1.

0 INTRODUCTION
Name Headquarters Employees CEO : : : : Starbucks Corporation (NASDAQ: SBUX) Seattle, Washington, U S !"#,$$$ in %$$& US'!$ (&( billion )o*ar+ Schult, (-oun+er o. Starbucks co..eehouse)

Revenue for 00! :

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 <$$

Strategic Management PMS 3393

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 Aobs but ca/e b0 at lunch or a.ter *ork to help out 5he store *as an i//e+iate success, *ith sales eBcee+ing eBpectations, 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 Cater 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. U S 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 Aob o. hea+ing /arketing an+ o7erseeing the retail stores

Strategic Management PMS 3393

1.1.

Era +0t. Ho+ard ,-.ult/

)o*ar+ Schult, spent /ost o. his *orking hours in the .our stores learning the retail aspects o. the co/pan0 businessD 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 eBplore 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 eBpansion o. business, he le.t Starbucks in !2&< Schult, starte+ the F;l >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 Schult,9s ;l >iornale, *hich rebran+e+ the ;l >iornale outlets as Starbucks an+ @uickl0 began to eBpan+ Starbucks opene+ it:s .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

Strategic Management PMS 3393

.0 ,T#R"UC$,1 2I,ION3 O"4ECTI2E, #ND 'I,,ION

.1 20s0on ,tatement

Starbucks 7ision state/ent isD G To esta*l0s. ,tar*u-5s as t.e most re-o6n0/ed and respe-ted *rand 0n t.e +orld and *e-ome a nat0onal -ompany +0t. values and 6u0d0n6 pr0n-0ples t.at 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-t0ves of ,tar*u-5s

Is to %ro+ *y ma50n6 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/pan0:s 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-o6n0/e t.at every dollar earned passes t.rou6. employees1 .ands Starbucks *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 recogni,e+ *ithout the support o. the e/plo0ees *ho attracts the custo/ers to a long ter/ relationships *ith the co..eehouse

Strategic Management PMS 3393

Use t.e pays3 *enef0ts and opportun0t0es for personal development to .elp 6a0n employee loyalty and *e-ome d0ff0-ult to 0m0tate.

?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 '0ss0on ,tatement

Starbucks 8ission State/ent isD 9Esta*l0s. ,tar*u-5s as t.e prem0er purveyor of t.e f0nest -offee 0n t.e +orld +.0le ma0nta0n0n6 our un-omprom0s0n6 pr0n-0ples +.0le +e 6ro+.: T.e s0; pr0n-0ples are: 1. (rov0de a 6reat +or5 env0ronment and treat ea-. ot.er +0t. respe-t and d06n0ty. . Em*ra-e d0vers0ty as an essent0al -omponent 0n t.e +ay +e do *us0ness. 8. #pply t.e .06.est standards of e;-ellen-e to t.e pur-.as0n63 roast0n6 and fres. del0very of our -offee. <. Develop ent.us0ast0-ally sat0sf0ed -ustomers all of t.e t0me =. Contr0*ute pos0t0vely to our -ommun0t0es and our env0ronment >. Re-o6n0/e t.at prof0ta*0l0ty 0s essent0al to our future su--ess.

Strategic Management PMS 3393

.8.1 #naly/0n6 t.e '0ss0on ,tatement Component Starbucks /ission state/ent is nee+e+ to be anal0,e+ to see the total nu/ber o. /ission co/ponent it has NO ! % ( 1 < # " & 2 Custo/ers ?ro+ucts or ser7ices 8arkets 5echnolog0 Concern .or sur7i7al, pro.itabilit0 an+ gro*th ?hilosoph0 Sel.4Concept Concern .or public i/age Concern .or e/plo0ees CO'(ONENT )E,?NO Ees Ees Ees No Ees Ees Ees Ees No

5his is a goo+ /ission state/ent 5his /ission state/ent lacks o. % co/ponents: 5echnolog0 an+ Concern .or e/plo0ees 5he co/pan0 /ust e7aluate *hether it is technologicall0 a+7ance+ an+ e7en though the co/pan0:s 7ision is concern to e/plo0ee, it still ha7e to a++ it in /ission state/ent

.8.

