Starbucks

Internal According to Reza and Saudah, organization used 7Ms which are management, manpower, marketing, method, machine, material and money as company input and fully utilize these resources will improve firm’s performance. The fundamental truth that called ‘The Right’ which is the right quality, the right quantity, availability at the right time, the right place, the right costs and the right information, would eventually lead to the costs increase or decrease of the company’s profit. (Silviu Crisan, 2011) One of the 7Ms is materials, it is already known that they are indispensable for the industry activity.

The material from a firm can consist a major importance, meaning they are irreplaceable. The quality of the coffee bean is the most important to have a good coffee. Once the coffee that have been freshly roasted and ground, good water and brewing equipment free of oil residues from the last brew and the quality of the coffee beans makes a huge different. Starbucks coffee beans Starbucks’ commitment is to become the highest quality coffee in the world. Starbucks take a holistic approach to ethically sourcing coffee through responsible purchasing practices, farmer loans and forest conservation programs.

When Starbucks buy coffee by this way, it helps create a long term supply of the high quality beans they have been carefully blending, roasting and packing fresh for more than forty years. Starbucks ensures the quality of the beverage in taste, temperature and appearance. All coffee must meet Starbucks high quality standard. The finest coffees are always handpicked because the machines only can do a decent job of shaking ripe fruit off coffee trees, but they are not discriminating as humans. After harvesting, the coffee cherries must be processed to remove the pulpy fruit outside and retrieve the two sought after seeds inside.

Coffee cherries approaching the peak of maturity Different producers use different processing protocols which can affect flavor greatly. There are three types which are dry, washed and semi washed method to process. First, in dry processing, after the outer pulp is removed mechanically, the whole cherries are sun dried for 10 days to three weeks. The coffee will tend to be fruitier, rounder, fuller bodied and more complex because the bean is in contact with the pulp longer. This type of coffee is known as unwashed or natural, such as Brazil Santos, Ethiopian Harrar or Yemen beans.

An alternative method, the just harvested cherries are transported to a processor, who skins the fruit mechanically to expose the sweet, sticky pulp. The beans are left to ferment in tanks for 12 to 18 hours, a step that helps to soften the pulp, and then washed and dried. The coffee will retain the most acidity. This method is called washed coffee, also is the most common fine coffee in the world. For semi washed beans, a variation of the washed technique, the pulp is removed mechanically, omitting the fermentation step.

This technique saves water but do not allow the processor to enhance flavor through fermentation. The coffees are relatively richer and earthier flavor. Finally, the coffee beans will be sorted by size, density and color and then graded, then go to roaster. Starbucks is sticking with its rule which is hard to remember and will break down under the weight of their own complexity, they focus on just two drinks at a time to reduce possibility for errors, customers will have to wait longer for their drinks. Consequently, customers can get the high quality coffee every time but just need to wait longer.

Besides, over the years Starbucks has launched several initiatives to decrease the environmental impact of its disposable cups. Since 2009, Starbucks hosted a Cup Summit to bring together all facets of its paper and plastic cup value chain to find agreement on criteria for a comprehensive recyclable cup solution. Recyclable cup Reducing the environmental impacts of cups depends on the success of two interrelated efforts. First is developing recyclable cup solutions and secondly dramatically increasing customers’ use of reusable cups such as umbler or mug. With environmental and marketing issues, Starbucks offer a 10 percent discount when customer use their own reusable mugs or tumblers for their beverage in stores in the US and Canada, RM2 discount in Malaysia. Starbucks tumbler and mug Furthermore, Starbucks offer Starbucks Card to earn free drinks and gifts such as Starbucks year planner. Starbucks grab its market share by customer loyalty through promotions such as discount and limited edition gifts. Starbucks Card Starbucks year dairy planner

According to Forbes 2012, Starbucks introduce single serve coffee machine which using Swiss engineered high pressure technology called Verismo to allow customers make their own lattes at home with real milk. Verismo features three different pod types which are espresso pod, coffee pods and milk pods that can be combined in a number of ways to make own custom drinks. The chief executive of Starbuck, Howard Schultz mentioned do not have any competitor can make a latte with fresh milk just similar quality with a single cup machine. Verismo one cup coffee machine

Starbucks is trying to capitalize on the popularity of single cup coffee machines, Verismo that use K cups, sealed plastic cups that contain ground coffee in a single filter. The president for channel development and emerging brands at Starbucks, Jeff Hansberry stated in 2011, more than $8 billion of machines and cups were sold worldwide and every three coffee machines, more than one is single cup machine. The key element of an organization is not building or a set of policies and procedures but is made up of people and their relationship with one another.

A firm exists when people interact with one another to perform indispensable functions that helps achieve goals. Management recognizes the significance of manpower with most new approaches plan to empower employees with better opportunities to learn and contribute as they work together toward universal goals. (Richard L. Daft, 2009) Starbuck treat its employees as partner. Starbucks have built a solid foundation on the direct and open relationship that they share with partners and their legacy of providing employees with a positive workplace. In addition, working at Starbucks is a lot like working with friends.

Starbucks believes that keeping each other informed is understanding and respect each others, so the senior leader hold the open forum to answer the juniors questions regularly. The Starbucks total pay package is called ‘Your Special Blend’ because it is just for you as employee. This package include competitive pay, insurance, bonuses, paid time off, retirement savings plan, stock options and discounted stock purchase plan, adoption assistance, domestic partner benefits, emergency financial aid, referral and support resources for child and elder care, also a free pound of coffee each week and discounted merchandise at Starbucks.

Moreover, there are various partner clubs and networks that help employees share interest and find life balance which include recreational athletic leagues, foreign language clubs and parenting resources. Due to the health care is important to the employees, Starbucks offers comprehensive benefits packages to eligible partners working at least 20 hours per week. Starbucks was named to FORTUNE’s ‘100 Best Companies to Work For’ list for 14th time in 2012, from previous rank 98 move up to rank 73.

