The Company of Starbucks - Research Proposal Example

? Project: Business Proposal Introduction The world of the 21st century is living in an era of rapid change and fast development. The emergence of the high speed internet powered technological connectivity along with the factor of rapid rise and faster acceptance of diverse range of technological gadgets like the Smartphones, laptop, I-pads etc has resulted in the faster evolution of various kinds of social and demographic trends. Talking on these lines, it needs to be mentioned that the emergence of the various kinds of social and demographic trends is paving the way for diverse kinds of trends associated with globalization. While discussing in a more specific manner, it can be said that the rapid evolution as well as tremendous advancement of connectivity technology has resulted in the faster access to information by consumers around the world. This has resulted in the shifting of the power balance from the sellers to the consumers. While consumers are getting more and more demanding in nature, because of their high access to information related to various products and services around the world, the sellers are getting under intense pressure to cater to the needs of the masses. This is resulting in connecting economic policy based developments with regards to political movements of many new and emerging regions, which is thus resulting in the emergence of new economies. Talking from the sellers’ point of view, it is important to mention that because of the high level of connectivity, the world of business has transformed itself into a single connected entity. Needless to say, because of the existence of a single connected world, gaining access to foreign and newer markets has become relatively easy as compared to the previous times. This is resulting in providing the boost to the companies and business organizations, in regards to the process of gaining information to the newer markets. It can be said that because of the easy access to information, the organizations are increasingly focusing on the process of entering new markets. This is resulting in the spiking of the level of competition in regards to the new markets, as in the recent times the more developed and well established markets of the West is facing a situation of stagnancy and low growth because of the multiple economic challenges. Because of the high amount of competition faced in the marketplaces of both the developed as well as the developing economies, the focus has increasingly shifted towards the multiple variables of marketing like product, place, promotion and price. For this project, it is important to mention that the company that has been selected is Starbucks. The entire project will highlight about the various issues related to the company of Starbucks as well as its related services in the various markets around the world. History of Starbucks It can be said that the company Starbucks was founded in the year 1971 in Seattle in America. The company opened with just a single store in the historic area of Pike Place Market and has entered into a mode of high growth and fast development. It is important to mention that the first chairman, president and chief executive of the company is Howard Schultz, who joined the organization in the year 1982. It has to be said that the first top level executive of the company had the vision of bringing the tradition of Italian coffee to the US. He also had the dream of building an image of a place for human interaction as well as community sense over a cup of coffee. Hence, the focus from the very beginning was not only on the product but was also on developing a feeling for the product as well. The mission of the company is to inspire and develop the spirit associated with a cup of coffee for a person at a single neighbourhood at any time. As of the recent day, the company Starbucks operates in over 62 countries, which are spread in various developing as well as the developed economies (Starbucks, “Our Heritage”). Product of Starbucks It is of considerable importance to mention the fact that the coffee brand Starbuck, ever since its early days of inception has always focused on the process of promoting coffee as a lifestyle product. It is of highly interesting to note that as of today’s date, the Starbucks Coffee Company has been highly successful in developing a popular coffee culture all over the world. Talking in the theoretical and textbook language, it needs to be mentioned that the product factor in the marketing mix, talks about the process of value creation for the customers. It is the basic medium using which the customers’ needs, wants and desires are fulfilled and the satisfaction level of the customers is increased. Talking on these lines, it can be said that the customer offerings of the brand Starbucks are to some extent diverse in nature. The product offering of Starbucks comprises of its flagship beverage along with multiple bakery based products. The beverage portfolio of Starbucks is to some extent diversified in nature and comprises of items like bottled drinks, brewed coffee, espresso and frappuccino beverages as well as chocolate beverages (Starbucks, “Drinks”). Also, the bakery based offerings comprises of multiple standard bakery products, breakfast items, sandwiches, ice creams and yogurt (Starbucks, “Food”). Talking on the lines of service offering of Starbucks, it can be said that the coffee brand has successfully positioned itself as a lifestyle product in the market. Hence, to augment its product appeal, the Starbucks Coffee Company offers a series of services. It can be said that the main aim of these services is to provide a special environment to its customers. As a result, it provides a series of technology based utility services to its customers like free wi-fi based connectivity, Starbucks mobile application for Iphone and Android systems (Starbucks, “AT&T Wi-fi (United States)”). It is of considerable importance to mention that these services do not fall in the basic product offerings of the company. The services are offered as a free additional package with any product purchase for any customer. It is very important to mention that by offering the free digital services, which falls in the domain of expected product offering for the US based consumers; the popular US based coffee