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I. CURRENT SITUATION A.

Current Performance STARBUCKS is/has: The worlds number one specialty coffee retailer Had over 11,000 stores in 36 countries of the world Employed over 10,000 people Over 40 million customers visit Starbucks every week Had over 7,600 retail locations in the United States alone

In addition to the information presented regarding Starbucks status which proves its domination in the market, the following tables also present the statistical information with regard to the success of the company in performing well in its operations. Return on Investment:

Market Share:

Profitability:

B. Strategic Posture The company establishes a proper guideline for the objectives and procedures to be followed in the organization. These guidelines are evident in its performance as well. This part of the strategic audit enumerates the mission, objectives, strategies, policies, and services of Starbucks. Mission: To inspire and nurture the human spirit one person, one cup and one neighborhood at a time. Objectives: To prevent competitors from getting a head start.
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To build upon the growing desire for Western brands. To take advantage of higher coffee consumption rates in different countries. To establish Starbucks as the most recognized and respected brand in the world. Strategies: Ensuring that coffee is responsibly grown, ethically traded and is thirdparty verified Protecting the environment and farmers livelihoods in coffee growing regions Applying the plan known as C.A.F.E- coffee and farmer equity practices and fair-trade, it is a set of social, economic, environmental and quality guidelines developed in collaboration with Policies: Global Human Rights C.A.F.E. Practices Supplier Code of Conduct Overview Starbucks Social Responsibility Standards for Manufactured Goods and Services Health Care Positions Menu Labeling Position Cocoa Practices Guidelines Cocoa Practices Overview Animal Welfare Standards of Business Conduct Corporate Political Contributions and Expenditures Corporate Political Contributions and Expenditures 2010 Results UN Global Compact Services: Starbucks offers a range of exceptional products that customers enjoy in our stores, at home, and on the go.
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Conservation International

Coffee: More than 30 blends and singleorigin premium coffees. Handcrafted Beverages: Freshbrewed coffee, hot and iced espresso beverages, Frappuccino coffee and noncoffee blended beverages, smoothies and Tazo teas. Merchandise: Coffee and tea brewing equipment, mugs and

accessories, packaged goods, music, books and gifts. Fresh Food: Baked pastries, sandwiches, salads, oatmeal, yogurt parfaits and fruit cups. Consumer Products Coffee and Tea: Whole bean and ground coffee (Starbucks and Seattles Best Coffee brands), Starbucks VIA Ready Brew, Starbucks KCup portion packs, Tazo tea filter bags and tea latte concentrates. ReadytoDrink (RTD):Starbucks bottled Frappuccino coffee drinks, Starbucks Discoveries chilled cup coffees, Starbucks Double shot espresso drinks, Starbucks Double shot Energy+Coffee drinks; Seattles Best Coffee Iced Lattes, Starbucks Refreshers beverages, Tazo bottled iced and juiced teas. Starbucks Ice Cream: Superpremium coffee and coffeefree flavors.

II. CORPORATE GOVERNANCE A. Board of Directors HOWARD SCHULTZ, 55, is the founder of Starbucks and serves as our chairman, president and chief executive officer. Mr. Schultz has served as chairman of the board since our inception in 1985, and in January 2008, he reassumed the role of president and chief executive officer. From June 2000 to February 2005, Mr. Schultz also held the title of chief global strategist. From November 1985 to June 2000, he served as chairman of the board and chief executive officer. From November 1985 to June 1994, Mr. Schultz also served as president. From January 1986 to July 1987, Mr. Schultz was the chairman of the board, chief executive officer and president of Il Giornale Coffee Company, a predecessor to the Company. From September 1982 to December 1985, Mr. Schultz was the director of retail operations and marketing for Starbucks Coffee Company, a predecessor to the Company.

BARBARA BASS, 58, has been a Starbucks director since January 1996. Since 1993, Ms. Bass has been the president of the Gerson Bakar Foundation. From 1989 to 1992, Ms. Bass was president and chief executive officer of the Emporium Weinstock Division of Carter Hawley Hale Stores, Inc. She also serves on the board of directors of DFS Group Limited, a retailer of luxury branded merchandise, and bebe stores, inc., a retailer of contemporary sportswear and accessories.