The reason Starbucks was recognized as a great place to work for is they made treating their partners with respect and dignity one of its guiding principles. There are more than five hundred professionals working in the finance group at Starbucks, in fields such as accounting, business unit finance, corporate development, finance services, internal audit, investor relations, tax and customs, treasury and risk management and safety and security. Full year financial results in 2012

Starbucks total net revenue increased 14% attaining a record $13. 3 billion. The company opened 1063 net new stores globally. Starbucks returned approximately $1. 1 billion to shareholders through share repurchases and dividend payments. Starbucks 2013 goals are open 1300 net new stores globally, representing 22% growth over fiscal 2012 and around 10-13% revenue growth. Starbucks Coffee Company has agreed to acquire Teavana Holdings in $620 million all cash acquisition.

Starbucks and Teavana will jumpstart the next wave of growth in this dynamic category, leveraging Starbucks core competencies of real estate, design and store operations and intergrading these with Teavana’s world class tea authority, global sourcing capabilities, merchandising and best in class retail store unit economics. Furthermore, Startbucks plan to continue to grow and extend Teavana’s successful 200 mall based stores as well as add high profile neighborhood store concept that accelerate Teavana’s domestic and global footprint based on Starbucks existing infrastructure.

Teavana Holding According to Gibbons, since 2008, Starbucks simplifying the complex structure it so that every job fell into one of the four basic supply chain functions which are plan, source, make and deliver. In planning sections involved its production planning, replenishment or new product launches. However, sourcing events were gathered by two areas which are coffee and non coffee procurement. For instances, Starbuck spends US$600 million on coffee every year and purchase non coffee procurement such as diary, furniture and paper goods US$2. billion annually. Furthermore, all manufacturing whether done in house or by contract manufacturers which are dispatched to be make functional unit. Finally, personnel working in distribution, transportation and customer service were appointed to the deliver group. The chair, president and chief executive of Starbucks, Howard Schultz mention the management changes come less than a year after Starbucks reworked its leadership structure into three operating model that focuses on North and Latin America, Asia and Europe or Africa or the Middle East. Lisa Jennings, 2012) This rearrangement will let the company to better deliver on local relevancy and velocity of decision making. The leadership moves Starbucks announced that they more swiftly position themselves for the exciting opportunities ahead while never losing sight of the fact that they are a global brand with a rich heritage in coffee, long standing values and the responsibility to use their scale for good. Starbucks use 3-M framework which are Megaphone, Magnet and Monitor.

Megaphone represents firm to customer communication, Magnet refers to customer to firm communication and the Monitor defined customer to customer interaction. (John G. and Sam R. , 2012) Starbucks had enhanced on the business measures by excelling in operations management. The quality and taste of coffee, the people serving the coffee and the experience in the retail stores are the reasons customers loyal to Starbucks. Starbucks improve productivity and profitability, then regain its market share. Paryani, 2011) According to Xing Zheng, Starbucks attracts consumers and increases their loyalty through offering Starbucks experience satisfied in psychology and emotion and creates extraordinary coffee brand. Starbucks’ supply chain transformation had support from the very top. For Starbucks far flung supply chain, the creation of a single global logistic system is very vital. Generally Starbucks brings coffee beans from Latin America, Africa and Asia to United States and Europe in ocean containers. References Chris Barth, 2012.

Starbucks’ New Verismo Machine Sinks Green Mountain. Will You Buy It? Forbes. http://www. forbes. com/sites/chrisbarth/2012/09/20/starbucks-new-verismo-machine-sinks-green-mountain-will-you-buy-it/ [Accessed 1 November 2012] James A. Cooke. 2010. From bean to cup: How Starbucks transformed its supply chain. Supply Chain Procurement. Accessed through http://www. supplychainquarterly. com/topics/Procurement/scq201004starbucks [Accessed at 27th October 2012] John Gallaugher and Sam Ransbotham, 2012. Social Media and customer dialog management at Starbucks. Open Journal Systems. e-journal] MIS Quarterly Executive. [Accessed 3 November 2012] Li Ying Ming. Adjustment of Enterprise’s Marketing Strategy in the times of experience economics. Journal of Human Institute of Engineering. Accessed Through: http://en. cnki. com. cn/Article_en/CJFDTOTAL-GCHS200504004. htm [Accessed 3 November 2012] Lisa Jennings, 2012. Starbucks makes major management changes. Restaurant News. Accessed Through: http://nrn. com/article/starbucks-makes-major-management-changes [Accessed 1 November 2012] Megan McArdle, 2012. Starbucks put quality over quantity. The

44577001079500

Women’s Campus

College of Business Administration

BUS351 International Business Course

TERM 172

GROUP PROJECT: FINAL DRAFTDUNKIN DONUTS

Working in the Quick Service restaurants industry gave Dunkin’ Donuts a huge challenge to face globally, when entering new markets using one mode of entry, “the Franchising”, it meant establishing a local base for a global business, and great opportunities exist in the Saudi Market, yet great challenges to prove ability of continuing business.

For 31 years, Shahia Food Limited was the franchisee global DD selected to represent the brand in the Kingdom, it applied a localized industry by promoting Saudi terms related to the brand, and was massively supported by the government to keep satisfying the Saudi taste, through its 200 shops across the Saudi land. KeywordsDunkin’ Donuts, Kingdom of Saudi Arabia, franchising, franchisee, joint venture, entry modes, entry determinants, 2030 vision. IntroductionRecently, Saudi Arabia has been the spotlight of the investments internationally. According to 2030’s vision, Saudi is attracting new investors every year.

