Starbucks Case Study 130211062542 Phpapp02

8/20/2019 Starbucks Case Study 130211062542 Phpapp02

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1.0 INTRODUCTION

Name : Starbucks Corporation (NASDAQ: SBUX)Headquarters : Seattle, Washington, US

Employees : !"#,$$$ in %$$&

Revenue for 00! : US'!$& billion

CEO : o*ar+ Schult (-oun+er o. Starbucks co..eehouse)

Starbucks Corporation is an international co..eehouse chain base+ in Seattle,

Washington, Unite+ States Starbucks is the largest co..eehouse co/pan0 in the

*orl+, *ith !#,!%$ stores in 12 countries, inclu+ing aroun+ !!,$$$ in the Unite+

States, .ollo*e+ b0 nearl0 !,$$$ in Cana+a an+ /ore than &$$ in 3apan

Starbucks sells +rip bre*e+ co..ee, espresso4base+ hot +rinks, other hot an+

col+ +rinks, snacks, an+ ite/s such as /ugs an+ co..ee beans 5hrough the

Starbucks 6ntertain/ent +i7ision an+ ear 8usic bran+, the co/pan0 also

/arkets books, /usic, an+ .il/ 8an0 o. the co/pan09s pro+ucts are seasonal or

speci.ic to the localit0 o. the store Starbucks4bran+ ice crea/ an+ co..ee are

also o..ere+ at grocer0 stores Starbucks ;talian st0le co..ee, espresso

be7erages, teas, pastries an+ con.ections ha+ /a+e Starbucks one o. the

greatest retailing stories o. recent histor0 an+ *orl+s biggest specialt0 co..ee

chain ;n %$$, Starbucks /a+e the .ortune


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1.1 "#C$%ROUND O& THE CO'(#N)

1.1.1 Era *efore Ho+ard ,-ult/

;n !2"!, three aca+e/ics, 6nglish 5eacher 3err0 Bal+*in, istor0 5eacher =el

Siegel an+ *riter >or+on Bo*ker opene+ Starbucks Co..ee, 5ea an+ Spice in

5ourist0 ?ikes ?lace 8arket in Seattle 5he three *ere inspire+ b0 entrepreneur

Al.re+ ?eet (*ho/ the0 kne* personall0) to sell high4@ualit0 co..ee beans an+

e@uip/ent 5he store +i+ not o..er .resh bre*e+ co..ee b0 the cup, but tasting

sa/ples *ere so/eti/es a7ailable Siegel *ill *ore a grocers apron, scoope+

out beans .or custo/ers *hile the other t*o kept their +a0 obs but ca/e b0 at

lunch or a.ter *ork to help out 5he store *as an i//e+iate success, *ith sales

ecee+ing epectations, partl0 because o. interest stirre+ b0 the .a7orable article

in Seattle 5i/es Starbucks or+ere+ its co..ee4bean .ro/ Al.re+ ?eet but later on

the three partners bought their o*n use+ roaster setting up roasting operations in

a nearb0 ra/shackle buil+ing an+ +e7elope+ their o*n blen+s an+ .la7ors B0 the

0ear !2&$s the co/pan0 ha+ .our Starbucks Stores in Seattle area an+ ha+ been

pro.itable e7er0 0ear ater on, Siegel le.t the co/pan0 an+ 3err0 Bal+*in took

o7er +a04to4+a0 /anage/ent o. the co/pan0 >or+on Bo*ker re/aine+ as an

o*ner but +e7ote+ /ost o. his ti/e in his Design -ir/ ;n !2&!, o*ar+ Schult,

the 7ice presi+ent o. US operations .or S*e+ish 8aker o. st0lish kitchen

e@uip/ent an+ co..ee/akers +eci+e+ to pa0 Starbucks a 7isit e *as curious

about *h0 Starbucks *as selling so /an0 o. his co/pan0 pro+ucts e *as

i/presse+ *ith the co/pan0 /anage/ent an+ the @ualit0 pro+ucts the /ake

Schult aske+ Bal+*in *hether there *as an0 *a0 he coul+ .it into Starbucks

an+ it took long ti/e to +eci+e his re@uest e trie+ /an0 ti/es till one +a0 he

*as gi7en a ob o. hea+ing /arketing an+ o7erseeing the retail stores

Strategic Management PMS 3393 2

http://en.wikipedia.org/wiki/Alfred_Peethttp://en.wikipedia.org/wiki/Alfred_Peet


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1.1. Era +t Ho+ard ,-ult/

o*ar+ Schult spent /ost o. his *orking hours in the .our stores learning the

retail aspects o. the co/pan0 business Schult *as o7er.lo*ing *ith i+eas .or

the co/pan0 is biggest inspiration an+ 7ision .or Starbucks .uture ca/e +uring

!2& *hen the co/pan0 sent hi/ .or an international house *ares sho* to

8ilan, ;tal0 5here he spotte+ an espresso bar an+ *ent to take a co..ee e *as

i/presse+ *ith the co..eehouse ser7ices an+ +eci+e+ to sta0 at 8ilan .or a *eek

to eplore all co..ee bars an+ learne+ as /uch as he coul+ about the ;talian

passion .or co..ee +rinks e /a+e a +ecision to ser7e .resh bre*e+ co..ee,

espressos, an+ cappuccinos in its stores an+ tr0 to create an A/erican 7ersion o.

