TABLE OF CONTENTS
Sr. # Description Page #
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
Business Strategy & Policy, Summer 2010.
1
Introduction
Name : Starbucks Corporation
Headquarters : Seattle, Washington, U.S.
Revenue for 2003 : US$3.3 billion
CEO : Howard Schultz (Founder of Starbucks coffeehouse)
Total Stores : 5886
Company started : In 1971 in Seattle, Washington
Positioning : Starbucks positioning itself as a “third place”
Products sold include : - Beverages - pastries
- Whole coffee beans - coffee-related retail items
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.
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Mission StatementMission Statement:
Not provided in Case study also not in website
Mission Statement (Original)
“Establish Starbucks as the premier purveyor of the finest coffee in
the world while maintaining our uncompromising principles while
we grow.”
The six principles are:
1. Profitability is essential to our future success.
2. Provide a great work environment and treat each other with respect and dignity.
3. Embrace diversity as an essential component in the way we do business.
4. Apply the highest standards of excellence to the purchasing, roasting and fresh
delivery of our coffee.
5. Develop enthusiastically satisfied customers all of the time
6. Contribute positively to our communities and our environment
Analyzing the Mission Statement Component
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
2. Products or services Yes
3. Markets Yes
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4. Technology No
5. Concern for survival, profitability and growth Yes
6. Philosophy Yes
7. Self-Concept Yes
8. Concern for public image Yes
9. Concern for employees No
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.
Proposed Mission Statement
“Establish Starbucks as the foremost provider of the deluxe coffee in the
world and also to be established as the most employee appreciated
company even as maintaining our uncompromising principles as we grow
mutually with hi-tech advances.”
The six principles are:
1. Provide a great work environment and treat each other with respect and dignity.
2. Embrace diversity as an essential component in the way we do business.
3. Apply the highest standards of excellence to the purchasing, roasting and fresh
delivery of our coffee.
4. Develop enthusiastically satisfied customers all of the time
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5. Contribute positively to our communities and our environment
6. Recognize that profitability is essential to our future
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Objectives and Goals
Objectives of Starbucks
Most recognized and respected brand in the world:
Company is having objective to establish Starbucks as the most recognized and respected
brand in the world.
Is to recognize that every dollar earned passes through employees’ hands
Starbucks will always appreciate the employee as the revenue which is increasing every
year is by the efficient and hardworking employees. This drastic increase in profit is not
recognized without the support of the employees who attracts the customers to a long term
relationships with the coffeehouse.
Market expansion:
Starbucks’ objective is to provide its services at the foot step to its valuable customers for
this Starbucks developing its market expansion and going into new markets and cover the
customers by lowering its price and providing good quality better then perception of its
customers.
Operations to Achieve Objectives:
For achieving its objectives Starbucks plans to continue to rapidly expending its retail
operations. And grow its sales and other operations.
CURRENT STRATEGIES USING
● Market Penetration ● Product Development
ORGANIZATIONAL STRUCTURE
N/APESTTLE
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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
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250 Pre Harvest and 650 Post Harvest financing to the Coffee growers and farmers
by the Starbucks in 2005 which more than 1.2 B Pounds
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
Providing the Varity if ways of improvement of Coffee Processing facilities in a
number of countries in the world
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:
N/A
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PORTER FIVE FORCES INDUSTRY ANALYSISThreat of new Entrant
Determinants Defining Question Assess the power of BuyersCircle one of the following.1 = low, 5 = high, or N/A if it doesn’t apply to your industry.
Economies of
Scale and
experience
Does successful entry require that companies have significant economies of scale or experience
1 2 3 4 5
N/A
Brand Identity Do new companies need to spend heavily on brand identification?
1 2 3 4 5
N/A
Product
Differentiation
Do new entrants need to differentiate by spending heavily on advertising, customer services or product differences to over come existing customer loyalty?
1 2 3 4 5
N/A
Switching Costs Does the buyer have to pay to switch from one supplier product to another?
1 2 3 4 5
N/A
Capital Required Does the new company need to invest large financial resources?
