Starbucks Corporation (Starbucks) is the roaster and retailer of specialty coffee in the world, operating in more than 50 countries. Starbucks purchases and roasts whole bean coffees and sells them, along with handcrafted coffee and tea beverages and a variety of fresh food items, through Company-operated retail stores. It also sells coffee and tea products and license its trademarks through other channels, such as licensed retail stores and, through certain of its licensees and equity investees, the Company produces and sells a variety of ready-to-drink beverages. In addition to its flagship Starbucks brand, its portfolio includes brands, such as Tazo Tea, Seattle’s Best Coffee, and Starbucks VIA Ready Brew. Starbucks has three operating segments: United States (US), International, and Global Consumer Products Group (CPG). In October 2010, the Company acquired Magic Johnson Enterprise’s remaining 50% interest in Urban Coffee Opportunities.
The US and International segments both include Company-operated retail stores and certain components of specialty operations. Specialty operations within the US include licensed retail stores. International specialty operations include retail store licensing operations in nearly 40 countries and foodservice accounts primarily in Canada and the United Kingdom. Its International segment’s markets are Canada, Japan and the United Kingdom. The CPG segment includes packaged coffee and tea, Starbucks VIA Ready Brew and other branded products sold worldwide through channels, such as grocery stores, warehouse clubs and convenience stores, and the United States foodservice accounts. CPG operates a portion of its business through licensing arrangements and a joint venture with a large consumer products business partner. The Company purchases green coffee beans from multiple coffee-producing regions worldwide. Starbucks operates Farmer Support Centres in Costa Rica and Rwanda. In addition to coffee, it also purchases dairy products, particularly fluid milk, to support the needs of its company-operated retail stores. Products other than whole bean coffees and coffee beverages sold in Starbucks retail stores are obtained through a number of different channels. Beverage ingredients other than coffee and milk, including leaf teas, as well as its selection of ready-to-drink beverages, are purchased from several specialty suppliers, usually under long-term supply contracts. Food products, such as fresh pastries, breakfast sandwiches and lunch items, are purchased from national, regional and local sources. It also purchases a range of paper and plastic products, such as cups and cutlery, from several companies to support the needs of its retail stores, as well as its manufacturing and distribution operations.
External Environment market:
Starbucks international operation was one of the major aspects of their success. , in the mid 1990s, with the market reaching saturation, Starbucks could no longer depend on the U.S. market for growth. To maintain its growth rates and to boost revenues, Starbucks had to venture abroad. Starbucks international presence is now in more than 25 countries and the United States of America. This presence is formed in three modes in entry that are Joint venture, licensing and wholly owned subsidiaries. This became a burden on the mother company in a later stage. That those types of entry moods need a lot of training, supervising, management assistance and technology transfer for the partner. This is along with inability to engage in global strategic coordination.
However, the success of Starbucks is not only to its aggressive expansion but also to its product innovation. Starbucks came out with new products to attract customers on different periods. Also diversification was one of the factors that Starbucks started to apply even on a small initiated base. That along with serving coffee, Starbucks also sold merchandise. In…