;talian co..ee bar culture e share+ his i+ea *ith Bal+*in an+ it took nearl0 a

0ear to con7ince 3err0 Bal+*in to let hi/ test an espresso bar ;n April !2&1, the

.irst espresso bar *as opene+ an+ it *as a success.ul too Eet Bal+*in .elt

so/ething is *rong A.ter Schult .aile+ to con7ince Bal+*in .or the epansion o.

business, he le.t Starbucks in !2&iornaleG co..ee bar

chain in !2&< an+ the co..eehouse *as 7er0 success.ul ;n !2&" Starbucks

o*ner 3err0 Bal+*in an+ Bo*ker +eci+e to sell the *hole Starbucks chain to

Schult9s ;l >iornale, *hich rebran+e+ the ;l >iornale outlets as Starbucks an+

@uickl0 began to epan+ Starbucks opene+ its .irst locations outsi+e Seattle at

Water.ront Station in Hancou7er , British Colu/bia, an+ Chicago, ;llinois, that

sa/e 0ear At the ti/e o. its initial public o..ering on the stock /arket in !22%,

Starbucks ha+ gro*n to !#< outlets ;n %$$2 5he Co/pan0 plans to open a net o.

2$$ ne* stores outsi+e o. the Unite+ States


http://en.wikipedia.org/wiki/Waterfront_Station_(Vancouver)http://en.wikipedia.org/wiki/Vancouverhttp://en.wikipedia.org/wiki/British_Columbiahttp://en.wikipedia.org/wiki/Chicagohttp://en.wikipedia.org/wiki/Illinoishttp://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/Waterfront_Station_(Vancouver)http://en.wikipedia.org/wiki/Vancouverhttp://en.wikipedia.org/wiki/British_Columbiahttp://en.wikipedia.org/wiki/Chicagohttp://en.wikipedia.org/wiki/Illinoishttp://en.wikipedia.org/wiki/Initial_public_offering


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.0 ,T#R"UC$, 2I,ION3 O"4ECTI2E, #ND 'I,,ION

.1 2son ,tatement

Starbucks 7ision state/ent is

G To esta*ls ,tar*u-5s as te most re-o6n/ed and respe-ted *rand n

te +orld and *e-ome a natonal -ompany +t values and 6udn6

prn-ples tat employee -ould *e proud of F

5he 7ision state/ent clearl0 +escribes the +rea/ or the .uture o. the co/pan0

that is to be the *orl+s /ost *ell kno*n co..eehouse an+ also to be the /ost

appreciate+ an+ positi7el0 gra+e+ bran+ b0 all le7els o. people aroun+ the *orl+

5he co/pan0 also .ocuses its 7ision to e/plo0ee satis.actions, so that the

e/plo0ees *ill be happ0

. O*7e-tves of ,tar*u-5s

Is to %ro+ *y ma5n6 employees feel valued

Starbucks approach the e/plo0ee *ith goo+ co/pensation an+ co/prehensi7e

bene.its package 5he co/pan0 belie.s that sharing the co/pan0s success *ith

the people *ho /a+e happen *ill help the/ think an+ acts like an o*ner o. the

co/pan0

Is to Re-o6n/e tat every dollar earned passes trou6 employees

andsStarbucks *ill al*a0s appreciate the e/plo0ee as the re7enue *hich is

increasing e7er0 0ear is b0 the e..icient an+ har+*orking e/plo0ees 5his +rastic

increase in pro.it is not recognie+ *ithout the support o. the e/plo0ees *ho

attracts the custo/ers to a long ter/ relationships *ith the co..eehouse



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Use te pays3 *enefts and opportuntes for personal development to

elp 6an employee loyalty and *e-ome dff-ult to mtate.

?a0ing scale an+ .ringe bene.it package allo*e+ it to attract /oti7ate+ people

*ith abo7e a7erage skills an+ goo+ *ork habits an+ also to /ake the e/plo0ee

to be lo0al *ith Starbucks

.8 'sson ,tatement

Starbucks 8ission State/ent is

9Esta*ls ,tar*u-5s as te premer purveyor of te fnest -offee n te

+orld +le mantann6 our un-ompromsn6 prn-ples +le +e 6ro+.

Te s; prn-ples are:

1. (rovde a 6reat +or5 envronment and treat ea- oter +t

respe-t and d6nty.

. Em*ra-e dversty as an essental -omponent n te +ay +e do

*usness.

8. #pply te 6est standards of e;-ellen-e to te pur-asn63

roastn6 and fres delvery of our -offee.. Re-o6n/e tat profta*lty s essental to our future su--ess.



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.8.1 #naly/n6 te 'sson ,tatement Component

Starbucks /ission state/ent is nee+e+ to be anal0e+ to see the total nu/ber o.

