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Starbucks Strategic Plan

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Starbucks is the global market leader in the coffee market, with more than 16,850 coffee shops in more than 50 countries, (Hoovers 2011, Starbucks, 2011). However, despite the – $10.71B in sales and its annual growth rate of 9.4 percent, the company faces a number of challenges, which includes an increasing level of competition and economic climate. The paper will provide an overview of the issues and identify several different strategies that can be used by the company to address them. This paper will also distinguish between strategy and tactics, perform an environmental analysis, apply strategic choice to achieve long-term objectives, identify critical success factors for plan implementation, and grand strategies formulation and selection. Finally, this paper evaluates Starbucks organizational strengths and weaknesses for meeting long-term objectives in the next 5 years.

COMPANY BACKGROUND

Starbucks Corporation (Starbucks) is a publically traded company on the¬†NASDAQ and the number one specialty coffee retailer in the world, (Hoovers – Starbucks, 2011). Since 1971, Starbucks has been roasting the highest quality Arabica coffee in the world. Globally, the company has a wide range of branded consumer products outside of its retail stores, which include Starbucks, Seattle’s Best Coffee, Tazo teas and Frappuccino, (ReportLinker, 2011). Starbucks operates in the United States, the Asia Pacific region, Greater China (China, Hong Kong, Macau and Taiwan), the Europe Middle East Africa (EMEA) region, and Latin America. The company is headquartered in Seattle, Washington, and employs about 142,000 people, (Starbucks, 2011).

VISION STATEMENT

The company’s vision is “to become national company with values and guiding principles that employees could be proud of,” (Starbucks Vision, 2004, para 3).

MISSION STATEMENT

Starbucks’ mission is to “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time,” (Starbucks, 2011, p. 1).

VALUES STATEMENT

Vital to the success of the company, Starbucks believes that business should be conducted in an ethical manner and strive to do the right thing, Starbucks (2011). Starbucks has become a global brand and “the premier roaster and retailer of specialty coffee in the world,” (Starbucks Values, 2010, p. 2). The comapny has recognized that their employees are critical to their continued success and the direct result of collective efforts from their “legendary customer service and the highest integrity,” (Starbucks Values, 2010, p. 2). Starbucks does not use forced labor, they promote equal opportunity in their hiring practices, and recruiting decisions are based solely on job-related criteria, (Starbucks Values, 2010, p. 5). All employees must “treat each other with respect and dignity” (Starbucks Values, 2010, p. 5), and free of harassment, bullying and discrimination.

ENVIRONMENTAL ANALYSIS

This section focuses on environmental scanning, a process in which the corporation or organization will identify trends and forces as well as to begin to collect information used in completing various assessments and analysis. The environmental scan, used in strategic planning for the purpose of collecting data, then converted into information from which good decisions may create competitive advantage. Starbucks must modify the company strategy to changing conditions. “External factors influence a firm’s choice of direction and action and, ultimately, its organizational structure and internal processes. These factors, which constitute the external environment, can be divided into three interrelated subcategories: factors in the remote environment, factors in the industry environment, and factors in the operating environment‚Ķ In combination, these factors form the basis of the opportunities and threats that a firm faces in its competitive environment,” (Pearce & Robinson, 2004, p. 78). To create an experience unlike its competitors, Starbucks must constantly evaluate all areas of their business while capitalizing on economies of scale and eliminating redundancies.

EXTERNAL ENVIRONMENT

Starbucks can benefit from an environmental scan from the environmental analysis, identifying challenges and opportunities, and by using the external and internal sources of information researched. These factors make up the external environment to include the remote and operating environment, (Pearce & Robinson, 2004). Market research by First Research (2010) has shown that the United States coffee shop industry includes about 25,000 stores with combined annual revenue of about $13 billion. Major companies in this industry include Starbucks, Caribou, Coffee Bean and Tea Leaf, and Praise International. The industry is concentrated with the top 50 companies generating more than 70% of sales.