WILLIAM W. BRADLEY, 65, has been a Starbucks director since June 2003. Mr. Bradley is a managing director of Allen & Company LLC. From 2001 until 2004, he acted as chief outside advisor to McKinsey & Companys non -profit practice. In 2000, Mr. Bradley was a candidate for the Democratic nomination for President of the United States. He served as a senior advisor and vice chairman of the International Council of JP Morgan & Co., Inc. from 1997
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through 1999. During that time, Mr. Bradley also worked as an essayist for CBS Evening News, and as a visiting professor at Stanford University, Notre Dame University and the University of Maryland. Mr. Bradley served in the U.S. Senate from 1979 until 1997, representing the State of New Jersey. Prior to serving in the U.S. Senate, he was an Olympic gold medalist in 1964, and from 1967 through 1977 he played professional basketball for the New York Knicks, during which time they won two world championships. Mr. Bradley also serves on the boards of directors of Willis Group Holdings Limited and Seagate Technology.

MELLODY HOBSON, 39, has been a Starbucks director since February 2005. Ms. Hobson has served as the president and a director of Ariel Investments, LLC, a Chicago-based investment management firm, and as the chairman (since 2006) and a trustee (since 2000) of the mutual funds it manages. She previously served as senior vice president and director of marketing at Ariel Capital Management, Inc. from 1994 to 2000, and as vice president of marketing at Ariel Capital Management, Inc. from 1991 to 1994. Ms. Hobson works with a variety of civic and professional institutions, including serving as a director of the Chicago Public Library as well as its foundation and as a board member of the Field Museum and the Chicago Public Education Fund. In 2004, The Wall Street Journal named her as one of its 50 Women to Watch. Ms. Hobson also serves on the boards of directors of DreamWorks Animation SKG, Inc. and The Estee Lauder Companies, Inc.

KEVIN R. JOHNSON, 48, has served as the Chief Executive Officer of Juniper Networks, Inc., a leading provider of high-performance networking products and services, since September 2008. Mr. Johnson also serves on the board of directors of Juniper Networks. Prior to joining Juniper Networks, Mr. Johnson served as President, Platforms and Services Division for Microsoft Corporation, a worldwide provider of software, services and solutions. Mr. Johnson was a member of Microsofts Senior Leadership Team
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and held a number of senior executive positions over the course of his 16 years at Microsoft. Prior to joining Microsoft in 1992, Mr. Johnson worked in IBM's systems integration and consulting business.

OLDEN LEE, 67, has been a Starbucks director since June 2003. Mr. Lee worked with PepsiCo, Inc. for 28 years in a variety of positions, including serving as senior vice president of human resources of its Taco Bell division and senior vice president and chief personnel officer of its KFC division. Mr. Lee currently serves as principal of Lee Management Consulting, a management consulting firm he founded. Mr. Lee also serves on the board of directors of TLC Vision Corporation.

SHERYL SANDBERG, 39, has served as the Chief Operating Officer of Facebook, Inc., an online social utility company, since March 2008. From 2001 to March 2008, Ms. Sandberg was the Vice President of Global Online Sales and Operations for Google Inc., an Internet search engine company. Ms. Sandberg also is a former Chief of Staff of the United States Treasury Department and previously served as a management consultant with McKinsey & Company and as an economist with The World Bank. Ms. Sandberg serves on a number of nonprofit boards including The Brookings Institution, The AdCouncil, Women for Women International, and V-Day. In 2008, Ms. Sandberg was named as one of the 50 Most Powerf ul Women in Business by Fortune and one of the 50 Women to Watch by The Wall Street Journal.

JAMES G. SHENNAN, JR., 67, has been a Starbucks director since March 1990. Mr. Shennan served as a general partner of Trinity Ventures, a venture capital organization, from September 1989 to July 2005, when he became general partner emeritus. Prior to joining Trinity Ventures, he served as the chief executive of Addison Consultants, Inc., an international marketing

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services firm, and two of its predecessor companies. Mr. Shennan also serves on the board of directors of P.F. Changs China Bistro, Inc.