1 2 3 4 5
N/A
Access to
Distribution
Does the new comer have access to distribution channel for product or services?
1 2 3 4 5
N/A
Cost advantage Established companies have cost advantages over new rivals.
1 2 3 4 5
N/A
Government
policies
Government policies can help to preserve or limit competition.
1 2 3 4 5
N/A
Expected
Retaliation
If industry leaders retaliate more for new entrants then threat for new entrants will be high.
1 2 3 4 5
N/A
Threat Of new Entrants:
(Four 4’s, Two 2’s, One 3s, One 1’s, one 5’s) So the threat of new entrants is High
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Intensity of Rivalry
Determinants Defining Question Assess the power of BuyersCircle one of the following.1 = low, 5 = high, or N/A if it doesn’t apply to your industry.
Industry growth How slowly or quickly is the industry growing? Intense fight among rivals for market share
1 2 3 4 5
N/A
Fixed Cost Does your business have a high fixed cost?
1 2 3 4 5
N/A
Product
Differentiation
Is your product commodity? The closer the product is to being a commodity the higher intensity of rivalry.
1 2 3 4 5
N/A
Switching Costs How costly is it for your buyer to switch between providers?
1 2 3 4 5
N/A
Intermittent
Overcapacity
How frequently is there a problem of excess capacity in your industry?
1 2 3 4 5
N/A
Brand Identity Is branding critical for your Rival’s success? Brand identification by buyer reduces the threat of rivals.
1 2 3 4 5
N/A
Concentration
and balance
Are there a large number of firms of equal size and power, all chasing after the same customer?
1 2 3 4 5
N/A
Diversity of
competitors
Are there competitors with different strategies and frame of reference? When competitors are diverse it is more difficult to establish the rules of game
1 2 3 4 5
N/A
Intensity of Rivalry:
(Three N/A’s, Three 2’s, One 3’s)
The rivalry is very intense and Low to Moderate.
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Bargaining power of Buyer
Determinants Defining Question Assess the power of BuyersCircle one of the following.1 = low, 5 = high, or N/A if it doesn’t apply to your industry.
Concentration Buyer is fragmented because to industry covers all Demographic segments.
1 2 3 4 5
N/A
Product Cost
versus Total
Purchases
!Unexpected End of FormulaDoes your product buyer’s purchase represent a significant fraction of the buyer’s cost? If so, buyer bargaining power is typically high.
1 2 3 4 5
N/A
Product
Differentiation
Product is standard or undifferentiated bargaining power is high.
1 2 3 4 5
N/A
Switching
Costs
If buyers face few switching cost there bargaining power is high.
1 2 3 4 5
N/A
Profits Profits with in the industry for buyers are if high then buyer’s power is high.
1 2 3 4 5
N/A
Backward
Integration
Can they make what you make themselves?
1 2 3 4 5
N/A
Impact on
Quality/
Performance
Is the product you offer important to the quality of the buyer’s product or services?
1 2 3 4 5
N/A
Buyers
Information
Does the buyer have complete information on the product he may purchase?
1 2 3 4 5
N/A
Bargaining Power of Buyer:
(Four 4’s, One 1’s, Two2’s One 5’s)The bargaining power of the buyer is High
Bargaining power of SuppliersBusiness Strategy & Policy, Summer 2010.
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Determinants Defining Question Assess the power of BuyersCircle one of the following.1 = low, 5 = high, or N/A if it doesn’t apply to your industry.
Concentration Are your supplier are
fragmented or highly
concentrated?
1 2 3 4 5
N/A
Presences of
Substitute
inputs
Are there any substitutes for
your supplier products?
1 2 3 4 5
N/A
Product
Differentiation
Is the supplier’s product or
service commodity?
1 2 3 4 5
N/A
Switching Costs How costly is it for you to
switch from suppliers product?
1 2 3 4 5
N/A
Importance
Relative to
Customer.
Is your industry an important
customer the supplier group?
1 2 3 4 5
N/A
Forward
Integration
Can the supplier produce the
product you make?