The market in Saudi is attractive and has significant attributes. In order to satisfy the Saudi taste and Saudi consumption trends, the company must meet what Saudi clients want, which will ensure an international success in the heart of the global world. Dunkin’ Donuts is considered one of the top ten companies worldwide, with more than 12,000 branches in all over the world. Dunkin’ Donuts is managed through maintaining a strong position in all its targeted markets, by using the modes of the entrance and proper strategies with an experience of nearly hundred years of offering baked goods and drinks.

Overview of the IndustryQuick service restaurant (QSR) industry was established in 1921, which offers previously prepared food immediately to the on-the-go consumers that were defined as a new type of restaurants. Donuts were created in 1847, and it has been developed to be combined with a variety of flavors through years and associated with hot drinks, to please the American taste with sugary products. The size of the market globally is predicted by more than 3 Trillion Dollars, due to the massive number of workforce around the world, fixed assets spread worldwide, and size of activities practiced.

The market of QSR maintains a small industry in it, for baked goods and coffee, maintains multiple international brands that operate in this field, and this industry is approximated in more than 1 Trillion Dollars annually, and the market is divided primarily between 4 brands as follows: Company BackgroundIn 1948, William Rosenberg initiated his first shop for coffee and doughnuts, the “Open Kettle”, which was based on a 40% of revenues, William was able to reach from his food in-plants outlets and food trucks, which was the impending trend of fast food, introduced to the world.

In 1950 William Rosenberg chose Dunkin’ Donuts as a new name of “Open Kettle”, to be the first Dunkin’ Donuts shop in Quincy, Massachusetts, USA, the shop offered 52 flavors, and William was able to open 6 more Dunkin’ Donuts shops during its first five years constructing a chain. In 1960 the International Franchising Association (IFA), was originated to franchise the brand globally and locally.

At the moment, Dunkin’ Donuts is based in Canton; Massachusetts, USA, Dunkin’ Donuts is part of the Dunkin’ Brands Group, Inc. family of companies.So far, Dunkin’ Donuts was able to achieve success, which maintains more than 11,300 shops in 44 countries (8,500 in the 41 US states, and 3,200 worldwide), offering everyday a stop for baked goods and coffee, setting the brand as a market leader globally.In 1971, William was diagnosed with lungs cancer, he passed the business to other Dunkin’ Donuts leaders.

An English businessman, Nigel Travis is the current CEO for Dunkin’ Donuts, who has been running Dunkin’ Donuts since 2009. Dunkin’ Donuts founder:William Rosenberg (1916-2002) was American entrepreneur who was the founder of Dunkin’ Donuts. Rosenberg attended a public school. Because of financial problems Rosenberg was forced to leave his school in the eighth grade to support his family. At the age of fourteen, Rosenberg worked as a delivery boy for Simco.

At the age of twenty-one, Rosenberg raised from delivery boy to national sales manager, supervising the production, cold storage, shipping, and manufacturing. In 1948, the Open Kettle was started by Rosenberg which is a coffee and doughnuts shop. Later, Rosenberg renamed it to Dunkin Donuts. Dunkin Donuts was popular offering fifty-two types of doughnuts over six stores. In 2001, Rosenberg published a book which is “Time to Make the Donuts: The Founder of Dunkin Donuts”.

William Rosenberg’s vision is kept until today under the name “the philosophy of Dunkin’ Donuts”: “Make and serve the freshest, most delicious coffee and donuts quickly and courteously in modern, well-merchandised stores.”Regarding Dunkin’ Donuts values, Dunkin’ Donuts attains twelve values applied perfectly to franchise owners, and they are as follows:Honesty – The truth is always the major key to success.Transparency – sharing thoughts fluency.

Respect – Give individuals their nobility and win others’ regard.Fairness – Do what is right even if it is hard to do.Humility – helping less fortunate individuals. It is about the team and the society as a whole.Responsibility- Be accountable for the outcome whether the situation is good or bad. Integrity – Character indicates when no individual is looking.In 1990, Allied Lyons the owner of Baskin Robbins purchased Dunkin’ Donuts that was renamed to Dunkin’ Brands in 2004.

Dunkin’ Donuts reached the first rank in customer loyalty of coffee category by Brand Keys for 10 years successively.Dunkin’ Donuts’s major competitors worldwide: Starbucks: Starbucks is obviously the leader of all Competitors of Dunkin’ Donuts. It competes with Dunkin’ Donuts by offering a variety of baked food and drinks in a relaxed atmosphere. McDonald’s: McDonald’s is one of the main fast food chains in the industry and one of the top Competitors of Dunkin’ Donuts.

Offering a variety of food items and drinks at low prices with quick service.Krispy Kreme: Krispy Kreme offers doughnuts and coffee, which means the toughest competition with Dunkin’ Donuts.Dunkin’ Donuts’s major competitors in Saudi Arabia: In Saudi Arabia market, Dunkin’ Donuts has a variety of competitors both international competitors and local coffee shops. International competitors are Starbucks, Krispy Kreme and McDonald’s.

The local coffee shops are Coffee Day, 12cups, Alchemy. As a result, Dunkin’ Donuts should adopt and understand the Saudi culture to compete with their competitors. Furthermore, selecting some reasonable areas that most of the locals may not have the capacity to manage the cost because of their limited budgets, Dunkin’ Donuts can gain a competitive advantage.Entering to the Kingdom of Saudi ArabiaGlobalization enabled local companies to become international, by giving them accessibility to invest in foreign markets, expanding their sizes, assets net worth, and targeted segments of customers.

Also, it gave governments better opportunities for developing communities.Entering KSA as an international business is an easy process, but must be applied with accuracy and professionalism. The competitive investing climate attracts investors to be on this land, and only the most creative innovative could last, since the mid-1970s as of recently.In 1986, Shahia food Limited Company wins the contract of Dunkin’ Donuts franchise and was able to introduce the brand Dunkin’ Donuts to Saudi Arabia.

