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Case study starbucks
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Starbucks is one of the largest chains of coffee shops in the world. There are many topics that arise throughout the case with Starbucks Corporation. Starbucks Coffee is located worldwide and there are many different ways to look at this situation. The company offers a unique range of coffee, lattes, espressos, and café style drinks. The company intended to reach a specific target audience, but has ended up in many different markets and has been growing rapidly. Starbucks has greatly used the “youth appeal” strategy to gain entrance into new markets. However, such enthusiasm cannot be counted on indefinitely; other strategies are always in the works. Over time Starbucks has been able to acquire a solid brand reputation and has a world renowned company logo. There have been some distinguished controllable and uncontrollable elements Starbucks has encountered when entering global markets. The strategies of any company’s goals are vital to its success. This is one area Starbucks has excelled in, just as McDonald’s has in recent years. Starbucks has paralleled its branding with the actions found at any Starbucks across the world. They have an excellent company vision, which they stick to, which in turn assists their brand image. Starbucks’ image has been achieved not only through this and their massive global entrance, but through their ability to provide honest quality service. In recent years there was a time that Starbucks saw the opportunity to go global and jumped on it.
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Tipping Point Convinced of tea’s health benefits and willing to experiment with different varieties in seeking superior taste, tea drinkers are visiting an expanding number of retail locations serving and selling packaged specialty tea. Rising affluence and the desire for convenience drive sales of hot and iced teas and have prompted Starbucks, DavidsTea, Argo Tea, Teavana and Unilever to open hundreds of new outlets. Middle class residents in urban India are showing a similar desire for tea at branded shops such as Golden Tips, airport shops like Chamraj (UNITEA) and Manjushree Tea and revitalized tearooms such as Cha Bar at OXFORD book store, Dolly’s Tea shop, Camellia bars, Tea Junctions Kolkata, and independent ventures like Chado Tea India in Mumbai. Premium Switch In the past year sales overall continued to climb due to the move to premium rather than greater volumes of tea. A tea cup of fresh leaf is six grams and a tea bag is closer to 4 grams. There is even less tea in a K-Cup but the difference in price is 3x to 6x. Last year Canadians drank about the same volume of tea and the same number of cups per capita but sales of specialty tea exceeded conventional (total volume is still greater for conventional). This is happening in the U.S. Sales in grocery are slipping as traditional brands lose ground. The industry is currently $8.7 billion but will quickly grow to $15 billion in three years (and some say sooner) despite the economic doldrums.
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Starbucks Corp. is betting its future on its coffee shops. To do that, the Seattle-based company has removed a distraction by selling the rights to offer its coffee and tea in grocery and retail stores to Nestle SA for more than $7 billion. Coffee sellers from Dunkin' Brands Group Inc. to McDonald's Corp. have crowded supermarket shelves with branded bags of ground and roasted beans. Starbucks products will give Switzerland-based Nestle a bigger stake in that fight without having to introduce a new brand to U.S. consumers. For Starbucks, the consumer packaged-goods business generated $1.8 billion in revenue in fiscal 2017, just 8% of Starbucks's total. "While consumer packaged goods is an important and highly profitable business, it's small," said Michael Schaefer, head of Euromonitor's global food and beverage practice. Sales have been slowing at Starbucks coffee shops in the U.S. as mall traffic declines and competition increases. Starbucks has opened higher-end stores under brands called Roastery and Reserve to compete with independent coffee shops and small chains that have grabbed sales from customers willing to pay more for specialty drinks and pastries. There are nearly 33,000 coffee shops in the U.S., according to market-research firm Mintel, up 16% from five years ago. Starbucks also wants to open more coffee shops in China, a market the Seattle-based company said will eventually overtake the U.S. as its largest. The company recently opened its first Roastery store in Shanghai. Retail operations in the U.S. and China "are our two big growth engines," Starbucks Chief Executive Kevin Johnson told investors on a call about the deal Monday. Starbucks has dropped other ancillary businesses recently to focus on its coffee shops. Last fall, Starbucks sold its Tazo tea brand to Unilever for $384 million. The company recently closed its mall-based Teavana tea stores because of weak traffic. Starbucks shares fell 23 cents to $57.45 on Monday. Nestle stock rose 1.6%. The deal gives Starbucks an upfront infusion of cash that it plans to return to shareholders through share buybacks. Starbucks said it planned to give $20 billion to shareholders over three years in buybacks and dividends. That might assuage some shareholder concerns as Starbucks works to boost sales growth. Nestle said it would pay Starbucks $7.15 billion as well as continuing royalties on all sales. Mr. Johnson said the partnership will raise familiarity with the Starbucks brand by getting its ground and whole bean coffee into international markets where it isn't currently sold. Nestle hopes more coffee sales can offset flagging sales of some of its other packaged-food businesses. As part of the Starbucks deal, Nestle will add Starbucks Reserve, Seattle's Best Coffee and Teavana to a portfolio that includes the Nescafe and Nespresso brands. Nestle will also manage the business of distributing Starbucks K-Cups, the single-serve coffee pods used in Keurig brewers in North America. .
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