(roposed '0ss0on ,tatement

Strategic Management PMS 3393

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 siB 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. eBcellence to the purchasing, roasting an+ .resh +eli7er0 o. our co..ee 1 De7elop enthusiasticall0 satis.ie+ custo/ers all o. the ti/e < Contribute positi7el0 to our co//unities an+ our en7iron/ent # Iecogni,e that pro.itabilit0 is essential to our .uture success

8.0 ,ITU#TION#@ #N#@),I,

1

Purveyor means provider Strategic Management PMS 3393

8.1 E;ternal analys0s

8.1.1 (E,T #nalys0s (ol0t0-al >lobali,ation 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 eBpan+ the business be0on+ bor+ers 5he basic nee+ .or globali,ation is to learn the +i..erent cultures o. the countr0 the0 plan to start business 5aking all aspects inclu+ing taB rates, la* an+ legislation is i/portant in globali,ation E-onom0?eople are no*a+a0s looking .or /ore inco/e to continue their luBurious 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-0al3 Cultural3 Demo6rap.0- and Env0ronmental 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

Strategic Management PMS 3393

bene.its such as 8e+icare an+ 8e+icai+ retire/ent bene.icial NeBt, 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 .leBible 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 /iB an+ it is /a+e .ro/ natural pro+ucts Te-.nolo60-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 organi,ation ;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 eBa/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 organi,ation

POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCT

8.1.

(orters f0ve &or-es

BARGAINING POWER OF SUPPLIERS

RIVALRY AMONG COMPETING FIRMS

BARGAINING POWER OF CONSUMERS

POTENTIAL ENTRY Strategic Management PMS 3393 OF NEW COMPETITORS

5he Ia+ial Diagra/ abo7e is ?orter:s -i7e4.orce /o+el ;t helps the Co/pan0:s strategists to e7aluate the in+ustr0 gro*th, /arket +e7elop/ent an+ organi,ation Strateg0 acco/panie+ *ith the goo+ intuiti7e Au+g/ent 5he big corporation .ir/ such as Starbucks nee+s a s0ste/atic an+ e..ecti7e eBternal4au+it s0ste/ because eBternal .orces a/ong .oreign countries 7ar0 so greatl0 5he anal0sis o. the Co/petiti7e can be +i7i+e+ into ?orter:s -i7e4-orces 5he .i7e .orces are as .ollo*s: ! ?otential entr0 o. ne* co/petitors % ?otential +e7elop/ent o. substitute pro+ucts ( Bargaining po*er o. suppliers 1 Ii7alr0 a/ong co/peting .ir/s < Bargaining po*er o. consu/er

Strategic Management PMS 3393

10

?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+ eBisting .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 eBisting ser7ices to tap into the specialt0 co..ee /arket 5here is potential o. '!%<,$$$ per 0ear in re7enue to be /a+e b0 each store i. the0 are able to success.ull0 enter the specialt0 co..ee /arket A potential +e7elop/ent o. substitute pro+ucts also +e7elops an en7iron/ent o. co/petition in the /arket a/ong the co/peting partners As all .ir/s *ant to co/pete in ter/ o. @ualit0 an+ substitute *ill lasts .or longer in the /arket i. the @ualit0 o. the substitute *ill be greater than the eBisting alternate No*a+a0s co..ees are being canne+ or bottle+ 5he option to bu0 bottle+ co..ee is also ineBpensi7e co/pare+ to co..ee in a /ug at the Starbucks store With the .ocus on ti/e /anage/ent, canne+ pro+uct is the ulti/ate choice Jther .actors also ha7e a /aAor i/pact on the substitutes Collecti7e bargaining po*er o. supplier is i. 7en+ors are less in the /arket an+ the organi,ations that ha7e to purchase .ro/ those 7en+ors is high 5he +e/an+ .or those suppliers *ill be /ore as the .ir/s ha7e to purchase .ro/ that less suppliers 5he bargaining po*er o. supplier a..ects the intensit0 o. co/petition in an in+ustr0 ;t is best to ha7e a /utual agree/ent bet*een the supplier an+ the bu0er Starbucks ha7e gone through this situation *hen the *orl+ co..ee bean price increase+ b0 the suppliers in %$$! Starbucks ha7e no choice but to bu0 at eBpensi7e price .ro/ the suppliers

Strategic Management PMS 3393

11

Cater on, Starbucks +eci+e+ to prepare an agree/ent +ocu/ent regar+ing to purchase co..ee beans at a .iBe+ 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 U S 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 eBcellence 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+ Cast 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 /aAor .orce a..ecting the intensit0 o. co/petition in an in+ustr0 5his /a0 arise *hen the consu/ers can ineBpensi7el0 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

