Posts Tagged ‘catering’
Starbucks business strategy is based on the following four pillars: 1. Offering ‘third-place’ experience. Starbucks stores are effectively positioned as a ‘third place’ away from home and work, where people can spend time in a relaxed and comfortable environment with their friends or alone. Customers are even welcome to get their work done in a Starbucks store. All company-owned stores in the US and most company-owned stores abroad offer free wi-fi. “Starbucks stores are meticulously designed to make customers stay longer, buy more, and return for another visit.”[1] After returning as CEO for the third time in April 2022, Howard Schultz announced his plans for the company. Plans include building drive-through in 90% of new locations and machinery that will allow baristas to handle increasingly complex customer orders more quickly. Some analysts note that while drive through may increase profit martin, at the same time they may compromise the essence of third place experience for customers. Furthermore, according to Starbucks Chief Marketing Officer Mr. Brady Brewer the Seattle-based coffee chain is also creating digital third place. Mr. Brewer shares his vision the global coffeehouse chain creating a new global digital community on the basis of Web3 in general and NFTs (non-fungible tokens) in particular.[2] 2. Selling coffee of the highest quality. Starbucks business strategy can be classified as product differentiation. Accordingly, the coffee chain giant focuses on the quality of its products and customers pay premium prices for high quality. Excellent customer services as one of the solid sources of Starbucks competitive advantage further increases the attractiveness of the coffee retailer. The multinational chain of coffeehouses duly recognizes the paramount role of its employees in customer-facing positions to sustain high level of customer service. Accordingly, the company refers to its employees as partners and offers them a wide…
Starbucks organizational culture is based on values and principles of its former long-term CEO Howard Schultz. It has been noted that “Starbucks’ culture is powerful because it is tightly linked to the company’s distinctive capabilities[1].” Starbucks organizational culture integrates the following four key elements: 1. Valuing employees and their contribution. At Starbucks employees are referred to as partners and they are taken care of by the company via competitive compensation packages. For example, the coffee chain offers stock options and health insurance even to part-time employees in the US. Moreover, “at the height of the global financial crisis, when other companies were cutting HR costs wherever they could, Starbucks invested in staff training, including coffee tastings and courses that ultimately qualified for credit at higher education institutions”[2] 2. Presence of close bonds among employees. The company firmly believes in relationship-driven approach to the business and encourages the formation of close bonds between employees in its stores. One can easily witness the presence of close bonds among employees by simply observing their interaction in any store belonging to the Seattle-based international coffee chain. This contributes to the formation of relaxing and comfortable environment in Starbucks store, effectively strengthening its role as ‘third place’ away from work and home, where customers can spend good time alone or with their friends. 3. Culture of inclusion and diversity. Embracing inclusion and diversity is placed at the core of Starbucks corporate culture. The world’s largest coffee retailer runs 12 diverse Partner Networks, representing the broad spectrum of employee backgrounds. These include Armed Forces Network, Black Partner Network, Disability Advocacy Network and others. The multinational chain of coffeehouses received 100% score on the Disability Equality Index. The principles of inclusion and diversity prevail not only among the workforce, but also have reflections on customer…
Starbucks corporate structure sustains international scope of its business operations that encompasses more than 34000 stores in 84 markets. Starbucks organizational structure is hybrid and integrates geographic, brand-based and functional hierarchy structures. Organizational structure of Starbucks can be divided into the following divisions: 1. Geographic divisions. Starbucks operations are divided into the following geographic divisions or segments: a) North America division. This division consists of USA and Canada b) International division consisting of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America and Caribbean 2. Brand-based divisions. Each brand within Starbucks Corporation portfolio represents a separate division led by the head of division. The world’s largest coffeehouse chain has brand-based divisions as illustrated in table below: Brand Founded Products Starbucks 1971 Coffee, non-alcoholic beverages, food Teavana® 1997 Variety of teas La Boulange® 1999 French pastries and breads Evolution Fresh™ 1992 Nourishment juices and foods Seattle’s