JAVIER G. TERUEL, 58, has been a Starbucks director since September 2005. Mr. Teruel served as vice chairman of Colgate-Palmolive Company, a consumer products company, from July 2004 to April 2007, when he retired. Prior to being appointed vice chairman, Mr. Teruel served as ColgatePalmolives executive vice president responsible for Asia, Central Europe, Africa and Hills Pet Nutrition. After joining Colgate in Mexico in 1971, Mr. Teruel served as vice president of Body Care in Global Business Development in New York, and president and general manager of ColgateMexico. He also served as president of Colgate-Europe, and as chief growth officer responsible for the companys growth functions. Mr. Teruel currently serves as a partner of Spectron Desarrollo, SC, an investment management and consulting firm. He also serves on the boards of directors of The Pepsi Bottling Group, Inc., Corporacion Geo S.A.B. de C.V. and J.C. Penney Company, Inc.

MYRON E. ULLMAN, III, 62, has been a Starbucks director since January 2003. Mr. Ullman has served as the chairman of the board of directors and chief executive officer of J.C. Penney Company, Inc., a chain of retail department stores, since December 2004. Mr. Ullman served as directeur general, group managing director of LVMH Met Hennessy Louis Vuitton, a luxury goods manufacturer and retailer, from July 1999 to January 2002. From January 1995 to June 1999, he served as chairman and chief executive officer of DFS Group Limited, a retailer of luxury branded merchandise. From 1992 to 1995, Mr. Ullman served as chairman and chief executive officer of R.H. Macy & Co., Inc. He also serves on the board of directors of the Federal Reserve Bank of Dallas.

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CRAIG E. WEATHERUP, 63, has been a Starbucks director since February 1999. Mr. Weatherup worked with PepsiCo, Inc. for 24 years and served as chief executive officer of its worldwide Pepsi-Cola business and President of PepsiCo, Inc. He also led the initial public offering of The Pepsi Bottling Group, Inc., where he served as chairman and chief executive officer from March 1999 to January 2003. Mr. Weatherup also serves on the board of directors of Macys, Inc.

B. Top Management JOHN CULVER, who leads the companys international business and president of the China and Asia Pacific region.

CLIFF BURROWS, president of Starbucks United States, heads the Americas region, which encompasses the United States, Canada, Mexico and Central and South America.

MICHELLE GASS, president of Seattles Best Coffee, president of Starbucks Europe, Africa and Middle East region.

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III. EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT) A. Natural Physical Environment: Sustainability Issues Starbucks is facing some environmental challenges with respect to its business. These are the growing scarcity of potable water, inadequate supply of quality green coffee, and spreading growth of coffee plant diseases and pests such as Coffee Leaf Rust, Coffee Berry Disease, Bacterial Blight, Nematodes, and Leaf Miner. However, the environmental threats to the company is not only limited to these specific challenges enumerated above. Starbucks is also continually faced with the inconsistency of the physical environment which can be felt by everyone, including those in different industries.

B. Societal Environment Economic Opportunities are booming in the industry because of the globalization. Starbucks is benefited from this due to the eventual standardization of the raw materials of the industry. However, this will also enable possible competitors to enter into the market and gain a market share which may be detrimental to Starbucks. Technological A great trend today is the green technologies which make consumers have preference over companies which apply them. Starbucks is known for its unique and charitable causes. Green technologies is also another factor which the company to utilize in order to gain more consumers and an advantage against other competitors. Starbucks may do this because of its high profits that enables it to invest in expensive new technologies, unlike other small competitiors.
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Political-legal The rules and regulations created by the politicians had significant

influences on the cost of running businesses and the way it can market products and services. This may be an opportunity for Starbucks to show their support to particular parties which the management deems appropriate based also on the response of their market. Sociocultural Society is losing touch with social nuances, cultural values, and the characteristics of traditional society because of the growth and development of information and communication technology. Since the market today is generally open to new ideas and possibilities, as well as willing to spend more in products or services which they deem relevant, the company can be confident that any appropriate introduction of products and services in the market will have a particular level of support.

C. Task Environment Not only this but also, Starbucks organizing activities such as neighbourhood clean-ups and walk-a-thons. Many examples are available on the web site of the company. Policies that also have been implemented are the buying policies, which only allow the company to purchase from those other businesses (suppliers) who follow the same environmental strategy as

Starbucks. This may push the company to lose an opportunity of good deal, because the supplier doesnt follow the company environmental policies. Finally, to integrate these policies to new employees, Starbucks has employed the services of a few partners which congregate together to create a Green Team, which installs the environmental views into trainees as well as coming up with inventive ways of helping the environment.