The external environment factors include competitors, creditors, customers, labor, and suppliers. Starbucks top three competitors in order are McDonald’s Corporation, Nestl√© USA, Dunkin’ Brands,¬†(Hoovers – Starbucks, 2011). Starbucks strives to give “the Starbucks Experience to all customers, recognizing and responding to their unique preferences and needs” (Starbucks Diversity, 2011, p. 1). They provide an exceptional customer experience by finding ways to connect with them in a culturally relevant way. Starbucks labor or employees are referred to as “Partners”. The company seeks “out and engage partners who are as diverse as the communities we serve” (Starbucks Diversity, 2011, p. 1). Starbucks wants to be “a trusted and welcoming company for suppliers” (Starbucks Diversity, 2011, p. 1). The company has a supplier diversity program used to increase their business relationships with minority and women-owned suppliers.

OPPORTUNITIES AND THREATS

OPPORTUNITIES

THREATS

Expanding its global operations

Entry into India and Asian markets

Diversification

International market penetration

Co-brand with food manufacturers

Increase whole bean sales

Apply these broad-based improvements to retail expansion

Price increase on coffee and dairy

Competitors such as McDonald’s and Duunkin Donuts

Economic climate

International market entry barriers

International cultural and political issues

TABLE A-1 OPPORTUNITIES AND THREATS IN THE EXTERNAL ENVIRONMENT, (HOOVERS – STARBUCKS, 2011), (STARBUCKS NEWS, 2010)

COMPETITIVE ANALYSIS

Starbucks name and image was “one of the fastest-growing brands in a BusinessWeek survey of the to100 global brands published Aug. 5” (Pearce & Robinson, 2004, p. 140). “Coffee shops compete with businesses such as convenience stores, gas stations, quick service and fast food restaurants, gourmet food shops, and donut shops,” (Hoovers – Starbucks, 2011, p. 1).

To identify Starbucks current and potential competitors, several important variables should be considered. Because “competition is intensifying in the specialty coffee industry, there is little to prevent customers from trading to quick-service restaurant alternatives such as McDonald’s” or Dunkin’ Donuts, (Hoovers – Starbucks, 2011). McDonald’s Corporation is “looking to steal business from Starbcks” by heavily promoting a line of espresso coffee drinks under the banner McCaf√©,” (Hoovers – McDonald’s, 2010). Home-brewed coffee is a significant source of competition for coffee shops, (Hoovers – Starbucks, 2011), which makes Nestl√© USA a strong competitor. “Nestl√© USA covers every other-side-of-the-Atlantic craving, from a child’s sweet tooth to a grown-up’s caffeine fix.” Nestl√© has designed a plan that contains a set of objectives that “will help Nestl√© further optimize its coffee supply chain” (Hoovers – Nestl√©, 2011).

“Over the next five years, Nestl√© will double the amount of Nescaf√© coffee bought directly from farmers and their associations” (Nestl√© Press Release, 2010, para. 2). Dunkin’ Brands is working to upgrade and enhance its aging brands with new menu items. “Dunkin’ Donuts has focused its marketing efforts on coffee, taking on Starbucks and McDonald’s in the morning java business.” It also launched a¬†line of sandwiches for breakfast and lunch in 2009 designed to drive additional traffic and boost sales, (Hoovers – Dunkin, 2011). Because home-brewed coffee is a significant source of competition for Starbucks, the company “is hard-pressed to grind out new profits in a home market that is quickly becoming saturated” from competitors such as Nescaf√© and Dunkin’ Donuts, (Pearce & Robinson, 2004, p. 140).

Currently, Starbucks dominates the industry and in some areas, the company has “saturated the market with so many locations that consumers perceive a shop on every corner,” (Hoovers – Starbucks, 2011). The benefits the customers derive from the products and services of Starbucks and their competitors are similar because they offer convenience and speed. McDonald’s and Dunkin’ Donuts both offer specialty coffee but Starbucks has launched Starbucks Express, “which blends java, Web technology, and even faster service. At about 60 stores in the Denver area, customers can pre-order and prepay for beverages and pastries via phone or on the Starbucks Express Web site,” (Pearce & Robinson, 2004, p. 142).

