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Starbucks (WAC) Business Strategy Analysis. Project Report
Starbucks (WAC) Business Strategy Analysis. Project Report
Starbucks (WAC) Business Strategy Analysis. Project Report
TABLE OF CONTENTS
1 Introduction 2
2 Mission Statement 3
3 Objective & Goals 6
4 PESTEL Analysis 7
5 Porter's Five Forces Model Industry Analysis 9
6 The Strategy Formulation Analytical Framework
7 Stage - I, The Input Stage 14
8 Stage - II, The Matching Stage
SWOT Analysis 17
SPACE Matrix 18
BCG & IE Matrix 20
9 Stage - III, The Decision Stage 22
SPACE Matrix
QSPM
10 Value Chain 23
11 Recommendation 28
Introduction
Starbucks, the coffee production and serving company took its exceptional name from a
character of the novel “Moby Dick” and have its roots in Seattle, Washington. Here you
can still find the very first coffee shop at the pike place market, which has been opened
since 1971. In 1987, Starbucks was bought by Howard Schultz and ever since has been
exploring all over the United States. Today Starbucks is the most known chain of
coffeehouses around the world. Starbucks is the largest coffeehouse company in the world,
with 5,886 stores in 40 countries, including around 1312 in the United States. Starbucks
sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks, and
items such as mugs and coffee beans. Through the Starbucks Entertainment division and
Hear Music brand, the company also markets books, music, and film. Many of the
company's products are seasonal or specific to the locality of the store. Starbucks-brand ice
cream and coffee are also offered at grocery stores. Starbucks’ Italian style coffee, espresso
beverages, teas, pastries and confections had made Starbucks one of the greatest retailing
stories of recent history and world’s biggest specialty coffee chain.
Mission Statement
Mission Statement:
Not provided in Case study also not in website
It is the analysis of mission statement of Starbucks in we examined the 9 elements rather they are
or not in this company provided mission statement.
NO COMPONENT YES/NO
1. Customers Yes
3. Markets Yes
4. Technology No
6. Philosophy Yes
7. Self-Concept Yes
It is the good mission statement which provided by Starbucks but its have not described 2
components among 9 components of Mission statement those are Technology and Concern
for employees. Company should must to discuss the technology factor in its mission
statement to let know to its stake holders about its concern about technology and also
about its employ those could be its competitive advantage by providing good services.
Objectives of Starbucks
Company is having objective to establish Starbucks as the most recognized and respected
brand in the world.
ORGANIZATIONAL STRUCTURE
N/A
PESTTLE
PESTEL Analysis
Political:
Globalization nowadays has changed worldwide trend of doing business. Companies find
it difficult to stay alive by relying solely on home market. The borders between various
countries are getting invisible. Companies are these days developing business in various
countries without boundaries. Advertisements are all over the world for many products.
Company strategists find it not an easy task to expand the business outside borders. The
basic need for globalization is to learn the different cultures of the country they plan to
start business. Taking all aspects including tax rates, law and legislation is important in
globalization. But in the case of Starbucks did not discuss as such any political factors
those can influence on Starbucks other then
• Allowance for the Direct Dealing with the growers after bypassing many of the
middle market which is eventually be the point of exposure for Starbucks
politically
Economical:
People are these days looking for more earnings to continue their luxurious life. The
number of two income households is getting increased all over the world. People are
looking forward for products which reduce their time to be spent on. Improved customer
service, immediate availability, trouble free operation of products is becoming more
important. Since the world is facing crisis, people are looking forward for cheap and
quality products. Price is becoming priority to customers but Starbucks having a threat
from its competitors that they are providing low priced products and services then
Starbucks which can make negative thing for Starbucks. Increase in the inflation rates and
increase in unemployment is also a factor for demand in lower priced products.
• Unwillingness to help improve the economic condition of the coffee growers
themselves by Starbucks
Social:
• Supporting Relief Organization such as CARE
• Providing Direct Support to the farmer and farm community around the world
• Contribute $43,000 in 2001 for construction of the Health Clinic and School in
Guatemala
Technological:
Mass communication and high technology are creating patterns of various cultures
worldwide. Ground-breaking technological changes and discoveries are having a dramatic
impact on organization. Internet is the world information spread machines that have
covered an interaction from one user to another user. In contrast, advertising through have
brought high achievement into marketing strategy. Starbucks discusses technological us in
this case study just about its one brand “shade Growth Mexico coffee’s” Online selling
throw its website Starbucks.com but its not provided information about any other use of
technology in this case study other then just about this one bran but Starbucks can take
advantage of use of technology. Advancement of the technology can cause increased in the
distributing of the products. High technology of the Machineries can increased the supply
of the products while achieve a better profits for the Starbucks.