Best Coffee 1991 Coffee, non-alcoholic beverages, food Tazo Tea 1994 Teas, herbs, roots and spices Brand-based divisions within Starbucks organizational structure Starbucks corporate structure is functional hierarchy and accordingly, groups are formed according to business functions on Executive Vice President (EVP) and Senior Vice President (SVP) levels. Specifically, as illustrated in figure below organizational structure of Starbucks includes 11 Executive Vice Presidents each leading a separate function below: Chief Financial Officer Chief Marketing Officer Chief Strategy & Transformation Officer Global Coffee, Tea and Cocoa Global Supply Chain Chief Technology Officer Public Affairs Chief Partner Officer Global Channel Development Starbucks North America General Counsel Starbucks Organizational Structure Similarly, there are 24 functions headed by 26 executives at Senior Vice Presidents level: Store Development Ethics and Compliance officer Chief Procurement Officer, Global Sourcing Product Experience Global Chief Inclusion and Diversity Officer Starbucks Canada Americas Finance Latin America & Caribbean Partner…
Founded in 1985 by Howard Schultz, Starbucks Corporation (NASDAQ:SBUX) currently operates in more than 34,000 stores in 84 markets according to its mission statement “to inspire and nurture human spirit – one person, one cup and one neighbourhood at a time”. Starbucks Corporation brand portfolio consists of Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange and Ethos and it sells coffee, tea, other beverages, and a variety of food products. There are two formats of Starbucks stores: company-operated and licensed stores. By the end of fiscal year of 2021, Starbucks had 17,133 (51%) company-operated stores and 16,700 (49%) licensed stores. As of October 2021, Starbucks had approximately 383,000 employees worldwide, including 245,000 employees in the US. The world’s largest coffeehouse chain refers to its employees as partners. Starbucks results for fiscal 2021 demonstrate the overall strength and resilience of the brand. Consolidated revenues increased 24% to USD29.1 billion in fiscal 2021 compared to USD23.5 billion in fiscal 2020, primarily due to business recovery from the COVID-19 pandemic. Also contributing to the increase was USD576 million of incremental revenue attributable to the extra week in fiscal 2021. Starbucks business strategy is associated with providing customers a Starbucks Experience, i.e. a ‘third place’ experience away from work and home, where people can have quality time with friends or alone enjoying quality coffee, beverages and fresh food. Currently, the company is following international business expansion strategy with a particular focus on China and Asia Pacific market segment. Starbucks is an acknowledged leader in the industry in terms of exploiting information technology and technological developments. The company has adapted mobile apps for the promotion of its brand and sales of products earlier than the competition. Starbucks app offers multiple features such as store locator, nutrition-based information and rewards program. Moreover, ‘MyStarbucks Signature’ initiative…
McDonald’s McKinsey 7S framework illustrates the ways in which seven elements of businesses can be aligned to increase effectiveness. According to the framework strategy, structure and systems represent hard elements, whereas shared values, skills, style and staff are soft elements. McKinsey 7S framework stresses the presence of strong links between elements in a way that a change in one element causes changes in others. As illustrated in figure below, shared values are positioned at the core of McDonald’s McKinsey 7S framework, because shared values guide employee behaviour with implications in their performance. McKinsey 7S model Hard Elements in McDonald’s McKinsey 7S Model Strategy McDonald’s pursues business strategy of cost leadership and an aggressive international market expansion. The company is able to operate with low operational costs due to economies of scale enjoyed to an enormous extent. Moreover, along with operating company-managed restaurants, McDonald’s capitalizes on the high level of brand awareness via franchising. High speed of customer services, universality of the taste and cleanliness of restaurants worldwide also belong to the list of competitive advantages for the fast food giant. Structure McDonald’s has divisional organizational structure and fast food chain’s business operations are divided into four divisions according to geographical locations. These divisions consist of United States, Europe, Asia/Pacific, Middle East and Africa (APMEA) and other countries. The company benefits from divisional organizational structure in a way that managers are free to make decisions taking into account unique aspects of respective markets. Systems There is a wide range of systems that enable McDonald’s operations at a global scale. These systems include but not limited to employee recruitment and selection, team development and orientation, transaction processing and customer relationship management system. Moreover, the fast food chain also relies on advanced business intelligence system and knowledge management system.…
