Starbucks

DEPARTMENT OF ACCOUNTANCY

UNIVERSITY OF ILLINOIS

MEMORANDUM

INTRODUCTION

In this memorandum, we analyze the strategies Starbucks employs to achieve its objectives and goals. We categorize the positioning of specific strategies as access-based, needs-based and variety-based. We also discuss attributes Starbucks might measure for their strategies. For attributes that are not directly observable, we suggest substitute attributes that can be used instead.

ACCESS-BASED

Strategies

Starbucks operates stores in a variety of ways to increase its accessibility to a wide range of customers. Unlike other coffee chains, Starbucks has stores not only at street corners, but also at airports, college campuses and hotels etc. Drive Thru and Off-Highway stores also offer convenient access for driving customers. Starbucks gets a license from Kraft Foods, Inc. to utilize Kraft’s extensive knowledge of marketing and distributing, so that Starbucks can deliver coffee directly to customers. Today Starbucks coffee is available in many major grocery stores across North America and the U.K. Starbucks also cooperate with Cooking.com to build an easy-to-shop and efficient website that offers premium coffee with affordable delivery. Furthermore, nowadays Starbucks operate internationally in over 43 countries. It makes Starbucks coffee easily accessible to customers around the world (10K).

Starbucks operates differently in each segment to access customers most efficiently, and to maximize profit for each store. For example, Starbucks’ stores in airports are usually smaller in size and provide fewer seats. Because airports are seldom short of seats, Starbucks can easily cut its operating costs by renting a smaller place and providing fewer seats. People at the airport are usually in a rush, they don’t have much mood to enjoy quality service-as long as they can get a coffee to relieve thirst and tiredness, Starbucks thus hires less employees in airport stores....