(orter1s &0ve &or-es Ta*le

Strategic Management PMS 3393

12

?orters .i7e -orces Ii7alr0 A/ong Co/peting -ir/

Details

;n+ustr0 pro.itabilit0

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 CJW an+ closing later to acco//o+ate custo/ers on the go With the &<K their North co..ee A/erican to go, custo/ers taking

con7enience is a /aAor .actor ?otential o. ne* co/petitors 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 eBisting ser7ices to tap into the specialt0 CJW co..ee /arket 5here is potential o. '!%<,$$$ per 0ear in re7enue to be /a+e b0 each store i. the0 are able to success.ull0 enter the specialt0 co..ee /arket ?otential +e7elop/ent o. );>) Water is a substitute *hich is health0 .or us an+ it is .ree 5he option to bu0 bottle+ *ater is also CJW ineBpensi7e co/pare+ to co..ee With the .ocus on healthier li7ing, *ater is the ulti/ate choice Bargaining po*er o. suppliers substitute pro+ucts

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

CJW

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 CJW Starbucks 5he sheer scale o. Starbucks: business re+uces the bargaining po*er o. an0 single group o. bu0ers

8.1.8 Compet0t0ve (rof0le 'atr0;

Starbucks Caribou coffee Gloria Jeans coffee

Strategic Management PMS 3393

13

CRITICAL SUCCESS FACTOR A+7ertising ?ro+uct Qualit0 ?rice Co/petiti7eness 8anage/ent -inancial position Custo/er lo0alt0 >lobal eBpansion 6/plo0ee bene.its Custo/er Ser7ice

WEIGHT WT!

RATI"G

WT SCORE

RATI"G

WT SCORE

RATI"G

WT SCORE

#$%# #$&# #$#' #$#( #$#' #$%# #$%' #$%# #$%) %$##

4 4 2 3 3 3 4 4 3

0.40 0.80 0.10 0.24 0.15 0.30 0.60 0.40 0.51 *$'#

4 3 3 2 3 2 2 2 2

0.40 0.60 0.15 0.16 0.15 0.20 0.30 0.20 0.34 &$'#

3 2 3 3 2 2 2 2 2

0.30 0.40 0.15 0.24 0.10 0.20 0.30 0.20 0.34 &$&*

TOTAL

Starbucks sho*n highest score an+ the secon+ highest *ere Caribou Co..ee an+ >loria 3ean:s co..ee sho*s the lo*est Score 5he co/petiti7e pro.ile /atriB (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 eBpansion $ !< 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

8.1.< E;ternal &a-tor Evaluat0on 'atr0; AE&EB

Strategic Management PMS 3393

14

$ey E;ternal &a-tors Opportun0t0es >lobali,ation /akes it .or eas0 cheap to enter internet

Ce06. t $ !< $ !$ $ !$ $ !$

Rat0n6 Ce06.ted 1 ( % ( ,-ore $ #$ $ ($ $ %$ $ ($

international /arket ?eople are looking

connections 6Bpress .oo+s are getting .a/ous to re+uce ti/e to be spent De/an+ .or non4che/ical pro+ucts T.reats ;ncrease in the in.lation rates creates a +e/an+ in lo*er price+ pro+ucts 8an0 co/panies are pricing their pro+ucts cheaper to i/press custo/ers ;ncrease in h0per/arkets an+ econo/ical super/arkets an+ health0

$ !< $ %$ $ !$ 1.00

( ( %

$ 1< $ #$ $ %$ .==

Ce06.t of TC,OD$ #L$ (L$ %L$ ($ M! 1$N$ 1< M ( !! Ce06.t of TC,TM$ 1<L$ #$L$ %$ M! %<N$ 1<% M % "& 6Bternal 67aluation 8atriB co/prises o. % lists Both are i/portant .or the co/pan0 ;t:s i+enti.ie+ as the opportunities an+ threats o. the co/pan0 5he .actors are rate+ .ro/ ! till 1, *here ! is the lo*est an+ 1 is the highest 5he highest *eight is assigne+ to the /ost i/portant .actors or se7eral 7er0 i/portant .actors 5he /ost i/portant .actors /a0be a threat or an opportunit0 ;n this case, it is an opportunit0