Dunkin’ Donuts is keeping spreading in KSA over thirty-one year. the first branch was established in Al Olaya. Nowadays, the company has more than 200 branches in all Saudi regions, starting from:Riyadh Region (King Khalid Intl Airport, Wadi Laban, Al Muzahimiah, Diriya, and more). Western Region, which includes (Mecca, Jeddah, and Madinah) Eastern Region (Khobar, Dammam, and Jubail)Qassim Region (Buraydah, Badiah, Bakeereya Unayzah, and Zulfi) Saudi employees versus Foreign employees:Dunkin’ Donuts employes an acceptable number of Saudis.

Its main purpose of having many Saudi employees is because of the policy of its industry, that employing Saudis to easily serve Saudi consumers will help to reach Dunkin’ Donuts products. Moreover, Saudi employees can realize their nation consumption habits more than foreign employees. KSA modes to enter Saudi market:There are many modes to enter Saudi market. every type serves organizations, governments, and customers, reaching their objectives.

Methods can be summarized as follows:Exporting: a country (exporter) sells goods and services and distributes them to another country (importer).Piggybacking: Selling goods services to local businesses, but they market the vendor globally.Buying a company: is the most expensive method of entering a country, it is about purchasing a local company.

Turnkey Projects: Forming a project from the ground, and selling it to local companies to warranty an indirect existence. Contracting: either through licensing, joint ventures, or partnering, it refers to a contractor assists to introduce the brand to the local market. The percentage of involvement the contractor obtains is different from a contract to another.Greenfield Investments: means a project where a firm builds operations in a foreign market beginning from scratch.

This mode has a large cost and local lows control it.A number of elements, such as expenses, local laws, necessities, desired quality, and industry will affect the company choices of these modes. Dunkin’ Donuts has chosen since 1960 using the franchising model to enter America and worldwide markets, and Dunkin’ Donuts used it in KSA too through Shahia Foods Limited that held the franchising method.

Dunkin’ Donuts KSA has its own vision statement that sequel the overall Dunkin’ Donuts vision: “To be always the desired place for great coffee beverages and delicious complementary donuts & bakery products to enjoy with family and friends” As well as Dunkin’ Donuts Mission:”To be the leading provider of the wide range delicious beverages & baked product around the kingdom in a convenient, relaxed, friendly environment, that insures the highest level of quality product and best value for money.

We provide our guest, the elegant service, and unforgettable experience to meet their expectations in every single visit.?”These strategic management tools state that Dunkin’ Donuts KSA works under the localization theme, because of Saudi community privacy, that Dunkin’ Donuts exists to make its enjoyable moments with delightful pastries and drinks, it is general in food firm to follow the localization theme because of the dependence of the food fields on the local tastes.

The localization method is tracked through the Dunkinha and Dunkawy cards terms that support the customer’s loyalty, and a customized menu made by Dunkin’ Donuts for only Saudi Arabia.

Conclusion

It is apparent that KSA was for Dunkin’ Donuts an important market, that’s why it was chose from the beginning to be located in. Saudi’s location, the type of consumption trends the society maintains, the support of the government received by international market players, and the encouraging purchasing power obtained by the Saudi people all these and other considerations, were the reason why 31 Dunkin’ Donuts existed in KSA.

The unique mode which is franchising is used by the company worldwide, this method was used due to the nature of the industry maintained by Dunkin’ Donuts, which is QSR, that means it is a must to have the food on demand, this point cannot be done by other types of entry, it should be done through actual existence, and to reduce cost and time of studying national taste and its trends. To represent the company in the kingdom Dunkin’ Donuts preferred to have a national local franchisee.

The choice of this franchise was distinctive, due to the 31 years position of ruling the QSR in backed food and drinks industry in KSA, accomplished by Shahia, where the total market share reached is 49% of total market, compared to 29% for Starbucks and 22% for MacDonald’s’.

Discussion Questions and Answers:Why choose Saudi Arabia? Dunkin’ Donuts is considered as the quick service restaurant industry., it is situated in Canton, Massachusetts, USA, it chose to invest in KSA because of its high concentration on building up the company’s points of interest by existing in Saudi Arabia the heart of the world, which means rising the abroad experience. Moreover, it strongly supports the fact of investing where it can be focused on expanding resources, inattentive of having power.

However, having the ownership flexibility, and publicizing risk.How the investment in Saudi Arabia? The comprehensive advantage of investment in KSA is known as stable. There is no need to concern about the nationalizing of the international businesses because of the encouragement practiced by the Saudi government towards foreign investors and the supporting for liberal ownership in the Saudi market.

How do political ; global policies affect your business?The high rate of return, and the taxation system, for foreign investors in KSA, were factors of attracting the international business. The kingdom of Saudi has many advantages for foreign investors which are the highest digits for GDP in the region, controlled inflation rate, the size of the Saudi market, and finally the size and support given for the infrastructure.

These great advantages are not only to attract Dunkin’ Donuts to Saudi Arabia but all types of investors.Entering KSA as an international business is considered an easy process?Entering KSA as an international business is an easy process, but must be applied with accuracy and professionalism.What were the difficulties you faced to enter the Saudi market? Studying and analyzing the Saudi customer needs, was one of the greatest work done by Dunkin’ Donuts KSA.

One of its studies stated that employing Saudi Staff, and practicing the Saudization, will give the Saudi clients a more pleasant and stratified experience. SWOT Analysis:Strengths:The industry’s most fundamental point of strength that makes it worth to persist the business through the past years is “the time-saving rule”, which means the industry reaches what regular restaurants can’t offer, all these restaurants guarantee fast processes and quick purchase of food.

Weaknesses:Staff who work in low conditions, with low wages, are considered from the weaknesses this industry face, which gave it a bad reputation among people worldwide.

Opportunities:Due to globalization every year there are new markets added to the demand forces as a huge opportunity to the industry.

