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ABSTRACT

This document contains an evaluation of the internal and external business environment for
Starbucks, the founded in 1971 and considered the biggest Coffeehouse in the world. The report
includes a critical assessment of the strategic resources and an examination of the extent to which
Starbucks is in strategic fit with its environment. The report will also include a critical appraisal
of the strategic options available to improve the performance of Starbucks company with a
justification. The Company has business in many counties of the world and the key point would
be to access strategies that can elevate the actual performance.

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DECLARATION

I declare this is a presentation of my own work, whatever contributions of others involved, every
effort was made to indicate this clearly, with due reference to the literature, and acknowledgement
of collaborative research and discussion.

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METHODOLOGY

This is a phenomenological research using a mixed method approach incorporating qualitative

positivistic features supported by data triangulation.

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GLOSSARY

Balanced scorecard This uses strategic and financial measures to assess the
Outcome of a chosen strategy.
Cash cow Products with high relative market shares in low-growth
Market.
Competitive
advantage the significant advantages that an organisation has over
Its competitors.
Dogs Products with low relative market shares in low-growth
Markets.
Emergent change- the whole process of developing a strategy whose outcome
Only emerges as the strategy proceeds. There is no defined
List of implementation action in advance of the strategy
Emerging.
Economies of scale the extra cost savings that occurs when higher-volume
Production allows unit costs to be reduced.
Gearing ratio the ratio of debt finance to the total shareholders funds.
Green strategy concerns those activities of the organisation that are
Focused on both sustaining the earths environment and
Developing the business opportunity that will arise from
Such additional activities.
Implementation the process by which the organizations chosen strategies
Are put into operation.
Innovation the generation and exploitation of new ideas.
Market
Segmentation the identification of specific groups (or segments) of
Customers who respond to competitive strategies differently
Oligopoly a market dominated by a small number of firms.
PESTEL analysis checklist of the political, economic, socio-cultural,

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Technological, environmental and legal aspects of the

Environment.

Stars Products with high relative market shares operating in high-

Growth markets.
SWOT analysis an analysis of the strengths and weaknesses present internally
In the organisation, coupled with the opportunities and
Threats that the organisation faces externally.

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COMMON ACRONYMS

C.O.G.S Cost of goods sold

C.R.M. - Customer relationship management

C.S.R. Customer service relation

CCLDP- Cross cultural leadership development program

K.B.L.M- Kellogg Business Leaders Model

K.P.S- Kellogg Planning System

H.A.C.C.P - Hazard Analysis Critical Control Points

H.R.M Human Resource Management

R.O.C.E Return on Capital Employed

R.T.E.C. Ready To Eat Cereal

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TABLE OF CONTENT

PART 1 ANALYSIS AND DISCUSSION

1.INTRODUCTION......................................................................1

2.INTERNAL ANALYSIS1
2.1 Historical Analysis.1
2.1.1 Strategic Choices....2
2.1.2 VMOST..2
2.1.3 Product Portfolio.4
2.1.4 Market Definition and location6
2.1.5 Current Competitive Advantage and Product Positioning...7
2.1.6 VRIO...8
2.1.7 Green Strategy...12
2.1.8 Summary of Historical Analysis13
2.2 Financial Analysis15
2.2.1 Summary of Financial Analysis.17
2.3 Value Chain Analysis...17
2.4 Core Competencies...22
2.5 McKinseys 7-S Framework.23
2.6 Summary of Strengths and Weaknesses...24

3. EXTERNAL ANALYSIS25
3.1 Environment Basics..26
3.2 Customer Analysis and Market Segmentation..28
3.3 Competitor Analysis.29
3.5 Competitive Industry Environment..........29
3.6 Key Factors for Success35
3.7 Industry Life Cycle...36
3.8 PESTEL Analysis.38
3.9 Degree of Turbulence in the Environment40
3.10 Summary of Opportunities and Threats..42

4. STRATEGIC FIT ANALYSIS...43

4.1 SWOT Analysis44
4.2 EVR Congruence..45
4.4 Summary of Strategic Fit..46

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PART 2 RECOMMENDATIONS

5. STARBUCKS GENERAL RECOMMENDATIONS..47

5.1 Starbucks Strategy Recommendation...48

6. TREND AND SENSITIVITY ANALYSIS....48

6.1 Scenario48
6.2 Market definition and market size50
6.3 PESTEL Analysis.50

7. RISK MANAGEMENT..52

7.1 Risks for Starbucks into Indias market52

8. STRATEGIC DIRECTION54

8.1 Business Strategy.54

8.2 Suitability to Resources and Capabilities..55
8.2.1 Suitability to Stakeholders.55
8.2.2 Summary of Suitability..57
8.3. Acceptability...57
8.3.1 Acceptability of Business Model...57
8.3.2 Acceptability to Ethics and Social Responsibility.58
8.3.3 Acceptability to Technology.59
8.3.4 Acceptability using Blue Ocean Strategy..59
8.3.5 Summary of Acceptability Analysis..60
8.4 Feasibility.60
8.4.1 Internal Feasibility Checklist.60
8.4.2 External Feasibility Checklist61
8.5 Summary of Feasibility63

9. INTERNAL DEVELOPMENT..64

10. E-COMMERCE.64

11. IMPLEMENTATION AND CONTROL65

11.1 General Business Plan65

11.2 Project Management Approach..66
11.3 Execution Plan68

REFRENCES...70
BIBLIOGRAPHY74

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LIST OF TABLES

Table 2.1: Starbucks VMOST Analysis.

Table 2.2: Starbucks Competitors.
Table 2.3: Starbucks VRIO Framework.
Table 2.4: Starbucks Ansoff Matrix.
Table 2.5: Starbucks Ratios.
Table 2.6: CAMELS Framework.
Table 2.7: Starbucks Value Chain.
Table 2.8 Starbucks McKinseys 7-S Framework.
Table 3.1: Environment Basics..
Table 3.2: Starbucks Customer Segmentation Analysis.
Table 3.3: Other Elements of Starbucks Market Segmentation.
Table 3.4: Starbucks Competitors in India.
Table 3.5: Starbucks Four-link model.
Table 3.6: Starbucks 5 Forces.
Table 3.7: Starbucks 3 Cs.
Table 3.8: Starbucks PESTEL.
Table 3.9 Analysis of Degree of Turbulence.
Table 4.1 Strategic Fit Analysis.
Table 4.2 SWAT Analysis.
Table 4.3 Balance Scorecard
Table 6.1 Multiregional Competitors
Table 6.2 India PESTLE.
Table 8.1 PEARLS Analysis.
Table 8.2 Starbucks Stakeholders
Table 11.1: General Business Model.

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LIST OF FIGURES

Figure 2.1: Starbucks BCG Matrix.

Figure: 2.2 Starbucks Positioning.
Figure 2.3 The Ansoff Matrix.
Figure: 2.4 Starbucks Stores worldwide.
Figure: 2.5 Michael Porters Value Chain.
Figure 3.1: 9 basic analytical tools.
Figure 3.2: Retail coffee US Market.
Figure 3.3: Porters 5 Forces
Figure 3.4 Starbucks Lifecycle.
Figure 3.5 Starbucks Expansions.
Figure 7.1 Indias risks for Starbucks.
Figure 8.1: Coffee shops in India 2014.
Figure 11.1: 4-D Model.
Figure 11.2 Gant Chart Starbucks India (3Years)