Starbucks: Recommendations Essay

Introduction

Starbucks needs to take advantage of the rising demand for coffee due to the change in social-cultural factors that cause people to desire the drink in social events and at home. The company needs to conserve the environment by reducing its usage of plastics when serving its drinks. Instead, it should use alternatives that are biodegradable. Starbucks charges high prices for its products. Customers do not desire high prices since they prefer to purchase goods that are affordable. The company needs to improve its efficiency in its supply chain to reduce costs and wastage that contribute to the high prices that are charged on its products to remain competitive in the market. Starbucks needs to also venture into the emerging markets where the demand for coffee has been increased to increase its market share and profits. The company needs to also diversify its business by forming strategic partnerships with companies to achieve various goals in business. The company must also be innovative and differentiate its products to fight the stiff competition from local and international firms. Even though Starbucks has a massive advantage in the market, it must continually reinvent and try new things to become well positioned in the market. The company has a weak force when it comes to bargaining with its suppliers. Starbucks needs to locate many suppliers to ensure that it gets a continuous supply of its coffee beans at affordable prices. The company needs to maintain its reputation in the market by offering high-quality products with the same taste that it has identified with from the beginning. It also needs to continue expanding into the developing countries and add more stores to ensure that customers access its coffee wherever they may be located.

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The company's largest revenues come from its operated stores which contribute about 79 percent of the total revenues. Its second largest source of revenue is licensed stores which contribute 11 percent of total revenue. The third source of revenue is consumer packaged goods also known as CPG which account for 8 percent of total revenue. Food service operation accounts for 2 percent of the company's total revenue. From this data, it is evident that the company derives the majority of its revenues from its operated stores. This segment comprises revenues from company-owned restaurants. Since the company manages every aspect of these restaurants, it keeps all the revenues from these stores. The consumer packaged goods segment includes coffee and tea linked products that are sold to food service companies such as US foods. The company also gets 8 percent of its revenues through license fees and royalties and2percent from food service operation. The company needs to maximize its food service operation to ensure that it increases its profits and profit margins. The company has not been doing enough to be known for its food including the juices. It needs to improve its promotional activities to help increase awareness of this product line. The company offers attractive compensation to employees since it values them and refers them as partners rather than employees. Administrative positions offer more competitive pay compared to retail or store roles. The compensation indicates that the company values its employees and should continue appreciating them by introducing a reward management system that will ensure that employees are appreciated further. Rewards will help in boosting employee morale which will be reflected in productivity.