Threats:Consumer demand for healthier food is increasing the threat in this industry, which will keep these restaurants under the consumer satisfaction indexes pressure.

Appendix

Interview questions ; answersWho are your national ; global competitors? Our competitors are other businesses operating in the same industry as we are. Which are: Krispy Kreme, McDonald’s and the main competitor is Starbucks.Does Dunkin’ Donuts buy from other countries or make the products?No, the raw material comes from America and Dunkin’ Donuts produces the products in Saudi.How is your marketing methods different here in Saudi Arabia to other countries?Marketing methods are different in each country because of cultural differences.

In Saudi Arabia, Dunkin’ Donuts understands and respects the culture and religion of the region by following the regulations and guidelines for advertising the company.What is the entry mode that Dunkin’ Donuts use (Franchising, licensing, joint venturing, exporting, turnkey projects or wholly owned subsidiary?Licensing with Franchising, as a combined mode used by the company worldwide.How do political ; global policies affect your business?

It impacts Dunkin’ Donuts by having many barriers to entry in different countries. Each country has its own policies that Dunkin’ Donuts needs to follow in order to operate the business there. These days, Saudi is becoming more strictly by developing new regulations regarding operating businesses.

In strategic positioning, does your business choose differentiation or low-cost methods for their products in order to create value for Dunkin’ Donuts products?No, Dunkin’ Donuts likes to keep up with the standards in order to offer high-quality products to the customers. After the value-added tax, Dunkin’ Donuts just added one riyal to all products and make more offers to attract customers.Do you have different methods of choosing your employees here from other countries?Dunkin’ Donuts likes to follow the government requirements regarding the Saudilization. As well as to have non-Saudi employees as a percentage of the staff, but to be able to speak English and Arabic as well.

The interviewee information:

Name: Gilhesh Paul

Position: Area Supervisor.

Phone number: 0560-213-910

Email: Gilhesh@dunkindonuts.sa

References

• Dunkin’ Donuts. (n.d.). Retrieved December 10, 2017, from http://www.dunkinbrands.com/about/donutsG. (2017, December 07).
• Dunkin’ Donuts franchise. Retrieved December 10, 2017, from http://worldfranchise.eu/franchise/dunkin-donuts
• Market Entry Strategies. (n.d.).Retrieved December 11, 2017, from http://www.tradestart.ca/market-entry-strategies
• Nigel Travis. (n.d.).Retrieved December 10, 2017, from https://news.dunkindonuts.com/about/leadership/nigel-travis
• Saudi Arabia – Market Opportunities Saudi Arabia – Market Opportunities. (n.d.). Retrieved December 11, 2017, from https://www.export.gov/article?id=
• Saudi-Arabia-Market-Opportunities(n.d.). Retrieved December 9, 2017, from http://www.dunkindonuts.sa/English/Dunkawy/Pages/default.aspx12,000
• Global Locations And Still Growing. (n.d.). Retrieved December 10, 2017, from http://www.dunkinfranchising.com/franchisee/en.html

The following report evaluates the marketing environment for the coffeehouse business, specifically Starbucks. The report will cover a brief background of the company and reasons to why Starbucks has been selected as a center group to display a marketing report. A macro environmental study will demonstrate important possible threats and opportunities for Starbucks. It will also look into further segmentation research, characteristics, views and behaviors within the consumer groups.

Background to Starbuck and Selection Criteria Starbucks was established in 1971. The global brand is well known throughout the world and now sits in 50 countries, with more than 17,000 stores (Starbucks,2011). In 2010 the international coffee house had revenues of $10. 7 billion (business insider,2011), with outstanding revenue Starbucks is recognised as the worlds top coffee retailer. The company has been selected as the author has personal experience of working within the establishment, in the role of a qualified barista.

During that time the business remained busy throughout the day, peaking in both the morning and evening, when customers were leaving for work or travelling home. The role came with pressure of continually making a high standard of coffee, whilst attempting to make each product consistent in taste, across the entire company. The Starbucks Macro Environment The macro environment is when all external environmental forces can affect how a company operates but which are beyond its control.

This can be structured as Political/legal, ecological, socio-cultural, technological and economical. These are also known in short hand as PESTEL. To really understand their market field in which their business is positioned marketers must assess their gap in the market for competition or business opportunities within the macro environment. Many different trends have an impact on an organisation and each is individually considered. Although Starbucks is currently the worlds leading coffee house, it still needs to stay competitive.

Coffee contains a high amount of caffeine that has been proven to lead to health issues, such as; high blood pressure, insomnia, muscle termers and heart disease (mayoclinic,2011). This socio-cultural pressure presents a potential threat to Starbucks, as people may start to reduce their caffeine intake. Leading to a decline in volume sales. Starbucks do offer a decaffeinated version of each product, however many coffee drinkers consume it for ‘kick’ of the caffeine. If health scares continue within the coffee trade Starbucks might find it hard to continue to make large profit margins annually.

You may also be interested in “Starbucks pricing strategy”

Currently Starbucks makes most of its trade on coffee, with only a few other products, such as; desserts and quick food like sandwiches and Panini’s. A socio-cultural threat is that coffee may not stay in favor with customers, it could simply be a phase. At the present going to a coffeehouse to catch up with your friends is seen as cool, but how long will this last. Could it be replaced in the future by a different leisure idea or even a different beverage. Is drinking coffee just a latest fashion? Another socio-cultural effect is simple and uncontrollable.

The weather can quite easily affect the sales of coffee. Many people drink hot beverages to keep warm on cold days, however if global warming persists to heat the world up, will the demand in coffee lower. Hypothetically people would want a cold drink or ice cream to cool them down rather than a warm drink on a blistering hot day. The economical threats of pricing could also have a negative effect on Starbuck’s income, while most people consider Starbucks coffee a luxury good and would pay whatever price is set for it, there is an increasing opinion that Starbucks charges too much.