/ission co/ponent it has

NO CO'(ONENT )E,?NO

! Custo/ers Ees

% ?ro+ucts or ser7ices Ees

8arkets Ees

1 5echnolog0 No


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6stablish Starbucks as the pre/ier pur7e0or ! o. the .inest co..ee in the *orl+ an+

also to be establishe+ as the /ost e/plo0ee 7alue+ co/pan0 *hile /aintaining

our unco/pro/ising principles as *e gro* together *ith technological a+7ances

5he si principles are:

! ?ro7i+e a great *ork en7iron/ent an+ treat each other *ith respect

an+ +ignit0

% 6/brace +i7ersit0 as an essential co/ponent in the *a0 *e +o

business

Appl0 the highest stan+ar+s o. ecellence to the purchasing, roasting

an+ .resh +eli7er0 o. our co..ee

1 De7elop enthusiasticall0 satis.ie+ custo/ers all o. the ti/e


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8.1 E;ternal analyss

8.1.1 (E,T #nalyss

(olt-al>lobaliation to+a0 has change+ *orl+*i+e tren+ o. +oing business Co/panies

.in+ it +i..icult to sur7i7e b0 rel0ing solel0 on +o/estic /arket 5he bor+ers

bet*een 7arious countries are getting in7isible Co/panies are no*a+a0s

creating business in 7arious countries *ithout boun+aries A+7ertise/ents are all

o7er the *orl+ .or /an0 pro+ucts Co/pan0 strategists .in+ it not an eas0 task to

epan+ the business be0on+ bor+ers 5he basic nee+ .or globaliation is to learn

the +i..erent cultures o. the countr0 the0 plan to start business 5aking all aspects

inclu+ing ta rates, la* an+ legislation is i/portant in globaliation

E-onom-

?eople are no*a+a0s looking .or /ore inco/e to continue their luurious li.e

5he nu/ber o. t*o inco/e househol+s is getting increase+ all o7er the *orl+

?eople are looking .or*ar+ .or pro+ucts *hich re+uce their ti/e to be spent on

;/pro7e+ custo/er ser7ice, i//e+iate a7ailabilit0, trouble .ree operation o.

pro+ucts is beco/ing /ore i/portant Since the *orl+ is .acing crisis, people are

looking .or*ar+ .or cheap an+ @ualit0 pro+ucts ?rice is beco/ing priorit0 to

custo/ers ;ncrease in the in.lation rates an+ increase in une/plo0/ent is also a

.actor .or +e/an+ in lo*er price+ pro+ucts

,o-al3 Cultural3 Demo6rap- and Envronmental

Accor+ing to these anal0ses, it creates +i..erent t0pe o. consu/er an+

conse@uentl0 nee+s .or +i..erent pro+ucts, +i..erent ser7ices, an+ +i..erent

strategies ;n the 7ie* o. social, e/plo0ees shoul+ ha7e bene.its

Conse@uentl0, a.ter retire/ent .or the group o. bab0 boo/er, there /ust be an

allocation o. .un+s .or the retiree to support there .a/ilies in li.e long ?ro7i+e



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BARGAININGPOWER OFSUPPLIERS

POTENTIAL ENTRYOF NEW

COMPETITORS

BARGAININGPOWER OF

CONSUMERS

POTENTIALDEELOPMENT OF

SUBSTITUTEPRODUCT

RIALRY AMONGCOMPETING FIRMS

bene.its such as 8e+icare an+ 8e+icai+ retire/ent bene.icial Net, pro+ucts are

pro+uce+ in globall0 /ust con7enience an+ attracti7e to be use+ b0 an0

custo/ers A cultural connection is create+, a/ong custo/ers because

pro+ucing the pro+ucts *ith @ualit0 .leible price .or the rich an+ /i++le class

.a/il0 ?eople are also looking .or*ar+ .or .ree che/ical pro+ucts 5his /eans

that the pro+uct is .ree .ro/ che/ical or a++itional .la7or /i an+ it is /a+e .ro/

natural pro+ucts

Te-nolo6-al

8ass co//unication an+ high technolog0 are creating patterns o. +i7erse

cultures *orl+*i+e Ie7olutionar0 technological changes an+ +isco7eries are

ha7ing a +ra/atic i/pact on organiation ;nternet is the *orl+ in.or/ation

sprea+ /achines that ha7e co7ere+ an interaction .ro/ one user to another user

;n contrast, a+7ertising through ha7e brought high achie7e/ent into /arketing

strateg0 -or ea/ple, a+7ertising pro+ucts into .acebook so that the users can

consu/e on their pro+ucts Jnline purchasing, this option it *ill create less

hassle to custo/er .or purchasing the pro+ucts *hich the0 nee+e+

A+7ance/ent o. the technolog0 can cause the li.e c0cle o. the pro+uct change+

an+ increase+ in the +istributing o. the pro+ucts igh technolog0 o. the

8achineries can increase+ the suppl0 o. the pro+ucts *hile achie7e a better

pro.its .or the organiation

8.1. (orters fve &or-es



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5he Ia+ial Diagra/ abo7e is ?orters -i7e4.orce /o+el ;t helps the Co/pan0s

strategists to e7aluate the in+ustr0 gro*th, /arket +e7elop/ent an+ organiation

Strateg0 acco/panie+ *ith the goo+ intuiti7e u+g/ent 5he big corporation .ir/

such as Starbucks nee+s a s0ste/atic an+ e..ecti7e eternal4au+it s0ste/

because eternal .orces a/ong .oreign countries 7ar0 so greatl0 5he anal0sis o.

the Co/petiti7e can be +i7i+e+ into ?orters -i7e4-orces 5he .i7e .orces are as

.ollo*s:

