FAKULTI SAINS SUKAN DAN REKREASI

KAMPUS SEREMBAN

UNIVERSITI TEKNOLOGI MARA CAWANGAN NEGERI SEMBILAN

SMG605 (STRATEGIC MANAGEMENT IN SPORTS ORGANIZATION)

GROUP ASSIGNMENT

PREPARED BY:
NO NAME MATRICS NO
1. NUR SAIDATUL ALIAH BINTI ZULKAFLI 2019572681
2. HAFIZUDDIN BIN RAMLEE 2019333933
3. AMANI AQILAH BINTI MOHAMAD AMINUDIN 2020961241
4. MUHAMMAD FARID IZZAT BIN MOHD FOZI 2019310487

PREPARED FOR:

MADAM UMMI KALTHUM BINTI MOHD MOKHTAR

SUBMISSION DATE:

18TH JUNE 2021

TABLE OF CONTENTS

1.0 COMPANY BACKGROUND ................................................................................................. 1

1.1 MISSION ..................................................................................................................................... 1

1.2 VALUES ...................................................................................................................................... 1

1.3 BUSINESS AREA ....................................................................................................................... 1

2.0 SWOT ANALYSIS ......................................................................................................................... 2

2.1 STRENGTHS .............................................................................................................................. 2

2.2 WEAKNESS ................................................................................................................................ 2

2.3 OPPORTUNITES ....................................................................................................................... 3

2.4 THREATS ................................................................................................................................... 4

3.0 CASE STUDY PROBLEM ............................................................................................................ 5

4.0 RECOMMENDED STRATEGY................................................................................................... 6

4.1 MARKET PENETRATION ...................................................................................................... 6

4.2 MARKET DEVELOPMENT .................................................................................................... 7

4.3 PRODUCT DEVELOPMENT................................................................................................... 7

5.0 CONCLUSION ............................................................................................................................... 8

REFERENCES ...................................................................................................................................... 9
1.0 COMPANY BACKGROUND

1.1 MISSION

Encouraging and sustaining the spirit of one person, one cup, and one community at
the moment. (Our Mission & Values, 2021)

1.2 VALUES
We live these beliefs by putting our partnerships, coffee, and consumers first. (Our Mission &
Values, 2021):

1. We are developing a society of participation and compassion in which everyone is

accepted.
2. We will act with bravery, confront the status quo, and discover new methods to
improve our organization and ourselves.
3. They are becoming aware and engaging with respect, integrity, and compassion.
4. We are providing our all in all we do and keeping us accountable for our
achievements.
5. We are performance-driven with a human-centered mindset.

1.3 BUSINESS AREA

Starbucks Corporation (Starbucks Coffee Company) employs its organization to
promote corporate growth in the worldwide coffee sector. As the world's biggest coffeehouse
chain, the firm retains its leadership in the industry due to its organizational structure's legality.
The executive or corporate design of a company influences all areas of the company, including
management and leadership, communication, change management, and strategic planning,
among other things. Starbucks adapts to guarantee that its organizational structure corresponds
to new business requirements. For example, after growing its operations by acquiring other
companies such as Ethos Water and Seattle's Best Coffee, the corporation altered its corporate
structure (MEYER, 2019). Starbucks Corporation's structure organization has been modified
to meet the company's requirements because of this change. This structure conforms to standard
organizational structure typologies. Like other multinational corporations, the firm uses its
structural qualities to guarantee that its procedures are simplified and well regulated.

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2.0 SWOT ANALYSIS

2.1 STRENGTHS
• Excellent brand image:
Starbucks' initial strength is its excellent brand image. People
automatically think about Starbucks after they consider coffee. It's a significant benefit
in terms of name familiarity and desire to frequent retail places. The mermaid logo and
colors are iconic. Over the years, branding has been one of the foremost essential
aspects of Starbucks' approach. The corporation has spent lots of cash making a
homogenous appearance and pity its locations, product, and food and beverages. one
of the foremost recognizable trademarks globally is the Starbucks Siren. Starbucks'
worldwide growth plan aims to recreate the Starbucks experience in every new nation
it enters. This effectively implies that its stores, whether in the big apple, New Mexico,
Moscow, Tokyo, or Shanghai, provide a comparable experience. (Martin Roll, 2021)
• Location and Aesthetic appeal of its Stores:

