The Financing and management of risk - Essay Example

The company has major business activities in countries like Canada, Japan, China, UK, Mexico, Taiwan, Philippines, India, etc. Apart from coffee, Starbucks also sells ice cream, cold and hot beverages, snacks, beer, etc. The products offered by Starbucks are specific to the location of the store and are seasonal and customized to the target market segment. Starbucks employs around 149000 employees in its coffee stores and operations all over the world. Through its massive chain of coffee houses all over the world, Starbucks generated revenue of $13.

29 billion in 2012 with a net income of $1.36 billion for the company. The strong performance of Starbucks’ coffee business across the world is highly dependent on its business model which has been well established by the company. The business model of Starbucks lays its success story for attracting customers into its stores for a cup of coffee day after day all over the world. The coffee selling stores of Starbucks present a status symbol for the customers of coffee. Although the coffee sold in the stores of Starbucks are priced highly, it the ambience that the stores of Starbucks offer to the customers that makes a difference.

The coffee selling stores are supported by friendly and helpful staffs who address the problems, queries and grievances of customers who walk in to take coffee. The customers taking coffee are largely valued in the stores which in turn help the stores to hold their customers (Starbucks Corporation, 2013, p.1). The over business model of Starbucks which is applicable to its national as well as international presence is described below. Starbucks have a transnational model of business in which it has a universal product that is customized to fit the requirements of the local market.

Starbucks follows a business model whereby the coffee and other products like beverages, beer, ice cream, snacks, etc. are sold through the coffee house chains in the international markets. Starbucks products under brand names are also sold in the grocery shops and retail market chains across the world. The coffee business of Starbucks has to be responsive to the markets and fits the taste and culture of the local people who walks in to take coffee. The strong business model of Starbucks has helped them to build international relationships and achieve their targets.

Starbucks original business model was based on marketing of coffee by providing enriched customer experience in an upbeat environment inside the coffee stores. In order to cope up with the competitive market, Starbucks have now adopted advertising strategies by media like newspapers, television, offering cheaper prices, etc (Kazmi, 2010, p.21). As depicted above in the diagram for business model of Starbucks, the business model takes into consideration a range of factors that includes product strategy, customer economic, marketing of coffee, cost of capital of the business, economic sale, assessing value of the business, production costs, revenue mechanism, growth of assets and competitive barriers, etc.

The product strategy is framed by looking at the emerging demands of the market. Apart from offering a single product of coffee, Starbucks took into consideration