Q2: Suggest with justifications five implementation issues that can be considered as improvements in Starbucks Strategy.

Q3Based on your current Starbucks Case Study and your conduct of SWOT analysis in the GCC region, conduct product positioning by recommending four products to be part of Starbucks menu based on market segmentation

Q4:Critically analyse Starbucks strategy using strategy evaluation components and suggest other strategies that can be used. .

1) Introduction: Starbucks Corporation, an American company founded in 1971 in Seattle, WA, is a premier roaster, marketer and retailer of specialty coffee around world. Starbucks has about 182,000 employees across 19,767 company operated & licensed stores in 62 countries. Their product mix includes roasted and handcrafted high-quality/premium priced coffees, tea, a variety of fresh food items and other beverages. They also sell a variety of coffee and tea products and license their trademarks through other channels such as licensed stores, grocery and national foodservice accounts.1 Starbucks also markets its products mix with other brand names within its portfolio of companies, which include Teavana, Tazo, Seattles Best Coffee, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, La Boulange and Verismo. Starbucks had total revenue of $14.89 billion as of September 29th, 2013.2 2) External Environment Of The Retail Market For Coffee & Snacks: 2.1) Industry Overview and Analysis: Starbucks primarily operates and competes in the retail coffee and snacks store industry. This industry experienced a major slowdown in 2009 due to the economic crisis and changing consumer tastes, with the industry revenue in the US declining 6.6% to $25.9 billion. Before this, the industry had a decade of growth consistent. Due to the economic slump, consumers spent less on luxuries like eating out, choosing to purchase low-price items instead of high-priced coffee drinks due to shrinking budgets.3 The industry grew at a low annualized average growth rate of 0.9% from 2008 till 2013 with current industry revenues at $29 billion in the US. The industry is now forecasted to grow at an annualized rate of 3.9% over the next five years, with a potential to reach $35.1 billion revenues in the US. This growth would be mainly driven by an improving economy, increase in consumer confidence and expanding menu offerings within the industry. Starbucks dominates the industry with a market share of 36.7%, Dunkin Brands with 24.6% and other competitors like McDonalds, Costa Coffee, Tim Hortons etc. taking the rest as shown in Appendix 1.4 2.2) Industry Life Cycle and Market Share Concentration: This industry is in a mature stage with a medium level concentration. Starbucks and Dunkin Brands make up more than 60% of the market share (Appendix 1), giving them considerable market power in determining industry trends. Industry Structure is given in Appendix 3. 2.3) Industry Demand Determinants and Profitability Drivers: The industrys demand for premium coffee and snack products are mainly driven by a number of factors which include disposable income, per capita coffee consumption, attitudes towards health, world pricing of coffee and demographics. This industry is highly sensitive to the macroeconomic factors that affect the growth in household disposable. During the recession, the decline in household disposable income due to increased unemployment and stagnant wages, caused a downward pressure on the revenue and profitability margins in the industry. Another crucial factor for analyzing the demand in the industry is the per capita coffee consumption where the increase in coffee consumption increases the revenue of coffee & snack shops. The main driver of this consumption increase would be the increase disposable income, as the economy improves and consumers start to relax their budgets. This driver has a positive effect on market revenue. Per capita coffee consumption is expected to increase in 2014. As coffee beans are the primary input in the value chain of the industry participants, the prevailing volatile prices of coffee beans determines market costs and profitability margins. The world price of coffee has risen sharply in recent years due to growing demand in other countries and the resulting supply shortages. During the five years to 2018, coffee bean prices are projected to decrease, which will likely translate into lower market costs and higher profitability.5 Attitudes towards health also play an important role in determining the demand in the industry. Strategic Analysis Of Starbucks Corporation There is an expected shift towards healthy eating and diet among the consumers in 2014, and this could be a potential threat to the industry as they become more aware of issues related to weight and obesity. There has been a proactive shift among the industry participants to tailor their menus towards more organic and healthy products mix. 2.4) Porters Five Forces Analysis of the Retail Coffee and Snacks Industry: Threat of New Entrants: Moderate There is a moderate threat of new entrants into the industry as the barriers to entry are not high enough to discourage new competitors to enter the market. (Appendix 2 shows Barriers to Entry Checklist). The industrys saturation is moderately high with a monopolistic competition structure. For new entrants, the initial investment is not significant as they can lease stores, equipment etc. at a moderate level of investment. At a localized level, small coffee shops can compete with the likes of Starbucks and Dunkin Brands because there are no switching costs for the consumers. Even thought its a competitive industry, the possibility of new entrants to be successful in the industry is moderate. But this relatively easy entry into the market is usually countered by large incumbent brands identities like Starbucks who have achieved economies of scale by lowering cost, improved efficiency with a huge market share. There is a moderately high barrier for the new entrants as they differentiate themselves from Starbucks product quality, its prime real estate locations, and its store ecosystem experience.6 The incumbent firms like Starbucks have a larger scale and scope, yielding them a learning curve advantage and favorable access to raw material with the relationship they build with their suppliers. The expected retaliation from well-established companies for brand equity, resources, prime real estate locations and price competition are moderately high, which creates a moderate barrier to entry. Threat of Substitutes: High There are many reasonable substitute beverages to coffee, which are mainly tea, fruit juices, water, sodas, energy drinks etc. Bars and Pubs with non/alcoholic beverages could also substitute for the social experience of Starbucks Consumers could also make their own home produced coffee with household premium coffee makers at a fraction of the cost for buying from premium coffee retailers like Starbucks.