Since 1992 Starbucks has been a publicly listed company on the National Association of Securities Dealers Automated Quotations (NASDAQ) with its trading name as “SBUX” with its main headquarters located in Seattle, Washington, United States of America U.S.
Starbucks has held its position as a premium café chain by purchasing and roasting high-quality whole bean coffees and selling them, with handcrafted coffee and tea beverages and a variety of fresh food items. Starbucks Coffee Australia was founded by Starbucks Corporation in the U.S, entering into the Australian market in the year 2000 through a joint venture and license agreement.
In mid 2008, it had closed 61 of its stores and currently 22 remain in Australia. It is currently 90% majority owned by Starbucks Corporation and it has never been its intention to become a franchise operation2. Analysts had commented that there was a symbol of ‘Americanisation’ and commercialism to the Australian people that was viewed as ‘cold’ and ‘corporate’.
This was attributed by a poor marketing strategy through a homogenised product offering, lack of customer value to the Australian community and using a ‘blanketing’ strategy, one which was akin to the business model in the U.S. Since then it has aimed to focus only on its best-performing stores in Australia by focusing on delivering value to specific customer needs it has increased profits dramatically.
The report will analyse the managerial organisational structure of Starbucks Coffee Australia and a balanced score card which has been developed to identify possible remedies on its current system.
2.0 Starbucks’ Business Strategy
Starbucks’ business strategy is identical to its corporate level strategy, as the organisation is currently a single business company, which solely focuses on coffee related products and retail outlets. The Starbucks’ mission is to establish itself as the premier purveyor of finest coffee in the world: “To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time”. It enforces this through the (6) guideline principles: their coffee, partners (employees), customers, shareholders, stores and neighbourhoods in which it operates.
2.1 Business Mission
According to IBISworld, Coffee is regarded to be the second most consumed beverage after water, the café and coffee shop industry is expected to have an expansion of international coffee houses, growth over the next five years due to a more positive outlook on the overall economy and effect on disposable income. Despite Starbucks’ closing a number of its stores due to unprofitable losses, the emerging market of the coffee culture in Australia, has led to sustaining their percentage share of the market with the possibility of slight growth in future periods. It can be concluded that the business is currently adopting a ‘hold’ mission in order to protect its business unit’s market share and competitive position7.
2.2 Competitive Advantage
Starbucks’ gains their competitive advantage by differentiating its product offering with that of other competitors7. Starbucks Australia confirmed by e-mail on 26th September its main direct competitors include; Gloria Jeans, McCafe, Hudson coffee and other small coffee chains. It pursues a differentiation strategy from the following:
2.2.1 Product Quality & Image
- Breadth of product range: Exceeds offerings of other coffee chains, by having; various styles of espressos, filtered coffee, Tazo tea and unique flavours, such as green tea lattes5.
- Pioneer in Speciality coffee innovation: Devoted in sourcing and roasting the highest quality and ethically harvested Arabica coffee in the world5. Offers its “pour over brewing method” that allows decaffeinated coffee or bold brewed coffee when its coffee is not already brewed (after hours) 5.
Social responsibility: Part of an annual developmental program to contribute positively