Starbucks has locations in some of the world's most prestigious and vital
establishments. They aim for high-traffic, high-visibility places close to a range of
situations. Their stores are physically appealing, have a "cool" factor, and are created to
reflect the distinctive character of the neighborhoods they serve. They are also ecologically
responsible. They give free internet, fantastic music, fantastic service, a pleasant ambiance,
and a community gathering space, all of which contribute to the overall 'Starbucks
Experience.' The company's primary goal is to turn its stores become a "third location" in
addition to home and work. (Sakal, 2018)

2.2 WEAKNESS
• Expensive products:
While Starbucks differentiates its goods by their excellent quality and
the overall 'Starbucks Experience,' consumers will intercommunicate lower-cost
competitors and forego paying a premium in times of economic uncertainty. This high
pricing may additionally be a hindrance to its success in developing nations. (Sakal,
2018)The method by which a company calculates the worth and amount of product
output that earns the best profit is called profit maximization. While this might seem
self-evident to everyone working in business, value-based pricing is

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 never accustomed to successfully uncover the utmost amount a client base is ready to
spend on their products.
• Imitability of products:

Starbucks does not have unique items on the market. It makes product imitability very
simple for other businesses. Other coffee shops and food franchises, like McDonald's
McCafé and Dunkin Donuts, provide similar services. (hub, 2020)Many Starbucks items
may be duplicated. Small local competitors, as an example, may manufacture beverages
that are near but not a twin of the company's offerings. Even the company's cafes'
appearance and ambiance are imitated. This sort of business environment gives rivals a
bonus. During this section of Starbucks Coffee Firm's SWOT analysis, the inner
components suggest that the firm must build strengths to mitigate the negative impacts of
imitation and the effect of high price points on the company's market share within the
worldwide industry. (Lombardo, 2019)

2.3 OPPORTUNITES
• Corporate social responsibility:
Starbucks has strong governance, ethical behavior, and social responsibility at
the foundation of its corporate practices. Starbucks has worked hard to grow
shareholder value and generate new opportunities. Starbucks also prioritizes the
maintenance of stakeholder relationships with the corporation. In terms of the Starbucks
Company, CSR is defined as operating a business to assist communities in social,
environmental, and economic benefits. Starbucks has always behaved in the best
interests of the company's stakeholders, including stockholders. Attracting and
maintaining our partners (workers), increasing customer loyalty, lowering operating
costs, improving our supply chain, and obtaining a license to use are just a few of the
company's genuine benefits.
Furthermore, Starbucks produces a Global Responsibility Report (in 9
languages!) every year that offers statistics showcasing the company's influence over
the previous year. They utilize this information to guide their plan for the future year,
ensuring that their initiatives are as effective as possible. Starbucks measures and
evaluates its initiatives rather than merely coming up with a CSR strategy and blindly
following it. (Vandeveld, 2015)
• Technological advances:

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 Starbucks has been using reinforcement learning technology to supply a more
personalized experience for patrons who use the Starbucks® mobile app.
Reinforcement learning may be a variety of machine learning within which a system
learns to form complex, unpredictable environments supported by external feedback.
Customers receive personalized order recommendations via the app generated
employing a reinforcement learning platform built on Microsoft Azure and hosted there
because of this technology and Starbucks data scientists' efforts, 16 million active
Starbucks® Rewards members now get intelligent food and drink suggestions from the
app supported local store inventory, popular options, weather, time of day, community
preferences, and prior orders. (Sokolowsky, 2019)
Each Starbucks location includes over a dozen pieces of equipment, ranging
from coffee machines to grinders and blenders, that need to operate for a minimum
of 16 hours a day. Any of those devices can malfunction, resulting in service visits and
high repair expenditures. More importantly, equipment issues may jeopardize
Starbucks' fundamental aim of regularly offering a high-quality customer experience.
Starbucks is teaming with Microsoft to implement Azure Sphere, which is meant to
shield the upcoming wave of linked internet of things (IoT) devices across its shop
equipment, to prevent interruptions to its experience and securely attach its
gadgets within the cloud. (Sokolowsky, 2019)