Customers can click or call in their order then pick it up at their convenience for an express checkout without waiting. Starbucks and their three top competitors’ “major products include beverages and food. Beverages include brewed coffee and tea; espresso drinks (cappuccinos, caf√© lattes), and cold blended beverages,” (Hoovers, 2011, p. 1). Their similar foods include pastries, bakery items, and desserts. Two of the competitors “sell whole or ground coffee beans for home consumption,” (Hoovers, 2011, p. 1). All of Starbucks direct competitors serve or “sell high-quality, premium coffee known as specialty coffee,” (Hoovers, 2011, p. 1).

Starbucks competitors are as committed to the industry as they are because “consumer taste and personal income drive demand, the profitability of individual companies depends on the ability to secure prime locations, drive store traffic, and deliver high-quality products.” By offering specialized products or providing superior customer service, small companies can compete effectively while serving a local market, (Hoovers – Starbucks, 2011, para. 3).

ECONOMIC ANALYSIS

Macroeconomic forecast of economic indicators

Starbucks has a four percent share of brewed coffee in the United States, (Hoovers – Starbucks, 2011) allowing them many opportunities to expand its customer base. A heightened focus on customer experience and a reinvigorated food offering at existing restaurants should boost sales. Starbucks may acquire additional market share from health-conscious breakfast consumers as the economy improves. Incremental licensing fees and bolster margins could be provided through the expansion of the Seattle’s Best Coffee franchise program, introduced at 9,000 Subway and 7,250 Burger King’s, (Hoovers – Starbucks, 2011).

Starbucks meaningful brand equity is confirmed by the success of “Starbucks VIA¬ģ Ready Brew” (Hoovers – Starbucks, 2011). In this $21 billion market, (Hoovers – Industry, 2011), many opportunities exist to capture additional market share, which includes profitable grocery store channel distribution and where instant coffee represents a higher mix of retail sales, in overseas markets. Through these opportunities in the coming years, Starbucks should be able to return increasing value to shareholders. Starbucks recently announced cash dividend, representing a dividend yield of 1.6% and is targeting a dividend payout ratio of 35-40%, (Hoovers – Starbucks, 2011).

Depending on the circumstance, external forces can affect positively or negatively a company’s decision-making and general direction. Five external forces exists that can impact a company’s success within the remote environment. According to Pearce and Robinson (2004), these factors or forces are economic, social, political, technological, and ecological. These factors can have an adverse effect on a company’s potential for growth, or positively by providing opportunities for the company on which to capitalize. A company’s success can be affected by the economic climate. “Economic factors concern the nature and direction of the economy in which a firm operates,” (Pearce & Robinson, 2004, p. 79). Starbucks must consider the economic trends in the segments that are affecting its industry to include the general availability of credit, how willing consumers are to¬†spend, the level of disposable income, inflation, and interest rates. The effect on consumers’ willingness to spend money at Starbucks can be a factor from these economic trends. Starbucks potential for success is increased when the economy is good because consumers are buying their products, spending money and the company can take advantage of the positive economic forces.

During economic growth, the company makes plans for expansion while diversifying its business. However, for Starbucks to compete in a tough economy, the company has made plans for creating value meals to sale in their coffee shops. As McDonald’s has started selling gourmet coffee, Starbucks has begun to sell value meals. “The tug of war for coffee drinkers has gotten hotter in recent months, with McDonald’s Corp. offering new, lower-priced specialty coffee drinks and Dunkin’ Donuts advertising value-minded deals,” (The Huffington Post, 2010, para. 2). Starbucks is looking to rebound from the decreasing domestic sales as more consumers cutting back on their spending in the deepening recession. Starbucks understands these economic forces and considers how it will operate within a positive or negative economic climate. “Consumption patterns are affected by the relative affluence of various market segments; each firm must consider economic trends in the segments that affect its industry” (Pearce & Robinson, 2004, p. 79).

