Background: Started in Seattle WA in 1971, Starbucks is primarily known as a retailer and roaster of whole bean and ground coffee, plus a variety of teas. Today, Starbucks consists of over 24,000 retail locations in 70 countries. Each location is designed to depict a relaxing atmosphere where people can socialize while enjoying coffee.
Starbucks has now been attempting to change its reputation for being a business that sells coffee. To achieve this change, Starbucks decided to add baked goods to their product mix by acquiring Bay Bread LLC in 2012. With this acquisition, Starbucks added La Boulange baked products to their menu list. However, this initial attempt at introducing food products to the product mix was not as successful as anticipated.
In July, 2016, Starbucks announced that they were going to make an investment in the Italian bakery and restaurant company Princi. Starbucks anticipates becoming successful in this venture due to the Princi’s product quality and knowledge.
Case Questions: You are a consultant to Starbucks. Use Porter’s Five Forces Model as a foundation to prepare a carefully researched strategic plan addressed to senior management. Include a short cover memo introducing your report to the management team. The report should discuss the following:
Provide a short description (2-3 sentences) of Porter’s Five Forces Model.
Briefly discuss how each of the Five Forces applies to Starbucks plan to increase market share by making additions to their product mix by adding food.
Recommend one of Porter’s three generic strategies for Starbucks to consider and your rationale for the recommendation.
Describe two tactics the company might use to achieve your recommended generic strategy.
Briefly describe two KPIs you would recommend Starbucks monitor to measure the changes.