1. ?otential entr0 o. ne* co/petitors

2. ?otential +e7elop/ent o. substitute pro+ucts

3. Bargaining po*er o. suppliers

4. Ii7alr0 a/ong co/peting .ir/s

5. Bargaining po*er o. consu/er



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?otential entr0 .or ne* co/petitors sho*s a balance bet*een +i..erent

.ir/s co/peting in a /arket ;t also re.ers *hene7er a ne* partner enter into a

/arket, the0 /a0 beco/e threat .or one an+ opportunit0 .or other co/peting

partners As all the ne* entries an+ eisting .ir/s are co/peting *ith each other

so the ne* entr0 *ill +e.initel0 /ake an e..ect on e7er0 one transacting in the

/arket Starbucks ne* co/petitor is the 8cDonal+s F8cCa.eG 5here is a great

+eal o. risk o. entr0 b0 potential co/petitors +ue to the lo* start up costs

8cDonal+s is able to a++ specialt0 co..ee to their eisting ser7ices to tap into the

specialt0 co..ee /arket 5here is potential o. '!%


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ater on, Starbucks +eci+e+ to prepare an agree/ent +ocu/ent regar+ing

to purchase co..ee beans at a .ie+ price 5here is /ore bargaining po*er .or

suppliers o. technological inno7ations such as auto/ate+ co..ee /achines, latte

an+ espresso /achines, etc because there are not as /an0 suppliers .or such

e@uip/ent as there are .or co..ee beans Starbucks /a0 pursue a back*ar+

strateg0 to gain control or o*nership o. suppliers

5he ri7alr0 a/ong the co/peting .ir/s is the /ost po*er.ul o. the <

co/petiti7e .orces Starbucks pri/ar0 co/petitors *ere restaurants, specialt0

co..ee shops, +oughnut shop, super/arket an+ all other stores selling hot an+

col+ co..ees ;n %$$, there *as !1$$$ specialt0 co..ee outlets in US itsel.

Starbucks also .ace+ co/petition .ro/ nation*i+e co..ee /anu.actures that

+istribute+ their co..ee through super/arkets pricing the/ cheaper co/pare+

*ith Starbucks An0*a0, Starbucks .eels that their ecellence ser7ices an+ the

high @ualit0 o. their co..ee is the biggest strength o. the/ Jther than this

Starbucks /a0 lo*er their prices or a++ /ore .eatures in their stores an+ /a0

also increase their a+7ertising all aroun+ the *orl+

ast but not least is the bargaining po*er o. consu/er When custo/er

are concentrate+ or large or bu0 in 7olu/e, the0 bargaining po*er represent a

/aor .orce a..ecting the intensit0 o. co/petition in an in+ustr0 5his /a0 arise

*hen the consu/ers can inepensi7el0 s*itch to co/peting bran+s Custo/ers

+i+ not reall0 ha7e bargaining po*er *hen it ca/e to pre/iu/ co..ee such as

Starbucks 5he sheer scale o. Starbucks business re+uces the bargaining po*er

o. an0 single group o. bu0ers

(orters &ve &or-es Ta*le



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?orters

.i7e

-orces

Details ;n+ustr0

pro.itabilit0

Ii7alr0 A/ong Co/peting -ir/

;>

5here is intense co/petition in the co..ee

/arket a/ongst establishe+ co..ee shops that

are .ighting to get custo/ers 5here are local

co..ee shops o..ering specials to lure potential

custo/ers in Iestaurants are opening earlier

an+ closing later to acco//o+ate custo/ers on

the go With the &

5here is a great +eal o. risk o. entr0 b0 potential

co/petitors +ue to the lo* start up costs

8cDonal+s is able to a++ specialt0 co..ee to

their eisting ser7ices to tap into the specialt0

co..ee /arket 5here is potential o. '!%

Water is a substitute *hich is health0 .or us an+

it is .ree 5he option to bu0 bottle+ *ater is also

inepensi7e co/pare+ to co..ee With the .ocus

on healthier li7ing, *ater is the ulti/ate choice

JW

Bargaining po*er o. suppliers

;>

5here is /ore bargaining po*er .or

suppliers o. technological inno7ations such

as auto/ate+ co..ee /achines, latte an+

espresso /achines, etc because there are

not as /an0 suppliers .or such e@uip/ent

as there are .or co..ee beans

JW

Bargaining po*er o. consu/ers

;>

Custo/ers +i+ not reall0 ha7e bargaining po*er

*hen it ca/e to pre/iu/ co..ee such as

Starbucks 5he sheer scale o. Starbucks

business re+uces the bargaining po*er o. an0

single group o. bu0ers

JW

8.1.8 Compettve (rofle 'atr;

Starbucks Caribou coffee Gloria Jean’s coffee



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CRITICAL

SUCCESS FACTOR

WEIGHT

WT!

