·Business Strategy·

Business strategy：

Store Expansion Strategy

The firm’s target areas are favorable demographics that could be supported by company infrastructure. Also strategy evolved to blanket major metro areas with stores and tighter control over operations compared to franchising. In addition, there is two-pronged approach to international expansion which is Company-owned and operated and License local partners.

Product Differentiation Strategy

The first initiative is in-house specialty sales group to market Starbucks products to restaurants, airlines, hotels, universities, hospitals, businesses and select retailers and Second initiative is joint venture with PepsiCo .Also it introduced Starbucks VIA Ready Brew in 2009 .

Workplace Strategy

They would like to attract, motivate, and reward store so that generating enthusiasm and achieving high levels of customer service. So they support Health care coverage for all employees, Stock option plan, Stock purchase plan, Competitive pay and training and recognition.

Coffee Purchasing Strategy

The coffee source is from multiple geographic areas, for example Coffee beans grown in 70 countries by 25 million small farmers. So there are three- key strategy elements, paying enough to ensure small farmers covered their costs, using fixed-price purchasing arrangements to limit Starbucks’ exposure to sudden price jumps and Working directly with small coffee growers.

Critical competitive factors:

Strengths	Opportunities
•       Strong brand equity •       Wide geographic presence •       High quality product (strong research and purchasing strategy) •       Strong financials	•       Strategic transformation initiative 2008-2010 •       Overseas expansion •       Product line extensions
Weaknesses	Threats
•       Heavy restructuring and store operating expenses •       Aggressive expansion	•       Lack of ownership of coffee farms can lead to price fluctuations •       Consumer preferences and health concerns •       Competition from fast-food services

The function of MIS:

The shift manager of Starbucks told us he identify two management information systems in Starbucks, which is a Management information system called IRIS (Intelligent Restaurant Information System) It provides a number of reports that can be used to help to manage store profitability. These reports can be viewed on the computer monitor or can be printed for review or archive. Store Managers can use the Management information System to prepare short term budget to plan long term profit and prepare proper forecasts. The Iris system helps the managers to identify customer needs trough accurate reports, so to implement sales and marketing strategy and to plan production based on actual demand. The Iris system can be also accessed to check and monitor inventory. Also the hardware components of the computer system are used in Starbucks. This allows the management work station to send and receive large quantities of data and information. There is a wireless internet provided by T-mobile, which allows customers to connect to the wireless network. To protect retailers, a new security system has been designed for cards which will use a smart chip. When customers pay using one of these cards, rather than signing a confidential security number (PIN) is entered. Recommendations are about training staff and limitation of the computer system used. The management information resources used by STARBUCKS’ partners are really accurate and detailed. The manager suggested us investing in new technologies such as new monitors, wireless system, printers etc.

Answer to chap3(5 force model)
Rivalry Among Sellers
Starbucks competes with a variety of smaller scale specialty coffee shops, mostly concentrated in different regions of the country: Caribou Coffee and Peet’s Coffee and Tea
Starbucks also competes against two of the largest companies: Dunkin Donuts, who claims to be "the world's largest coffee and baked goods chain" and McDonald’s
Threat of New Entrants       
Economies of scale within the specialty coffee industry have increased as the size of the top players has increased (Dunkin' Donuts and McDonald's).
As the industry matures, the ability to access distribution channels and select from the highest quality coffee beans has become increasingly difficult.
Starbucks has very loyal customer bases stemming from its past advertisements, customer service, objective product differentiations and early entry into the industry. This makes it more difficult for new entrants to gain a solid customer base.
Suppliers
Many farmers who sell to Starbucks and other premium coffee chains are united by an initiative known as Fair Trade Certified Coffee.
Substitute ProductsPrimary substitute products still posing a threat to the specialty coffee industry are the caffeinated soft drinks offered by Pepsi and Coca-Cola.
At present, these substitute products pose little threat to the premium coffee industry; coffee has gradually gained preference over carbonated soft drinks (health concern).
Suppliers are more powerful today.  Increased unity among the coffee farmers, decreased significance of specialty coffee retailers’ purchases as a proportion of premium coffee bean sales, and increased importance placed on high-quality coffee beans by purchasers have combined to increase the bargaining power of the supplier group.
By locking their coffee suppliers into long-term contracts to dilute potential price volatility, Starbucks diminished suppliers’ ability to play one buyer against another, which decreases the suppliers’ bargaining power.
Buyers
Primary buyers in the specialty coffee industry remain individual consumers, who neither engage in concerted behavior nor individually purchase in large volumes relative to the total sales of a corporation such as Starbucks.
Buyers have an enormous selection of retailers from whom they can buy.
Threat of backward integration. This threat can be carried out if a buyer chooses to start a “mom and pop” specialty coffee store in close proximity to an established specialty coffee store.