company is highly successful in increasing the happiness quotient of the consumers with regards to the Starbucks products. Legal Issues It has to be said that the legal issues of an organization falls in the purview and domain of external environmental analysis for the organization. While talking on these lines, it needs to be mentioned that the legal issues faced by organization are highly individualistic in nature, and differs on a case by case basis. Starbucks, from the very beginning of engaging in the business of delivering coffee to its customers, has focused on compliance to its core values. It is hereby of considerable importance to mention that the core values, which acts as the pillars of strength for the globally present and widely popular coffee company has been designed on the basis of abiding of various laws as well as addressing of issues related to ethics. Talking on the lines of legal issues of Starbucks, it can be said that the company focuses on strong compliance with the diverse set of rules, regulation and laws that are applicable in its regions and countries of operations. The company also takes a step forward in regards to ensuring that all its stakeholders like the suppliers and partners comply with domestic as well as international laws in regards to dealing of business transactions (Starbucks, p. 10). However, in the recent times, it has to be mentioned that the US based specialty coffee company has got entangled in legal issues in regards to tax payments in the UK region. While highlighting in a detailed manner, it has to be said that the coffee company has participated in the process of making minimum tax payments in regards to the conduction of business in the UK region. While this has become a hot trend of doing business in the recent times by various multinational companies in the UK region, the issue has garnered a lot of attention from the politicians a well as the common masses. Reports from various news sources have revealed the fact that the US based coffee chain has paid a tax of around 8.5 million pounds in regards to generation of revenue of around 3 billion pounds as of the year 2012 (Blackden, “Starbucks fights shy of UK figures amid fear of tax backlash”). Talking in regards to the resolution of this legal issue, it can be said that the US based specialty coffee company has promised to pay a corporation tax of around 20 million pounds over the next two years period even it faces losses in the company’s operations of the UK region. Societal Issues It is important to mention that the social factors associated with an organization falls in the periphery of the external environment of an organization. It has to be said that the premium coffee company of the United States is highly considerate of its impacts and influence on the society as well as its stakeholders, while participating in its daily business operations. It is important to mention in the recent times, that the company has faced some critical times from the consumers of UK for the purpose of paying low taxes. Talking in more details on the societal influence of the particular issue, it is highly relevant to mention that the company though has attained significant growth in the UK market in regards to business operations, yet it focused on the process of less amount of contribution towards the corporation tax. The company has strongly focused on addressing these particular issues on the lines of the fulfilling societal needs. While the company has promised to pay a larger amount towards the Corporation tax, it has also promised to help the society of UK in regards to solving its multiple economy related issues. . It can be said that the company focused on solving the UK region’s problems related to youth unemployment by openly announcing the creation of around 1000 jobs for the youths of that region (Ashton, “Corporate social responsibility could swamp social enterprise in 2013”). Economic issues The economic factor which is part of the external environment analysis of an organization plays a major role in regards to the conduction of economic issues of the organization. The economic issues as of the recent times, has played some very key roles in manipulating the performance of a business in both the developed as well as the emerging nations and economies. On a general note, it can be said that the economic crisis of the Eurozone has seriously dampened the business prospects of many countries of the European Union. It also has to be said that the slowing down of economic output of other western countries like the UK is creating the impression of a possible emergence of a scenario related to a triple dip recession. Coupled with it is the factor of slowing of industrial productivity in the United States as well as the possibility of slowing down of rapidly emerging nations like China and India. Needless to say, that all these multiple issues is contributing to the process of growing of economic challenges for any business organization. Talking in regards to Starbucks, it is highly important to mention that the company is facing challenges in regards to the economic issues in the recent times. In a more detailed manner, it can be said that in the case of the European operations of Starbucks, various seniors officials has stated in the middle of the year 2012, that the company is facing tremendous difficulty in regards to performance of the company in the European regions. Highlighting on a more specific note, it needs to be mentioned that the economic challenges of the entire Euro region has impacted the earnings of the business operations in the first and second quarter and had high chances of its probable negative influences in the upcoming business quarters as well. The European operations of Starbucks have been significantly weak on the lines of store operations, cost management as well as interaction with the customers (Gasparro, “Economic issues in Europe hurt sales: Starbucks”). It is also of considerable importance to mention that as a result of fall in industrial output along with slowdown in the US economy, the premier coffee company in the United States has taken a series of strategic measures. Firstly, it needs to be mentioned that the company as of the year 2008 had decided to shutter down around 600 stores all over the US because of low economic performance (Linn, “Starbucks