Support Of Starbucks Four Business Units example essay topic

However, there is no possibility for anything to be always good. As most organizations have weaknesses, the Starbucks is not an exception out of this. Several parts of the Starbucks Company are growth sensitive and therefore not very competitive. This can pose as a large problem in an organization trying to take advantage of a rapidly expanding market. Areas such as quality of employment can become difficult. With each expanding business unit, Starbucks has to provide each employee with training and knowledge about coffee (Ortiz).

When there are large batches of employees that need to be trained, this can become time consuming and expensive. Finding enough good people that could reproduce the values, culture and services would become a continuous challenge. Another area that can prove sensitive to rapid growth is the support of Starbucks four business units: the retail store units, the specialty sales and wholesale channels, the mail order business, and the grocery channel (Carrol). Supporting all four of these in an integrated, successful, efficient, and cost-effective method is a challenge.

Innovation is a key factor in trying to prevent a rise in supply costs within these business units. Currently, a key concern is the marketing of the company's brand equity. Starbucks is unsure as to how to market its products and what direction to take in order to continue its dominance in the coffee industry (Schultz). A possible reason for this is the company's inability to concretely define its brand image. There have been many opportunities that Starbucks has successfully taken advantage of in the past, and will hope to take advantage of in the future for obtaining such an important competitive edge.

Just recently, Starbucks has introduced espresso carts to its lines of business (Talbot). Through the use of these carts it allows the company to take advantage of earlier untouched markets such as train stations, street corners, and malls, to name a few. Starbucks also has three new business ventures underway. They include Dreyers Ice Cream, bottled Frappuccino with Pepsi Co, and the penetration into the grocery channel (Seattle Audubon Society). Each one of these provides its own opportunities for growth for the company. With an estimated $40 million in retail for 1997, Dreyers Ice Cream would open Starbucks to a new customer base, with the ability to create a reputation within the grocery industry (Schultz).

Starbucks also believed that with its bottle Frappuccino it could possibly be one of Starbucks biggest ventures. Pepsi estimated the opportunity to be worth $1 billion. It is thought that the international market would best suit this product, especially in countries with an already defined cold coffee beverage market, like the Pacific Rim where total sales are estimated to reach $150 million in 2000 . As for the grocery market, it is felt that in order to be a major player in coffee for home, Starbucks needs to be available in supermarkets across the country. Grocery stores were responsible for 81 percent of specialty coffee sales. Convenience is a large factor to consumers when buying coffee and Starbucks cannot continue to allow supermarkets the ability to capture 70 to 80 percent of the home coffee business (Starbucks Coffee Company Executive Report).

Even more areas for opportunity avail in the introduction of Starbucks coffee to the higher echelon restaurants, and day-part chains. This would involve partnerships with other firms, and would allow Starbucks to create even more brand awareness without having to incur high costs. When looking at the whole bean retail sales, it is actually estimated to have more growth between 1994-1998 than ground specialty coffee. This may be an avenue that Starbucks will want to pursue. It is also forecast ed that by 1999, whole bean will be able to contribute $4.5 million in net contribution earnings to Starbucks. This contribution is higher than the predicted $3 million estimate that Ice Cream has (Ortiz)..