Pavel Dyulgyarov Starbucks BMC report - BUSINESS MODEL CANVAS STARBUCKS PAVEL DYULGYAROV Contents - Studeersnel

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BUSINESS MODEL

CANVAS

STARBUCKS

PAVEL DYULGYAROV

Contents

Introduction ……………………………………………………………………………………………………………………
Business Model Canvas ………………………………………………………………………………………………
- Value Proposition ………………………………………………………………………………………………………….
- Customer segments ……………………………………………………………………………………………………..
- Channels ………………………………………………………………………………………………………………………..
- Customer relationships ………………………………………………………………………………………………..
- Revenue streams ………………………………………………………………………………………………………….
- Key resources ………………………………………………………………………………………………………………..
- Key activities …………………………………………………………………………………………………………………
- Key partnerships …………………………………………………………………………………………………………..
- Cost structure ……………………………………………………………………………………………………………….
Bibliography………………………………………………………………………………………………………………………….
Appendix : Feedback providedǁ ………………………………………………………………………………………………..

Business Model Canvas ………………………………………………………………………………………………

Value Proposition ………………………………………………………………………………………………………….

The value proposition is the first building block of the business model canvas. This building
block is a representation of the company’s core intent to state what the organization stands
behind and to influence the customers to choose that certain products/services. In other
words, a marketing strategy in combination with a business one. There are 2 type of value
proposition:[ CITATION www19 \l 1033 ]
 Entirely new
 Like existing ones

Starbucks stores are an amazing place for many people, including myself. A coffee lover can
go there and grab a cup of nice, high-quality coffee, which is planted and grown under the
high-quality standards of the company and enjoy it on the go. On the other hand, if one is
like me, he/she would stay to do some work or plan his/her day, enjoying the free wi-fi and
the comfortable and cozy atmosphere. Moreover, one can enjoy the freshly prepared food.
No matter which type you are, we are both going to enjoy the service of always smiling and
helpful staff, while ordering the product, we have gone for. [ CITATION sta \l 1033 ]

Customer segments ……………………………………………………………………………………………………..

Customer segmentation is the second part of the Business Model Canvas. Market
segmentation is a process conducted by marketers, aiming to find groups or sub-groups of
people who are going to be interested in a company products/services and eventually pay for
them. Simply said, dividing the market into groups of people with characteristics in common[
CITATION inv19 \l 1033 ].

No company reaches such global markets with aiming only one segment. I fall in the biggest
group of people aimed by the company’s marketers-the lovers of high-quality coffee, as well
as many more millions, if not a billion, people. However, the other segments of the company
include athletes and workaholics. As a student, I once again fall into one of their chosen
groups. Moreover, most of us know how environmentally friendly and conscious the
company is with promoting recycling and removing the double cupping trend, creates one
more segment being attracted. Starbucks is mainly focusing on Generation X and Millennials,
who are younger people and aged between 18-45.

Channels ………………………………………………………………………………………………………………………..

The third building block is the networks. The channels are the natural continuation of the
process. After creating a value proposition and find customers to enjoy it, the next step is the
delivery, or how a company communicates and delivers its products/services to the final
customers. The channels have 5 different phases:[ CITATION inv19 \l 1033 ]

Awareness
Evaluation
Purchase
Delivery
After-sales
As already mentioned, Starbucks is a company that is recognizable and differentiated
worldwide. For such big sizes, the company needs to have many channels, to deliver its
products. To begin with, the company as of 2019, the company has more 30 000 stores in 80
markets. Even in Bulgaria, the country I am from, there 8 stores in the bigger cities.
Moreover, not only the physical stores, which are now closed, because of the pandemic, they
have free and fast delivery. If one is not from the people who order online, there are also
coffee packages and capsules available in the bigger food chains. However, the company’s
Instagram account is one of the biggest in the world, with 18 million followers and they also
have a well-designed, simple, and use to website, which is full of products and formation,
some of which presented in this report[ CITATION sta \l 1033 ].

Customer relationships ………………………………………………………………………………………………..

The fourth building block of the Business Model Canvas is the customer relationships. This
building block represents the way a company supports the relationship with already created
customers. There are two types of customer relationships:

 Personal-when a customer speaks to a real advisor/assistant.
 Automated-when a customer speaks to a robot or searches for the needed
information in the FAQ of a company.