RATI"G WT

SCORE

RATI"G WT

SCORE

RATI"G WT

SCORE

A+7ertising #$%# 4 0.40 4 0.40 3 0.30

?ro+uct Qualit0 #$ 4 0.80 3 0.60 2 0.40

?riceCo/petiti7eness

#$#' 2 0.10 3 0.15 3 0.15

8anage/ent #$#( 3 0.24 2 0.16 3 0.24

-inancial position #$#' 3 0.15 3 0.15 2 0.10

Custo/er lo0alt0 #$%# 3 0.30 2 0.20 2 0.20

>lobal epansion #$%' 4 0.60 2 0.30 2 0.30

6/plo0ee bene.its #$%# 4 0.40 2 0.20 2 0.20Custo/er Ser7ice #$%) 3 0.51 2 0.34 2 0.34

TOTAL %$## *$'# &$'# &$&*

Starbucks sho*n highest score an+ the secon+ highest *ere Caribou Co..ee an+

>loria 3eans co..ee sho*s the lo*est Score 5he co/petiti7e pro.ile /atri

(C?8) *eighs pro+uct @ualit0 5he pro+uct @ualit0 ($%$) an+ is the /ost

i/portant ite/ on the list o. critical success .actors Starbucks score on this

.actor as the highest in co/parison to their t*o chie. co/petitors, Caribou an+

>loria an+ re.lecting a +istincti7e co/petiti7e a+7antage in the /arket Custo/er

ser7ice $!", 6/plo0ee bene.its $!$ an+ global epansion $!< replicates a high

le7el o. i/portance on the C?8 5he a+7ertising *eight, $!$, on C?8 +oes not

re.lect a high le7el in ranking the critical success .actors, but +oes release

7aluable in.or/ation in co/parison to their co/petitors on the C?8 Starbucks

rates an+ scores the lo*est on the price co/petiti7eness .actor

3.1.4 E;ternal &a-tor Evaluaton 'atr; AE&EB



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e6t of T,O$#L$L$%L$$ M!1$$1<

M !!

e6t of T,TM$1


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Base+ on the ke0 eternal .actors, the /ost critical .actors are that /an0

co/panies are pricing their pro+ucts cheaper to i/press custo/ers ;ncrease in

the in.lation rates creates a +e/an+ in lo*er price+ pro+ucts co/es along as the

/ost critical threats to the co/pan0

An0*a0, there are still opportunities to increase the gro*th o. the

co/pan0 ;t is kno*n that the .actors *hich carries /ost *eight is the .actor that

/ost to be a++ress >lobaliation /akes it eas0 to enter international /arket is a

goo+ opportunit0 .or Starbucks Since the total *eighte+ score is %"& generall0

Starbucks is not so e..ecti7e in a++ressing its C-S *hich eists in its current

en7iron/ent ;t nee+s to upgra+e its e..ecti7eness

o*e7er, this is subect to .urther anal0sis o. in+i7i+ual *eighte+ score o.

opportunities (5WSJ) an+ *eighte+ score o. threats (5WS5) Base+ on the

calculation, as sho*n in the table abo7e, is /ore e..ecti7e in a++ressing the

Jpportunities Still, Starbucks /ust .in+ the *a0 to re+uce the threats to .ocus on

the .uture challenges

8. THE INTERN#@ #N#@),I,

8..1 &nan-al #nalyss

#B (ro7e-ted In-ome ,tatement

&s-al )ears 00800=



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Jct %%$$<

K Jct %$$1

K Sept %$$

K Di..bet*een

%$$<an+

%$$1

Di..bet*een

%$$1an+

%$$;n +ollar $$$, ecept per share a/ounts

Net revenue:

Ietail '


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to custo/er an+ specialt0 /eans custo/er ro0alt0 5he sale .or %$$14%$$<

perio+s is less then !$K .ro/ %$$ to %$$1 *hich is %$K

Another signi.icant obser7ation .ro/ the state/ent is the operating inco/e ;t is

sho*n that .ro/ %$$ to %$$< the inco/e is increase+ ;t coul+ be because o.

the per.or/ance o. the co/pan0 is going concern Jperating inco/e .ro/ %$$

to %$$1 is increase+ b0 11K5his +rastic increase is because o. the purchase o.

Seattle9s Best Co..ee an+ 5orre.aione ;talia .ro/ A-C 6nterprises, bringing the

total nu/ber o. Starbucks4operate+ locations *orl+*i+e to /ore than #,1$$

While the sharehol+er is i/portant to an0 co/pan0, the net earnings per share

are e@ui7alentl0 i/portant to the sharehol+ers As obser7e+, the net earnings o.

share +ilute+ o. the co/pan0 increase+ .ro/ '$1 in %$$ to '$12 in %$$1,

reaching '$#! b0 %$$


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;n /illions, ecept-or per Share ;te/s

Jct %%$$<

Di..erentBet*een%$$1an+%$$<

K

Jct %$$1

Di..erentBet*een%$$1an+%$$ K

Sept $%$$

Current assets '!%$21 (!!) '!

#nalyss summary

As obser7e+ in the abo7e table current assets increase+ .or %$$4%$$1 b0 1#K;t

coul+ be because o. co/pan0 acti7ations an+ reloa+s on Starbucks Car+s, but

.or the 0ear %$$14%$$< is +roppe+ b0 !!K because o. the a+7ertising Starbuck

co..ee

Besi+es, the sharehol+er 6@uit0 increase+ +ue to the increases in net earning .or

the co/pan0 While the sharehol+er e@uit0 +ecrease+ .or about !