to close 600 stores in the U.S.”). Secondly, it needs to be mentioned that because of strong competition in regards to coffee products, the Seattle based Starbucks Corporation has focused on the process of reducing the prices of its coffee products, so as to drive sales (Reuters, “Starbucks to cut grocery coffee prices, join Kraft and Smucker”). Political Issues The factor of political issues falls under the domain of external environment analysis, which is done by normally using the PEST framework. It can be said that the premium coffee selling company of the United States has serious entanglements with various political issues. It is important to mention that given the size of the company, the company presence in various countries around the world. The company is facing tremendous amount of political heat from the regions of UK. Talking in more specific terms, it needs to be highlighted that the UK based politicians as well as various activist groups have alleged that the company has focused on the process of profit generation processes by indulging in business processes in the UK region. It has been drawn into focus that like many other international business organizations, Starbucks too have focused on the process of paying low amount of corporation tax in the UK region and thereby creating a tremendous imbalance in regards to the profits made from the UK region and the amount of taxes paid to the government. The campaigning groups which comprised of the local masses as well as the top level politicians highlighted that Starbucks has stopped paying taxes since the year 2009; though it has achieved strong business performance backed growth from the nation (BBC News, “Starbucks rejects tax row threat after Cameron speech”). It also needs to be highlighted that in the recent times, the CEO of Starbucks, Howard Schultz has motivated retailers in the United States to actively participate in the political forum and thereby bring into end the states of a gridlock situation in the Congress. The politically charging statement from one of the most powerful company leaders of Starbucks arrived at a time, when the surrounding environments were filled with issues related to fiscal cliff uncertainty (Martinez, “Engage in political issues, Starbucks CEO tells retailers”). Talking further on the lines of political issues, it needs to be mentioned that the CEO of the company makes political statements with regards to his participation in the support of gay marriages in the United States. The CEO while addressing this particular issue in an annual meeting has highlighted that the support in regards to gay marriage is politically necessary as well as important for the company, since the company has provided employment to around 200,000 people and it helps in providing employee based diversity (Allen, “Howard Schultz to Anti-Gay-Marriage Starbucks Shareholder: 'You Can Sell Your Shares'”). Placement It has to be said that the place variable is an important component of the entire marketing mix. The place factor highlights the value delivery proposition associated with a product. Talking on the issues of Starbucks, it needs to be mentioned that the premium coffee company of the United States is present in multiple locations all over the world. It needs to be highlighted that as a part of the growth strategy, the company has focused on attending growth in regards to the entering of new markets in the emerging economies like that of China and India. It also has to be said that because of its focus in the Eastern markets, the coffee chain has made its foot prints in both the developed economies of the West as well as the emerging economies of Asia and Africa. As of the current date, the store outlets of Starbucks in the Asian market are around 1500. Talking more specifically in regards to store distribution in the Asian region, it can be said that the store count in the regions of China and Japan is 1000, while in the Korean region, it is 500. As of the recent times, it needs to be highlighted that the company Starbucks Corporation has highlighted an aggressive growth strategy for the American market. As of the year 2012, the Seattle based coffee company has focused on opening around 3000 new coffee outlets in the American market over a period of 5 years. Talking in regards to the company’s global strategy for growth in the international markets, it needs to be highlighted that the company will focus on opening around 20,000 stores in six continents by the year 2014. While discussing in terms of growth statistics in the recent times, it needs to be highlighted that the Asian market is attaining the maximum growth. The company has predicted that the Chinese market will eventually become the second biggest market with a store count of around 1500 over the next 3 years (Perez, “Starbucks Plans Aggressive Growth Strategy”). Promotion The factor of promotion is one of the critical variables of the marketing mix. It needs to be mentioned that the promotion variables talks about the issues related to value communication of the products and services to the end consumers, who essentially forms the circle related to the desired target audience. Talking in more details about the promotion of a product, it needs to be mentioned that the factor related to segmentation, targeting and positioning becomes critically important for the process of successful value delivery of the product or services to the desired target audience. Through the right and proper segmentation of the customers of a particular region, the right kind of consumers of a particular target market can be identified. By opting for the appropriate targeting of the right consumer market, it has to be said that the chances of effective promotion increases. Finally, discussing on the lines of positioning of the product, it can be said that the right placement of the product to the right set of consumers helps in attaining a high rate of value communication success for the product. The Seattle based global coffee selling chain has long realized that in the process of marketing their product, they need to bundle it regards to some specialty services. Hence, with the passage of time, the premium coffee brand Starbucks has diversified from simply selling coffee to the customers to the process of selling various augmented and expected services to the customers