• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11
  12. 12
    12
  13. 13
    13
  14. 14
    14
  15. 15
    15
  16. 16
    16
  17. 17
    17
  18. 18
    18
  19. 19
    19
  20. 20
    20
  21. 21
    21

Strategic Audit of Starbucks

Extracts from this document...

Introduction

Strategic Audit of Starbucks Strategic Audit of Starbucks Traci Hall Jones College Business Policy and Administration Professor E. Smith June 20, 2011 I. Current Situation A. Current Performance Starbucks is the fastest growing food chain and shows no signs of slowing down. it plans to boost earnings by 20% to 25% annually over the next three to five years and to bring its number of storefronts to 40,000 worldwide which is 10,000 more than McDonald's. Starbucks is conservative in how it finances its goals. Operating cash flow from existing stores pays for new-store development. So far, the return on new stores has been excellent. Increasing same-store sales has been a tougher order, though, and Chairman Howard Schultz has expressed worries that moves to improve same-store sales with automatic equipment and off-brand merchandise could be turning consumers off. The return on investment (ROI) for Starbucks in 2010 was 22.50%. The market share was $27.33 billion while the profitability was at 30.4% (Donald, 2007). B. Strategic Posture Starbucks has an impressive mission statement because it addresses their product as a whole and their mission for different relationships. "The Starbucks Mission Statement-To inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time. Here are the principles of how we live that every day: Our Coffee-It has always been, and will always be, about quality. We're passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done. Our Partners-We're called partners, because it's not just a job, it's our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold each other to that standard. Our Customers-When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers - even if just for a few moments. ...read more.

Middle

South and Central America produce the majority of coffee traded in the world. Starbucks depends upon both outside brokers and direct contact with exporters for the supply of green coffee. The supply of coffee is affected by weather conditions, and the health of coffee trees. An over-crowded market will give the coffee suppliers bargaining power. According to a 1996 Starbucks Case Profile, the price of the coffee bean could rise in the future due to lower supply, and heightened demand. For the industry, these are alarming threats. The quality of coffee sought by Starbucks is very high, and Starbucks has traditionally paid premium prices for its green coffee. There are no substitute products for the coffee beans Starbucks must buy. This is a potential threat to the company. Starbucks, however, has exhibited how little control its suppliers might actually have. In 2001, Starbucks announced new coffee purchasing guidelines, developed in partnership with The Center for Environmental Leadership in Business. These guidelines are based on the following four criteria: quality baselines, social conditions, environmental concerns, and economic issues. Only suppliers who can meet Starbucks' coffee standards will be able to supply the giant company. The supplying industry to Starbucks, therefore, has few companies. Starbucks will offset this threat by paying a premium of up to ten cents per pound of coffee to vendors based on how well their coffee meets Starbucks' standards. Starbucks has a degree of control over its suppliers in an industry where it is possible for suppliers of premium coffees to have an enormous amount of bargaining power (Kembell, 2002). D. Summary of External Factors External Factor Analysis Summary (EFAS Table): Starbucks | External Factors | Weight | Rating | Weighted Score | Opportunities | | | | Global Operations | 0.10 | 4.0 | 0.40 | Co-branding | 0.10 | 5.0 | 0.50 | Mergers, joint ventures or strategic alliances | 0.15 | 4.0 | 0.60 | Product range diversification | 0.10 | 5.0 | 0.50 | Socially responsible | 0.10 ...read more.