D. Summary of External Factors EFAS

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Opportunities

Weight Rating

Weighted Score

Comments New markets for coffee

New Markets with Low Investments

0.20

0.8

such as India and in other nations are beginning to emerge.

Coffee Market Growing New distribution channels (delivery) Product range is more diversified (more food and non-food items) Co-branding with other manufacturers of food and drink Threats Boycotting for Political reasons (Middle East) Financial Crises and Recession Increase in Domestic Competition

0.13

0.65

A lot of people are into coffee today People can get to the products easily. New products and services are available.

0.07

0.28

0.09

0.36

0.05

0.15

To help them get to their customers.

0.14

0.7

Will greatly affect the operations of the company. Will determine the amount

0.11

0.44

of revenue they will be acquiring

0.04

0.12

Others will choose lower cost products. The coffee and dairy

Volatile coffee and dairy products

0.03

0.09

products depend on the scarcity or being abundant of the products.

Consumer tends toward more healthy ways and

0.14

0.56

Consumers will choose healthier drinks other than

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away from caffeine Total 1 4.15

coffee.

IV. INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES (SWOT) A. Corporate Structure Starbucks Coffee Company announced a new corporate structure that took effect by the end of September 2011. This new structure of the company is believed to accelerate its growth strategy. Starbucks split the organization into three separate regions in order for it to have a better handling of their operations and keep their customers satisfaction. A president for each region, who answers to Starbucks Global, oversees the company-operated retail business, working closely with both the licensed and joint venture business partners of the company. In order to continue building out Starbucks brands and channels in each region, Starbucks will also be working closely with Starbucks Global Consumers Products and Foodservice team. Also, the regional managers will allow the company to meet consumerspecific needs in each region while maintain the overall mission of Starbucks which is to inspire and nurture the human spirit one person, one cup and one neighborhood at a time. This new structure employed by Starbucks is a matrix system which is an organization form in which there are multiple lines of authority and some individuals report to at least two superiors. The fact that Starbucks is an international company, it can be considered as a company having a worldwide matrix. The three regions which Starbucks is divided will be China and Asia Pacific (all Asia-Pacific markets and China), Americas (United States, Canada, Mexico and Latin America) and EMEA (Europe, U.K., Middle East, Russia and Africa).

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While Starbucks successfully operates under a matrix structure, as far as its products are concerned, also works under a divisional structure. The products of the company are divided into five main groups, namely: (1) Coffee blends and single-origin premium Arabica coffees, (2) Handcrafted Beverages freshbrewed coffee, hot and cold beverages, Frapuccino, smoothies, Tazo teas (3) Merchandise brewing equipment, mugs and accessories, packaged goos, music, books, (4) Fresh Food bakes pastries, sandwiches, oatmeal, and (5) Consumer Products coffee (whole bean and ground, instant coffee and ice cream). Having the new organizational structure, Starbucks is able to focus on specific regions that it serves. In addition, this causes a much more effective operation than delegating the responsibilities of managing and overseeing only to the CEO. Given the fact that Starbucks uses the matrix structure and divisional structure, its decision-making authority is decentralized for each regional division president is assigned to manage a specific region. They oversee regional groupings of stores. These regional managers report directly to the Starbucks Corporation. At each store, a store manager acts as the chief. Under this store manager are a collection of shift supervisors who act as managers on duty when the store manager is out. Below the shift supervisors are the rest of the employees, referred to as baristas. On the other hand, given the current organizational structure of Starbucks, the leaders tend to disregard the operations of specific stores and be too cross functional. Although it split the organization into three separate regions to be able to reach out to locations outside market, the company lacks stores in suburban areas. Thus, Starbucks is only able to serve people that are residing in the city. Because most of its cafes are located in the US, the business risk that the company faces is not widely spread. Regarding its product, the company is mainly dependent on its main competitive advantage, which is the retail of coffee. This makes them slow to diversify into other sectors should the need arise. Furthermore, Starbucks refuses to guarantee that the products it provides, such

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as milk, beverages, chocolate, ice cream and baked goods, which are sold in its stores are free of genetically-modified ingredients.