1 2 3 4 5
N/A
Impact on
Quality/
Performance
Is your supplier product
essential to the quality or
performance of your business?
1 2 3 4 5
N/A
Bargaining Power of Supplier:
(Three 4’s, Three 2’s, One 5,s)
So the Supplier power is HIGH
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Threat of Substitute
Determinants Defining Question Assess the power of BuyersCircle one of the following.1 = low, 5 = high, or N/A if it doesn’t apply to your industry.
Price
performance
Does the substitute offer a
better price performance?
1 2 3 4 5
N/A
Switching Cost Is it costly for buyer to switch
to the substitute product?
1 2 3 4 5
N/A
Threat of Substitutes:
(One 2’s One 3,s)
So the threat of substitute is Low to Moderate
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
The Strategy – Formulation Analytical Framework
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STAGE 1: THE INPUT STAGE
Company’s Strengths, Weaknesses, Opportunities & Threats
Strengths: Expansions in retail operations
Product Development
New distribution channels
Employees stock ownership plans
Market development
Perceive premium product
Product differentiation
Peaceful atmosphere (Especially service with music)
Proper customer guidance by providing wide ray of coffee selection & 0pportunities.
Evaluation of companies business lines (Assembly of experienced professionals increasing growth)
Quality of service
Employees training benefits
Weaknesses: Lack of employee compensations and benefits
Critical parking place at busy streets of North America
Sales saturation
Less spending on advertising
Employees overworked/under paid.
Decrease in sale of per store.
Opportunities:
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Direct relationships with coffee farmers
Providing ready access to consumer
Unroasted beans
Market Expansion (Pacific, Northwest & California, Boston, Washington)
International Expansion (more to Asia, Europe & Latin America)
Joint ventures (for achieving the target of more then 500 branches till 2003)
New product placement at existing coffee
Espresso bar Concept
Providing Organic products
Buying in long term contracts (By less spending on cost)
Coffee of the day (Fair Trade Coffee in North America)
Threats:
Anti Globalization movements
Plummeting pressure of Coffee Prices
Labor & real estate prices
Imports & Brokers (Sale to mass Market)
Less profit from joint ventures
Cash out from the business
Substitutes
Misuses of brand names
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STAGE 1: THE INPUT STAGE
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
COMPATITIVE PROFILE MATRIX (CPM) N/A
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.
INTERNAL FACTOR EVALUATION (IFE) MATRIX
FINANCIAL ANALYSIS
In Excel Sheet
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The Strategy – Formulation Analytical Framework
STAGE 2: THE MATCHING STAGESWOT Analysis
StrengthsS1:Expension in retail operationsS2:Product DevelopmentS3:New distribution channelsS4:Employees stock ownership plansS5:Market developmentS6:Perceive premium productS7:Product DifferentiationS8:Peaceful atmosphere (Specially service with music)S9: Proper customer guidance by Providing wide array of coffee selection.S10:Evaluation of companies business lines (Assembly of experience professionals increasing growth)S11:Quality of serviceS12:Employees training benefits
WeaknessesW1:compensations and benefits W2:Critical parking place at busy streets of North AmericaW3:Sales saturationW4:Less spending on advertisingW5: Employees overworked/Under paid.W6: Decrease in sale of per store.
OpportunitiesO1:Direct relationships with coffee farmersO2:Providing ready access to consumerO3:Unroasted beansO4:Market Expansion (Pacific, Northwest & California, Boston ,Washington)O5:International Expansion ( more to Asia, Europe & Latin America)O6:Joint ventures ( for achieving the target of more then500 branches till 2003)O7:New product placement at existing CoffeeO8:Espresso Bar ConceptO9:Providing Organic productsO10:Buying in long term contracts (By less spending on cost)O11:Coffee of the day (Fair Trade Coffee in North America)
SO Strategy
S 5 , S 7 & O 8:Use espresso bar concept in world
market which will ultimately
differentiate the product from
other coffee provider.