They are also very inflexible in terms of location. For example, Starbucks charges the same price for their products whether you’re in UK or Beijing (ft,2011). In addition to fixing its prices for international customers, Starbucks also has lacked some tact in the way of international relations. Starbucks boasts that it has stores worldwide in over 50 countries, however less economically developed countries where Starbucks trade, such as; Vietnam, will struggle to meet targets as less people will be prepared to spend money on an expensively priced cup of offee. Currently with the economical crisis, this could have a large effect in sales. Coffee to many people is seen as a luxury, it isn’t needed to survive, so if prices continue to soar, people may simply eliminate it from their lifestyles. This will give other competitors a gap in the market to compete against its prices, Starbucks already has competition from many fast food chains, such as; Burger King and MacDonald’s as their prices are low and its convenient.

Other coffee roasters have also closed the gap on Starbucks, competing with lower prices and more to offer than coffee and a minimal food selection (money,2011) The majority of Starbucks beverages contain milk, and recently diary products prices have increased due a rise in raw materials and diesel prices, again this could lead to an increase in price at Starbucks coffee, which could eventually end in losing customers, who simply don’t have the money to spend on coffee (Telegraph,2011).

Starbuck’s are very modernised when it comes to the technical side of the macro environment, they have Wi-Fi in the majority of stores, and have their own loyalty cards to help maintain their regular customers (florence20,2011). Recently they have brought out an app for the I-phone and other smart phone users, where you can quite simply scan your phone to pay for your drinks, the app also finds your closest Starbucks (Starbucks,2011). All of these ideas have helped to keep Starbucks popular as it gives customers the sense of importance, and are being helped to make their visit quicker.

However recently fellow competitor Costa has designed a self-service machine (marketingweek,2011). Andy Harrison, chief executive of Whitbread (Costa), says: “Customers increasingly want great tasting coffee on the go, which makes the self-serve coffee market very attractive” this could steal some of Starbucks customers who just want a drink on the go rather than sitting. Research into Customer Segments Market research “The collection, analysis and communication of information undertaken to assist decision-making in marketing” (Wilson,2006).

Market research helps any organistation and if the facilities were available, it would be a very good place to start when a company wants to make a change or introduce something new within the company. Companies need to research their markets so they can discover who their main customer target groups are. According to Kotler (1998), segmentation is the act of dividing the market into specific groups of consumers/buyers who share common needs and who might require separate products and communications.

Understanding the needs of the segment allows marketers to make better decisions about when and where to advertise a product, how to price it and where to sell it. Currently Starbuck’s largest segment in the market is young business people and graduate students. To increase revenue Starbucks could research when products are more likely to sell, and explore if it would be beneifitiacal to stay open longer. The overall aim; to increase revenue, could be explored by a number of objectives such as: To find out if sales of cold drinks increase during the summer months across Europe, by December 2012.

To explore if customers in the UK who work within the travel industry or travel during off-peak times, would use a Starbucks store during uncooperative times by June 2012. The first objective would be met by collecting internal information from each shop, the study would be based over a year, enabling the study to research if the sales do increase over the summer months. Depending on Starbuck’s database’s secondary research could be conducted, by looking over previous sales, looking over stock sheets, and asking staff if there is any noticeable change throughout the seasons.

The timescale of one year, is necessary to compare results to previous research. The method would be simple and very cost effective as the information goes directly on to the till each day, which prints off as a z-read, showing sales of both hot and cold drinks. When the data has been collected, it would be presented on a line graph to clearly show when cold drinks peak throughout the year. If the research proves that cold drinks do consistently peak during the summer season, then Starbucks may be inclined to introduce a larger variety of cold drinks, or focus on promoting the cold products during warm seasons.

The second objective would be met by collecting primary data, which is information collected for the first time and for a specific purpose. The objective identifies that it will be focusing on people who work within the travel industry or use public transport during off-peak hours. To complete this objective quantitative research methods would need to be used. Questionnaires could be distributed around busy 24hour airports or train stations, possibly offering the customer a free drink at Starbucks on completion.

When distributing the questionnaires ethics wills need to be considered, making sure all data stays anonymous and persons under 18 have consent from a carer. The questionnaire would have to be specific to recogonise how much money they would be prepared spend, and how often they travel in off-peak times. Once the information is collected Starbucks could present their research in a pie chart showing the percentage of who would and wouldn’t use the store, following with how much an average customers would pay. This would give Starbucks an idea if opening a store around the clock in a busy airport/train station would be beneficial.

is the leading retailer and roaster of specialty coffee in the world. During its early years, Starbucks experienced rapid growth and expanded internationally as they strived to fulfill their mission: “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”. However, overexpansion led to dilution of its brand equity. After restructuring, Starbucks emerged stronger than ever, maintaining its international presence with more than 17,000 retail stores in over 50 countries.

Using the COSO ERM Framework Model, we shall examine how Starbucks’ internal environment has contributed to its early successes, eventual shortcomings and how they have emerged stronger. Risk Management Philosophy The guiding principles of the Starbucks Corporation are synonymous with the “Five Ways of Being”: Be Welcoming, Be Genuine, Be Knowledgeable, Be Considerate and Be Involved.

These concepts are explained in The Green Apron Book, a pocket-sized booklet given to every partner1 containing suggestions and ideas on how to create the Starbucks Experience. It teaches partners how to personalize relationship with customers by connecting and elevating customer interactions. Ultimately, partners at every level of the company are taught to place customer service as top priority and work towards creating a unique and memorable customer experience for anyone they meet.

At the store level, Starbucks empowers all partners to make decisions that impact the reputation2. Partners are encouraged to be innovative and do whatever they can to create the Starbucks Experience. For instance, Timothy Jones, a store manager at the Seattle’s University Village Section played his own music there so as to provide a unique, warm and consistent enrichment to the customer experience. Such low-cost ideas are usually carried out at the individual store level with approval from the store managers. At the corporate level, Starbucks conducts numerous programmes to instill the “Five Ways of Being” in all partners.