Value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the business. The figure below illustrates the essence of McDonald’s value chain analysis. McDonald’s value chain analysis McDonald’s Primary Activities McDonald’s Inbound logistics McDonald’s inbound logistics involves receiving and storing raw materials and using them to produce its burgers and other items in the menu. Raw materials for the fast food chain include meat, raw vegetables, ketchup, mayonnaise, napkins etc. Economies of scale are the main source of value creation in McDonald’s inbound logistics. The fast food giant has been pursuing backwards vertical integration strategy. This strategy involves companies to expand their roles and capabilities to complete tasks formally fulfilled by other companies in their supply chain. Specifically, McDonald’s “grow their own beef through contracted producers, process their own meat, create their own spices and mixes in factories that they contract, grow their own potatoes and other vegetable through contracted producers, transport their goods on their own.”[1] Backward vertical integration strategy allows the fast food chain to control the quality of their ingredients and reduce the costs of supply. McDonald’s Operations McDonald’s operates more than 40,000 company-owned and franchised restaurants. As of December 2021 in total 37,295 stores, or 93%, were franchised[2]. McDonald’s franchise restaurants have one of the following formats: conventional franchise, developmental license or affiliate.[3] Conventional franchising involves franchisees paying rent and royalties on the percentage of sales along with the payment of initial fees when opening a new restaurant. In this type of franchising, McDonald’s Corporation owns the land and building or secures a long-term lease for the restaurant location and the franchisee pays for equipment, signs, seating and décor.[4] Developmental license involves licensees providing capital for the entire business, including the real estate interest.[5] In developmental license…
McDonald’s CSR is an interesting topic due to the size and scope of the operations of the company. The fast food giant had formulated its 2020 Aspirational Goals that explain the measures of sustainable sourcing of foods and packaging, providing balanced choices to customers, developing and operating environmentally efficient McDonald’s restaurants and supporting local communities to be initiated by the company. By the end of 2020 the fast food giant achieved or substantially achieved the majority of its aspirational goals. The company releases The Good Business Report annually and it includes the details of McDonalds CSR programs and initiatives engaged by the company. McDonald’s Supporting Local Communities McDonald’s claims to be improving the lives of children and their families via the support of Ronald McDonald House Charities (RMHC) and other organizations. According to McDonald’s this support addresses the needs such as education and physical activity The company is also proud to support the network of over 260 local chapters of RMHC spanning over 60 countries and regions that creates, finds and supports programs that directly improve the health and well-being of children and their families. In 2020, the fast food chain announced a five-year, USD10390 million commitment to RMHC. McDonald’s Educating and Empowering Workers McDonald’s Hamburger University, founded in 1961, comprises 8 campuses around the world and provides training for McDonald’s Franchisees, managers and employees In Europe, McDonald’s and participating Franchisees have pledged to offer 45,000 apprenticeships by 2025[1] Labour and Human Rights at McDonald’s The company requires its suppliers to adhere to the Supplier Code of Conduct. The Code clarifies requirements of McDonald’s about issues related to Human Rights, Environmental Management, Workplace Environment and Business Integrity In 2018, the fast food chain introduced McDonald’s Human Rights Policy, which outlines its commitment to respect its people and their…
McDonald’s 7Ps of marketing comprises elements of the marketing mix that consists of product, place, price, promotion, process, people and physical evidence. Product Element in McDonald’s Marketing Mix (McDonald’s 7Ps of Marketing) McDonald’s restaurants offer a substantially uniform menu, although there are geographic variations to suit local consumer preferences and tastes. The fast food chain sells a wide range of fast food products such as hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps and french fries. The company also offers salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafé beverages and other beverages.[1]Although, the company has long announced its pledge to increase the nutritional value of its meals, McDonald’s foods widely remain to be perceived as unhealthy. Place Element in McDonald’s Marketing Mix (McDonald’s 7Ps of Marketing) There are 40,031 McDonald’s restaurants in 119 countries.