B. Corporate Culture Organizational culture is a structure of values, beliefs, and assumptions deemed appropriate in thinking and acting inside an organization. Being shared by the organizations elements, culture helps solve and understand extrinsic and intrinsic problems. Neglected notions, stable and long-lasting beliefs on significant matters and understandings of the relationship between objects and concepts all contribute to the culture at work, so the members accept their validity and are influenced by the same regarding the peoples perspective, thoughts, feelings, and behaviour within the organization. Aside from providing extraordinary coffee, Starbucks has made a business out of human connections, community involvement and the celebration of cultures. The company commits itself to upholding a culture where diversity is valued and respected. As a guiding principle, Starbucks views diversity as an integral part in everything that it does. An equation is used by the organization on how it defines diversity. This is Diversity = Inclusion (human connection and engagement) + Equity (fairness and justice) + Accessibility (ease of use and barrier free). Partners, customers, suppliers and communities are the four areas that their diversity strategy focuses on. For Starbucks, it believes that its workers are very valuable. Thus, it calls its employees partners. Starbucks seeks partners who are as diverse as the communities that it serves. From the individual who makes the coffee to the person to whom a customer pays and exchange a smile, all Starbucks workers are partners in the company. Though each worker occupies and performs different tasks, each task is deemed important for the companys eff ective and efficient operation. The term partner is intended to make clear how integral Starbucks employees, no matter how low on the chain, are to the company's success. Starbucks also has in its heart the development of each of its partners
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by educating and giving them ample training. It enjoins all new employees to consummate twenty-four hours of training to learn the operation of espresso machines, the customer service reflective of their mission statement, and the processing and production of coffee beans. As a result of this training, the workers can transfer what they have learned to the customers. Training programs offered by Starbucks nurture consistency for all employees and empower the organizations public image. Although Starbucks provides excellent customer service due to their loyal and dedicated employees, they do this at a cost. They pay their employees more than restaurants and retailers. Furthermore, they offer benefits to full-time and part-time employees. This results in high costs for the company. The company extends the Starbucks Experience to all customers by recognizing and responding to their unique preferences and needs. Starbucks take into consideration the values of the culture of each nation that the firm operates. The firm ensures an exceptional customer experience by connecting with the customers in a culturally relevant way. When it says that it is fully engaged, according to their mission statement, we connect with, laugh with, and uplift the lives of our customers even if just for a few moments. It is not simply giving an assurance that a perfect beverage is offered but its work goes far beyond that. Its really about human connection. However, limited products are offered to certain locations. Thus, not enabling the customers outside the main branch of Starbucks experience such products. Also, the organization has a strong presence in the US, with more than of their cafes in the home market and lacks international presence. The company is also criticized by pressure groups for not using free trade products. Contrary to their mission of extending the Starbucks Experience to customers, the firm is having a decline in the satisfaction that these people get from the company as observed from the comments of MyStarbucksIdea.com. Another area that the company focuses on is its communities. Investing and supporting in local neighborhoods and global communities through strategic partnerships and economic development opportunities is one thing that
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Starbucks believes to be one of the keys to its success. Starbucks treats every store in every part of the world as part of a community. Keeping in mind that it can be a force for positive action, it strives to bring together its partners, customers, and the community to contribute every day. A larger responsibility is perceived by Starbucks for it supposes that the world is looking to Starbucks to set the new standard in the industry that it operates. The fourth area is the companys suppliers. The company states in its mission statement, We are a trusted and welcoming company for suppliers through our supplier diversity program that works to increase our pipeline of minority and women owned suppliers. From the statement, it can be inferred that the firm is not only considering suppliers that are prominent or owned by men but it opens its operations to have supplies from starting, small ventures and womenowned businesses. Not only does Starbucks give importance to the four areas stated above but it also cares about the environment. It helps on encouraging others to share the same belief that the planet is a very essential place. Developing more environment-friendly cups, reducing the waste it creates by recycling programs, using renewable energy source, evaluating store design, equipment and operations to identify ways to continue to reduce the amount of water it uses, designing its stores as green as it can by using responsible building materials and energy efficient designs to reduce its impact on the environment and pursuing strategies addressing problems that poses a threat to the worlds coffee-growing regions and helping farmers mitigate the impact of such problems are the activities that Starbucks does in order to demonstrate their stand on taking care of the environment because it believes that as a company that relies on an agricultural product, it makes good business sense. Hence, Starbucks position on important issues facing the corporation such as productivity, quality of performance, adaptability to changing conditions and internalization is directed towards positivity and success.