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co/pan0 has etra earnings to pa0 o.. +ebt Since this is a long ter/ +ebt, the

a/ount is tre/en+ousl0 big an+ b0 re+ucing it b0 !1K *ithin a 0ear sho*n that

the +e7elop/ent ne* shops reall0 has a big i/pact on the co/pan0s

per.or/ance

&nan-al Rato

%$ Li+ui,it- ratios

#' #.



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Current ratio = $1209334 = $1350895$1226996 $746259

= 0.99 x = 1.81 x

5he Current ratio is another test o. a co/pan09s .inancial strength ;t calculates

ho* /an0 +ollars in assets are likel0 to be con7erte+ to cash *ithin one 0ear in

or+er to pa0 +ebts that co/e +ue +uring the sa/e 0ear i@ui+it0 can be

/easure+ through current ratios an+ @uick ratio An acceptable current ratio

7aries b0 in+ustr0 5he /ore li@ui+ the current assets are, the s/aller the current

ratio can be *ithout cause .or concern -or /ost in+ustrial co/panies, !< is an

acceptable current ratio an+ Starbucks current ratio is $22 .or the 0ear %$$<

co/pare+ to !&! .or the 0ear %$$1 5his can be consi+ere+ as a +ecline an+shoul+ be seriousl0 concerne+ an+ still enough to co7er up current liabilit0 or

short4ter/ +ebt

. @evera6e Rato

#' #.

ong ter/Debt4to4total4assets ratio

= $3618 = $4353

$2090634 $2470211

= 0.0017 = 0.0018

5he Debt4to4total4assets ratio Sho*s the proportion o. a co/pan09s assets *hich

are .inance+ through +ebt ;. the ratio is less than one, /ost o. the co/pan09s

assets are .inance+ through e@uit0 ;. the ratio is greater than one, /ost o. the

co/pan09s assets are .inance+ through +ebt

Co/panies *ith high ratios are sai+ to be Ohighl0 le7erage+,O an+ coul+ be in

+anger i. cre+itors start to +e/an+ repa0/ent o. +ebt an+ .or Starbucks, the ratio

is 7er0 lo* at both 0ears 5he ratio is $$$!" at %$$< an+ $$$!& .or the 0ear



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%$$1 respecti7el0 an+ the ratio +rop slightl0 5his /eans that /ost o. the

Starbucks assets are .inance+ through e@uit0 an+ is sa.e i. cre+itors start to

+e/an+ repa0/ent o. +ebt

8. #-tvty Rato

#' #.

ixed assets turnover = $6369300 = $5294247

$2304731 $2035646

= 2.76x = 2.6x

#' #.

!ota" assets turnover = $6369300 = $5294247

$3514065 $3386541

= 1.81x = 1.56x

Acti7it0 ratios sho* ho* e..ecti7el0 a .ir/s assets are being /anage+ Acti7it0

anal0sis, together *ith the le7erage ratios are the ke0 .actors in +eter/ining

pro.itabilit0 -ie+ Asset turno7er ratio is one o. the /easures o. acti7it0 Another

acti7it0 /easure is the 5otal Asset turno7er ratio Base+ on the abo7e tables,

Starbucks has a bigger asset turno7er *hich /eans that the co/pan0 is using its

assets /ore e..icientl0 than other co/petitors in the in+ustr0 Co/pan0s Fno4

in7entor0G polic0 has signi.icant e..ects on its superiorit0 ;n both ratios , there is a

sli+e increase *hich sho*s the co/pan0s e..icienc0 on using assets has

increase+ too


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#ross Proit %ar&in = $6369300'2605212 = $5294247'2191440

$6369300 $5294247

= 0.59 (59)* = 0.58 (58)*

?ro.itabilit0 ratios /easure an+ eplain the abilit0 o. the .ir/ to generate inco/e>ross pro.it /argin has increase+ 5his sho*s that the co/pan0 has a greater

/argin to co7er the operating epenses an+ 0iel+ a pro.it

#' #.

+et Proit %ar&in = $494467 = $388973

$6369300 $5294247

= 0.078 (7.8)* = 0.073 (7.3)*

5here is a s/all increase in the pro.it a.ter ta 5his sho*s that the co/pan0s

pro.it has increase+ Eet, the percentage o. pro.it co/pare+ *ith the sales is

s/all *hich is "&K .ro/ total sales is the net inco/e o. 0ear %$$


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$2090634 $2470211

= 0.24 (24)* = 0.16 (16)*

Ieturn on e@uit0 /easures a corporation9s pro.itabilit0 b0 re7ealing ho*

/uch pro.it a co/pan0 generates *ith the /one0 sharehol+ers ha7e

in7este+ 5he IJ6 is use.ul .or co/paring the pro.itabilit0 o. a co/pan0 to that

o. other Starbucks sho*s a +rastic increase .ro/ !#K to %1K .or the 0ear %$$


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$ey Internal &a-tors e6t Ratn6 e6ted ,-ore

,tren6ts

! uge /arket epansion to China,

Brail, ;n+ia an+ Iussia

$%! 1 $&1

% ?ro7i+e a great *ork en7iron/ent $!$ 1 $1$

Appl0 the highest stan+ar+s o.

