Starbucks France: The value chain

Résumé du document

Found in 1971, Starbucks Corporation is the leader in the coffee shops industry, with a turnover of $9,411.5 million in 2007 (source: Datamonitor). Its main activity is to manage coffee shops (85% of its turnover) and to sell licenses (10,9%), but Starbucks has also diversified its activity (4,1%) by selling new products (food, machines, tools…), buying subsidiaries in the catering sector (Tazo Tea Company, Seattle's best coffee), selling its products out of coffee shops (airlines, hotels, outlets…) and even has an activity out of the coffee sector with Hear Music, its record label.

Since 1987, Howard Schultz, who is the current CEO, has owned the company. With him at the head of the firm, it became international. Nowadays, even if its main market is clearly in the USA, Starbucks is known worldwide, having more than 8500 coffee shops under its name and more than 6500 licensed shops.

Extraits

[...] The marketing concept of Starbucks is a great success, dealing on one hand with equity and fair trade, and on the other sharing a peculiar atmosphere and the Starbucks Experience in the warm and welcoming stores. In 2007, the net income of the firm was 672.64 million dollars. How does the company manage to be so profitable? It optimizes its value chain. The value chain Primary activities Supply: The firm acquires very efficiently its resources. Indeed, Starbucks negotiates directly with the coffee producers, which explains that problems are rare. Moreover, Starbucks gives higher price to the coffee producers, which contributes to optimize this activity of the value chain. [...]

[...] Starbucks roasts its coffee beans by itself. Moreover, there are new “coffee-making equipments like the PID (Proportional Integral and Derivative) controller for espresso machines, technology that amps up the ability for better control over temperature and coffee stability”. Source: FRALIC Shelley. The Geek side of the coffee business. Vancouver Sun [Online] Starbucks believes in innovation, it is a part of the Starbucks Experience. As a result, research and developments is a key of the strategy of the firm to challenge the status-quo. [...]

[...] Starbucks has suppliers from various areas in the world. This strategy gives two advantages to the company. First, customers can have a large range of kind of coffee. Secondly, Starbucks minimizes the risks such as for example the weather, political issues Starbucks has its own agents to meet growers and distributors worldwide. In order to preserve equity and their aim of a responsible business, they buy coffee at a high price to ensure so farmers have enough money to ensure their production costs and family life. [...]

[...] Production: Starbucks transforms coffee beans from all over the world into delicious beverages. But it also sells them in packages. It acts in the same way for tea. It has proven to be a very efficient method. Commercialization: In France, Starbucks products are available only on the coffee shops of the brand, and online. But they are likely to be sold in other places like cinemas or theaters in the future. The commercialization is likely to evolve to create more value for the company. [...]

[...] Partners of Starbucks are real assets for the company. They are well trained to give a perfect service and inform customers. Starbucks shows them consideration, offering those benefits as for instance stocks options and providing insurances, and full part benefit for part time employees. How nice to work for Starbucks! It is one of the factors explaining the low rate of staff turnover in the company compared to other companies in the same sector. As a conclusion, we wanted to highlight how efficient this value chain is, and how well it contributes to add value for the Starbucks Company. [...]