Arpa Term Paper Full Copy

7/29/2019 Arpa Term Paper Full Copy

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Executive Summary

Now-a-days every company needs to improvise more & more on their

technological base in case of developing marketing strategies especially to capture

market in other country. The Starbucks is one of the fastest growing Coffee

companies of the World and its based in Washington, United States . This

foreign company is running successfully their business since 1971. Due to its

strong management & well technological background, it captures the market

rapidly. This report mainly focuses on how they enter in BD market and how

Bangladesh get their franchise and how BD maintain their profit-growth, increase

sales & retain their existing customer base as well as attract new customers.

Introduction

.

S t a r b u c k s w a s f o u n d e d b y t h r e e c o f f e e l o v e r s G o r d o n B o w k e r , J e r r y

Ba ld wi n, Ze vSiegel in 1971. Howard Schultz has joined the Starbucks in 1982 and

the tur ning point ing companys history was his visit to Italy in 183, where he saws a coffee

bar culture. Helices the idea and suggests introducing the ready-to-drink coffee in US. Howard

Schultz buys Starbuck for $3.7million with its 6 retail stores and 1 roasting plant in 1987.

S t a r b u c k s m a d e a h i s t o r i c a l g r o w t h u n d e r t h e l e a d e r s h i p o f H o w a r d

S ch ul tz a nd t he s t a r b u c k s b r a n d w a s r e g a r d e d a s o n e o f t h e b e s t

k n o w n Co f f e e b r a n d i n U S . H e man ag es t o exp an d i ts n umber o f s to res f ro m

5 to 115 in next 5 years. 1n 1992, Howard decided to make Starbucks a public

limited company and issued shares to general publican $17 pershare. The money

generated from general public is spent on the expansion ofStarbucks overseas, with

stores in Japan and Singapore (A. Thompson, the University of Alabama, John E.Gamble,


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University of South Alabama).In 2000s, Starbucks achieved lot of milestones which

includes 5000 retail stores, 1000stores in Asia , 2000 stores in outside USA. In 2008,

Origin of the report:

For this study, we are inspired by our honorable course instructor SheikhAtiq and our

old traditions and opportunity of sales in local foreign markets

Objective of the Report

Behind this term paper, obviously there have some objectives which must have to be fulfilled.

There both have some general objectives and specific objectives.

1. General objectives-

To fulfill the academic requirements of term paper

To get an idea in Overall system of franchise

2. Specific objectives

To have an overall idea about Stat bucks and franchise

To get a clear idea about foreign company and how it can run when they come in

Bangladesh market

To evaluate market

To suggest our findings for continuous improvement


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Scope

This report has been prepared through broad discussion with group meats. At the time of preparing the

report, we had a great opportunity to have an in depth knowledge of all the franchise and Starbucks

company.

Limitations

The group mates are very co-operative but because of time limitation and other causes we can

not share whole idea that how we are going to set up the whole things. Every task has some

limitations. We faced some usual constraints during the preparing the term paper. These are as

follows:

The main constraint of the study is irrelevant information, which has hampered

the scope of analysis required for the study.

Every organization has their own secrecy that is not revealed to others. While

collecting data they did not disclose such information that hampers the

organizational confidentiality.

Could not communicated with Top level management

Methodology

Secondary data: Relevant data for this report has been collected from different

records, Documents and Website of Starbucks

Historical Background:


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Analysis:

3.1. Company Profile:

Starbucks Company began in 1971. Back then they were z roaster and retailer of whole bean and

ground coffee , tea and spices with a single store in Seattles Pike Place Market.

Folklore:

Starbucks is named after the first mate in Herman Melvilles Moby Dick. The logo of Starbucks

also inspired by the sea-featuring a twin-tailed siren from Greek mythology.

Starbucks Mission:

The mission of Starbucks is to inspire and nurture the human spirit-one person, one cup and one

neighborhood at a time.

3.2. Target Customer:

Adults

Starbucks primary target market is men and women aged 25 to 40. They account for almost half(49 percent) of its total business. Starbucks appeal to this consumer age group through hip,

contemporary design that is consistent in its advertising and decor, and working to keep its

products current as status symbols. Customers tend to be urbanites with relatively high income,professional careers and a focus on social welfare. This target audience grows at a rate of 3

percent annually.

