Provide an industry analysis of the present structure of Coffee Industry
Introduction
The assignment here is to address a rigorous and precise report on the Strategic Planning Group and project management team of a particular industry. The industry that has been chosen here is the Coffee industry of the world. Some strategies are to be delivered in response in terms of location, sources, the supply of raw materials, significant products, customer base, market condition, and competitiveness of the leading companies in the coffee industry as a general view. Along with that, strategies should also include the aspects of ethical, sustainability, and social responsibilities related issues. Then a specific company, here Starbucks, has been chosen to understand the problems that it faced in its ethical, sustainability, and social responsibility categories as SPG and PMT way and recommendation and responsiveness and nonresponsiveness to overcome these issues.
Provide an industry analysis of the present structure of Coffee Industry
The leading coffee shop industries of the world are Starbucks, Dunkin Donuts, McDonald’s, and Caribou. Coffee is among the largest commodities in the world. The top three coffee producing countries are Brazil, Vietnam, and Colombia, etc. Many developing countries depend on their coffee industries to maintain their local economy. The world’s largest importer of green coffee beans is the US, and it is also one of the largest consumers of coffee as well in the world.
Starbucks SPG team mainly focuses on four standards while sourcing the raw material for the supply chain; they are quality of the coffee, social responsibility, economic accountability, and environmental leadership. The raw materials are shipped from six roasting facilities in the US or Amsterdam European Roasting facility.
The supply chain process of the coffee beans generally comprises of several steps starting from growing to harvesting, hulling, drying, packing, bulking, blending, and roasting. The supply chains of big companies are extended through several intermediaries such as the global transporters, retailers, exporters, etc.
Coffee consumption is reportedly highest in the Northeast, where over 60% of the population consumes coffee on a daily basis, according to a study in Northern Coffee Association where coffee drinks on an average 3.5 cups on a regular basis.
The main products that are sold by a coffee shop include beverages and other consumable food items. Refreshments included freshly brewed coffee, espresso drinks like café latte and cappuccino, cold blend coffee, soft drinks, and juices. The other products that may consist of pastries, cookies, desserts, candies, sandwiches, or bakery items. The shops also sell whole or ground coffees for consumption at home, and some even sell high-quality premium coffee such as specialty coffee.
The age group that is the typical coffee committed drinkers starts from 25 to 45 years. Usually, the customers have educated adults. The baby boomers are seen to drive the success of the coffee shop; the specialty of this coffee seems to drive the adult demography as well, which includes not only the college students but also the young adults. Big brands also sometimes sell coffee beans in wholesale markets to the commercial customers like restaurants or grocery stores.
The demand is dependent on the personal income and taste of the consumers. The profitability factors of these industries (Starbucks, Dunkin Donald, Caribou) depends on their capability to secure a chief location, deliver quality products, drive store, etc. The Larger companies like Starbucks, Dunkin Donald’s, etc., have the advantage of purchasing, marketing, and financing. In contrast, small companies can compete with larger companies by providing the specialized products in the market by offering in the local market. The coffee industries are extremely labor intensive, the salary of per worker annually is approximately $ 40,000.
Economists have analyzed that the market is heating up as all the three big brands Starbucks, Mcdonald’s and Dunkin Donald’s are fighting for the number one position in the market. The smaller independent companies can not fight with these giants and failing to make their mark wayside.
In the long run, the intensive competition between the three would actually may benefit them in respect of many of the smaller chains. Not only McDonald’s is giving a tough competition to Starbucks in the market field of US and also making them run for the money in abroad countries. Hence Starbucks has been looking for more international markets after establishing its territories in China and India. By 2009 Mcdonald’s has open 200 cafes in Europe and again in 2010 another 200 more cafes. These shops quickly started becoming the top sellers of Coffee in Europe. Dunkin Donald’s is not running back in capturing the potential markets for their coffee sell Dunkin Donuts in a new couple of years are moving past their association with customers more towards coffee and less towards the doughnuts.