S 11 , O 2 & O 9:
We can create customer loyalty
through adding benefit to the
product.
WO Strategy
W 6 & O7 :
Can increase sale of per store by
placing out some new product at
existing coffee
ThreatsT1:Anti Globalize movementsT2: Reducing pressure of Coffee PricesT3:Labour & real estate pricesT4:Imports & Brokers ( Sale to mass Market)T5:Less profit from joint venturesT6:Cash out from the businessT7:SubstitutesT8:Missuse of brand names
ST Strategy
S4 & T8:Can avoid the misuse of brand
name by employee stock
ownership plan( employee loyalty)
WT Strategy
W4 & T1:
Can reduce the threat of
anti globalization movements
by advertisement.
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SPACE MATRIX
Internal strategic position External strategic position
X-Axis Competitive analysis Industry strength
-2 Product quality
-3 Market capital share
-4 Technological know how
-2 Control over distributors
+6 Profit potential
+5 Growth potential
+5 Financial stability
+5 Ease of entry into market
Average= -2.75 Average= 5.25
Y – Axis Financial Strengths Environmental Stability
+4 Cash flow from operations
+5 Liquidity
+5 Leverage
+6 working Capital
+4 Cash Flow from Operation
-4 Price range Competing Products
-2 Barriers to entry
-2 Competitive pressure
-5 Barriers to Exit
-3 Risk involved in business
Average= 4.8 Average= -3.2
Total X-axis score= -2.75 + 5.25 =2.50 Total Y-axis score= +4.8 – 3. 2 = 1.6
SPACE MATRIX (Graphical Presentation)
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The Space matrix results show Aggressive response of the company. In this position, the
company has to adopt the following strategies.
Backward, Forward & Horizontal Integration
Market Development
Product Development
Market Penetration
Diversification (Related or Unrelated)
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STAGE 2: THE MATCHING STAGE
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.
INTERNAL EXTERNAL (IE) MATRIX
The IFE total Weighted Scores
4.0 Strong (3.0-4.0) 3.0 Average (2.0-2.99) 2.0 Weak (1.0-1.99) 1.0
High
3.0_4.0
3.0
I II III
Medium
2.0
_2.99
2.0
IV V VI
Low
1.0_1.99
1.0
VII VIII IX
IFE score 2.86 ● EFE score 3.09
GROWTH AND BUILTBusiness Strategy & Policy, Summer 2010.
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IFE
EFE
Forward , backward, Horizontal integration
Product development
Market development
Market Penetration
GRAD STRATEGY MATRIX N/A
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.
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The Strategy – Formulation Analytical Framework
STAGE 3: THE DECISION STAGE
1. POSSIBLE STRATEGIES (Strategies Selection Table) Excel Sheet
2. QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM) Excel Sheet
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Value Chain of STARBUKS (Interlink Activities)
Currently Adding Value represented by (+)
Loosing value represented by (-)
Potential to add value represented by (P+)
Primary Activities:
Inbound Logistics:
Starbucks bypass the much of the middle market +
Starbucks Developed expertise and relationship with coffee growers themselves +
Taking out cost of its supply chain +
Joint venture with sazaby that had expertise in both retail and estate. +
Starbucks is giving direct support to the coffee growers. +
Company had purchased Peet’s Coffee and Tea, a Berkeley, California, Coffee roaster
and distributor, straining the company’s management and financial capabilities. +
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Company can pursue the opportunity of leverage the brand by introducing new
products and development of new distribution. (P+)
The New York “C” coffee prices remained at near record lows, decreasing
sourcing costs and increasing gross operating margins. (P+)
Operations:
Between 1995 and 1998 Starbucks had averaged $0.69 million per store. +
Company was continuing expand international operations at breakneck pace. +
Outbound Logistics:
Additional to its retail stores: +
1. It sells through specialty sales groups
2. Direct response business
3. Supermarket
4. Online selling at starbucks.com
Marketing and Sales:
Company is still spending less than $20 million per year on advertising. P+
Products type offering: +
Also sells bottled frappuccino coffee drinks & line of premium ice-cream through
its joint venture partners. +
Also offers a line of innovative premium teas produced by its wholly owned
subsidiary, Tazo Tea. +
$215 M profit on $3.29B sales in 2002 & expecting 25% growth in 2003. +
` New stores cannibalizing existing stores. (-)
Too many number of stores did created barriers for the competitors +
But this huge number of store owing led to downward trend in sales per stores. (-)