as well. It is of considerable importance to highlight the fact that the product marketing and promotion efforts of the brand Starbucks highlights about the various issues related to the position of the brand with regards to various value based deals for the end customers. While talking about the positioning of the brand, it needs to be mentioned that the CEO of Starbucks has always had the vision of promoting a special environment for its coffee patrons in all of its outlets. It can be said that the brand Starbucks engages in multiple highly innovative promotion tactics. While Starbucks focus on promoting the products through the promotion of its entire brand, it often uses various non conventional promotion tactics. A very popular promotion tactics of the brand is to promote special products at special prices on certain days of a week or week. While this strategy helps in easy and better value communication, it also raises the satisfaction level of the consumers as well as the sales of the products (Shields, “Starbucks eyes reputation recovery with 'Monday promotion'”). For the purpose of value communication of the Starbucks products, the Seattle based coffee chain often uses the strategy of promoting word of mouth marketing as well as viral marketing. For adding mileage to the promotion campaigns of the company, the Starbucks Corporation has focused on the process of promoting a special community in the name of Starbucks Community. This helps in a great way of the communication of the product and services value of the brand, while providing beneficial support to the various community stakeholders (Starbucks, “Starbucks has a long history of helping communities thrive”). It also needs to be mentioned that for effective promotion of products, the USA based coffee company also uses the social media to help in the process of value communication to the desired target audience (Butcher, “Starbucks taps mobile social media for Frappuccino promotion”). Pricing The price of a product falls within the criteria related to value delivery proposition of the entire marketing mix. It has to be said that the US based coffee company offers a range of bundled products and services to its customers. Over the years, the company has placed itself in a third place, where consumers normally prefer to go between their daily schedules related to commuting between home and office. The coffee based environment promoted by Starbucks provides relaxation to the consumers on the grounds of free internet access, music and food (Ferrell and Hartline, 2). This helps in a great way in forming a special place for the brand of Starbucks in the consumers’ minds. It needs to be mentioned that the prices of products and services are pegged on the basis of its brand value. The brand also promotes premium pricing of its products as well as add on based pricing to generate revenue from its high sales turnover. However, it also needs to be mentioned that in the case of introduction of new products in the market, the Starbucks brand also implements introductory pricing to help in faster product acceptance by the consumers. International Marketing It is of considerable importance to highlight that the US based coffee selling chain Starbucks is present in six continents in the world. This gives an idea of the amount of global presence that is being enjoyed by the brand in the recent times. However, in order to sustain in the face of competition from rivals as well as the challenges of macroeconomic nature emerging from various developed western markets, the company needs to focus on attending growth in the markets that are providing significant prospective opportunities for growth. Around the year 2008, the company had communicated the fact that only 20% of the company’s revenues come from the foreign operations (Barr and Baertlein, “Starbucks reorganizes for international growth”). The company has focused on increasing the revenue returns from the international operations over the years. It has to be said in the upcoming future the company has focused to cater to the growth opportunities arising in the emerging markets. The company has highlighted that it will focus on opening around 20000 outlets in the six continents. The growth strategy highlighted by the company in the recent times can be outlined on the basis of a country specific manner. The company has forecasted that in the emerging Brazilian market, the company wishes to expand its store count to around 1000 from the current 100 outlets. In the South East Asian markets, the company wishes to add around 1500 outlets in the upcoming years (Allison, “ Starbucks maps future of Venti-sized global expansion”). Works Cited Allison, Mellisa. Starbucks maps future of Venti-sized global expansion. 4 Aug. 2012. Web. 18 April, 2013. Baertlein, Lisa and Barr, Alistair Web. Starbucks reorganizes for international growth. 11 July 2011. Web. 18 April, 2013. Butcher, Dan. Starbucks taps mobile social media for Frappuccino promotion. 14 May 2010. Web. 18 April, 2013. < http://www.mobilemarketer.com/cms/news/database-crm/6260.html> Shields, Ronan. Starbucks eyes reputation recovery with 'Monday promotion'. 7 Jan 2013. Web. 18 April, 2013. < http://www.mobilemarketer.com/cms/news/database-crm/6260.html> Starbucks. Starbucks has a long history of helping communities thrive. N.d.Web. 18 April, 2013. < http://www.starbucks.com/responsibility/community/community-stores> Perez, Antonio. Starbucks Plans Aggressive Growth Strategy. 10 Dec, 2012. Web. 18 April, 2013. Allen, Frederick. E. Howard Schultz to Anti-Gay-Marriage Starbucks Shareholder: 'You Can Sell Your Shares'. 22 March 2013. Web. 18 April, 2013. < http://www.forbes.com/sites/frederickallen/2013/03/22/howard-schultz-to-anti-gay-marriage-starbucks-shareholder-you-can-sell-your-shares/> Martinez, Amy. Engage in political issues, Starbucks CEO tells retailers. 14 Jan 2013. Web. 18 April, 2013. < http://seattletimes.com/html/businesstechnology/2020131165_nrfhowardschultzxml.html> Reuters. Starbucks to cut grocery coffee prices, join Kraft and Smucker. 12 April 2013. Web. 18 April, 2013. Linn, Allison. Starbucks to close 600 stores in the U.S. 7 March 2008. Web. 18 April, 2013. Gasparro, Annie. Economic issues in Europe hurt sales: Starbucks. 12 June 2012. Web. 18 April, 2013. BBC News. 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