Starbucks creates customer relationships in many ways. The most famous and enjoyable one
is in the stores. The staff makes every cup mass-customized, with writing the name of the
customer on it, which makes a more personal relationship. An interesting fact about it is that
baristas usually spell wrongly the name of the customers. My name is Pavel. How simple is
that? When I am not in my Bulgaria, it has never happened to me to have a correctly written
name, I am often Pablo. However, other relationships include a song of the day, but only for
users of iTunes, and membership with gift cards on their website. However, the company is
also socially cautious and have a high social media presence, introducing problems and how
they cope with them, by the usage of sustainable cups, for example. As already mentioned,

Key activities …………………………………………………………………………………………………………………

The key activities of a business include all the necessary steps which contribute to an
organization’s main goal-delivering value proposition. Every business has different key
activities, depending on its size and products or services. But there are 3 main activities that
every successful business must consider:

Production
Problem-solving
Platform/network[ CITATION bus19 \l 1033 ]

Starbucks has a variety of different activities, but not all turn out to be key ones. To begin
with, the company is the business of selling coffee and coffee products, so this is their main
activity. On the other hand, they deal with many more. The management of the company
deals with all the processes arising from the planting of coffee beans, to marketing. Other
important activities include training franchisors, who are resellers of Starbucks’ products, as
well, as branding, in order to be differentiated[ CITATION sch19 \l 1033 ].

Key partnerships …………………………………………………………………………………………………………..

“If one wants to go far, that one needs comrades”. That is why companies need to have
partnerships. Behind the idea of partnership, many reasons could be put-cheaper resources
or better channels. On the other hand, partnerships create the stability of a company, as
their chain gets bigger. [ CITATION inv19 \l 1033 ]

The coffee seller has many partnerships in order to stay on the market and to satisfy its
customers. Of course, as they sell coffee, their most important ones are farmer and their
suppliers. In addition, the company put an emphasize on delivering goods, which are paid
ethically. They also have started a movement against exploiting producers[ CITATION sta \l
1033 ] On the other hand, they have their franchisors, who are unalterable part of their
business, because, not only the mother company earn money by them, but also expands its
markets. The core suppliers to operate the business of the coffee company are:

 Regency Centers
 Dean Foods
 Bab Inc
 Archer Daniels Midland Co

Moreover, the company also has suppliers for their packaging, furnishing, and clothing for
their staff, which are mentioned in the BMC[ CITATION csi20 \l 1033 ].

Cost structure ……………………………………………………………………………………………………………….

The last part of the business model canvas is the cost structure. In other words, how much,
in money terms, is needed, so that the business can do its continuous operations or to meet
their average total costs. However, an organization should decide if it is going to be value or
cost-driven business[ CITATION www19 \l 1033 ].

Because of the size of the company and its monopolistic appearance, the company has
reached economies of scale. As already mentioned, the company has a strong balance sheet
and a long list of contractual suppliers. However, their main cost from the purchasing of
coffee- the 2 most consumed beans are- Arabica, which I love, and Robusta. All the expenses
on needed inputs total of approximately $2 billion. On the other hand, the company spends
millions of dollars on marketing- as of 2019 almost $250 million. On the other hand, they
have $0 R&D costs, because they are used as a tax reduction. Moreover, they have spent a
lot of money on operating expenses, or approximately $22 billion. Also, because of the
strong balance and that the company is incorporated, they pay huge amounts on taxes-
$161 million[ CITATION fin19 \l 1033 ].

Appendix ǁ: Feedback provided

Feedback for Pavel Dyulgyarov 0983766
Feedback from Jip Stam 0995782

Feedback on the visualization of the BMC

FEEDBACK
Positive points (what
and why)

Like the fact that you are using sticky notes to explain, makes it easy to read.
Also using short terms to explain keeps it easy.

Improvement points
(what and why)

Spelling error under channels. (network). Also, there is not one visual in the
visualization, maybe add some small pictures to make it look nicer and less
‘boring’

Feedback on the description of the BMC

FEEDBACK
Positive points (what
and why)

You are using good references to support the stories of the description. Clear
and concise language is being used to describe the blocks. Also using personal
details to support stories is good. Also good use of adding some numbers to the
building blocks.
Improvement points
(what and why)

Feedback on the observation

FEEDBACK
Positive points (what
and why)

Improvement points
(what and why)

Feedback on the overall layout

FEEDBACK
Positive points (what
and why)

It is easy to read. Clear and concise language is used to describe everything.

Improvement points
(what and why)

You might want to add page numbers to the pages