffeehouse that has built one of the world's
    most powerful and recognizable brands upon
    high-quality coffee and the unique "Starbucks
    Experience."
  • Starbucks has sought to capitalize on its growing
    popularity through expansion the addition of
    over 1,500 stores in just over a year brought its
    total store count to over 16,600 in 2008. In
    fiscal 2008, the company's stores (retailer and
    licensed) generated US 10.4 billion in revenue

18
USA Operations
  • Self-Cannibalization Risk
  • An additional challenge facing Starbucks may be
    its own dominance - with a Starbucks on every
    street corner in some parts of its core U.S.
    market and an average of 8.5 new locations opened
    weekly in the country.

19
USA Operations
  • Self-Cannibalization
  • Starbucks percentage of new stores growth
  • In 1999 it had 2,000 stores but in 2007 it was
    pushing a 10,000 company owned stores mark. Lets
    put this in perspective in 1999 Starbucks opened
    447 stores - 1.8 stores per working day in 2007
    that number more than tripled to 1,403 stores a
    year - 5.5 stores per working day.

20
USA Operations
  • Economic Recession
  • With the current economic conditions, Starbucks
    faces significant headwinds. While past concerns
    over commodities prices, particularly coffee
    beans and milk, have subsided, a shift in
    consumer spending triggered by a global economic
    recession may decrease sales in the coffeehouse
    market in general.

21
USA Operations
22
USA Operations
23
USA Operations
  • Starbucks has set the following financial and
    operational targets for fiscal 2010
  • The company is targeting revenue growth in the
    low-to-mid single digits, driven by modestly
    positive comparable store sales, a 53rd fiscal
    week, and approximately 300 planned net new
    stores.
  • Starbucks is targeting approximately 100 net new
    stores in the U.S. and approximately 200 net new
    stores in International markets. Both the U.S.
    and International net new additions are expected
    to be primarily licensed stores.

24
USA Operations
  • Starbucks outlook on the U.S. operating margin
    has further improved the company is now
    targeting full-year operating margin improvements
    for both the U.S. segment and the International
    segment (excluding restructuring charges) of 200
    to 250 basis points. The CPG segment margin is
    expected to remain in its current range of 35 to
    40. The cumulative result of these expected
    margins is a consolidated non-GAAP operating
    margin that is anticipated to reach double
    digits.
  • Capital expenditures are expected to be in the
    range of 500 million to 550 million.
    Approximately half of this amount will be
    allocated to renovations and store equipment
    upgrades, one quarter to systems upgrades, and
    one quarter to new stores and other capital
    investments.
  • Starbucks expects cash flow from operations to be
    approximately 1.4 billion, and free cash flow of
    approximately 900 million.

25
Japan
  • Regional Operations Profile

26
Japan Operations
  • For the Japanese, tea is a traditional bracing
    drink during a day, although it does not mean
    that there is no demand for coffee. Japan is the
    3rd biggest importer of coffee in the world(2008)
    gt Japan a good market for coffee industries
  • Japan approach to Japaneses life was a huge
    challenge for Starbucks. Different tastes,
    cultural like smoking and Japanese fluctuating
    economy made Starbucks to face real problems

27
Japan Operations
The trend for smoking in Japan is well known.
Many people smoke and expect to be able to smoke
in the restaurants, pubs and coffee
shops. Starbucks became a very popular place
among non-smoking females who wanted to drink
their coffee in peace away from smoke and crowd
  • Moreover, the policy of Starbucks was to be
    everywhere and do not let the customer to cross
    the street. What is more, people were surprised
    by the amount and location of Starbucks stores.
    The stores are located very close to themselves

28
Japan Operations
  • The Japanese perfection and hard-working, a huge
    market potential for coffee in Japan. Big
    population and fast lifestyle attract the
    Japanese to drink more coffee instead of tea
    which is already well known. Coffee company has
    to be well prepared and offer something more than
    just an average taste coffee
  • Starbucks had an experience on other non American
    markets and is known worldwide. The expansion was
    quite risky, Starbucks assumed that they do not
    have to localize Starbucks and its goods on the
    Japanese market