C. Corporate Resources
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1. Marketing The underlying marketing problem that Starbucks has lies in its failure to see that its marketing strategies do not necessarily meet its marketing objectives. Its desire to expand failed to take into consideration that it has not been meeting the market. Market profile was shifting to characteristics that the brand was not originally marketed for and a high-end priced product in a seemingly expensive place did not match the market that was becoming lower economic bracket, less educated, and younger. The whole packaging of Starbucks was targeted towards a high-end market. It would naturally see a lower growth rate amidst a market base that is shifting to low-end. Younger and less educated people will not sit it out on a lounge chair to sip coffee, read, or talk about issues. The prices are high compared to competitors like Dunkin Donuts and McDonalds. The market perceived Starbucks as merely concerned with growth in the number of stores and profits because the companys executives failed to see the fact that if it wanted to saturate the market, its product and service offerings must be really meeting the characteristics of the market. . The wide potential market base did not see Starbucks as concerned with their needs. Nevertheless, the company's aggressive "Starbucks on every corner" strategy has allowed Starbucks to dominate local markets. Starbucks is the world's largest coffee chain, with approximately 20,000 stores in 60 countries, 12,937 of which are located in the United States alone. Another, the companys popularity makes it easy for its managers to penetrate newly identified markets because the name Starbucks is already established in the market. Starbucks does not heavily invest in marketing. Instead, it relies on the word-of-mouth achieved through the high quality of products and high level of customer services. However, occasional marketing activities initiated by the company involve sampling of new products that are usually conducted within areas nearby the stores.

2. Financial
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Starbucks has been able to establish strong financial picture. EPS, net revenues, comparable store sales, operating income and margins were all up and CPG Revenue grew 45%, driven by increasing share of premium coffee category. Two of the main goals of effective management of working capital are maintaining a balance of inventories, accounts receivable, cash, and other forms of revenue to provide profitability and making sure that a company can remain operational after paying off current assets. These are the two goals that Starbucks most likely focuses on when it comes to the effective management of working capital. It seems as though Starbucks has been working towards achieving these goals. Starbucks seems to understand the importance of effectively managing its net working capital, which is why they employ over 500 employees on their finance team, which includes everything from accounting, auditing, corporate development and more other functions. Starbucks can be perceived to be able to pay its liabilities seeing the noticeable improvement in net working capital from 2010 to 2011. Also, having working capital in excess of $977 million demonstrates that Starbucks is very liquid and maintains healthy balance sheets along with accounting measures. 3. Research and Development (R&D) The research and development department of Starbucks conducted a research to develop sensory preference map which helps the company identify what customers prefer. "If I know a little bit about you, I can tell what you drink, when you drink it, how you drink it, why you drink it, and whats important in your life." In simplest terms, the sensory map shows what the global universe of coffee drinkers prefer--mild or bold; smooth or biting; woody or acidic. Starbucks drinkers, the dark roasters, fall within a certain small area of this map. But 40% of U.S. coffee drinkers prefer lighter, milder roasts. As Wagner explained, "This is huge. So we looked at it as a big opportunity to offer something for everybody."

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Blonde, in other words, represents the companys big--that is, huge--long-term ambitions and appetite for growth. The company strives to get the best mix of ingredients in order to serve the customers demands by using coffee science, new technology available, using equipment that produces high-quality coffee. The company continues to develop its product and menu to assure customers quality coffee. Conversely, too much focus on developing its coffee makes Starbucks forget about its operating efficiency.

4. Operations and Logistics Value chain analysis allows the firms to understand the parts of its operations that create value and those that do not. Understanding these issues is important because the firm earns above-average returns only when the value it creates is greater than the costs incurred to create the value (Hitt et al, 2009, p.84). With regards to Starbucks, its inbound logistics involve company agents choosing coffee beans producers mainly in African continent, communication the standards related to the quality of coffee beans, establishing strategic relationships with suppliers and organizing the supply-chain management. While its outbound logistics has traditionally involved selling its products through its stores without any intermediates. However, starting from recent, a range of Starbucks products such as 3-in-1 coffees in sachets are being sold through a set of leading supermarkets. Starbucks operations are conducted in more than 50 countries in two ways: direct operation of the stores by the company and licensing. Currently there are 8870 company-operated stores globally, whereas 8139 stores operate on the basis of license (Starbucks Company Profile, online, 2011). Leaders at Starbucks have provided a structure that allows partners to infuse themselves into their work, so they can inspire customers in legendary ways. The leaders call this the Five Ways of Being (Be welcoming, be genuine, be considerate, be knowledgeable and be involved). The company also has
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product and brand consistency that lets customers get what they expect from the company. However, too much focus on the expansion of its operations, Starbucks already lacked internal focus.