Strategic Management PMS 3393

15

Base+ on the ke0 eBternal .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 >lobali,ation /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 eBists in its current en7iron/ent ;t nee+s to upgra+e its e..ecti7eness )o*e7er, this is subAect 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 &0nan-0al #nalys0s #B (ro7e-ted In-ome ,tatement &0s-al )ears 008E 00=

Strategic Management PMS 3393

16

Jct % %$$<

Jct ( %$$1

Sept ( %$$(

;n +ollar: $$$, eBcept per share a/ounts

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

Di.. bet*een %$$1 an+ %$$(

Net revenue: Ietail Specialt0 5otal net re7enue Operat0n6 e;penses: Store operating eBpenses Jther operating Depreciation an+ a/orti,ation eBpenses >eneral an+ a+/inistrati7e +e7elop/ent ;nco/e .ro/ e@uit0 7enture

'<(2!2%" 2""("( '#(#2($$ !$$

'11<"("& &(#&#2 <%21%1" !$$

'(112#%1 #%<&2& 1$"<<%% !$$

%! !" %$

%2 (1 ($

%!#<2!! !2"$%1 (1$!#2

(1 ( <

!"2$!#& !"!#1& %&2!&%

(1 ( #

!("2<"1 !1!(1# %11#"!

(1 1 #

%! !< !&

($ %! !&

(<"!!1 "#"1<

# !

($1%2( <2$"!

# !

%11<<$ (#2$(

# !

!" ($

%1 #$

Jperating inco/e >ain on sale o. in7est/ent Net earnings Net earning per share4 +ilute+

"&$#!< 4 '1211#" '$ #!

!% 4 & $

#$#<&" 4 '(&&2"( '$ 12

!% 4 " $

1%$&<$ 4 '%#<(<< '$ (1

!$ 4 " $

%2 4 %" %1

11 4 1" 11

#nalys0s summary 5he 5otal net re7enue .or the Starbucks sho*s stea+il0 increase+ .ro/ %$$(

until %$$< 5he big increase .ro/ %$$( to %$$1 coul+ be +ue to the /aAor custo/er +e/an+ an+ custo/er ro0alt0 .or the pro+uct 5otal net re7enue can be +i7i+e+ into retail an+ specialt0 Ietail is /eant b0 selling .oo+ be7erage +irectl0

Strategic Management PMS 3393

17

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 11K 5his +rastic increase is because o. the purchase o. Seattle9s Best Co..ee an+ 5orre.a,ione ;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 %$$1, reaching '$ #! b0 %$$< 5his is because o. the co/pan0 per.or/ance in achie7ing target 5he net earnings per share increase+ b0 11K .ro/ %$$( to %$$1 an+ increase+ b0 %1K .ro/ %$$1 to %$$<

"B

(ro7e-ted "alan-e ,.eet &0s-al years 008E 00=

Strategic Management PMS 3393

18

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

Jct % %$$<

Di..erent Bet*een %$$1 an+%$$< K

Jct ( %$$1

Di..erent Bet*een%$$1 an+%$$( K

Sept ($ %$$(

Current assets Current l0a*0l0ty Working Capital 5otal assets Cong4ter/ +ebt(inclu+ing current portion) Sharehol+ers e@uit0

'!%$2((1 !%%#22# (!"##%) (<!1$#<

(!!) #1 1

'!(<$&2< "1#%<2 #$1#(# ((&#<1!

1# %( &$ %%

'2%1$%2 #$&"$( ((<"#" %""#!!%

(#!& '%$2$#(1

!" (!<)

1(<( '%1"$%!!

(!1) !2

<$"# '%$#&#&2

#nalys0s 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 !<K in

co/parison o. %$$14%$$< )o*e7er sharehol+er e@uit0 increase+ b0 '%$2$#(1 in %$$< it:s because o. the stabilit0 net earning

Cong ter/ +ebt sho*n in the table +roppe+ !1K .ro/ %$$( to %$$1 pre7iousl0 it *as kno*n co/pan0:s net earning increases, thus it coul+ /ean that the

Strategic Management PMS 3393

19

co/pan0 has eBtra 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/pan0:s per.or/ance

CB %$

&0nan-0al Rat0o Li+ui,it- ratios &##' &##.