Young Adults

Young adults, aged 18 to 24, total 40 percent of Starbucks sales. Starbucks positions itself as aplace college students can hang out, study, write term papers and meet people. Starbucks appeals

to this consumer directly through introducing technology as soon as it comes available, focusingon social networking and actively cultivating a cool image. The young adult audience grows

4.6 percent each year.


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Kids and Teens

Kids and teens are also a large part of Starbucks target audience. Together, customers age 13 to17 account for just 2 percent of Starbucks sales, but most items for kids are purchased by theparents. Whether the focus is on the steamed milk that Starbucks baristas refer to as babycinos

or the sugary, caffeinated, whipped cream topped coffee drinks that are so popular with

teenagers, kids and teens form a large part of Starbucks business. Kids go there with theirparents; both mother and child leave with cup in hand. Teens meanwhile use Starbucks as a place

to hang out with friends or study. Starbucks may not cater directly to kids (and risk criticism

about the high calorie and caffeine content of some of its drinks) but it does make its products

kid-friendly, offering special child sizes for instance.

3.3. Uncontrollable Factors:

3.3.1. Economy:

One of the most important uncontrollable elements is a nation's economy. The economy of

Bangladesh is not so good , so the Company will face a depressed economy and Starbuck's

profits will be down.

3.3.2. Technology:

Starbucks Company used a high quality technology, which will be very costly and this cost will

be added to the products price. So, technological problem can be arrived if Starbucks wants to dobusiness in Bangladesh.

3.3.3. Infrastructure:

Starbucks global infrastructure program delivers special and standard service to international

markets in support of Starbucks global growth rate.

3.3.4. Political and Legal :

Starbucks will have to do some political and legal statement if they want to do business in

Bangladesh. LIke in U.S.A the company dont have to give tax but in Bangladesh the Companyhave to pay tax.

3.3.5. Social:

The people of Bangladesh are very much fond of coffee and tea . So the society of Bangladesh

will take the company highly acceptable for them.


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3.3.6. Religion:

There will be no religious problem if The Starbucks Company want to do business in

Bangladesh.

3.3.7. Environment ( Business Ethics and CSR):

The environment is the main problematic factor Bangladeshi Companies. The environment

becomes difficult for the people of Bangladesh n different time. For example in Stike and

Political protests the total environment becomes difficult to do anything.

3.3.8. Competitor:

Before doing a business a company has to analyze their competitor and in Bangladesh the

competitor for Starbucks Company will beThe Coffee Shop and the tea stalls etc.

3.3.9. Geography:

The geographical problem will also be harmful for Starbucks Company. If they want to do

business in Bangladesh they have to come to Bangladesh from USA and USAs geographical

structure is totally different from Bangladesh.

3.4) Supply Chain Management:

Supply chain management (SCM) is the management of a network of interconnected businesses

involved in the provision ofproduct and servicepackages required by the end customers in a

supply chain. Supply chain management spans all movement and storage ofraw materials, work-

in-process inventory, and finished goods from point of origin to point of consumption. Supply

chain activities can be grouped into strategic, tactical, and operational levels:

Starbucks has the security team what it calls "Enterprise Security Platform," a central

security facility that "converges enterprise and physical security," by monitoring critical

facilities, retail stores, as well as monitoring conditions around the globe.

Container security is a key part of supply chain management of Starbucks.. Starbucks

uses video monitoring of loading facilities, to capture images of loading and sealing

containers with "container security devices" a magnetic device that tracks the closing of

the container doors.
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Its opening and temperature and humidity along its journey. The device also is capable of

uploading data from third party logistics providers. And it detects tampering. (Starbucks

rejected using RFID or GPS devices as not worth the cost, Dettloff said.)

A cross-functional governance council sets company policies for the company. Starbucks

has built an electronic policy library to help employees know what to do and how to do it.

Security provides in-store training to employees to help them understand how to handle

risky situations, from customers who turn violent to criminal activity.

Design elements also provide for lighting and clear visibility into stores. Future

enhancements call for furniture designed to help consumers protect their handbags and

laptops.