[2] As of December 2021 in total 37,295 stores, or 93%, were franchised. According to its aggressive expansion business strategy, the company aims to establish its presence in urban, as well as, in rural areas. The company states that “McDonald’s looks for the best locations within the marketplace to provide our customers with convenience. We build quality restaurants in neighbourhoods as well as airports, malls, tollways, and colleges at a value to our customers”.[3]. Generally, major fast food restaurants tend to cluster and in most locations, where there is a McDonald’s, there is also a Burger King right across the street.[4] Price Element in McDonald’s Marketing Mix (McDonald’s 7Ps of Marketing) McDonald’s pricing strategy comprises the following: 1. Economy pricing. McDonald’s follows cost leadership business strategy and accordingly, its foods and drinks are offered for competitive prices. The fast food chain offers customers the possibility to dine for a fraction of costs that are charged…
McDonald’s marketing strategy relies upon an extensive utilization of individual elements of the marketing communication mix. Specifically, McDonald’s marketing communication mix comprises print and media advertising, sales promotions, events and experiences, public relations and direct marketing. McDonald’s marketing and promotional efforts focus on value, quality, food taste, menu choice, nutrition, convenience and the customer experience McDonald’s Print and Media Advertising McDonald’s marketing strategy attempts to integrate the elements of creativity and uniqueness in its print and media advertising. For example, the company has launched ‘Easy Morning’ print ads with the tagline “In the morning not everything is as easy as breakfast at McDonalds”, and a humorous attempt has been made to show an appropriate time to eat burger via a print ad. McDonald’s spends considerable amount of financial resources for print and media advertising. These investments amounted to USD 82.9 million, USD 329.2 million and USD 81.5 million for 2021, 2020 and 2019 respectively. Particularly, in 2020 the fast food chain made significant investments in brand communications.[1] The company has launched some controversial marketing campaigns as well. These include commercial in UK that exploits a child’s grief over the death of his father, “Carry On,” campaign referencing public tragedies including 9/11 and the Boston Marathon bombings and others. McDonald’s viral marketing also plays an instrumental role in terms of spreading the marketing message among the members of the target customer segment. The most noteworthy McDonald’s viral marketing campaigns include “Ask McDonald’s YouTube campaign” in Canada, ‘McDonald’s GOL!’ marketing video clip that attracted more than 10 million views and others. McDonald’s Sales Promotions Sales promotion is a popular marketing technique with McDonald’s and other fast food chains. McDonald’s uses the following sales promotions techniques: Competitions. Free breakfast delivery promotion according to mobile nominations[2] Seasonal promotions. “”McPick 2,” a limited-time…
Porter’s Five Forces analytical framework developed by Michael Porter (1979)[1] represents five individual forces that shape the overall extent of competition in the industry. McDonald’s Porter’s Five Forces are represented in figure below: Porter’s Five Forces Threat of new entrants in McDonald’s Porter’s Five Forces Analysis Threat of new entrants into fast food chain industry is moderate. Potential entrants into fast food chain industry have to deal with the following factors. 1. Massive capital investment requirements. Establishing a fast food chain requires huge financial investments to create an infrastructure, secure leases for locations, purchasing equipments and recruiting staff, among others. Securing funding for a new fast food venture can prove to be challenging taking into account high level of market saturation internationally. 2. Economies of scale. Major market players such as McDonald’s, Starbucks Coffee, Burger King, KFC and Subway substantially benefit from the economies of scale with positive implications on their cost structure. New market entrants, on the other hand, cannot benefit from the economies of scale to similar extend and this may prove to be a significant industry entry barrier. 3. Creativity and innovation. Despite fast food industry entry barriers such as huge capital requirements and economies of scale mentioned above, there is still a chance for new companies to successfully enter the industry. They can do so by innovating in terms of foods to offer, as well, as achieving greater technological integration into various business processes. Bargaining power of buyers in McDonald’s Porter’s Five Forces Analysis Bargaining power of McDonald’s buyers is immense. The following set of factors, among others determines customer bargaining power in fast food industry: 1. No switching costs to competition. Customers can switch from McDonald’s to any other fast food chain such as KFC, Pizza Hut, Starbucks and Burger King with no…