Strategic Management PMS 3393

20

Current ratio

= =

$1209334 $1226996 0.99 x

= =

$1350895 $746259 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 Ci@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 $ 22B .or the 0ear %$$< co/pare+ to ! &! B .or the 0ear %$$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 Rat0o &##'
Cong ter/ Debt4to4total4assets ratio

&##. = $4353 $2470211 = 0.0018

$3618 $2090634

0.0017

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

Strategic Management PMS 3393

21

%$$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. #-t0v0ty Rat0o &##' ixed assets turnover = = $6369300 $2304731 2.76x = = &##. $5294247 $2035646 2.6x

&##' !ota" assets turnover = = $6369300 $3514065 1.81x = =

&##. $5294247 $3386541 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 -iBe+ 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/pan0:s 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/pan0:s e..icienc0 on using assets has increase+ too

<.

(rof0ta*0l0ty Rat0os &##' &##.

Strategic Management PMS 3393

22

#ross Pro$it %ar&in

= $6369300'2605212 $6369300 = 0.59 (59)*

= $5294247'2191440 $5294247 = 0.58 (58)*

?ro.itabilit0 ratios /easure an+ eBplain 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 eBpenses an+ 0iel+ a pro.it &##' +et Pro$it %ar&in = $494467 $6369300 = 0.078 (7.8)* &##. = $388973 $5294247 = 0.073 (7.3)*

5here is a s/all increase in the pro.it a.ter taB 5his sho*s that the co/pan0:s 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 %$$< &##' ,eturn on !ota" -sset( ,.-* = $494467 $3514065 = 0.14 (14)* &##. = $388973 $3386541 = 0.12(12)*

5he ratio is consi+ere+ an in+icator o. ho* e..ecti7el0 a co/pan0 is using its assets to generate earnings be.ore contractual obligations /ust be pai+ 5he greater a co/pan09s earnings in proportion to its assets, the /ore e..ecti7el0 that co/pan0 is sai+ to be using its assets Starbucks IJA ratio sho*s that in 0ear %$$< the e..icienc0 o. using assets to generate earning has increase+ .ro/ !%K to !1K

&##' ,eturn on e/uity ( ,.0* = $494467

&##. = $388973

Strategic Management PMS 3393

23

$2090634 = 0.24 (24)*

$2470211 = 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 %$$< 5his sho*s that the co/pan0 is generating a goo+ pro.it .ro/ the sharehol+ers /one0 5his *ill, increase the sharehol+ers a/ount in .uture 6?S Eear %$$< %$$1 6arning per share '$ #! '$ 12 5he earnings per share are a goo+ /easure o. pro.itabilit0 When co/pare+ *ith 6?S o. si/ilar co/panies, it gi7es a 7ie* o. the co/parati7e earnings or earnings po*er o. the .ir/ 6?S ratio calculate+ .or a nu/ber o. 0ears in+icates *hether or not the earning po*er o. the co/pan0 has increase+ Starbucks 6?S has increase+ an+ thus sho*ing that the earning po*er has increase+

8. .

Internal &a-tor Evaluat0on 'atr0;

Strategic Management PMS 3393

24

$ey Internal &a-tors ,tren6t.s

! )uge /arket eBpansion to China, Bra,il, ;n+ia an+ Iussia % ( ?ro7i+e a great *ork en7iron/ent Appl0 the highest stan+ar+s o. eBcellence in ser7ices 1 Starbucks has /onopolistic a+7antages o7er its co/petitors < ?urchase+ 6thos health0 *ater .or & /illion an+ also +oes not use che/ical .la7or .or co..ee # Caunching the sales o.

Ce06.t

Rat0n6

Ce06.ted ,-ore

$ %!

$ &1

$ !$ $ !$

1 (

$ 1$ $ ($

$ !$

$ ($

$ !%

$ 1&

$ $&

$ %1

-rappuccino in 3apan an+ 5ai*an

Cea5nesses
! ?rice o. co..ee is high at Starbucks

$ !$ $ $"

% %

$ %$ $ !1

% less /arketing an+ a+7ertising its

pro+uct ( Starbucks pro+ucts are not a7ailable at super/arket

$ !%

$ %1

TOT#@

1.00

8.1<

5J5AC W6;>)56D SCJI6 -JI S5I6N>)5 N 5J5AC SCJI6 -JI S5I6N>)5

5WSS: $ &1L$ 1$L$ ($L$ ($L$ 1&L$ %1 N$ %!L$ !$L$ !$L$ !$L$ !%L$ $& : % <#N$ "! : 8.>0
5J5AC W6;>)56D SCJI6 -JI W6APN6SS N 5J5AC SCJI6 -JI W6APN6SS

