CASE BACKGROUND

The world's largest chain of coffee shops is Starbucks Corporation. It is

renowned for serving up the best coffee in the business and has excellent customer
service. It was established in 1971 by Jerry Baldwin, Gordon Bowker, and Zev Sieg,
who also opened the company's first store at Seattle's Pike Place Market. The business
is well recognized for its progressive expansion strategy, whereby it expands without
exercising appropriate caution. As a result, revenues decreased since several of their
stores underperformed.

SWOT
Internal Factors
STRENGTHS
1. Supply and Distribution Chain
- Mobile Pour, a brand-new delivery method from Starbucks, is currently in
beta. This is a fantastic opportunity for the company's end product distribution
systems to grow in the future, and successful implementation could result in
increased revenue.
- Starbucks has a strong brand reputation, which it can use to expand the
horizontal lines of its business and diversify its product offerings.

2. Location
- Starbucks has locations in the best, most advantageous areas all around the
world. Their stores are spread throughout the world in prime, high-traffic,
high-visibility locations close to many locations, including offices, universities,
retail areas, and off-highway and rural areas. They offer Wi-Fi, music,
excellent service, a welcoming environment, and a place for locals to gather,
all of which are part of the overall "Starbucks Experience."

3. Research and Development

- With its "Starbucks App" for apple and android devices, Starbucks skillfully
makes use of technology. Every year, they spend a lot of money on
technology to maintain their growth.

4. Operations
- Large retailers are where Starbucks sells its packaged coffee goods, iced
beverages, and merchandise. The potential of this industry has not yet been
completely exploited, giving Starbucks excellent opportunities to monetize
their brand in the future.
 - Starbucks capitalizes on its well-known brand by advertising items and
licensing its trademark. Starbuck's expanded supply networks and distribution
channels helped the company attain economies of scale.

5. Corporate Social Responsibility (CSR)

- Their stores support recycling and waste reduction, and they are
neighborhood-friendly. They develop a solid reputation in the neighborhoods
where they work.
- Starbucks enjoys a cult following among customers, and they have used
loyalty programs, such as the Starbucks Rewards programs and Starbucks
Card, to promote trustworthiness.

6. Human Resources
- The workers at Starbucks is renowned for their superior understanding. They
receive superior compensation, such as stock options and retirement perks,
because they are the company's major assets. The product line from
Starbucks caters to all age groups while taking demographics into account.

7. Assurance of Quality
- They place the highest value on product quality and steer clear of standard
quality in order to increase manufacturing output.

WEAKNESSES
1. Financial Environment
- In times of economic slowdown, people are switching costs to other players'
products with lower prices to avoid paying a premium. Starbucks does
differentiate their goods with high quality combined with the "Starbucks
Experience." These higher prices can also indicate a limitation in Starbucks'
ability to expand in underdeveloped nations.

2. Operations
- Aggressive same-brand competition results from aggressive growth and
overload brought on by market overpopulation. This lessens Starbucks' long-
term growth objectives. Starbucks alone runs 8078 locations across the US.
- In keeping with the US market's self-cannibalization. Due to the significant
portion of their total revenue that comes from the US, Starbucks is impacted
by the outlook for the US economy.
- Starbucks is subject to higher scrutiny and is required to make CSR
investments, just like other large corporations. It also keeps strict supervision
over labor laws.
External Factors
OPPORTUNITIES
1. Coffee's annual growth rate ranges between 2.0 and 2.5%
- It is anticipated that the yearly growth rate of coffee consumption would
recover to values between 2.0 and 2.5%.

2. Growth in emerging markets

- Expansion into developing markets, which increases profits.

3. Heightened interest in organic coffee

- High market demand for organic coffee.

4. Formation of partnerships and alliances

- Create partnerships and alliances to increase the product portfolio and
increase customer awareness of various items.

5. Instant coffee accounts for 40% of global coffee sales.

- Instant coffee accounts for 40% of global coffee sales.

6. Social media's advancement

- Social media's emergence and the ongoing rise in internet users.

THREATS
1. Competition provides cheaper coffee
- Competitors sell coffee at a lower price.

2. Development of substitute products

- The introduction of substitute products like milk tea.

3. Consumers' changing food preferences and tastes

- The distinct food preferences and tastes of consumers.

4. Customers are becoming more mindful about health

- Consumers seem to be more concerned with their health.

5. Economic downturn
- Customers began looking for less expensive coffee options as a result of the
economic downturn.

STRATEGIC FACTOR EVALUATION

External Factor Evaluation Matrix (EFE)
Key External Factors Weigh Rating Weighte
t d Scores
Opportunities
Coffee's annual growth rate ranges between 2.0 and 0.13 4 0.52
2.5%
Growth in emerging markets 0.10 4 0.40
Heightened interest in organic coffee 0.08 3 0.24
Formation of partnerships and alliances 0.07 3 0.21
Instant coffee accounts for 40% of global coffee sales. 0.07 4 0.28
Social media's advancement 0.05 3 0.15

Threats
Competition provides cheaper coffee 0.15 1 0.15
Development of substitute products 0.12 2 0.24
Consumers' changing food preferences and tastes 0.10 2 0.20
Customers are becoming more mindful about 0.08 1 0.08
health
Economic downturn 0.05 1 0.05
Total 1 2.52

A rating between 1 and 4 to each key external factor indicates how effectively the firm’s
current strategies respond to the factor, where:
1 – response is poor;
2 – response is average;
3 – response is above average; and
4 – response is superior

Overall Rating:

Internal Factor Evaluation Matrix (IFE)

Key External Factors Weigh Rating Weighte
t d Scores
Strength
Supply and Distribution Chain
Location
Research and Development
Operations
 Corporate Social Responsibility (CSR)
Human Resources
Assurance of Quality
Weaknesses
Financial Environment
Operations
Total

A rating between 1 and 4 to each key internal factor indicates how weak or how strong a
certain factor is where:
1 – major weakness;
2 – minor weakness;
3 – minor strength; and
4 – major strength.

