2.1
Vision Statement
Starbucks vision statement is ;
” To establish Starbucks as the most recognized and respected brand in the world and become a national company with values and guiding principles that employee could
be proud of “
Conclusion :
The vision statement clearly describes the dream or the future of the company that is to be the worlds most well known coffeehouse and also to be the most appreciated and positively graded brand by all levels of people around the world. The company also focuses its vision
to employee satisfactions, so that the employees will be happy .
2.2
Mission Statement
Starbucks Mission Statement is ;
“ 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. 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 5. Contribute positively to our communities and our environment 6. Recognize that profitability is essential to our future success.
Analyzing the Mission Statement Component
Starbucks mission statement is needed to be analyzed to see the total number of mission component it has . NO COMPONENT YES/NO 1 . Customers Yes 2 . Products or services Yes 3 . Markets Yes 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
This is a good mission statement. This mission statement lacks of 2 components: Technology and Concern for employees. The company must evaluate whether it is
technologically advanced and even though the company’s vision is concern to employee, it still have to add it in mission statement.
2.2.1 Proposed Mission Statement
Establish Starbucks as the premier purveyor1 of the finest coffee in the world and also to be
established as the most employee valued company while maintaining our uncompromising principles as we grow together with technological 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 5. Contribute positively to our communities and our environment 6. Recognize that profitability is essential to our future success.
Porters five Forces :
Porter’s Five Forces Table Porters five Forces Details Industry profitability
Rivalry Among Competing Firm
HIGH
There is intense competition in the coffee market amongst established coffee shops that are fighting to get customers. There are local coffee shops offering specials to lure potential customers in. Restaurants are opening earlier and closing later to accommodate customers on the go. With the 85% North American customers taking their coffee to go, convenience is a major factor
LOW
Potential of new competitors
HIGH
There is a great deal of risk of entry by potential competitors due to the low start up costs. McDonalds is able to add specialty coffee to their existing services to tap into the specialty coffee market. There is potential of $125,000 per year in revenue to be made by each store if they are able to successfully enter the specialty coffee market .
Potential development of substitute products HIGH
Water is a substitute which is healthy for us and it is free. The option to buy bottled water is also inexpensive compared to coffee. With the focus on healthier living, water is the ultimate choice .
LOW
Bargaining power of suppliers
HIGH
There is more bargaining power for suppliers of technological innovations such as automated coffee machines, latte and espresso machines, etc because there are not as many suppliers for such equipment as there are for coffee beans
LOW
Bargaining power of consumers
HIGH
Customers did not really have bargaining power when it came to premium coffee such as Starbucks. The sheer scale of Starbucks’ business reduces the bargaining power of any single group of buyers.
LOW
Competitive Profile Matrix
Starbucks Caribou coffee Gloria Jean’s coffee CRITICAL SUCCESS FACTOR WEIGHT (WT) RATING WT SCORE RATING WT SCORE RATING WT SCORE Advertising 0.10 4 0.40 4 0.40 3 0.30 Product Quality 0.20 4 0.80 3 0.60 2 0.40 Price Competitiveness 0.05 2 0.10 3 0.15 3 0.15 Management 0.08 3 0.24 2 0.16 3 0.24 Financial position 0.05 3 0.15 3 0.15 2 0.10 Customer loyalty 0.10 3 0.30 2 0.20 2 0.20 Global expansion 0.15 4 0.60 2 0.30 2 0.30 Employee benefits 0.10 4 0.40 2 0.20 2 0.20 Customer Service 0.17 3 0.51 2 0.34 2 0.34 TOTAL 1.00 3.50 2.50 2.23
Starbucks shown highest score and the second highest were Caribou Coffee and Gloria Jean’s coffee shows the lowest Score. The competitive profile matrix (CPM) weighs product quality. The product quality (0.20) and is the most important item on the list of critical success factors. Starbucks score on this factor as the highest in comparison to their two chief competitors, Caribou and Gloria and reflecting a distinctive competitive advantage in the market. Customer service 0.17, Employee benefits 0.10 and global expansion 0.15 replicates a high level of importance on the CPM. The advertising weight, 0.10, on CPM does not reflect a high level in ranking the critical success factors, but does release valuable information in comparison to their competitors on the CPM. Starbucks rates and scores the lowest on the price competitiveness factor .