Ecological:
Cultivated under the Company of shade Trees in Organic product
Legal:
Business Strategy & Policy, Summer 2010.
8
N/A
• Intensity of Rivalry:
Threat of Substitute
• Threat of Substitutes:
INDUSTRY COMMENTS:
As there are three high forces and Two Low to Moderate force so the over all industry is
very attractive and growth is expected to be there in the industry
Product Development
Market development
Product differentiation
Proper customer guidance by providing wide ray of coffee selection & 0pportunities.
Quality of service
Weaknesses:
Lack of employee compensations and benefits
Sales saturation
Opportunities:
Business Strategy & Policy, Summer 2010.
14
Joint ventures (for achieving the target of more then 500 branches till 2003)
Threats:
Substitutes
We know that the Competitive Profile Matrix (CPM) constructed on the basis of
critical success factor of the organization that give organization the competitive
advantage against it competitors in sustaining market and getting profits. But in
this, Starbucks, case no such information give about such critical success factors
and the competitors of the Starbucks. That’s why, it is not possible to construct the
Competitive Profile Matrix.
• FINANCIAL ANALYSIS
In Excel Sheet
Total X-axis score= -2.75 + 5.25 =2.50 Total Y-axis score= +4.8 – 3. 2 = 1.6
The Space matrix results show Aggressive response of the company. In this position, the
company has to adopt the following strategies.
• B C G Matrix N/A
BCG Matrix is also not applicable because the company’s portfolio’s share with
respect to its competitor not available.
4.0 Strong (3.0-4.0) 3.0 Average (2.0-2.99) 2.0 Weak (1.0-1.99) 1.0
High I II III
3.0_4.0
3.0
Medium IV V VI
EFE
2.0
_2.99
2.0
1.0_1.99
1.0
Grand Chart matrix describes the company’s competitive position against its
competitors and company’s market growth rate based on the results of Competitive
Profile Matrix (CPM) and BCG Matrix. But in this case, both matrixes are not
implementing due to non availability of sufficient information about the competitors as
well as the company’s products portfolio. That’s why Grand Chart not constructed.
Primary Activities:
Inbound Logistics:
Operations:
• Between 1995 and 1998 Starbucks had averaged $0.69 million per store. +
• Company was continuing expand international operations at breakneck pace. +
Outbound Logistics:
3. Supermarket
Services:
• The perceived premium was both in the products’ quality and in the method of its
delivery. +
• Starbucks believe and actively giving superior services by giving the sense of
discovery and excitement and loyalty that bend the customer to Starbucks. +
• It had evolved into its own Americanized version of specialty coffee provider of
coffee shop services. +
• Special pastries and music provided an atmosphere of both warmth and comfort. +
• Starbucks is providing ready access to consumer foot traffic such as commuting
routes. +
• Employees are trained to provide wide array of advice on coffee selection and
appropriateness to potential customer. +
• Internet Selling. +
Business Strategy & Policy, Summer 2010.
25
Explanation:
The company owns a good repute in the global market which gives it the best strength. The
company owns 5700 total number of stores globally. As it works in with other business
partners under the contract of joint venture, the number of total stores adds up to 5886 out
of which 1312 is owned outside US market. The company offers a variety of products in
different shapes and ways which are related to their core offering (coffee) to the customers.
The company gives importance to its employees and it trains them for enhancing their
performance. They consider their employees as their partners and offer them stocks to
make them feel as they are the part of organization. This adds their morality in work. There
is a big objection to the company that, it is not giving benefit to their employees who are
over working and most of them are under paid. Due this objection the purpose of adding
the benefit doesn’t support their strategy of retaining their employees.
Stores are located in pivotal positions for consumer recognition and access. All stores were
owned by the company in domestic market inside US market. This helped the company to
increase its availability aspect in the eye of the customer. But unfortunately, this strategy
wasn’t helping the company to increase the sales per store. Infect, the stores introduced
was cannibalizing the sales of the existing stores. The company uses multiple channels for
providing the product to the end customers.
Starbucks is creating good relations with their suppliers. This helps the company to gain a
good quality product on a low price as compared to the market rates. The company gives
benefits to the as well so they can improve their economic stability.
Infrastructure:
• Starbucks used two basic structures for international expansion that were company
owned and licensing agreements. +
Recommendations
Impacts
Potential Risks