Risk Appetite At the store level, partners place the highest priority on creating a consistently high-quality customer experience. Hence, the risk appetite of each individual store is small and much attention paid to every detail that affects a customer’s visit. Whenever there is an opportunity to provide services, partners are unwilling to lose them. Be it exchanging spoilt French Presses for free, providing free drinks when opportune, establishing close bonds with regular customers or keeping outlet toilets clean; partners are willing to do anything within their means to make customers happy. Even the store design has to be perfected to achieve a balance of functionality with a warm friendly ambience. Most importantly, partners are unwilling to compromise on the quality of coffee during preparation and thus receive trainings from management.

On a corporate level, Starbucks was willing to accept a variety of risks associated with a strategy focused on local and international expansion, as aligned with their mission. Starbucks was willing to face cultural barriers in tea-drinking nations such as Japan, China and Britain as they believed in the potential for growth in the absent luxury coffee market there. Despite initial resistance and losses, Starbucks was willing to adapt its practices and store image so as to merge into the local community. However, Starbucks was unwilling to compromise on its brand name. Starbucks eventually withdrew from the Forbidden City when forced to sell coffee under the palace museum brand name in order to maintain operations there.

For growth, Starbucks leaders were willing to have multiple business operation models, thus accepting the risk of weak corporate cultures in non-company-operated stores. By 2002, 85% of Starbucks’ revenue came from company-operated retail stores and the remainder from licensed stores, key partnerships and specialty operations such as foodservice accounts and mail-order catalogue sales. To provide a comprehensive Starbucks Experience, Starbucks was willing to accept risks related to product dilution as they introduced new products such as Starbucks VIA(r) Ready Brew, music compilations and licensed merchandise.

Riding on its belief in innovation, Starbucks accepted risks from not conducting market research or sufficient advertising, choosing to rely on market testing and purely-word of mouth to develop its products. In fact, up till 1996, Starbucks had spent a total of only $10 million on advertising. Eventually, Starbucks failed to take appropriate risk mitigation processes and faced decreasing incomes in 2008. In order to stay competitive, Starbucks redefined its strategy and changed its risk appetite. Starbucks cut costs of at least $500 million, closed 800 stores in the U.S. and laid off more than 4,000 employees. Starbucks also conducted more customer research, offered discounts, advertised.

Board of Directors’ attitude Starbucks’ Board of Directors consists of 11 experienced individuals from various backgrounds. The management maintained a transparent and close working relationship with the directors, keeping them informed of all news about Starbucks. As such, the directors were able to offer informed advice frequently and providing suggestions for improvement. This was evident in 2008, where the various directors worked closely with Howard Schultz, sharing their experience and offering insights on the Transformation Agenda1.

Integrity & Ethical Values To preserve their corporate culture and reputation, Starbucks has a Business Ethics and Compliance program that adheres to its mission by providing resources that help partners make ethical decisions at work. Starbucks’ Standards of Business Conduct, distributed to all partners, provides clear and concise directives on how partners are expected to conduct their business and make appropriate decisions at work.

It covers conduct in the working environment, acceptable business practices and persuades active involvement in the community. In events of uncertainty, the Ethical Decision-Making Framework provided partners additional guidance. Moreover, channels such as the toll-free 24h Business Conduct Helpline and the Business Conduct Webline provides avenues for partners to seek guidance and raise concerns without fear of retaliation from management. Partners are assured confidentiality and anonymity. Given the close proximity to their managers, partners are also encouraged to seek their managers for help. Easy access to resources for help and a collaborative working environment supports the strengthening of integrity and ethical values.

In any business schemes, there is no guarantee that a particular process of marketing will become beneficial or not. In the case when the “trombo” program is foreseen to experience some problems with regards to profitability, a good possible strategy is to manage the amount of exposure of each brand, say three non competing brands, according to the market location stability. In order to start this out, a good survey research or the use of available data can identify in which locations each one of the three brands is performing well.

Afterwards, those locations can retain the overall higher exposure and marketing rate of the brand which correspond to this high degree of market presence. The two other brands may then be included as supporting commodities and should not measure up with how the better performing product is being promoted. Of course, all of them should have the best possible advertising strategies to sustain the need to defy the competitors. However, the brand which is distinctively very strong in a particular location should gain the most investment shares.

For example, it has been observed and noted that Dunkin Donuts remains as one of the strongest name in the North Eastern part of the USA. Given that status, the remaining two brands should only serve as supporting commodities in any of the geographical location within the North East. On the other hand, if there is a specific location where Baskin-Robbins is independently performing well while Dunkin Donuts is not, then the latter should be identified as the supporting brand.

This scheme can also be applied to Togo’s and vice versa. With such strategy, each of the brands in their respective strongholds will still be able to maintain their market shares or even surpass it. Of course, it was mentioned that they are classified as non-competing brands but the exposure of each one proportional to their strength in a location should be able to provide more positive effects. The aggressive marketing plan of Dunkin Donuts should largely depend on the amount of financial disadvantage rate that they can accept.

In business however, this aspect won’t be identified unless the actual process strategy has been initiated. Therefore, the company should take very minimal steps in order to let it see anything which could possibly become a problem in terms of marketing. The more ideal procedure is to establish their presence first in some identified test markets. Doing such procedure, the company will be able to acquire information to gauge the feasibility of presenting the product or services to a geographic or demographic based location even before doing a widespread roll out of marketing.

(Wikipedia, 2007). In doing an initial step to acquire a certain geographic location in terms of commercial share, it would be best if the minimal amounts of resources can be established in a specific location. Although Dunkin Donuts has already founded its reputation in a national and even global scale, there is always the aspect of “non-assurance” of profit generation especially in the world were new ideas are always formulated and used to destroy other competitors.