NON-ECONOMIC FACTORS IN THE REMOTE ENVIRONMENT

Social and Cultural

The social factors that affect Starbucks are factors that affect the revenues of the company, which involve the “beliefs, values, attitudes, opinions, and lifestyles of persons in the firm’s external environment” (Pearce & Robinson, 2004, p. 79). These social forces are constantly changing from the efforts of individuals by adapting to environmental factors to satisfy their wants and needs. The effect on consumers’ willingness to spend money at Starbucks can be a factor from these economic trends. Starbucks potential for success is increased when the economy is good because consumers are buying their products, spending money and the company can take advantage of the positive economic forces. During economic growth, the company makes¬†plans for expansion while diversifying its business. However, for Starbucks to compete in a tough economy, the company has made plans for creating value meals to sale in their coffee shops. As McDonald’s has started selling gourmet coffee, Starbucks has begun to sell value meals.

“The tug of war for coffee drinkers has gotten hotter in recent months, with McDonald’s offering new, lower-priced specialty coffee drinks and Dunkin’ Donuts advertising value-minded deals,” (The Huffington Post, 2010, para. 2). As more consumers cutting back on their spending during the recession, Starbucks is looking to come back from their decreasing domestic sales. Starbucks understands these economic forces and considers how it will operate within a positive or negative economic climate. “Consumption patterns are affected by the relative affluence of various market segments; each firm must consider economic trends in the segments that affect its industry” (Pearce & Robinson, 2004, p. 79). Starbucks continually monitors the economic trends that affect its industry.

Political Factors

Political activity has an influential “impact on two governmental functions that influence the remote environment‚Ķ the supplier and the customer function”, (Pearce & Robinson, 2004, p. 83). The supplier function can affect Starbucks through government decisions regarding the accessibility to government owned natural resources and national stockpiles of agricultural products in foreign countries where they purchase coffee beans. A small possibility exists that Starbucks would be affected by the customer function, which is present when the “government demand for products and services can create, sustain, enhance, or eliminate many market opportunities,” (Pearce & Robinson, 2004, p. 83). Knowing the direction and stability of political factors are important in formulating Starbucks strategy.

Technological Factors

To promote innovation, Starbucks researches technological changes that may influence its industry so its products become stagnant. “Creative¬†technological adaptations can suggest possibilities for new products, for improvements in existing products, or in manufacturing and marketing techniques,” (Pearce & Robinson, 2004, p. 84). One of the toughest challenges to overcome is in the home market, so Starbucks “announced expansion of a high-speed wireless Internet service to about 1,200 Starbucks locations in North America and Europe” (Pearce & Robinson, 2004, p. 143).so they can compete. The company calls it the “world’s largest Wi-Fi network” and Starbucks executives hope that this innovation will attract the next generation of customers, (Pearce & Robinson, 2004, p. 143).

Ecological Factors

The most conspicuous of the non-economic factors in the remote environment is the ecological factors. Ecology refers to “the relationships among human beings and other living things and the air, soil, and water that support them,” (Pearce & Robinson, 2004, p. 85). Starbucks makes an extensive effort to go “green” because of the specific concerns such as “global warming, loss of habitat and biodiversity as well as air, water, and land pollution,” (Pearce & Robinson, 2004, p. 85). Starbucks is “committed to supporting programs that facilitate farmers’ access to carbon markets, allowing them to generate additional income while helping to prevent deforestation,” (Starbucks Responsibility, 2011, para. 3). Starbucks Responsibility in “Tackling Climate Change” the company is addressing climate change as a big priority, (Starbucks Responsibility, 2011, para. 3). They believe it is time to increase their investments in solutions and strategies to address not only their environmental footprint but also to help ensure that their customers are receiving the supply of high-quality coffee, now and into the future, (Starbucks Responsibility, 2011). Since 2004, “Starbucks has been implementing a climate change strategy” that focuses on “renewable energy, energy conservation, and collaboration and advocacy” (Starbucks Responsibility, 2011, para. 4).