Before entering in any new country, the company first takes a complete research +
“Commitment to Origins” company program. +
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All the three coffees under “commitment to Origins” program was 20-25% more
expensive compared to Starbuks traditional blends. +
Starbucks introduced Fair trade coffee in North American stores and promoted it
through various brochures and promotions. +
Company can offer “Coffee of the day” per week rather than per month. P+
Corner locations, the hallmark of early growth store provided high visibility. +
It expanded all facets of the industry as distributed through traditional supermarket
distribution systems. +
It has three-legged stool for global development which are retail coffee and
assorted specialty items, specialty sales and Frappuccino coffee drinks and
specialty coffee ice creams sold through retailer globally. +
It can enhance its marketing decide under the leadership of Howard Schultz. +
R&D for new markets in which it has to enter.+
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. +
Explanation:Business Strategy & Policy, Summer 2010.
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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. +
Human resource management:Business Strategy & Policy, Summer 2010.
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Howard Schultz joined the company as member of marketing team. +
In decade of 1990s, Starbucks expand its talent pool on the most senior levels +
Starbucks is focusing on employee training. +
Company also giving health care benefits to the employees (more then 20
hour/week). +
First time Starbucks gave stock ownership to its employees. +
Starbucks bought all foreign managers to its Seattle offices for 13 day training. +
It can start employee benefits and motivation programs. P+
Recommendations
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Recommendations for Improvement:
1) Revamp the employee reward system
2) Tighten focus on creating the “Third Place” environment
3. Focus profitability measures on profitable sales, not just reduction in staffing
1) Revamp Employee Reward System: Large percentage of the staff are under the age of twenty
Benefits package focuses on medical, dental, and vision care, as well as the
employee stock options
Outside of hourly wage, and semiannual raises, there are few monetary rewards
2) Improve “Third Place” Environment
Site has a very high employee turnover rate
Manager “promoted” to a another store in hopes of improving their poor
performance
Site has very poor handicapped accessibility
Condition of restroom in each of our visits was poor and had no baby changing area
3) Focus Profitability Measures on More Than Just Staffing:
Store is underperforming on some high margin product segments
Too high a focus on minimizing direct labor as a key to achieve profitability
Focus on high-margin items and profitable add-on sales
By increasing pastry sales by 33%, store would realize a $16K increase in
contribution
Action Plan For Improvement
Decrease employee turnover rate
– Focus on hiring older employees where benefits package is more appropriate
– Base raises on performance rather than maximizing raises for economic reasons
– Develop and actively maintain a reward system for employees (i.e. employee of
the month)
– Develop a system of regular employee communications / meetings
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Improve site accessibility and cleanliness
– Upgrade front door and restrooms for handicapped accessibility
– Add a baby changing station
– Redesign restroom to separate cleaning supplies from bathroom or move
cleaning supplies to another location
– Focus employee attention on restroom cleanliness
Enhance Starbuck’s differentiated atmosphere
– Utilize entertainment budget to hire outside entertainers, have book / poetry
readings, etc.
– Display the store’s collection of games and activities more prominently
– Make the location more of a “scene”
Impacts
By focusing on the initial recruitment and hiring stage, and by rewarding
employees based on merit current turnover rates will be reduced.
By focusing on site accessibility and cleanliness, the physical facility will not
detract from atmosphere.
By improving Starbucks’ atmosphere, it will become a more attractive place to go.
Potential Risks
Customers may not react positively to the changes being made
Not enough available employees to meet re-aligned hiring needs
Claims of age discrimination and negative affect on sales in youth demographic
Costs associated with planned change
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