Starbucks has been a target of protests on issues such as fair-trade policies, labour

relations, environmental impact, political views, and anti-competitive practices .Through

the Starbucks Entertainment division and Hear Music brand, the company also markets

books, music, and film.

Many of the company's products are seasonal or specific to the locality of the store.

Starbucks-brand ice cream and coffee are also offered at grocery stores.

3.5) Service Planning and Development:

Value engineering (VE) is a systematic method to improve the "value" of goods or products and

services by using an examination of function. Value, as defined, is the ratio of function to cost.

Value can therefore be increased by either improving the function or reducing the cost. It is a

primary tenet of value engineering that basic functions be preserved and not be reduced as a

consequence of pursuing value improvements.[1]

Value Engineering is a technique applied to

identifying optimum value solutions during new product development.

Starbucks announced a change to its logo: no longer have will Starbucks and coffee

appeared on its products. Just a tailed siren will stay put, colored in white and green.
http://en.wikipedia.org/wiki/Costhttp://en.wikipedia.org/wiki/Costhttp://en.wikipedia.org/wiki/Value_engineering#cite_note-0http://en.wikipedia.org/wiki/Value_engineering#cite_note-0http://en.wikipedia.org/wiki/Value_engineering#cite_note-0http://en.wikipedia.org/wiki/Costhttp://en.wikipedia.org/wiki/Cost


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The logo change reflects a broader business and brand strategy. The Value Engineers

receive weekly training on all areas of branding. a refrigerated Starbucks coffee,

packaged like an in store product (below). This seems to be targeted at shoppers that want

the handy Starbucks cup.

Value Engineering can achieve impressive savings, much greater than what is possible

through conventional cost reduction exercise even when cost reduction is the objective of

the task.

Value Engineering is a function oriented, systematic team approach and study to provide

value in a product, system or service. Often, this improvement is focused on cost

reduction; however other important areas such as customer perceived quality and

performance are also of paramount importance in the value equation.

3.6) Value Pricing:

Using a value-pricing strategy is a better proposition because it attracts loyal customers. Why do

customers buy designer-labelled clothes and luxury cars? Why are those items more expensive

when they dont cost so much more to make? The answer lies in the perceived value. Value is

not an inherent attribute of the product but it commands a higher price .Customers do not buyfeatures and benefits, they buy VALUE .Value is subjective. Value is a benefit but a benefit is

not necessarily of value to all customers. For example, a vendor offers free installation and free

updates for his software. Behind value-pricing strategies there are a few important concepts:

Customers are value conscious rather than price conscious e.g. some customers will pay

extra for prompt delivery.

Customers assign a personal value to a product or service e.g. a teenager is willing to pay

a premium price for a concert performed by his idol.

Starbucks selling price is based on customers perceived value rather than on the

vendors costs e.g. an e-book costs less to produce than a paperback but readers will pay

more for it because of the value placed on format and instant delivery.


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When customers evaluate competing products, they are usually comparing value. To

increase the value of your products, you can either add benefits or reduce the perceived

risk factors rather than resorting to reducing your price.

Starbucks uses value-added benefits do not replace comprehensive product information

but are complimentary strategies to help converting website visitors into customers and

giving you the competitive edge.

Special packaging e.g. recyclable containers, gift wrapping with card Package deals (for

convenience) e.g. bundles, "all inclusive" value pack Fulfillment options e.g. "white

glove" delivery service, instant download Payment options e.g. monthly and yearly plans

For their better value pricing free training material e.g. online manual, video, audio,

Personalized service e.g. "I oversee each account" Free product updates or refreshers (for

courses). Bonus offers .Certification e.g. license, training certificate

For Starbucks new customers, there will an element of risk in purchasing from a new

vendor, especially over the internet. These are examples of value-pricing strategies to

boost confidence and credibility.

A professionally designed website Free trials or samples. Extended warranty option. Free

after-sales service . Your credentials, length of time in business, list of important clients.

Guarantees of satisfaction "100% satisfaction guarantee". User-friendly privacy, security

and refund policies

Naturally, everyone loves value for money but does not necessarily want the cheapest

option. What value do customers perceive in your product and how much are they willing

to pay? Value comes at a price!