INTERNAL ANALYSIS

Starbucks chairman, Howard Schultz “who turned Starbucks into a global brand¬†during the 1990s, has executed a remarkable turnaround since seizing back day-to-day management of the chain in early 2008” (Clark, 2010, para. 2). Starbucks is about to enter its 40th year in an “undeniably healthier” state than ever, according to a Christmas message to employees from Schultz, who quoted an industry analyst’s remark: “What a difference two years makes.” Schultz continues his message with “as we leverage our collective strength, I have absolutely no doubt that the power of Starbucks partners will make 2011 another great year,” (Seattle Times, 2010, para. 8). Currently, Starbucks is aiming to open 1,500 stores in China where annual coffee consumption is minimal and “hardly anybody has heard of a cappuccino” (Clark, 2010, para. 3). The company is using “Fairtrade” produce and is researching ways of recycled materials. JP Morgan analysts are expecting Starbucks’s “sales to pass $11bn next year. The shares are up 52% in a year” (Clark, 2010, para. 5). Currently, Starbucks revenue total for 2010 is $10.71B.

STRENGTHS

WEAKNESSES

2010 Sale – $10.71B

1-Year Sales Growth – 9.54%

2010 Net Income – $945.60M

Starbucks is the market leader in the coffee market

More than 16,850 coffee shops in over 50 countries

Starbucks operates more than 8,800 of its shops, 10 countries

High brand equity

Over 137,000 employees

Owns the Seattle’s Best Coffee and Torrefazione Italia coffee brands

Too dependent on the retail of coffee – higher than competitors

High operating cost

Profits dependent on coffee bean prices

Less control over licensees and franchisees that operate more than 8,000 units worldwide

Lower sales than two major competitors

TABLE A-2 OPPORTUNITIES AND THREATS IN THE INTERNAL ENVIRONMENT (HOOVERS 2011, STARBUCKS, 2011).

The competition within the coffee industry can be affected by this threat and influence Starbucks profitability when the consumer chooses an available substitute over the company’s. Substitutes can increase competition and decrease profits because each company offering the product or service may need to offer discounts or price cuts. It appears that Starbucks specialty coffee is itself a substitute product, threatening established brands such as Maxwell House and Folgers. “People try to classify us as a restaurant company or a specialty coffee company, but that focus is just too narrow. It’s important to recognize that what we have built is one of the most powerful consumer brands in North America,” (Papiernik, 1996, p. 1).

Coffee bars fill a lifestyle need and Starbucks has become known as a popular gathering place. Though it may be said there is no substitute for a good cup of coffee, Starbucks is facing a substitution threat in the form of alternative distribution outlets such as McDonalds and Dunkin Donuts whom have become skilled at brewing a premium cup of coffee (McKay, 2010). McDonald’s has expanded into the gourmet-coffee market and is trying to directly compete with Starbucks (Gutierrez, 2008). There is also the threat of substitutes that compete with baristas, supermarkets because they offer¬†additional forms of distribution channels which Starbucks might see as a competitive threat and opportunity because they can sell their products using these channels. According to 12manage (2010), there a number of factors a company can determine if there exists a substitution threat. These factors are: is there a better quality substitute, “buyers’ willingness to substitute, the relative price and performance of substitutes, and the costs of switching to substitutes” (p. 1).

LONG-TERM OBJECTIVES

The strategic long-term objectives are the “results that an organization seeks over a multiyear period” (Pearce & Robinson, 2004, p. 14). These objectives are “profitability, return on investment, competitive position, technological leadership, productivity, employee relations, public responsibility, and employee development” (Pearce & Robinson, 2004, p. 14). Long-term objectives are important in achieving sustained corporate growth and profitability (Pearce & Robinson, 2004).

In the SEC Filing (2010, p. 12), Starbucks stated its “strategic initiatives are designed to improve results of operations and drive long-term shareholder value, and include¬†successfully leveraging Starbucks brand outside the company-operated store base, including an increased focus on international licensed stores, Starbucks VIA ¬ģ Ready Brew, and the Seattle’s Best Coffee brand¬†focusing on relevant product innovation and profitable new growth platforms;¬†accelerating the growth of our global consumer products business as we transition from our licensing relationships with Kraft Foods Global, Inc.¬†balancing disciplined global store growth while meeting target store-level unit economics in a given market¬†executing a multi-channel advertising and marketing campaign to effectively communicate our message directly to Starbucks consumers and partners” (SEC Filing (2010, p. 12).