5. Human Resources Management (HRM) Starbucks depend mainly on their employees to manage their operation, thus, they focus on training employees as they are the main asset in the company. Starbucks paid considerable attention to the kind of people it

recruited. The company hired people for qualities like adaptability, dependability and the ability to work in a team. Benefits for employees/partners like health insurance for 20-hours-per-week employees, offered stock options, extensive training in product knowledge, guiding principles of success, personal empowerment, and the importance of creating warm customer experiences are granted to the employees of the company. However, this policy of the company generates a large cost for Starbucks. Employee turnover rate, according to some reports, is 120% less than the industry average. This means that the partners of the company have a longer tenure than those of the competitors. Furthermore, according to a book called Workforce Management, Starbucks employees have an 82% job satisfaction rate. It is perceived by Starbucks that its workforce is duly perceived to be the most valuable resource by Starbucks. Accordingly, a wide range of training and development programs are available for them and they are motivated by both, tangible and intangible incentives.

6. Information Technology (IT) Information is considered as one of the most important and vital aspects of any business and organization. This is due to the fact that it plays a significant role in the process of decision-making. On the other hand, due to the different influence and impact of globalization as well as technology, primarily, the Internet, there are different problems that can be encountered by companies in handling and using the information that they need. That is the reason why more and more organizations and businesses are jumping into the bandwagon of
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Information Technology or IT in managing their data and information gathering, processing, sharing as well as analyzing. Processing and recording the financial management is a rigorous function that needs the assistance of information technology. Just like any other companies, IT plays an important role in such task. Employing information technology helps in improving the relationship with customers by being able to deliver effective and efficient services and goods to them. This is applied by Starbucks in terms of their inventory as well as point-of-sale that is considered as the most important and initial part of the whole financial and product flow in the company. By applying IT in such part, it enables the company to know the buying behavior and patterns of their customers, in specific stores, that can help them forecast the demand of their customers in terms of decision-making in the stock of different products and improving their services. This will help each and every store to know their client, thus will help to maintain the position of the company in the global market. The company is also one of the first organizations that applied WiFi in their stores. This had been done in order to attract more customers (Starbucks Coffee 2008).

D. Summary of Internal Factors IFAS Strengths Weight Rating Weighted Score Comments Well-known for its High Brand Equity 0.20 5 1 products and services offered in the market They have these rewards Coffee Market Growing 0.02 4 0.08 that motivates their employees

Exclusive coffee products

0.15

0.75

They claim that they offer


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the finest coffee in the world Great number of purchaser Strong financial foundation Weaknesses High prices Over dependency on coffee and coffee related products Lack of internal focus (too much focus on Expansion) Cross Functional management Stores open near each other Total 0.04 3 0.12 Common practices in their daily operations Competes with its own goal 0.17 4 0.68 Affect its brand image 0.20 4 0.8 0.18 5 0.9 Common complaints of their customers Customers have limited choices 0.09 4 0.36 They target many consumers They will continue creating 0.04 3 0.12 and growing the coffee culture

0.09 1

0.36 5.17

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V. ANALYSIS OF STRATEGIC FACTORS (SWOT) A. Situational Analysis Strengths High visibility locations to attract customers. Company operated retail stores, International stores. Valued and motivated employees, good work environment. The organization is dependent on a main competitive advantage, the retail of coffee. Starbucks Corporation is a very profitable organization. Starbucks has a reputation for new product development and creativity. Starbucks has a highly developed brand, logo, copyrights, trademarks and website. The Starbucks brand name is famous for its intense customer loyalty and innovative products.

Weaknesses Very few food options


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The company also faces an increasing number of competitors, especially niche competitors. Companies like Coffee Bean & Tea Leaf and Boss coffee are carving out a comfortable space for themselves in the margins of the premium coffee market.