3.7) Value Delivery:

Starbucks companys value delivery will be their testes. They can use such taste which can

differentiate from others. Way of giving service can be their value delivery. Their value delivery

can be a important poin and they should make their teste on the basis of Bangladesh perspective.


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3.8) Value Proposition:

Managing Starbucks can be hard work and usually all the time is spent on daily tasks. Little time

is left on developing new ideas and marketing even when we all know how important this is.

Competition is usually pretty high and it is therefore vital that you are to stand out from the

crowd. Always try to picture yourself in the eyes of the customer and ask yourself why you

should visit your coffee shop.

Advertising

Starbucks can use news media, billboard, newspaper, internet advertising as their promotional

activities. Here have probability to know about Starbucks company easily.

Providing 100% Halal Items

If Starbucks company use halal items customer will receive their items without any restriction

because as a Muslim country they always want halal items.

Loyalty Cards

Yes, many coffee shops offer loyalty cards: get the 10th coffee for free. But why not make it a

bit more special? Why dont you offer the 5th coffee for free? You will probably get a higherreturn of your customers.

Coffee Feedback Cards

Not many people will supply you with feedback about your products face to face. Coffee

feedback cards that are placed on tables can be a very good research tool for you. Receive honest

and anonymous feedback from your customers about coffee.

Refills only half the priceIts very good to get your customers to buy another drink. You can achieve this by offering

discounts on further drinks and by lowering the size of your cups. Offering refills for half the

price could be a good alternative for Unlimited Coffee.


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Training

Spent a good deal of your time training your staff in coffee and customer service skills. Training

will keep them motivated and it will reflect on the overall quality of your coffee shop. Its not

hard to distinguish trained from untrained baristas.

Offering several choices on coffees

Why would you only offer espresso based coffees? You are a coffee shop right? Its quite easy to

offer a large range of different coffees with the brewing method of the French Press. Try to find

a supplier that can supply you with a range of coffees in pre-ground sealed sachets (so the coffee

stays fresh).

Set yourself a target for average spent per customer

Setting targets can really improve your sales. Set yourself a realistic target and find different

ways to achieve these. A coffee and a muffin offer for example. Or a simple way of upselling

one product per day (be careful with upselling for it may scare people off).

Time based special offers

Do you have a lot of people travelling past your coffee shop on the way to work? Find a way to

make them stop by your shop. Maybe you can offer the take out coffees for a smaller price

during the morning. Or focus on your lunch time with special freshly prepared food.

Signs and promotion boards outside

The outside of your shop is the first thing that people see. It has to be attractive, clean, clear that

its a coffee shop and should tell the customer why he/she should enter your shop. What is it that

makes the outside of your shop so different from others? Is your door open or closed all the

time? Is is possible for you to place tables and chairs outside? Have a promotional sign outside

advertising the amazing quality of your coffee.


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Logo of Starbucks:

Tanias Part missing

3.9-3.12

3.13 Porter's Five Generic Competitive Strategies:

A firm's relative position within its industry determines whether a firm's profitability is above or

below the industry average. A firm positions itself by leveraging its strengths. Michael Porter has

argued that a firm's strengths ultimately fall into one of two headings: cost advantage and

differentiation. By applying these strengths in either a broad or narrow scope, three generic

strategies result: cost leadership, differentiation, andfocus. These strategies are applied at the

business unit level. They are called generic strategies because they are not firm or industry

dependent.


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Cost Leadership Strategy

In cost leadership, a firm sets out to become the low cost producer in its industry. Thisgeneric strategy calls for being the low cost producer in an industry for a given level of

quality. They may include the pursuit of economies of scale, proprietary technology,preferential access to raw materials and other factors. if a firm can achieve and sustainoverall cost leadership, then it will be an above average performer in its industry.

Differentiation Strategy

In a differentiation strategy a firm seeks to be unique in its industry along some dimensions

that are widely valued by buyers. It selects one or more attributes that many buyers in an

industry perceive as important, and uniquely positions itself to meet those needs. It is

rewarded for its uniqueness with a premium price. Starbucks mainly focus on this strategy.