Because of such degree of possible unexpected drawbacks, investing as little as possible would provide a far lesser risk. Since there are other franchised brands elsewhere, the approach of the Doughnut giant of aggressively establishing its scope puts it on a very high scale risk. What it should do is to still pursue the “trombo” concept but in smaller dispersion units. References Wikipedia. 2007. Test market. Wikipedia-the Free Encyclopedia. Retrieved November 16, 2007 from http://en. wikipedia. org/wiki/Test_market.

According to Michael Porter, the five forces that affect the company in any industry include the competition, the suppliers, the customers, the threat of new entrants and the threat of substitutes. The porters five forces analysis for KFC in China is depicted below.

Industry Competition

A diverse and expansive industry of restaurant, food and beverage and fast food items is present in the region. This makes the competition in the industry highly competitive in nature. However the competition is still not entirely perfect in nature. The long standing rival of the company in this region is the chain of McDonald fast food stores. This is a flourishing industry as until now almost the entire population of china was China oriented and made a point to buy local products. However the increased Americanization of the younger generation has made the Starbucks brand popular angst the market as well, making it a strong force in the competition

Power of Buyers

The power of the buyers is highly strong in China as KFC is an international and foreign chain to them and they yield the power of determining which products should be made available by KFC. However in terms of prices, the bargaining power of KFC in chain is low as a diverse offering of products and services is already existent in the market which reduces the impact on the competition.

Power of Suppliers

KFC makes a policy of taking in raw materials for about 80% of the required material form the local and domestic produce market. This tends to increase the profitability and operations in the domestic market. However the supplier power is moderate in nature as the company tries to reduce threats of supplier power by taking on multiple suppliers.

Barriers to Entry

The KFC is an established brand name so when other companies think of entering the industry/ market they are somewhat constrained by the brand name and the competition in the industry. As a result the threat of new entrants is moderate. The threat of substitute for the chain is high as the local and international businesses are trying to offer much more appealing product offerings to the consumers.

However due to the established brand name and image as well as the popularity of chicken as a meal reduces the threats of substitutes for the company. After the analysis of the company and its prospect in China it was determine that the best strategy for entry in the Chinese food and beverage market would be to focus on increasing the profitability of the company while proving high quality products and services to the customer and increasing the market share in China as well as across the world. The market penetration pricing would involve charging a slight premium for the products and service offered in order to establish and keep the brand name in the market as a well renowned and famous entity. Aside from this the company will have to employ diversity management strategies. The company would also have to customize its product offering and settings according to the customer’s requirements in the region without abandoning and changing then original theme and ambiance of the truck retail outlet and store.

Moreover by including the following four elements the Starbucks company would be able to successfully enter and establish itself in the Chinese market These elements pertain to “establishing and maintaining good relationships with government officials and local joint-venture partners; targeting the nascent middle class beyond first-tier cities; finding and hiring experienced local executives, and adapting business models and systems to local conditions and requirements” (‘China’s New Consumers’, 2006) The internal resources, which are available to the KFC company in order to compete in the market while establishing itself in the Chinese fast food industry are derived form the strengths of the company. The KFC Corporation has been operating in various parts of the world since the 1950s which gives the company and the brand a long term experience which is varied and extensive in nature.

This can allow the company to be proactive in its strategies for change and business management. The strong brand image of the company allows it to establish itself in the new industry with ease while the customer orientation of the company enables it to build a loyal customer base. The global expansion strategy employed by the company tends to combat the challenges of the domestic market while providing for growth. Aside from this the company has also been establishing itself as a socially responsible corporate citizen, which can help improve the image of the brand and the company much more in the eyes of the consumer. Additionally the trained staffs of the KFC Corporation and its experienced managers and executives are an integral part of the internal resource for the company as well.

The primary aim is to evaluate the Starbucks website (www. starbucks. com) and the Greenmountaincoffee website (www. greenmountaincoffee. com) to discover the major customer related activities and their support by the latest information technology. Depth evaluation of what services and functions the websites provide to the various levels of customers. The secondary research is about the e-commerce strategy models that have been adopted for effective functioning of the website for the customers. It includes the business models adopted for servicing the customers.

The first section deals with the Starbucks website discussing the services it provides to the clients and the involvement of the business models. The second section takes up Greenmountaincoffee website and the customer related services along with the business models that successfully implement the business models.  The homepage offers a great look  displaying all the services that the company provides and are accessible from online site. The various customer related services can be highlighted as follows:

1. Browse the Coffee catalog: The Link “Our Coffee” provides an insight to all the items and products that are available with the company and can be used by the customers for their choice.
2. Browse store locations: The customers can browse store locations that are near to them. Starbucks is spread in over 27 countries and over 5 continents in the world.
3. Customer service options: In spite of selling coffee, the customers can listen to music, read books, access to local events, access Wireless internet and so on at the coffee parlors at selected locations. These are the additional entertainment options they offer at the parlors for fetching more customers of every length and dimension.
4. Starbucks card: The various offers and gift cards are available for a price. It helps one to avail discounts, whole bean purchase, brewed coffee refills at no cost. One has an option to regulate designing of loyalty card and also take care of the refills and various gift options.
5. Purchase options: The organization has allowed selling of coffee packages over the internet for various groups of customers from individual to institutional customers. It allows customers to use their Credit card, debit card and Paypal options for making any sort of payments.
6. Food service: It also offers food service to various businesses and industry cafeterias, hotels, colleges, healthcare and other centers.
7. Entertainment Services: It also sells Starbucks branded books, music collections, movies and many more.
8. Ancillary services: It also sells brewing equipments, coffee, tea and many more. The store locater search option provides various search facilities for any store within the domain of Starbucks.