Conclusion

Review of Mission and Objectives Starbucks has literally shaped the culture of America by altering what we'll pay for coffee, what we eat, where we meet and how people spend their time. Since Starbucks went public in 1992, it became part of the popular culture that extends "beyond the espresso machine to influence the films we see, CDs we hear and books we read." It definitely met its long range goal of becoming the most recognized brand of coffee in the world. Starbucks has expanded rapidly in number, averaging five stores opening every week, into the 2000s. In recent years however, its endeavor of expansion has been coming to a screeching halt due to the economic downturn. Faced with a rather difficult operating environment, Starbucks announced the closure of 900 under-performing stores since 2008. It's a part of initiatives that Starbucks has been taking to "enhance long-term fundamentals by slowing growth, controlling costs and investing in traffic-driving [strategy]."Turning the market around will be a gradual transition, but the long term outlook of Starbucks is positive as many investors would agree based on its current financial performance. Howard Schultz's ongoing drive to reinvent the way Starbucks does its business is another positive attribute to the company that enhances the future outlook of the company (Carmicheal, 2010). VI. Strategic Alternatives and Recommended Strategy It would be recommended that Starbucks differentiate themselves from the others in the market. The differentiation strategy would allow Starbucks to establish a clear difference between themselves and their competitors. They must create a perception that the customer is actually receiving superior value from a Starbuck's product that cannot be provided by Tim Horton's, Panera Bread or Dunkin Donuts. This can be accomplished by focusing on providing superior customer service and reinforcing the idea that they are providing the highest quality products in the industry. Differentiating themselves successfully from the competition will provide Starbucks with a competitive advantage and allow them to charge a premium for the products and services (Hunger, 2010). ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Management Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Management Studies essays

  1. Aldi. A critical evaluation and audit of its Structure, strategy, culture and management/leadership

    The questions were designed specifically around the characteristics, organisational structure and culture, incentives, missions and goals of the organization, business strategy, management and leadership style and the overall personality of the organization. This study being a phenomenological , all questions were related to theoretical characteristics.

  2. Analysis of Zara's market position. ZARA is the main success factor of Inditex's growth ...

    During the whole international expansion process it is very important that Zara maintains its business strategy due to short lead time, quick inventory turnover but should consider attaching more importance in advertising. Zara faces plenty of possibilities on how continue its suitable growing.

  1. A Case Analysis: Starbucks Growth Destroyed Brand Value?

    In other words, the customers were declined. This happened due to, first; the early customers who adapted and valued Starbucks' atmosphere and relaxing over quality coffee recognize themselves as a group of minority that the company mainly focused on those grabs and go type of customers; second, there are too many new products introduced; third, new stores opening and new products launching made superficial growth.

  2. Strategic Business Plan of Nokia. This strategic report examines thoroughly Nokias current position ...

    Location & commerce team: Develop NAVTEQ: digital mapping and automotive navigation system (5) Nokia screen Reader * New application designed for elderly customers which converts words and texts displayed into speech (6) R&D of biomaterials - Renewable natural resources are used to reduce greenhouse gas emission Procurement (1)

  1. Balfour Beatty. The purpose of this report is to identify and select a UK ...

    These companies are Belfour's main rivals when it comes to major projects. The current market is slowing down, therefore decreasing the threat of rivals, making the industry less competitive then it was a couple of years ago. 32 Appendix 8: Table 8: Ansoff Matrix Market Penetration seeks to achieve four

  2. Investigation Recruitment and selection process.

    * Allows the applicants to speak to someone from the Cadbury HR department and ask questions. * Cadbury's telephone may be busy or engaged and good applicants never get through. CV Employee write all their details including education and employment history on two pages, including referees * Cadbury HR department

  1. International Strategy of Starbucks. At present, the company uses three different strategies of entry ...

    Licensor will give the right to licensee to apply their know-how in a certain period of time. It mainly referred to patents, formulas, process, copyrights and trademarks. The licensees have to pay the fee in order to achieve the agreement or permission with the licensor.

  2. Assignment on Strategies Adopted By Zappos.com MBA2: Strategic Management

    Political factors can generate advantages and benefits for organisations. As well as they can create obligations and responsibilities on organisations. Political factors include the following types of instrument: - Legal factors such as the minimum wage or anti discrimination laws. - Business code of conduct - Market regulations - Trade agreements, tariffs or restrictions - Tax levies and tax

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work