5WSW: $ %$L$ !1L$ %1 N $ !$L$ $"L$ !% : $ <&N$ %&

Strategic Management PMS 3393

25

: .00 ;nternal -actor 67aluation (;-6) 8atriB is a su//ar0 step in con+ucting an internal strategic4/anage/ent au+it 5his strateg04.or/ulation tool su//ari,es an+ e7aluates the /aAor strengths an+ *eaknesses in the .unctional areas o. business, an+ it:s also pro7i+es a basis .or i+enti.0ing an+ e7aluating relationship a/ong those area Base+ on ke0 ;nternal -actor, the /ost a+7antage .actor is Starbucks9 co/pan0 is eBpan+ing its /arket to china, Bra,il an+ Iussia 5hese are 7er0 big /arkets an+ *ill +e.initel0 increase its gro*th 5he strategic o. Starbucks9 ser7ices pro7i+e+, @ualit0 o. co..ees an+ /anage/ent o. the co/pan0 /akes strength beca/e as 7er0 i/portant .actor ;t is because Starbucks9 pro7i+e a great *ork en7iron/ent an+ treat each other *ith respect an+ +ignit0 Besi+es o. that, other than that, Starbucks ?urchase 6thos health0 *ater .or & /illion an+ also +oes not use che/ical .la7or .or co..ee 5his is also a great strength to it as its co..ee:s are .ree .ro/ che/ical .la7ors an+ it blen+s an+ /iB the real ha,elnuts to the co..ee Since the total *eighte+ score is ( !1 generall0 Starbucks is e..ecti7e in a++ressing its C-S *hich eBists in its current en7iron/ent But still, its *eakness is also high % $$ is 7er0 high, this /eans that Starbucks is still *eak in i+enti.0ing its *eakness Since Starbucks9 has its o*n strength to increase the gro*th o. the co/pan0, there is also has *eaknesses 5he prices o. co..ees sol+ at Starbucks are higher co/pare+ *ith other stores 5his is a /aAor strength .or other co/petitors

Jther than that, Starbucks +oes not interest in /arketing its pro+ucts through a+7ertisings a lot ;t .ocuses on its @ualit0 co..ee *hich has the po*er to attract custo/ers An0*a0, this is subAect to .urther anal0sis o. in+i7i+ual *eighte+ score o. strength (5WSS) an+ *eighte+ score o. *eakness (5WSW) Base+ on the calculation, as sho*n in the table abo7e, is /ore e..ecti7e in a++ressing the

Strategic Management PMS 3393

26

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

Strategic Management PMS 3393

27

8.8

TOC, #nalys0s ,TREN%TH,

,1 )uge /arket eBpansion to China, Bra,il, ;n+ia an+ Iussia , ?ro7i+e a great *ork en7iron/ent ,8 Appl0 the highest stan+ar+s o. eBcellence in ser7ices ,< Starbucks has /onopolistic a+7antages o7er its co/petitors ,= ?urchase+ 6thos health0 *ater .or & /illion an+ also +oes not use che/ical .la7or .or co..ee ,> Caunching the sales o. -rappuccino in 3apan an+ 5ai*an C1 ?rice o. co..ee is high at Starbucks

CE#$NE,,E,

C less C8 Starbucks pro+ucts are not a7ailable at super/arket /arketing an+ a+7ertising its pro+uct

O((ORTUNITIE, O1
>lobali,ation /akes it eas0 to enter international /arket

,O ,trate60es ,13,83O13O 3O8

Do a+7ertise/ents about the -I66 internet connections an+ the eBcellent ser7ice the0 pro7i+e

CO ,trate60es C13C 3O13O8

Ie+uce the price an+ A+7ertise the pro+ucts all o7er the places

O
?eople are looking .or cheap internet connections

O8
6Bpress .oo+s are getting .a/ous to re+uce ti/e to be spent

C13C83O8 ,=3O<
Do Starbucks shall increase the health0 pro+ucts into /arket as the +e/an+ .or it is high IQD to sell pro+ucts at super/arkets *ithout re+ucing the @ualit0 *ith cheap price

O<.
De/an+ .or non4che/ical an+ health0 pro+ucts

Strategic Management PMS 3393

28

,T ,trate60es THRE#T, T1
;ncrease in the in.lation rates creates a +e/an+ in lo*er price+ pro+ucts

CT ,trate60es C13C 3T13T

Create ne* co/ple/entar0 pro+ucts *hich contain goo+ @ualit0 an+ lo*er price to attract /ore custo/ers