The main strategies of the industry
Starbuck’s Strategy
Starbucks ‘ Strategic Management Team is mainly looking after it comprises of establishing the name of the brand as the most recognized and reputed in the world. The enterprise continues to grow its retails expansion operations, rapid extensions, choose the better opportunities to leverage the company to introduce new products and new channel distribution development. The biggest competitor of Starbucks, the McDonald’s goal, is to take away the potential customers of the Starbuck.
McDonald’s is among the leading food service brands in the world, with 30,000 restaurants all over the world serving more than 50 million people in 119 countries of the world. A recent strategic change of McDonald’s is to increase the potentiality in rivalry with two of its biggest competitors that is Starbucks and Caribou. McDonald’s though being a fast-food brand in recent days, the Strategic Planning Group has started focusing on their coffees a lot more; they have successively improved their coffee and was able to launch a premium coffee in roast version. Moreover, the Project Management team of McDonald’s has been looking for the day part penetration as a growth strategy. Where currently, they are planning to take over the breakfast segment of the company to overtake the afternoon segment. McDonald’s PMT has now clearly specified that they would serve the specialty of the coffee beverages like that of the caramel cappuccinos and the vanilla lattes. They also sell these drinks at a cheaper price than that of Starbucks, which is an excellent strategy on the part of the company. The move has been consistent with the overall strategic shift of burgers and fries to upscale drinks like specialty coffee serving faster than the Starbucks approach. The further threatening factor for the competitors of McDonald’s is its capability to enhance its services and develop its stores by reducing its expansions and funds.
Dunkin Donut’s SPG strategy is to broaden the coffee specialties and broaden the base nationally. Moreover, the CEO of Jon Luther emphasized that the policy of the company should be faster and userfriendly in comparison to Starbucks. Dunkin Donut’s SPG team is convinced that most of its market opportunities lie among the younger generation. Dunkin Donut’s SPG team has also started using the espresso machine in main location markets; hence it was able to give the deliveries of the coffee at a faster rate. It has also made the inner infrastructure fancy, environment mood lightening, and the chairs to be comfortable. The company aims at reaching 15000 to 20000 customers in its target markets. According to the CEO of the company, the business of Dunkin Donut is a game that mostly relies on ubiquity. However, it is essential as high margins of the coffee business are to allow the company to buy the significant sites.
A well-argued section about potential ethical, sustainability and SR issues in Starbucks
The issues that are faced by Starbucks is the ethical issues related to the strategy of the company is expanding its business. Starbucks has currently determined to establish as many stores as possible around the world in order to grow the business. But most of the time they end up in creating the stores around the streets, this can be a negative effect on the smaller shops on the roads, which can lead these shops to go out of business ot even bankruptcy as it is very evident that Starbucks would outshine these stores. When Starbucks first came to the market, it was very successful, but over the years, according to sources, the business has been losing its charm to a certain extent. Even recently, Starbucks has been losing some of that ethical customers in comparison to other global companies which is a long term issue and requires the involvement of Strategic management team.. To understand the reason why Starbucks is recently losing most of the customers The Times has conducted a survey to know the reason. The souces found out that the environmental conditions and sourcing conditions are two of the main reasons for the downfall of the business. Many customers were seemed to argue that the commitment of Starbucks regarding environmental friendly is a false statement, as those customers have reported that Starbucks ‘ location keeps their water taps running all day for washing their utensils. However, it is a short term issue and most preferably be taken care of by the Project Management Team. Starbucks in the ethical and social responsibility group was also being criticized for the attempt of trademark register for their coffee as a Fair Trade. This results in a loss of 47 million annually. Another significant issue faced by Starbucks is mainly because of environmental and consumer issues resulting in a substantial part loss in the Starbucks corporation.