Overall Rating:

COMPETITIVE PROFILE MATRIX

Critical Success
Factors Weight Starbucks Dunkin’ Krispy Kreme
Donuts
Ratin Weighte Ratin Weighte Rating Weighted
g d Score g d Score Score
Product Quality 0.20 4 0.80 3 0.80 4 0.80
Global Expansion 0.15 4 0.60 3 0.45 3 0.45
Market Share 0.13 4 0.52 3 0.26 2 0.26
Price Competitiveness 0.11 2 0.22 3 0.22 2 0.22
Customer Service 0.09 3 0.27 4 0.27 3 0.27
Customer Loyalty 0.09 4 0.36 4 0.27 3 0.27
Advertising 0.08 3 0.24 3 0.24 3 0.24
Product Range 0.05 3 0.15 2 0.10 2 0.10
Financial Position 0.05 3 0.15 3 0.10 2 0.10
Employee Benefits 0.05 4 0.20 3 0.15 3 0.15
Totals 1 3.51 3.13 2.86
ASSUMPTIONS
General Environment Stability:
The socio-demo-cultural, technological, economic, environment, and politico-legal
environment is stable since Starbucks provides a welcoming ambiance space to enjoy
and offer Wi-Fi, music, great service and a pleasant atmosphere with a high quality
products all odd up to enjoyable experience.
Industry Growth Prospects:
The markets presents a promising opportunity since the Starbucks is fully compatible
with accepting mobile payments, and the user friendly feature connects consumer
loyalty through incentive programs. As a result, Starbucks was able to grow their
market. Moreover, the number of Starbucks locations across the Philippines is greatly
increasing.
Financial Strength and Competitive Position:
Based from the analysis of the firm’s financial records, the company ____(results of
financial computation)____. Aside from this, the competitive strengths of the company
are Starbucks expand their branches all over the word, it also promotes it is well-known
brad by using merchandise and trademark licensing.

PROBLEM STATEMENT
The corporation's net income decreased from $672,638 million in September
2007 to $315,500 million in September 2008, according to the company's income
statement. This is because there is more rivalry from businesses like McDonald's, 7-
Eleven, and Dunkin Donuts.

ALTERNATIVE COURSES OF ACTION

Tows Matrix

STRENGTHS WEAKNESSES
1. Supply and 1. Financial
Distribution Chain Environment
2. Location 2. Operations
 3. Research and
Development
4. Operations
5. CSR
6. Human Resources
7. Assurance of Quality

OPPORTUNITIES S-O STRATEGIES W-O STRATEGIES

1. Political Legal and
Conditions
2. Economic and Technical
3. Social and Cultural Setting
1. Market Development 1. Strategy
2. Market Penetration 2. Market Development
3. Market Development 3. Divesture

THREATS S-T STRATEGIES W-T STRATEGIES

1. Political Legal and
Conditions
2. Economic and Technical
3. Social and Cultural Setting
4. Natural Settings
1.Product Development 1. Product Development
2.Product Development 2. Divesture
3.Horizontal 3. Market Development
Diversification

Internal-External Matrix

IFE TOTAL WEIGHTED SCORE

Strong Average Weak

(3.0 – 4.0) (2.0 – 2.9) (1.0 – 1.99)

EFE High I II III

TOTAL (3.0 – 4.0)
WEIGHTED
SCORE Medium IV V VI
(2.0 – 2.9)

Low VII VIII IX

(1.0 – 1.99)
GRAND STRATEGY MATRIX ANALYSIS (NASA POWERPOINT YUNG FORMAT)
SUMMARY OF STRATEGIES

STRAGEGY OPTIONS TOWS IEM GSM TOTAL

INTEGRATION STRATEGIES

1. Forward Integration

2. Backward Integration

3. Horizontal Integration

INTENSIVE STRATEGIES

1. Market Penetration

2. Market Development

3. Product Development

DIVERSIFICATION STRATEGIES

1. Concentric Diversification

2. Conglomerate Diversification

3. Horizontal Diversification

DEFENSIVE STRATEGIES

1. Joint Venture

2. Retrenchment

3. Divestiture

4. Liquidation

QUANTITATIVE STRATEGIC PLANNING MATRIX

KEY WEI STRATEGIC ALTERNATIVES
FAC GH
TOR T STRATEG STRATEG STRATEG
S YA YB YC

Ra Wei Ra Wei Ra Wei

tin ghte tin ghte tin ghte
g d g d g d
Scor Scor Scor
e e e

OPPORTUNITIES:

1.
2.
3.
4.

THREATS:

1.
2.
3.
4.

SUB- 1.00
TOT
AL

STRENGTHS:

1.
2.
3.
4.

WEAKNESSES:
 1.
2.
3.
4.

SUB- 1.00
TOT
AL

OVE - - - -
RAL
L
SCO
RE

Rating Values:
1 = not attractive,
2 = somewhat attractive
3 = reasonably attractive
4 = highly attractive

RECOMMENDED ALTERNATIVE AND ACTION PLAN

ACTION PLAN

FUNCTIONAL OBJECTIVES STRATEGIES TIME BUDGET

AREA FRAME
 Marketing

Production

Finance

Other
Functional
Areas

FINANCIAL PROJECTIONS