Starbucks BRAZIL Prepared by: Aminata Ouattara Daniele Albagli Melissa Butz Matvey Kostromichev Presentation Outline Introduction Mission & Objectives PESTEL Analysis PORTER Analysis SWOT Analysis Capabilities Strategic Choices Strategic Implementation Conclusion 1
Introduction Mission & Objectives The current mission of Starbucks is: To create an agreeable working environment and to treat others with dignity and respect. To consider the diversity as a fundamental component of our way of working. To apply the highest standards of quality in terms of purchasing, producing, and delivering of our coffees. To develop continuously and with enthusiasm the satisfaction of our clients. To bring a positive contribution to our society and to our environment. To know that our profitability is essential to our future success. Objectives of Starbucks are: To follow the global strategy. To be recognizable as the greatest coffee chain in Brazil. 2
PESTEL Analysis Political: The government stimulates the customers purchasing power. Brazil s political situation is continually improving. The Brazilian government is encouraging foreign investors to open coffee businesses. Economical: BRIC countries. Brazil has an average annual growth rate of 2.4% since 1980. The Brazilian coffee consumption rate rose 3.96% within the last 12 months. Current fiscal and monetary policies are designed to stabilize the public debt levels. Brazil is the second-biggest coffee consumer, following the U.S.. Brazil has high importation taxes. PESTEL Analysis Social: 93% of the Brazilian population is regular coffee consumers. Income distribution is extremely uneven. Education level is higher in the metropolitan areas. Consumerism is high, and there is a demand for higher quality products. Technological: Most of the technology is imported. Environmental: Weather Legal: Employees are protected by employment laws ensuring proper work hours, benefits, and sanitary conditions. There are regular audits in order to monitor the quality of the supply chain. 3
External Environment Analysis PORTER Analysis Customers: Competitors: Suppliers: New entrants: Substitutes: Have a high bargaining power. Many competitors but with lower quality. Only one local supplier. The rest will be imported. The threat of new entrants is high. Fruit juices as an additional alternative to refreshments. External Environment Analysis SWOT Analysis Threats: Price: Starbucks has higher products price than have its competitors. Competition of established local coffee chains who already have their regular customers. Substitute products such as teas, fruit juices, etc. Opportunities: The size of the Brazilian consumers market looking for quality products and good services is growing. Consumers looking for differentiated service. The cafeteria market has not been explored, which leaves room to Starbucks to be equally welcomed. Brazil has a potential for producing more quality coffee than it is currently doing. Starbucks has an immense potential of success due to its differentiation strategy. 4
Internal Environment Analysis SWOT Analysis Strength: Brand Recognition and Global Dominance. Customer Service excellence. Differentiated product. Starbucks own all of their stores. Visionary leader. Low turnover rate. Weakness: Starbucks has the most expensive coffee in the market. There is only one local supplier, Brazil Ipanema Bourbon. No smoking area. Capabilities The Key Success factors for Starbucks are: Brand Recognition. Global Dominance. Customer Service Excellence. Financial Resources. Innovative Business Strategy. 5
Strategic Choices Our Goal: Suitability: Acceptability: Feasibility: Corporate Strategy: To develop a market for Starbucks specialty coffees in Sao Paulo, Brazil. Internal development is the best way for Starbucks to enter a new market. There is little to no risk involved with the method of internal development. Funds are not an issue as Starbucks has the money to invest in new markets. provides comprehensive support to all of its stores, especially the ones opening up in new markets. Strategic Implementation Operations strategy First step: Second step: Third step: Find an investor. Wait for good profitability. buys franchise from investor. 6
Strategic Implementation Operations strategy Organizational Structure for Starbucks Sao Paulo: President in Brazil Marketing Operations Finance Store Manager Assistant Manager Shift Manager Baristas Strategic Implementation Marketing Strategy The Internal Strategy: Invest in the training of our partners (employees) in hand-crafting coffee. Hire individuals who are adaptable, self-motivated, passionate, creative and team-oriented. Partners will also be motivated through a scheme of incentive from opportunity for professional development, to automatic benefits package, or stock options. 7
Strategic Implementation Marketing Strategy The External Strategy Segmentation: we will target Brazilians of all social conditions living in Sao Paulo, but more specifically the business people and the shoppers around the Starbucks coffeehouse. Positioning: Products: Price: Place: has a line of food, music, beverage and related articles, which will be introduced in the Brazilian market. Starbucks coffee price will be higher than the Brazilian competitors prices. Starbucks coffeehouse in Sao Paulo will open in a carefully selected place. We will choose a location central to business customers and shoppers. Promotion: In line with corporate social responsibility policy, we will also initiate actions towards a positive impact in the community. Distribution The machines will be imported from (Seattle) in channel: case there are not any potential suppliers in Brazil. Conclusion The time is right for Starbucks to invest in Brazil. Analysis of the environment shows that the economy, as well as the culture, in Brazil is very promising for foreign investments as it is considered an emerging market. Sao Paulo has been chosen as the city which will host the flagship Starbucks retail store, due to its affluence and great locations. Although there are many competitors, Starbucks will introduce a new concept of enjoying a cup of coffee and will carry out its usual business strategy of added value differentiation and costumer satisfaction. 8
Perhaps we have the opportunity to be a different type of global company, a global brand that can build a different model, a company that is a global business, that makes a profit, but at the same time demonstrates a social conscience and gives back to the local market. Howard Schultz, CEO of Starbucks Questions & Comments Thank You! 9