Internal Factor Evaluation Matrix
Key Internal Factors Weight
Rating Weighted Score
Strengths 1. Huge market expansion to China,
Brazil, India and Russia 0.21
4 0.84
2. Provide a great work environment 0.10
4 0.40
3. Apply the highest standards of excellence in services.
0.10 3
0.30
4. Starbucks has monopolistic advantages over its competitors. 0.10
3 0.30
Key External Factors Opportunities Weigh t Ratin g Weighted Score
Globalization makes it easy to enter international market 0.15
4 0.60
People are looking for cheap internet connections .
0.10 3
0.30
Express foods are getting famous to reduce time to be spent . 0.10
2 0.20
Demand for non-chemical and healthy products .
0.10 3
0.30
Threats Increase in the inflation rates creates a demand in lower priced products .
0.15 3
0.45
Many companies are pricing their products cheaper to impress customers .
0.20 3
0.60
Increase in hypermarkets and economical supermarkets 0.10 2 0.20 1.00 2.55
5. Purchased Ethos healthy water for 8 million and also does not use chemical flavor for coffee.
0.12 4
0.48
6. Launching the sales of
Frappuccino in Japan and Taiwan. 0.08
3 0.24
Weaknesses 1. Price of coffee is high at Starbucks 0.10
2 0.20
2. less marketing and advertising its product
0.07 2
0.14
3. Starbucks products are not available at supermarket 0.12 2 0.24 TOTAL 1.00 3.14 SWOT ANALYSIS: STRENGTHS
Huge market expansion to China, Brazil, India and Russia
Apply the highest standards of excellence in services .
Starbucks has monopolistic advantages over its competitors .
Purchased Ethos healthy water for 8 million and also does not use chemical flavor
Launching the sales of Frappuccino in Japan and Taiwan
WEAKNESSES
less marketing and advertising its product
OPPORTUNITIES O1 .
Globalization makes it easy to enter international market
O2 .
People are looking for cheap internet connections O3 . Express foods are getting famous to
reduce time to be spent O4 .
Demand for non-chemical and healthy products SO Strategies
S1,S3,O1,O2,O3 Do advertisements about the FREE internet connections and the excellent service they provide .
S5,O4 Starbucks shall increase the healthy products into market as the demand for it is high .
WO Strategies W1,W2,O1,O3 Reduce the price and Advertise the products all over the places .
W1,W3,O3 Do R&D to sell products at supermarkets without reducing the quality with cheap price
THREATS
ST Strategies S2,S3,S4,T1,T2 Starbucks needs to change its market strategy by reducing the
price to compete with the competitors .
WT Strategies W1,W2,T1,T2 Create new complementary products which contain good quality and lower price to attract more customers .
W3,T3 Starbucks needs to analyze the way to reduce the risks of selling its coffee products at supermarkets as customers are demanding for it .
3.2.4 Space Matrix
FINANCIAL STRENGTHS T1 .
Increase in the inflation rates creates a demand in lower priced products .
T2 . Many companies are pricing
their products cheaper to impress customers .
T3 .
Increase in hypermarkets and economical supermarkets
RATING
A Starbucks asset is financed through equity and is safe if creditors start to demand repayment of debt. Long term debt-to-equity ratio is only 0.0017. 5
Starbucks Return on Asset ratio shows that in year 2005, the efficiency of using assets to generate earning has increased from 12% to 14%. 4
Starbucks net income increased to $494.5 million in the year 2005 compared with $388.9 million in 2004. There is an increase of 21.3% in the income of Starbucks.
4
13
INDUSTRY STRENGTHS
Starbucks Coffee Liqueur was the top selling new spirit product, grossed sales over $8million annually.
4
Starbucks agreed to serve Starbucks Coffee in all United flights. 3
“Starbucks Everywhere” approach has increased foot traffic for all the stores in area. This makes customers easy to fine Starbucks all the places in town.
5
12
ENVIRONMENTAL STABILITY
RATING
Starbucks products prices are high compared with competing coffee houses. They price their products several dollars below then Starbucks price.
-4
Demand for Starbucks products to be supplied in supermarkets
increase. But, doing that will put Starbucks business in risk as customers don’t know the way to brew the coffee.
-2
Increase in world coffee bean price in 2001, forced Starbucks to increase its beverages and coffee sold at retail.
-3 -9 COMPETITIVE ADVANTAGES RATING
Starbucks coffee and beverages are high in quality brewed by well trained employees.
-1
Starbucks teamed up with T-mobile WI-Fi service to provide internet access to all over Starbucks Coffeehouse
-1 + 6 = best + 1 = worst
There are 16,120 Starbucks coffeehouses worldwide and plan to open another 1800 stores.
-2
Starbucks is a customer oriented Coffeehouse.
-2
-6