ecellence in ser7ices

$!$ $$

1 Starbucks has /onopolistic

a+7antages o7er its co/petitors

$!$ $$

5. ?urchase+ 6thos health0 *ater .or

& /illion an+ also +oes not use

che/ical .la7or .or co..ee

$!% 1 $1&

# aunching the sales o.

-rappuccino in 3apan an+ 5ai*an

$$& $%1

ea5nesses

! ?rice o. co..ee is high at Starbucks $!$ % $%$

2. less /arketing an+ a+7ertising its

pro+uct

$$" % $!1

Starbucks pro+ucts are not

a7ailable at super/arket

$!% % $%1

TOT#@ 1.00 8.1<

5J5A W6;>56D SCJI6 -JI S5I6N>5 5J5A SCJI6 -JI S5I6N>5

5WSS: $&1L$1$L$$L$$L$1&L$%1 $%!L$!$L$!$L$!$L$!%L$$&

: %


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: $


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calculation, as sho*n in the table abo7e, is /ore e..ecti7e in a++ressing the

Strength, still, Starbucks9 /ust .in+ the *a0 to o7erco/e *eaknesses to .ocus on

the .uture challenges



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8.8 TO, #nalyss

Strategic Management PMS 3393

,TREN%TH,

,1uge /arket epansion to China,

Brail, ;n+ia an+ Iussia,

?ro7i+e a great *ork en7iron/ent

,8

Appl0 the highest stan+ar+s o.

ecellence in ser7ices,

aunching the sales o. -rappuccino in

3apan an+ 5ai*an

E#$NE,,E,

1?rice o. co..ee is high at

Starbucks

less /arketing

a+7ertising its pro+uct

8

Starbucks pro+ucts are

not a7ailable at

super/arket

O((ORTUNITIE,

O1

>lobaliation /akes it eas0 to enter

international /arket

O

?eople are looking .or cheap internet

connections

O8

6press .oo+s are getting .a/ous to

re+uce ti/e to be spent

O


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8.< ,pa-e 'atr;


THRE#T,,T ,trate6es

,3,83,


30/40

&IN#NCI#@ ,TREN%TH,

IA5;N>

A Starbucks asset is .inance+ through e@uit0 an+ is sa.e i. cre+itors

start to +e/an+ repa0/ent o. +ebt ong ter/ +ebt4to4e@uit0 ratio is onl0 $$$!" <

Starbucks Ieturn on Asset ratio sho*s that in 0ear %$$

Starbucks Co..ee i@ueur *as the top selling ne* spirit pro+uct,grosse+ sales o7er '&/illion annuall0 1

Starbucks agree+ to ser7e Starbucks Co..ee in all Unite+ .lights

FStarbucks 67er0*hereG approach has increase+ .oot tra..ic .or all the

stores in area 5his /akes custo/ers eas0 to .ine Starbucks all the places in

to*n

<

1

EN2IRON'ENT#@ ,T#"I@IT)


L# M best L!M *orst

30


31/40

IA5;N>

Starbucks pro+ucts prices are high co/pare+ *ith co/peting co..ee

houses 5he0 price their pro+ucts se7eral +ollars belo* then Starbucks price 41

De/an+ .or Starbucks pro+ucts to be supplie+ in super/arkets

increase But, +oing that *ill put Starbucks business in risk as custo/ers +ont kno*

the *a0 to bre* the co..ee

4%

;ncrease in *orl+ co..ee bean price in %$$!, .orce+ Starbucks to

increase its be7erages an+ co..ee sol+ at retail 4

F

CO'(ETITI2E #D2#NT#%E,

IA5;N>

Starbucks co..ee an+ be7erages are high in @ualit0 bre*e+ b0 *ell

traine+ e/plo0ees 4!

Starbucks tea/e+ up *ith 54/obile W;4-i ser7ice to pro7i+e internetaccess to all o7er Starbucks Co..eehouse 4!

5here are !#,!%$ Starbucks co..eehouses *orl+*i+e an+ plan to open

another !&$$ stores 4%

Starbucks is a custo/er oriente+ Co..eehouse

4%

>

CONC@U,ION


4! M best 4#M *orst

31


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-S A7erage is ! M E,

Starbucks /ust pursue a strateg0 that is Aggressi7e 5he strategies that inclu+e in aggressi7e strategies is

back*ar+ integration, .or*ar+ integration, horiontal integration, /arket penetration, /arket +e7elop/ent,

pro+uct +e7elop/ent an+ +i7ersi.ication *hich inclu+e relate+ an+ unrelate+ +i7ersi.ication

8.= "C% 'atr;



33/40

HI%H 'EDIU' @O

HI%H

'EDIU'

@O

,U''#R)

5he Boston Consulting >roup (BC>) /atri is enhancing a /ulti+i7isional .ir/s

e..orts to .or/ulate strategies 5his /atri allo*s a /ulti+i7isional organiation to

/anage its port.olio o. businesses b0 ea/ining the relati7e /arket share

position an+ the in+ustr0 gro*th rate each +i7ision relati7e to all other +i7isions in

the organiation Starbucks are /easure+ to i+enti.0 the stores strategic position

in the Boston Consulting 8atri 5he BC> /atri, *ere inclu+e+ 1 +i7isions

*hich is Question 8arks, Star, Cash Co*s, an+ Dogs ;n +i7ision @ua+rant ;,

sho*s lo* relati7es /arket position, high gro*th in+ustr0 -ir/s cash nee+s are

high an+ cash generation is lo*

5his +i7ision +eci+es to strengthen on pursuing an intensi7e strateg0 Di7ision

@ua+rant ;;, i+enti.ies best long4run opportunities .or gro*th an+ pro.itabilit0 Star