2.4 THREATS
• COVID-19
COVID-19 is a significant threat; people do not go to a store to lounge around
to stay home due to quarantine orders. Many competitors are selling a similar product
such as coffee, cookies, and smaller, niche stores that can affect their sales and products
that may be healthier. The disruption caused by the COVID-19 epidemic is being used
by Starbucks to "move aggressively and better differentiate" its brand from competitors.
Kevin Johnson, Starbucks' president, and CEO mentioned this during a quarterly
earnings conference with investors. Even though the company's sales plummeted by
38% year over year, he remained confident for the long run. Periods of upheaval occur
in every sector, and those organizations that adapt to the disruption, invest in
appropriate ways and improve their distinctiveness and competitive edge benefit
significantly. (WARC , 2020)
• Environmental environment:

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 Coffee producers have made environmental stewardship a priority, and creating
"green" and "fair" coffee is a crucial feature for boosting the brand's image among
customers and environmentalists. Coffee production significantly influences forests,
biodiversity, and water use, and firms such as Starbucks are working hard to lessen their
environmental effect. Another important topic is whether the earnings of large coffee
businesses reach the individuals who harvest the beans. Governments have urged coffee
manufacturers all around the globe to implement fair trade and ecologically sustainable
methods. Governments, particularly in developing countries, are not always diligent in
implementing and enforcing appropriate trade standards. Fortunately, businesses have
taken control of the execution of such measures by establishing their responsibility
guidelines. Starbucks, for example, uses ethical sourcing techniques and has an
environmental responsibility program in place to help local farmers and safeguard the
environment. (Hassan, 2014)

3.0 CASE STUDY PROBLEM

Considering the COVID-19 pandemic, businesses, including Starbucks, are

attempting to minimize the enormous effect of this unexpected pandemic on them. The
negative impact is in locations where tight quarantine measures restrict output and
consumption, and managers and stakeholders receive unfavorable warnings. The effect
of the pandemic on the world economy is devastating, and efforts to prevent and
manage the COVID-19 pandemic are intensifying. Many industries have been worst
damaged by the COVID 19 pandemic. Starbucks is just like other businesses, was not
utterly incapable of COVID-19. Starbucks is dealing with the situation and
implementing the consequences for their business. The pandemic has impacted
Starbucks' revenues and produced a sales decline not seen since the company's financial
crisis in 2008-2009. Starbucks has proved that it is more vulnerable to economic
declines than most other fast-food companies or coffee shops by tracking its
performance throughout the Great Recession of 2008-2009. Starbucks' most significant
advantage is consumer loyalty. The loyalty card members contribute more than 44% of
the company's income. As a result, the company's performance is mainly dependent on
customer loyalty, emphasizing the importance of the customer's view.

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4.0 RECOMMENDED STRATEGY

All the analysis described above reveals Starbucks' strengths and weaknesses, as well
as unforeseen opportunities and threats that may jeopardize its long-term viability. After doing
this analysis, we propose some practical strategies to assist Starbucks in regaining its top
position in the coffeehouse business. Given the enormous development potential in the
worldwide market, Starbucks employs various methods for effective company expansion. As
part of its ambitious growth goals, the coffeehouse company focuses more on growing its
international market access and offering high-quality and value-added merchandise. Starbucks
modifies the mix of these market expansion strategies and the importance given to each method
based on current market conditions in local and regional markets. Starbucks' recommended
strategies are intensive strategies that consist of market penetration, market development, and
product development.

4.1 MARKET PENETRATION

Market penetration can be Starbucks Coffee's primary intensive expansion strategy.