, 3,83,<3T13T
Starbucks nee+s to change its /arket strateg0 b0 re+ucing the price to co/pete *ith the co/petitors

T
8an0 co/panies are pricing their pro+ucts cheaper to i/press custo/ers

C83T8
Starbucks nee+s to anal0,e the *a0 to re+uce the risks o. selling its co..ee pro+ucts at super/arkets as custo/ers are +e/an+ing .or it

T8
;ncrease in h0per/arkets an+ econo/ical super/arkets

Strategic Management PMS 3393

29

8.<

,pa-e 'atr0;

&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 Cong ter/ +ebt4to4e@uit0 ratio is onl0 $ $$!" % Starbucks Ieturn on Asset ratio sho*s that in 0ear %$$<, the e..icienc0 o. using !%K to !1K ( Starbucks net inco/e increase+ to '121 < /illion in the 0ear %$$< co/pare+ *ith '(&& 2 /illion in %$$1 5here is an increase o. %! (K in the inco/e o. Starbucks assets to generate earning has increase+ .ro/

<

1 18

INDU,TR) ,TREN%TH, IA5;N>

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

<

L# M best

L!M *orst

Strategic Management PMS 3393

30

EN2IRON'ENT#@ ,T#"I@IT) 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 De/an+ .or Starbucks pro+ucts to be supplie+ in super/arkets increase ( But, +oing that *ill put Starbucks business in risk as

41

4%

custo/ers +on:t kno* the *a0 to bre* the co..ee ;ncrease in *orl+ co..ee bean price in %$$!, .orce+ Starbucks to increase its be7erages an+ co..ee sol+ at retail

4(

EF

CO'(ETITI2E #D2#NT#%E, IA5;N>

! Starbucks co..ee an+ be7erages are high in @ualit0 bre*e+ b0 *ell traine+ e/plo0ees % Starbucks tea/e+ up *ith 54/obile W;4-i ser7ice to pro7i+e internet access to all o7er Starbucks Co..eehouse 5here are !#,!%$ Starbucks co..eehouses *orl+*i+e an+ plan to open another !&$$ stores 1 Starbucks is a custo/er oriente+ Co..eehouse

4! 4! 4% 4% E>

4! M best

4#M *orst

Strategic Management PMS 3393

31

CONC@U,ION -S A7erage is !(N( M ;S A7erage is !%N( M 6S A7erage is 42N( M CA A7erage is 4#N1 M <.8 <.0 E 8.0 E 1.= E4 aBis: 1 ( L (4( $) M 1.8

Directional Hector Coor+inates: X4 aBis: 1 $ L (4! <) M .=

,(#CE '#TRIG
&, H> E CON,ER2#TI2E H= E H< E H8 E H C# I E> I E= I E< I E8 I E I E1 0 E1 E E E8 DE&EN,I2E E E CO'(ETITI2E I H1 I H I H8 I H< I H= I H> E A .=3 1.8B I, #%%RE,,I2E

H1 E

E< E E= E> E E E,

Starbucks /ust pursue a strateg0 that is Aggressi7e 5he strategies that inclu+e in aggressi7e strategies is back*ar+ integration, .or*ar+ integration, hori,ontal integration, /arket penetration, /arket +e7elop/ent, pro+uct +e7elop/ent an+ +i7ersi.ication *hich inclu+e relate+ an+ unrelate+ +i7ersi.ication

Strategic Management PMS 3393

32

8.=

"C% 'atr0;

HI%H HI%H

'EDIU'

@OC

"a-5+ard3 &or+ard3 or Hor0/ontal Inte6rat0on 'ar5et (enetrat0on 'ar5et Development (rodu-t Development

'ar5et (enetrat0on 'ar5et Development (rodu-t Development D0vest0ture

STARS
'EDIU'

QUESTION MARKS
I

II ,T#R"UC$,
(rodu-t Development D0vers0f0-at0on Retren-.ment D0vest0ture

Retren-.ment D0vest0ture @0qu0dat0on

CASH COWS
@OC

DOGS
I2

III

,U''#R) 5he Boston Consulting >roup (BC>) /atriB is enhancing a /ulti+i7isional .ir/:s e..orts to .or/ulate strategies 5his /atriB allo*s a /ulti+i7isional organi,ation to /anage its port.olio o. businesses b0 eBa/ining the relati7e /arket share position an+ the in+ustr0 gro*th rate each +i7ision relati7e to all other +i7isions in the organi,ation Starbucks are /easure+ to i+enti.0 the stores strategic position in the Boston Consulting 8atriB 5he BC> /atriB, *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*