“Given the current economic climate, farmers prefer to know they have buyers for future harvests. By signing long-term contracts with farmers,” Starbucks can purchase future coffee supply at predictable prices over multiple crop years, increasing purchases of coffee negotiated through long-term contracts, which average three to five years, (Hoovers – Starbucks, 2011, p. 2). Starbucks will continue to expand the number of locations offering drive-through service (Hoovers – Starbucks, 2011). The company plans to increase “farmer loan guarantees to $20 million by 2015 and provide farmers with incentives to reduce the environmental impact of coffee production” (Starbucks Responsibility, 2011, p. 1). Starbucks “plans to create a multi-faceted, global consumer brand and the significant potential to achieve a greater share of the nearly $145 billion world coffee market with a renewed focus on innovation and expansion,” (Starbucks Financial Release, 2010, para. 1).

The company will extend the “Starbucks Experience to customers beyond the third place to every part of their day, through multiple brands and channels”, (Starbucks Financial Release, 2010, para. 2). Retail growth outside the United States is central to the company’s long-term strategy, (Starbucks Financial Release, 2010, para. 4). Starbucks plans “to accelerate growth into established markets, such as Canada and Japan, and new or emerging markets such as China, Brazil, India and Russia,” (Starbucks Financial Release, 2010, para. 4). “The company also announced plans to build a world-class consumer packaged goods (CPG) organization” (Starbucks Financial Release, 2010, para. 5) by creating an “infrastructure that combines the best of Starbucks marketing and promotional expertise with best-in-class CPG capability,” (Starbucks Financial Release, 2010, para. 5). “As it continues to expand its retail and grocery footprint, Starbucks is also building stand-alone brands like Seattle’s Best Coffee, which continues to grow its points of distribution and to make high-quality coffee more accessible than ever before,” (Starbucks Financial Release, 2010, para. 6).

STRATEGIC ANALYSIS AND CHOICE

Strategic analysis and choice is used to assess the external environment, resulting in the selection of options from which a strategic choice can be¬†made. “The process is meant to provide the combination of long-term objectives, and generic and grand strategies that optimally position the firm in its external environment to achieve the company mission” (Pearce & Robinson, 2004, p. 14). Starbucks must continue satisfying customer needs by ensuring customer satisfaction levels are met so there is sufficient differentiation to justify the premium price. To realize the goals, first Starbucks must develop a strategic management plan that will outline the actions and decisions for the formulation and implementation designed to achieve the objectives.

Establishment of long- term goals

Starbucks has a new brand identity along with a new logo that will give them “the freedom and flexibility to explore innovations and new channels of distribution” (Starbucks Next Chapter, 2011, para. 5), that will keep them in step with their current customers and build strong connections with new customers.

Generic and Grand Strategies

Starbucks announced it would begin using a new corporate logo in 2011 as it continues to expand its product offerings in an effort to boost sales, (Hoovers – Starbucks, 2011). The company rolled out a menu with more breakfast items and other hot foods, as well as a new menu of cold drink options, (Hoovers – Starbucks, 2011). Starbucks uses a differentiation strategy to be unique in its industry along with dimensions that are widely valued by its customers by selecting one or more attributes that many of them perceive as important and positions the company to meet those needs.

PLAN GOALS AND IMPLEMENTATION

GLOBAL RESPONSIBILITY SCORECARD (SOURCE: STARBUCKS SCORCECARD, 2009)

GOALS

PROGRESS

To continually increase annual purchases of coffee verified through C.A.F.E. Practices.

