Starbucks Management

Considerations

We need to consider who our current buyers are. What does our market look like? Who is buying coffee? Is there an untapped market we need to reach into? Who will pay for our product? Is the current economy stable enough for us to expand as a company? Is there a market to expand into? Does the average person without current access to our product have the means to give us their business?

How are most people buying their coffee now? Is there a way to expand our business without opening new stores? Would it be just as financially beneficial to sell our products in more existing businesses and locations rather than opening new stores? Can we reach just as many new customers buy selling our product through supermarkets and the like? Would this also be a good way to introduce new people to our business and further gain their business if we open new physical locations in the future?

What are our competitors doing? Can we learn from them as to what the safest and most profitable move is? Are there overall declines in sales across the board for our industry? How can we stay competitive in the current market? How can we market ourselves to consumers to continue to secure our brand as well as their business with us? How can we market ourselves as a necessity rather than a luxury? What did the economy look like during our past expansions and how does our current economic condition compare?

Aside from domestic economics, can we afford the cost of expanding in addition to a potential rise in cost of beans due to weather and other natural causes? During the time it will take for the U.S. economy to make a more full recovery from the recent recession, can we make a viable plan to expand our business abroad in new markets? Will giving ourselves several years to plan, strategize, and implement a course of action in regards to expanding be feasible assuming we are on more sound economic footing at that time? Could our current situation, namely the recent closing of numerous locations, afford us the opportunity to devote more thorough planning to the possibility of expanding outside of the U.S.? How can we take advantage of the stable and thriving economies of other countries as a means to boost our own?

Clearly there is a need to focus on our current markets and protect our current business before we expand. However, in the time it will take for us to be able to expand at a comfortable rate and minimal risk, we can strategize and brainstorm on ways to market ourselves in new places. This generous amount of time will give us the ability to move into new areas with confidence in our endeavors. Also, we can gradually introduce ourselves rather than becoming an overwhelming new presence.

Planning

In this, our 40th yr. in business, we are happy to report the best quarter in our fiscal history and strong projected growth for 2012. (3) Taking in over $11 billion dollars in 55 countries last year, we are one of the world's most recognized brands. Following two years of deep retrenchment in which we closed over 900 stores, our stock has nearly quintupled since 2008. As we look forward to our future, our recommendation for the next 2-4 years will be two pronged: First, to hold off on expansion within the US until economic conditions improve and Second, to place all of our energies into expanding within emerging markets, namely, China and India.

Coffee consumption is increasing worldwide at about 2% annually, but much faster in emerging markets. China, specifically, has seen recent coffee consumption grow nearly 20% annually. (2) Despite China and India being traditionally tea drinking countries, the burgeoning middle class in both countries, wishing to embrace western culture and with more disposable income, is rapidly changing their desire for coffee. It is not only the products in our stores but also the western café experience that is desired. The sheer number of people in each of these countries presents a huge untapped market for our products. It is our continued commitment to our mission statement that allows us to provide a nearly identical café experience whether we are located in Beijing, Mumbai or New York (while also offering some unique menu items suited to Asian palates).

While we have been in China for a number of years, our plan is to open outlets in second and third-tier cities and bring in new product lines. We will open 1,500 stores in China by 2015. (7) With our recent partnership in the Starbucks Yunnan Coffee Project we are reinforcing our coffee leadership in China where we currently hold 70% of the coffee market. (6)(2) Through a series of initiatives, including the increased and direct sourcing of Yunnan coffee, the investment in and operation of coffee processing facilities, and the establishment of a Starbucks Farmer Support Center, Starbucks aims to develop a complete value-chain in China - from coffee seed to its authentic Starbucks Experience in stores. (6) We are also committed to promoting responsible coffee-growing practices while developing high quality Arabica coffee beans.

Our plan for India will be similar to that of China where coffee consumption has nearly doubled over the last 10 years. (1) In January, we signed an agreement with Tata Coffee, Ltd. to begin sourcing beans and discuss opening our stores there. (1) We hope to open our first stores later this year in Mumbai. With India being Asia's 3rdlargest coffee producer, (5) we have the opportunity to use the Yunnan Coffee Project as a model for a similar development in India over the next 10 years.

Leading

At Starbucks we lead the "coffee world" in innovation, we're constantly finding ways to make ourselves better and reach consumers of all sorts. Our Mission Statement states our goal is "To inspire and nurture the human spirit - One person, one cup and one neighborhood at a time." (3) In order to succeed in our leadership plan for the expansion of India and China, it's important that we reach out to our new consumers with a marketing plan that can show each and every individual that Starbucks is the best choice for their coffee needs. Our leadership goal is to show that we, Starbucks, by our actions & services, facilitate the movement of our new consumers of China and India towards patronizing our brand.

Leadership is ultimately about creating a way for people to contribute to making something happen. Our goal with the addition of these new stores is to build an entirely new customer basis overseas by providing the same quality of products that the Starbucks foundation was built on. Our company has seen success because we have offered