Strategic Management PMS 3393

33

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 +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 NeBt 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+ eBternal 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 ( <, an+ it +eter/inant that relati7e share position is HI%H Besi+es that, Starbucks ;nco/e State/ents sho*s the Net Ie7enue *ere consecuti7el0 increase+ bet*een the 0ears %$$( until %$$< 5he re7enues on the 0ear %$$( is '1$"<,$$$, *hile '%!2!,$$$ in 0ear %$$1, '#(#2,$$$ in 0ear %$$< 8oreo7er, the in+ustr0 sales gro*th rate bet*een 0ear %$$1 an+ %$$<is <# (K ;t +eter/inant HI%H position o. in+ustr0 sales gro*th rate ;n conclusion, Starbucks *ere i+enti.ie+ in S5AI +i7ision 5his +i7ision represents the Starbucks long4run opportunities .or the gro*th an+ pro.itabilit0 While, this +i7ision is in high relati7e /arket share an+ in+ustr0 gro*th rate an+ subse@uentl0 the0 recei7e+ substantial in7est/ent 5he +i7isions are .or*ar+, back*ar+, an+ hori,ontal integration, /arket penetration, /arket +e7elop/ent an+ pro+uct +e7elop/ent are *ill be consi+ere+

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<.0 '#4OR I,,UE,

<.1 Corporate @evel Starbucks: co..ees price /uch eBpensi7e 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 neBt store <. &un-t0onal @evel Starbucks ha7e poor /arketing strateg0 on a+7ertising 5he0 pre.er to buil+ the bran+ b0 pro/oting the +rinks cup4b04cup *ith custo/ers ;n this *a0, the a+7ertise/ent en+s until the0 +rink the co..ee, *hile so/e groups o. people *illing to support the a+7ertise/ent .or ti/ing Aust to taste the +rink .or .ree 5he chances to attract 7aluable custo/ers are 7er0 lo* 5here.ore, it also a..ects gross pro.it o. Starbucks, the stu+0 +oes not sho* +rastic increase+ bet*een 0ear %$$1 an+ %$$< 5he percentages o. the pro.it increase+ .ro/ <&K in 0ear %$$1 to <2K in 0ear %$$< 5his *oul+ because o. lack o. /arketing strateg0 in a+7ertising 5he co/pan0 spent total o. '&" " /illion on a+7ertising in .iscal %$$<, up .ro/ '12 # /illion in .iscal %$$( ;t sho* Starbucks +oes not e/phasi,e on .un+ing the /one0 into a+7ertise/ent

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 Starbucks +oes not e/phasi,e in +istributing their pro+ucts to super/arkets 5he0 are 7er0 concern on @ualit0 o. the co..eeD i. the co..ees *ere package+ into plastic bags the /iBing 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 organi,ation +i+ not sho* a proper gui+eline to /iB 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 /iBe+ in the Starbucks Starbucks co..ee Custo/er:s satis.action on the co..ee *ill ba+l0 a..ect an+ as *ell as +e/an+ o. the

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=.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/pan0:s best 0ears la0 on the strategic roa+ ahea+ =. "U,INE,, @E2E@

Carge co/panies like Starbucks can e..ecti7el0 pursue -ocus4Base+ Strateg0 in conAunction *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 speciali,e 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

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;ntro+ucing accurate /iBing 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 /iBing 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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>.0 CONC@U,ION
Starbucks success is achie7e+ through a .e* .actors Jutstan+ing Qualit0 o. the co..ee bre*e+ 6Bcellent ser7ice pro7i+e+ at the stores -ast gro*th o. ne* stores all aroun+ the *orl+ 5hese .actors not onl0 ha7e increase+ the sales but also the reputation a/ong the co..ee lo7ers Starbucks encounters aggressi7e co/petition in all areas o. its business acti7it0 5he /arket .or each o. their business seg/ents are characteri,e+ b0 7igorous co/petition a/ong /aAor corporations *ith long establishe+ positions an+ a large nu/ber o. ne* an+ rapi+l0 gro*ing .ir/s An0*a0, as Starbucks ha7e a goo+ .inancial capacit0 *ith goo+ strategiesD it can o7erco/e all the co/petitors to shine high as t.e f0rst -lass -offee purveyor

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