This method, known as the market expansion grid or Ansoff Matrix, helps the company's rapid
growth by optimizing revenues from existing markets while maintaining the same or similar
food and beverage goods. Starbucks currently operates in over 78 nations and territories. The
corporation can use market penetration to maximize sales and growth in these present markets
by building more company-owned outlets or franchised cafe locations. For instance, Starbucks
wants to create more areas where the company is underrepresented, such as Africa and the
Middle East. However, in these coffee markets, the corporation must overcome regulatory and
sociological difficulties. Starbucks' Marketing Mix, or 4Ps, supports its aggressive market
penetration approach, particularly in extending its visibility through strategic locations and
promotions. This method is being used to increase the market share of existing available items.
It also looked for different ways to deliver its items outside of its stores. This technique
provides for increased sales and revenue from existing markets. In general, it requires a more
significant emphasis on marketing efforts to improve the market share of existing products and
services. Starbucks has typically made very little expenditure in marketing. The company used
to sell itself mainly through high-quality items and excellent service. However, things have
changed over time, and Starbucks has increased its marketing spending. The brand actively
markets itself and its products through its website and other platforms such as social media. It

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allows you to attract more customers and exceed your competitors. It is also one of Starbucks'
most critical intense techniques for expanding its market share.

4.2 MARKET DEVELOPMENT

Starbucks' secondary approach for rapid expansion is market development. It is a

possible choice for excellent organizations at what they do and has a strong presence in their
current markets. It comprises the expansion of existing products and services into new
geographical areas. Starbucks first opened a store outside of North America in Japan in 1996.
After that, it began selling its products in the Asia Pacific region in nine countries: Australia,
Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, and Thailand.
Its influence in the region has grown significantly since then. It now operates around 2500
stores in China, with aims to double that number by 2021. It also made history in India by
having a relationship with Tata.

Furthermore, Starbucks shaped the specialty coffee business in the United States
through educating customers and establishing trends. Starbucks effectively converted a
commodity into a premium item for which customers were willing to pay top dollar. The
company created its market from the ground up and expanded into other demographics and
geographic market segments. As a result, we recommend that Starbucks concentrate its efforts
on market development to expand geographic segmentation for its new customers in the future.

4.3 PRODUCT DEVELOPMENT

Aside from the two comprehensive techniques discussed above, the corporation also
concentrates on product development. It may add to Starbucks Corporation's growth by
introducing new goods or variants that increase revenue. New items are considered
opportunities to increase sales revenues in this active expansion approach, especially in
coffeehouse marketplaces that are already competitive. For example, the company offers
brewing equipment and ready-to-drink items in grocery stores because of product innovation.
Product development can also occur because of mergers and acquisitions, such as when
Starbucks introduced the Frappuccino after acquiring The Coffee Connection Starbucks. This
forward-thinking company has continued developing new items. It can be accomplished by
expanding its product to fulfill an ever-increasing demand. To be more specific, the flavor of
good coffee varies by country. Thus, Starbucks should adapt by presenting a variety of coffee

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to suit cultural diversity and preferences. It is an incredibly efficient method of meeting
customer demand.

On the other hand, the most important trend right now is environmental awareness.
Because severe pollution in underdeveloped nations and a water shortage has had such a
significant impact on society, we believe Starbucks should follow suit and demonstrate its
commitment to the community and environment. For example, Starbucks may create initiatives
that use ecologically friendly packaging materials and have procedures to trace down any
wastewater generated throughout its operations.

5.0 CONCLUSION

Starbucks' goals include tailoring stores to customers' lives, improving the impression
of high-quality items, and completely covering areas of the market, even if the stores'
operations are harmed. One of the first to offer new products into new overseas markets will
help Starbucks build consumer loyalty and retain its image as a forward-thinking company.
Aside from that, they must continue to be a market leader in creative goods and concepts. In
addition to coffee, they offer several amenities to its customers, such as environment, music,
mugs, and internet connection. They must also place their stores in high-traffic, high-visibility
areas. They must exercise extreme caution while choosing locations since its outlets worldwide
must represent their uniqueness in site and structure. Starbucks' future, which is now
undergoing fast development, seems to be bright and hopeful. However, those success
characteristics may not be applicable in tomorrow's climate or the worldwide industry. To
remain and grow competitive, a firm must build strategies based on its innovative, significant,
and leading skills and resources, rather than the goods and services themselves, and adapt
proactively to an ever-changing internal and external environment. Even though there are now
no significant challenges to Starbucks' dominance in both foreign and domestic markets, In the
long run, it should not be brushed aside. Starbucks' future performance will be defined by its
ability to preserve and grow on its strengths, reduce weaknesses, minimize risk, and take
advantage of opportunities. If Starbucks can accurately identify and handle the problems that
exist now and shortly, it may stay hopeful about future economic growth.

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