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Starbucks Business problem

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Introduction

Starbucks is a publicly traded company that offers a variety of products including: brewed coffees, Italian-style espresso beverages, cold blended beverages, roasted whole bean coffees, tea products, sodas and coffee liqueur (Data monitor, 2008). The Starbucks Corporation's business strategy during the economic downturn will be the focus of this business proposal paper. The research portion of the business proposal will explore Starbucks current operations, responses to previous changes in the market economy and the company's current plan to sustain shareholder wealth while operating in a market recession. The business proposal section will examine how Starbucks developed its business plan; specifically how research data and statistics such hypothesis testing, regression and forecasting to formulate future development. Team A will also apply anecdotal information to support their hypothesis. Additionally, comparable with the strategy of Coffee Time, Team A will explore the expansion of Starbucks into the Asian markets. This paper will also discuss the dependent and independent variables of the team's study as well as the primary and secondary data used to support the study. The team will state the applicable null and alternate hypotheses as well as the methodology used to test the team's hypotheses. An appropriate sample size will be used to ensure that the team arrives with a representative sample that will be sufficient to use when analyzing the sampling data to make informed business decisions. Business Problem Paper Team A previously submitted a business proposal that discussd the business decisions and subsequent decline of Starbucks Coffee's stock price over the last 12 to 24 months. Starbucks is a publicly traded company that offers a variety of products, including: brewed coffees, Italian-style espresso beverages, cold blended beverages, roasted whole bean coffees, tea products, sodas and coffee liqueur (Data monitor, 2008). The company also offers food items and gift ideas such as coffee mugs and music CD's. With India being one of the largest growing economies in the world (see Appendix A), second only to China, and the second largest population (1.1 billion people) ...read more.

Middle

30, 1948). Alternative Hypothesis A null hypothesis supports calculating the probability of observing a data set with particular parameters. Typically, researchers face the challenge of determining with precision how probable the data would be if the alternative hypothesis were true. In the case of Starbucks the market research team does not seek to validate the alternative hypothesis through statistical testing. Executives at Starbucks wish to disprove the null hypothesis so that the organization can expand operations thus boosting sales revenues and increasing shareholder value. Should the multivariate data set support rejection of the stated null hypothesis the statistical analysis process requires an alternative hypothesis H1, one that supports Starbuck's mission and vision. The recommended alternative hypothesis states that: � The Indian culture, infrastructure and economy support expanding Starbucks' operations, premium product sales, into targeted regions of India. The complexities involved with collecting and analyzing financial, infrastructure, demographic and market data present significant challenges for the global market research team. Inadequate or inaccurate data could result in a false failure to reject the null hypothesis leading to a faulty business decision. The financial investment requires a high level of confidence that the survey data and associated analysis accurately represent the true state of conditions within India, at a 95% probability level. Hypothesis Testing As part of Starbucks' statistical testing the alternate hypothesis will form the basis of future business decisions if a sample contains sufficient evidence to reject the null hypothesis. The stated alternative hypothesis communicates the expected conclusion of statistical testing, support for market expansion into India. Should the statistical tests fail to disprove the null hypothesis then the research team will fail to reject the null hypothesis rather than stating acceptance. Starbucks' statistical testing will not prove the null hypothesis; instead it will disprove the hypothesis and reject it (Wallace, & Perlman, 1979). Starbucks' business plan requires the use of multiple regression and Chi-Square tests as methods for validating data and developing projections that fall within the confidence levels specified by Starbucks' market research team. ...read more.

Conclusion

Strategic Decision The global market research team recommends expanding Starbucks' operations into the following regions of India: � New Delhi (multiple retail locations) � Mumbai (Bombay - multiple retail locations) � Lucknow � Chandigarh The comprehensive statistical analysis package completed on behalf of the global market research team supports expansion into specific target areas while indicating that other cities within India may not prove to be viable expansion candidates. Evaluating a limited set of data always presents the risk of poor business decisions based upon faulty assumptions. Statistical testing cannot prove the viability of Starbucks' alternate hypothesis so company executives must weigh the test results using the wealth of professional experience possessed by the Starbucks' organization. Conclusion When faced with challenging business decision one should conduct as much research as possible to aide in the decision making process. "There are three components to any decision: (1) the choices available, or alternatives; (2) the states of nature, which are not under the control of the decision maker; and (3) the payoffs. Statistical decision theory is concerned with determining which decision, from a set of possible alternatives, is optimal for a particular set of conditions" (Lind et al, 2005, pp. 688 - 689). The CoffeeTime scenario was an excellent example of how to use statistics to help make viable business decisions that provide plausible short and long-term solutions that will support overall growth projections that will meet or exceed the company's financial goals. Developing a good research design is very important and having the ability to use secondary research to target resources and develop primary research is also an extremely valuable tool. In research, the limitations and boundaries that one must consider are varied, such as validity of data, sample size and budget constraints. However, the goal remains the same, which is to minimize the risk in order to maximize the rewards. When making any business decision, conducting research provides the overall business with quantitative and qualitative statistical data which can help a business achieve their overall goals and objectives through the gathering, review, analysis and presentation of valid, reliable and accurate data. ...read more.

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