Focus Strategy

The generic strategy of focus rests on the choice of a narrow competitive scope within an

industry.

The focus strategy has two variants.

(a) In cost focus a firm seeks a cost advantage in its target segment, while in

(b) differentiation focus a firm seeks differentiation in its target segment. The targetsegments must either have buyers with unusual needs or else the production and deliverysystem that best serves the target segment must differ from that of other industry

segments. Cost focus exploits differences in cost behavior in some segments, whiledifferentiation focus exploits the special needs of buyers in certain segments.


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Porter's Competitive Advantage

Competitive advantage (CA) is a position that a firm occupies in its competitive landscape.

Michael E. Porter posits that a competitive advantage, sustainable or not, exists when a

company makes economic rents, that is, their earnings exceed their costs. A firm possessesa Sustainable Competitive Advantage (SCA) when it has value-creating processes and

positions that cannot be duplicated or imitated by other firms that lead to the production of

above normal rents which is not easily replicated.

Competitive advantages vary from situation to situation and from time to time. Some basicexamples of CAs can be divided in 4 main global areas:

Cost: Low-cost operations

Quality: High quality, Consistent quality

Time: Delivery speed, On-time delivery, Development speed

Flexibility: Customization, Volume flexibility, Variety

4.0 Implication and recommendations for Management:

For Bangladesh prospective Starbucks need to plan for a different strategy. They need to

differentiate their product because of Bangladeshi culture. They need to make a strong security

and select a price to attack customer. Bangladeshi people love hot coffee rather than cold. They

like to drink sweet, no sweet and also salty taste. They also use free campaign strategy for their

advertisement. For implication their products, they need to focus on some points. Starbucks

company's products are not seasonal or specific they have also other product. They need to

improve the "value" of goods or products. Using a value-pricing strategy is a better proposition

to attracts loyal customers, because Bangladeshi customers are price conscious rather than value
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conscious but they must need to follow a standards of their product. Starbucks companys value

delivery will be their testes. Starbucks can use news media, billboard, newspaper, internet

advertising ,free campaign as their promotional activities. As a Muslim country they always want

halal items so they should offer a halal product. Time based special offers, Offering several

choices on coffees, Loyalty Cards, Coffee Feedback Cards, Refills only half the price should

increase their business. Giving training to staff about coffee and customer service skills is also an

important issue to expand and cover a new market.

5.0 Conclusion:

Starbucksis one of the fastest growing Coffee companies of the World and due to its

strong management & well technological background, it captures the world market rapidly. In

future Starbucks must improve their product and services with unique taste. Starbucks can also

include some other product in their company. They can also make more differentiation their

customer based on their occupation or taste level. They should create a new strategy for

advertisement to make loyal customer. And for Bangladesh they can differentiate their

customer based on culture and religion.


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6.0 References:


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7.0 Appendix:

1. Generic Strategies and Industry Forces

IndustryForce

Generic Strategies

Cost Leadership Differentiation Focus

Entry

Barriers

Ability to cut price in

retaliation deters

potential entrants.

Customer loyalty can

discourage potential entrants.

Focusing develops core

competencies that can act as an

entry barrier.

Buyer

Power

Ability to offer lower

price to powerful

buyers.

Large buyers have less power

to negotiate because of few

close alternatives.

Large buyers have less power to

negotiate because of few

alternatives.

Supplier

PowerBetter insulated from

powerful suppliers.Better able to pass on supplier

price increases to customers.

Suppliers have power because of

low volumes, but a differentiation-

focused firm is better able to pass

on supplier price increases.

Threat of

Substitutes

Can use low price to

defend against

substitutes.

Customer's become attached to

differentiating attributes,

reducing threat of substitutes.

Specialized products & core

competency protect against

substitutes.

RivalryBetter able to

compete on price.Brand loyalty to keep

customers from rivals.Rivals cannot meet differentiation-

focused customer needs.

2. Porter's Generic Strategies

TargetScope

Advantage

Low CostProduct

Uniqueness

Broad(Industry

Wide)

CostLeadership

Strategy

DifferentiationStrategy

Narrow(Market

Segment)

FocusStrategy(low cost)

FocusStrategy

(differentiation)


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