Starbucks hs failed on its sustainability pledge, and the Strategic Planning Group should consider this – the campaign which was lately initiated by the comparate pledges in order to tackle the problem of plastic pollution in collaboration with McDonald’s and coca Cola failed measurably. The Pledge of Starbucks in making a 100% recyclable paper cup and 25% reusable cups to drink, was a failure. As even in today’s date, Starbucks was unable to keep the promise of 100% recyclable paper cups, and at present, date only serves 1.4% of the drinks in the reusable, recycled containers. Though Starbucks was aware of their environmental impact still pledge to dramatically expand its business in different parts of Asia with no successful plans to execute in tackling its plastic wastes. Thus because of this neglectful behavior, the government was forced to take action. The parliament committee in the UK proposed the Latte levy on a single cup to address the increasing issues in relation to the plastic pollution problem. The cups, lids, straws all lead to the catastrophic plastic pollutions in the seas. Even in the marine ecosystem, the plastic breakdowns acts as an indigestible material for the aquatic birds and animals who swallows the synthetic thinking that to be food resulting in the loss of the vast amount of marine creates.
A section setting out the impacts a response and nonresponse to these issues is mostly to have on the company’s performance in 10 years. And outline the possible measures to mitigate these issues.
In order to have a positive impact, the Project Management team Of Starbucks has on the communities that Starbucks works in, and with, Starbucks team develops a community store that is in partnership with the local non-profit makers. These non-profit stores then work to provide services to attain the needs of the community of that locality. Starbucks is reported to have donated about $0.05 to $0.15 on per transaction to these non-profit partners. Starbucks has also determined to hire at least 10,000 militaries by 0.18. Starbucks has also been focusing on diversity and inclusion in their organization as they have distinct employees and customers. The company is also offering training opportunities for the young generation in their community; this has lead to the foundation of Starbucks. The main goal of the foundation is to strengthen the communities of Starbucks even further. These are few among the many community activities that are done by Starbucks.
The second pillar of the Project Management team of Starbucks is their Ethical sourcing; it largely dictates the ways by which Starbucks acquires its products. The organization has promised to bring in the best coffee, cocoa, tea, or other manufacturing goods and sees to it that the products are purchased and produced ethically by the firm and brought by the company. Starbucks has also believed that the success of the company is on the success of its farmers and suppliers who generally harvest and grow the raw materials. This Project Management team Starbucks is committed to purchasing those raw materials from the farmers or manufacturers that have values of ethical conduct. Starbucks ‘ response to moral issues is to try their best in saving as much water as possible , for them to emergence as a environmental friendly global company of coffee. They are also trying to be environmentally friendly by building as many stores as possible, by facilitating recycling, minimizing the packaging used for the products.
The project management team of Starbucks commits the planet as one of their most important business partners and takes every possible measure to reduce the effect on the environment. They have built the LEED-certified stores that are following the process of recycling of the waste materials, conserving the water and energy, and also trying to make strategies that would address the climatic change at the global level. Mostly Starbucks has always tried to be as much environment friendly that it can be in all dimensions of the operations.
The project management team of Starbucks was, from the very first, determined that they want to invest in the people and communities that they work for and with. Thus when the company decided to bring positive changes in the society for the people, they work with and serves consumer notice. Reports also show that when a company has supported the ethical and social responsibility issues, about 93% of its customers are bound to have a positive image of the company. The strategies and the results outputs of the Starbucks industry are generally proof positive, as known from the study. Moreover, when a company invests in its employees, they result in fewer turnovers, and the companies get advocates of the organization also.
Along with all these Starbucks teams, every year also publishes a report known as the Global responsibility Report, where the focus is on providing the data sharing the impacts they faced over the past years. They use this data to build the coming years’ strategy in order to ensure that their program is effective for a large number of communities. Thus Starbucks does not exist just com eup with a random CSR strategy or just blinding sticking to that. This shows how Starbucks manages yo take time and measure and evaluate their programs. Thus for Starbucks, the corporate social responsibility programs are not just PR stunts. They showed that these programs could be extremely helpful and impactful if it is done in the right way and implemented properly. By utilizing all these strategies measures Starbucks would be able to tackle the issues and enhance their performance in the coming 10 years and thus the business could continue to be successful.
Conclusion
From the report study it can be concluded that there are many strategies both in SPG and PMT are associated with the leading coffee industries of the world like Starbucks , McDonald’s Dunkin Donut etc. the leading industries are examined in details in areas of location, sources of raw materials, products, customers, markets, ethical sustainability, and social responsibility where a vivid study report has been given about the major issues that are faced by Sbucks along with the strategies in terms of SPG and PMT.