No form of any advertising.

Opportunity The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge. Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential. Technological advances Emerging international markets Continued domestic expansion/domination of segment

Threats Increased competition from coffee shops and others (restaurants, street carts, supermarkets) Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future. Financial crisis and recessions.

B. Review of Mission and Objectives One of their objectives seems to appear as a goal.
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To establish Starbucks as the most recognized and respected brand in the world Their mission appears to be possible. achieve. It is not that hard for them to

VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY A. Strategic Alternatives 1. Starbucks should continue in their existing marketing strategy for promotion and advertising because they should make strategy of good price reduction strategy. Pros: To enter new markets and maintain current customers. Cons: Additional cost or expenses.

2. Continuous improvements: To empower functional teams to improve their performance or services and evaluating their performance. Pros: To avoid any accumulative losses and to take quick corrective actions. To improve their productivity as the customers satisfaction will increase also. Cons: Problems might occur among workers in different departments or divisions.

3. Giving more focus to their Research and Development.


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Pros: Because of their original and famous products, they will continue to be the leader in coffee shops. Cons: Expensive and time consuming.

B. Recommended Strategy We recommend the third alternative course of action, giving more focus to Research and Development. To have a competitive advantage against other coffee shops, the Company must make use of the technology; they must conduct a survey to secure the capacity of their product if it will be saleable in the market, they should produce a product with healthier ingredients. The company must have such strategy where it can be useful to adapt the changing environment, and in order for them to make sure of what the customers wants. VII. IMPLEMENTATION A. What Kinds of Programs Should Be Developed to Implement the Recommended Strategy? The Research and Development Department may perhaps start innovating new products that they could come up with and introduce it to the consumers quarterly. They should carry on to make innovative products so that they could have specific new products to compromise, and search for more ecofriendly products. A flavor of the month could be one of the marketing strategies that they can use to draw consumers.

B. Are the Programs Financially Feasible? Can Pro Forma Budgets Be Developed and Agreed On? Are Priorities and Timetables Appropriate to Individual Programs? The programs are financially feasible since funds are already allocated in each of the companys departments, especially in the Research an d Development Department. Pro forma budgets can be developed and agreed on,

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and priorities and timetables are appropriate to individual programs for the company to monitor improvement on the implementation of such programs.

C. Will New Standard Operating Procedures Need To Be Developed? New standard operating procedures may be developed depending on the program newly implemented. If such program needs a different standard operating procedures, then new standard operating procedures must be developed.

VIII. EVALUATION AND CONTROL A. Is the Current Information System Capable of Providing Sufficient Feedback on Implementation Activities and Performance? Can It Measure Strategic Factors? The current information system is capable of providing sufficient feedback on implementation activities and performance because it is designed to expedite reporting information. It quickly collects and edit data, summarizes results, and be able to adjust and correct errors promptly. Based on the ability of the current information system, it can also measure strategic factors.

B. Are Adequate Control Measures in Place to Ensure Conformance with the Recommended Strategic Plan? Adequate control measures are in place to ensure conformance with recommended strategic plan.
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IX. REFERENCE MorningStar. Starbucks Corporation Financials and Key Ratios. Retrieved from http://financials.morningstar.com/ratios/r.html?t=SBUX Quora. What is starbucks market share globally and in the US? Retrieved from http://www.quora.com/Business/What-is-starbucks-market-shareglobally-and-in-the-US

International Strategic Management. Starbucks Structure. Retrieved from http://itnlstrategicmngt.blogspot.com/2012/04/starbucksstructure.html Chron. Starbucks & Its Organizational Design. Retrieved from http://smallbusiness.chron.com/starbucks-its-organizationaldesign-12857.html

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Little Gapanese, Organizational Culture: The Starbucks Case. Retrieved from http://littlegapanese.blogspot.com/2009/08/organizational-culturestarbucks-case.html

Trends Updates. The Starbucks Weakness. Retrieved from http://trendsupdates.com/the-starbucks-weakness/

Fast Company. The Worlds 50 Most Innovative Companies. Retrieved from http://www.fastcompany.com/most-innovative companies/2012/starbucks

Starbucks. All data pertaining to Starbucks. Retrieved from www.starbucks.com

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