"a-5+ard3 &or+ard3 or

Hor/ontal Inte6raton 'ar5et (enetraton

'ar5et Development

(rodu-t Development

STARSII

,T#R"UC$,

'ar5et (enetraton

'ar5et Development (rodu-t Development

Dvestture

QUESTION MARKSI

(rodu-t Development

Dversf-aton

Retren-ment Dvestture

CASH COWSIII

Retren-ment

Dvestture

@qudaton

DOGSI2


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+i7ision is high relati7e /arket share an+ high in+ustr0 gro*th rate ;n con7ince

o. substantial in7est/ent to /aintain or strengthen their +o/inant positions Net

in @ua+rant ;;;, Cash Co*s *ith high relati7e /arket share position but co/pete

in a lo* gro*th in+ustr0 ,*hile this +i7ision *ill be /anage+ to /aintain strong

position .or as long as possible

-inall0, in @ua+rant ;H Dogs ha7e lo* relati7e /arket share position

an+ co/pete in a slo* or no /arket gro*th in+ustr0 5his +i7isional are *eak

into internal an+ eternal position an+ o.ten li@ui+ate+, +i7este+ or tri//e+ +o*n

the retrench/ent Ietrench/ent can be best strateg0 to pursue because /an0

+ogs bounce+ back, a.ter strenuous asset an+ cost re+uction, to beco/e 7iable,

pro.itable +i7isions ;n contrast, the highest score+ is


35/40

Starbucks co..ees price /uch epensi7e than other /arket co/petitor

pro+uct, it is because Starbucks purchase+ onl0 high @ualit0 co..ee

beans, 5his *ill increase the @ualit0 o. the pro+uct as *ell as the price o.

the pro+uct As Starbucks ha7e /an0 co/petitors, this *ill be an

a+7antage o. the co/petitors ?eople are also no*a+a0s looking .or*ar+

.or cheap pro+ucts 67en though Starbucks has its o*n custo/er *ho

spen+s their /one0 to get the @ualit0 co..ee, it still has to look .or the other

people *ho are running to the net store


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Starbucks +oes not e/phasie in +istributing their pro+ucts to

super/arkets 5he0 are 7er0 concern on @ualit0 o. the co..ee i. the

co..ees *ere package+ into plastic bags the /iing o. the beans *ill not

be as accurate ;t *ill cause the taste o. the co..ee *ill be +i..erent an+ the

co..ee beans *oul+ not be .resh as grin+e+ beans ;n a++ition, the

organiation +i+ not sho* a proper gui+eline to /i the co..ee to

custo/er 5here.ore, the packaging co..ee in super/arket +i+ not ha7e

sa/e taste as co..ee *hich /ie+ in the Starbucks Custo/ers

satis.action on the co..ee *ill ba+l0 a..ect an+ as *ell as +e/an+ o. the

Starbucks co..ee



37/40

=.0 RECO''END#TION

=.1 COR(OR#TE @E2E@

Ie+uce their price b0 pro+ucing a ne* pro+uct o. co..ee using cheaper beans or/a0 co/e out *ith special +iscounts pro/otions to increase the sales

Starbucks co..ee is *orl+s pree/inent global bran+ Starbucks shoul+ +ecrease

price o. the co..ee to .ace co/petition .ro/ nation*i+e co..ee /anu.actures

5he0 also can +o pro/otion or pro/ote packages o. co..ee set to i/press

custo/ers, such as 8cDonal+ pro/oting their pro+uct ;. the challenge *as /et

success.ull0, in all likelihoo+ co/pan0s best 0ears la0 on the strategic roa+

ahea+

=. "U,INE,, @E2E@

arge co/panies like Starbucks can e..ecti7el0 pursue -ocus4Base+ Strateg0 in

conunction *ith +i..erentiation or cost lea+ership base+ strateg0 Being a lo*er

cost store *ill increase the +i..erence bet*een Starbucks an+ other stores At

present, Starbucks co/petitors are atte/pting to specialie in the co..ee

business, there.ore Starbucks /ust pursue .ocus strateg0 to increase its

strength

=.8 &UNCTION#@ @E2E@

A+7ertise/ent can +e7elop through internet that ser7ices con7ince+ .or users to

access, gi7e the brochures, +o roa+ sho*s, so that public co/e to kno* /ore

about Starbucks +etails 8arket penetration an+ /arket +e7elop/ent *ill help to

increase the sales an+ re+uce the *eakness in Starbucks Distribute packaging

o. Starbucks instant co..ee *ill +e.initel0 increase the sales as it is a +e/an+

.ro/ custo/ers



38/40

;ntro+ucing accurate /iing le7el o. the co..ee in a tea bag st0le *ill increase the

sales at super/arkets ?acking it together *ith the gui+elines on /iing co..ee

beans an+ sugars *ith /ilk to result sa/e taste o. co..ee *ill ne7er re+uce the

@ualit0 o. the co..ee ?ro7i+ing proper steps to custo/er *ill /ake a better @ualit0

o. co..ee in+ee+



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Starbucks Case Study 130211062542 Phpapp02

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