Purchases of C.A.F.E. Practices veriÔ¨Āed coffee increased from 77% of total coffee purchases in 2008 to 81% of total coffee purchases in 2009

Invest in farmers and their communities by nearly doubling farmer loans to $20 million by 2015

Farmer loan commitments increased by $2 million in 2009

Mobilize our partners (employees) and customers to contribute more than 1 million hours of community service per year by 2015

Service hours decreased by 24% in 2009

Engage 50,000 young people to innovate and take action in their communities by 2015

Through grants awarded in 2009, Starbucks engaged 20,868 young people in community activities, reaching 42% of 2015 goal

Support programs that facilitate farmers’ access to carbon markets, allowing them to generate additional income while helping to prevent deforestation

Through partnership with Conservation International, in 2009 piloted programs in 29 co‚ÄĎee-growing communities in Chiapas, Mexico, and Sumatra, Indonesia

Develop a comprehensive recyclable cup solution by 2012

In 2009, convened a Ô¨Ārst-ever summit with local governments, cup manufacturers, recyclers, and other stakeholders to jointly identify the steps required to make our cups recyclable in form and in practice

Implement front-of-store recycling in our company-owned stores by 2015

In 2009, developed local market testing and implementation tools to accelerate front-of-store recycling in the future

Serve 25% of beverages made in our stores in reusable serveware or tumblers by 2015

Served 4.4 million more beverages in reusable cups in 2009 than in 2008

Reduce energy consumption by 25% in our company-owned stores

Electricity use decreased by 1.7% in company-owned stores in 2009

Purchase renewable energy equivalent to 50% of the electricity used in our company-owned stores

Renewable energy purchases increased to the equivalent of 25% of the electricity used in company-owned stores in 2009

Reduce water consumption by 25% in our company-owned stores by 2015

Water use decreased by 4.1% in company-owned stores in 2009

Achieve LEED certiÔ¨Ācation for our new, company-owned stores beginning in 2010

As a participant in the U.S. Green Building Council’s LEED Volume CertiÔ¨Ācation pilot program, in 2009 Starbucks submitted formal plans to build or renovate a minimum of 10 pilot stores around the world

FINANCIAL PROJECTIONS AND ANALYSIS

YEAR

RATIO

2010

2011

2012

2013

2014

Current Ratio

1.55

9.54%

4.39%

7.35%

10.95%

Quick Ratio

0.99

1%

1%

1%

1%

Cash Ratio

14.45

Total debit/equity ratio

0.15

.032

.032

.032

0.32

Debit/Equity Ratio

0.15

0.16

0.16

0.16

0.16

Return on Equity

28.14%

21.2%

21.2%

21.2%

21.2%

Return on total assets

15.81%

10.6%

10.6%

10.6%

10.6%

Net profit/sales

8.83%

6.0%

6.0%

6.0%

6.0%

Price/Earnings Ratio

2.30

16.10%

17.10%

16.00%

16.00%

(SOURCE: HOOVERS.COM)

CRITICAL SUCCESS FACTORS

The current market and competition will need to be assessed to identify potential areas of consumer taste that are underserved or completely un-served so that this gap may be leveraged by the company. Good research and development skills will be required to assess the market and product development testing stages of the process.

To increase knowledge of the new products, marketing will be necessary.

As a result of increasing the level of fair trade coffee used within the supply chain, the company must address the need for change in the perception the organization.

CONTROLS AND EVALUATION

In terms of time scale, budget and sales results, the controls will be incorporated in predetermined stages and measured against the defined goals. In addressing positive or negative deviation, the source will be investigated to remedy results while building on the positive. Consumer market research will be conducted to assess brand perception and response to the products and values that are being proliferated. Success will be measured against set goals, revenues, and profit levels. Customer perception will be measured through market research and levels of compliance.

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Starbucks Diversity (2011). Tackling Climate Change. Retrieved on January 6, 2011 from http://www.starbucks.com/responsibility/diversity

Starbucks Financial Release. (2010). Starbucks Outlines Blueprint for Multi-Channel Growth. Retrieved on January 6, 2011 from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=1502236&highlight=.

Starbucks News (2010). Starbucks Outlines Blueprint for Multi-Channel Growth. Retrieved on January 6, 2011 from http://news.starbucks.com/articledisplay.cfm?articleid=476.

Starbucks Next Chapter. (2011). Looking Forward to Starbucks Next Chapter.

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