29
Japan Operations
  • Starbucks Japan's fiscal Q1 pretax profit
    (quarter ended June 30) rose 9.4 to 1.32 billion
    yen (11.1 million), driven mostly by expanded
    food sales. Its food menu was updated to match
    local tastes better, and also to capitalize on
    the fact that 80 of customers consume in-store,
    whereas the same percentage of customers take-out
    in the U.S. The main reason for Starbucks Japan's
    difficulties is due to intense competition coming
    not only from rival coffee shops, but also from
    convenience stores and vending machines. Japan is
    Starbuck's second largest market with 630 stores
    and plans for 1,000 by 2010

30
Japan Operations
  • A "local" strategy it implemented last year has
    paid off nicely so far but why ruin a good thing
    by putting pressure on the firm to expand at that
    rate compared to its 50-75 new store range over
    the past two years. Starbucks Japan currently has
    624 stores.

31
Japan Operations
  • The market is not quite saturated and the brand
    continues to grow.
  •  Besides the introduction of Japanese-style
    drinks, the company has significantly expanded
    its food offerings, including a special line
    of Wellness sandwiches. 

32
Japan Operations
  • Moreover Starbucks may be on the way to extending
    itself into Japan's high-end cafe market.
  • Opening of a luxury Starbucks Cafe in Tokyo's
    Roppongi Hills is imminent, and that the posh new
    shop is part of a Japan-only effort to strength
    the brand's competitiveness.

33
china
  • Regional Operations Profile

34
China Operations
  • Starbucks eyes China as next major market
  • China, tea-drinking country will be 2nd home
    market for Starbucks after U.S. It's going to be
    a huge opportunity for Starbucks.
  • The first Starbucks store located in mainland
    China Beijing in Jan of 1999 through a
    licensing agreement with Mei Da Coffee Co.Ltd.
  • It has also opened in the China cities such as
    Changzhou, Chengdu, Chongqing, Dalian, Dongguan,
    Foshan, Hangzhou, Kunshan, Nanjing, Ningbo,
    Qingdao, Shaoxin, Shenyang, Shenzhen, Suzhou,
    Tianjin, Wuxi, Wuhan and Xian .

35
China Operations
  • Customers in China have embraced the high-quality
    arabica coffee, personalized handcrafted
    beverages and the unique Starbucks Experience
    offered in Starbucks stores. And Coffee
    represents change in a new western lifestyle and
    its becoming more popular for the young people
    in China.
  • Starbucks shares our coffee passion and expertise
    with customers in China by encouraging them to
    sample, savor and enjoy its premium coffee.
  • At the end of the second quarter of fiscal 2009,
    there are more than 690 Starbucks locations
    throughout Starbucks Greater China, which
    includes the Peoples Republic of China, Hong
    Kong, Macau and Taiwan.

36
China Operations
  • Starbucks will see China become the company's
    next major market after the United States in the
    near future. "It's absolutely very, very
    important. This has really become our second home
    market," said Wang Jinlong, the company's head
    for Greater China. Wang said profit
    contributions from the rapidly growing Chinese
    market more than doubled in 2009. Starbucks
    Chief Executive Howard Schultz said earlier this
    month he saw the potential for thousands of
    stores in China. Starbucks, whose current 2010
    forecast calls for 100 net new stores in the
    United States and around 200 net new
    international cafes, has nearly 700 cafes in
    China. Starbucks also raised its financial
    forecasts for 2010, a sign a year-long turnaround
    effort is boosting margins and putting it back on
    track for growth.
  • Source Reuters Nov 24, 2009

37
conclusion
38
Conclusion
  • Starbucks is going to be a larger company 3, 5,
    and 10 years from now. The main reason Starbucks
    will grow is because coffee and tea are both
    enormous markets, domestically and globally.
    Second, Starbucks has low penetration rates in
    terms of the number of locations it has,
    especially in the BRIC countries. Finally,
    Starbucks has nice potential for growth in
    packaged coffee, ready to make beverages, and the
    instant coffee markets, especially
    internationally.
  • http//seekingalpha.com/article/172178-why-starbuc
    ks-will-grow

39
  • Q A
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