Balanced Scorecard

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Starbucks Balanced

Scorecard Project

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•Company Overview

•Purpose of Starbucks BSC

•Starbucks Strategy at the Store Level

•Starbucks BSC

•Causality Relationships for the Proposed BSC

•Consequences of New BSC

•Feasibility of Proposed Metrics

•Conclusion

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Company Overview

Established in 1971, since then have grown to become the leading retailer, roaster, and brand of specialty coffee in the world with locations in North America,

Latin America, Europe, Middle East, and Asia Pacific.

AS OF 2006 •Net revenue 7.8 Billion

•Net earnings 564 Million

•Earnings per common share diluted $0.71 •Number of countries Starbuck’s is located in 37

•Total retail stores world wide (excluding franchises) 12,440 •Number of partners (employees) worldwide 145,800

BSC Purpose

The purpose of this BSC is to develop

metrics that allow individual Starbuck’s

stores to measure current performance as

they align with the overall store strategy.

This scorecard incorporates both lagging

and leading metrics to create a holistic

view of performance as it pertains to the

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Starbuck’s Individual Store Strategy

1. To provide a clean and comfortable store

experience with consistent

quality products

and service

2. Contribute positively to our

communities &

environment

3. Provide a

great work environment

and treat

each other with respect and dignity

4. Recognize that

profitability

is essential to

success

• Source: Starbucks CSR brochure, tailored to the store level

Balance Scorecard

INTERNAL PROCESS PERSPECTIVE FINANCIAL PERSPECTIVE CUSTOMER PERSPECTIVE

LEARNING AND GROWTH PERSPECTIVE

Starbuck’s

Strategy

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GOAL MEASURE STRATEGY ALIGNMENT Knowledgeable Employees •Test scores on completed training units

(Leading)

• Number of products tested (Leading) •Number of training sessions completed (Leading)

•Number of employee suggestions submitted (Lagging)

•Strategy 1, 3, 4

Employee Satisfaction •Employee work referrals (Leading) •Length of employee tenure (Lagging) •Percent employee absenteeism (Lagging) •Employee satisfaction surveys (Lagging)

•Strategy 1, 2, 3, 4

LEARNING & GROWTH

LEGEND

Starbucks Store Strategy

1. Quality products/service 2. Contribute to communities 3. Great work environment 4. Profitability

GOAL MEASURE STRATEGY ALIGNMENT Customer

Satisfaction-Product Mix

•Survey (Lagging) •Percent total sale of new products (Lagging)

•Strategy 1, 4

Customer Satisfaction-Product (Drinks, pastries, etc.)

•In Store audits (Leading) •Number of returned drinks (Lagging) •Strategy 1, 4 Customer Satisfaction-Service •Number of complaints (Lagging) •Strategy 1, 3, 4 Continuous Community Involvement •Number of projects/month (Leading) •Number of volunteer hours/month (Leading) •Strategy 2, 4

CUSTOMER PERSPECTIVE

LEGEND

Starbucks Store Strategy

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Goal Measure Strategy Alignment Minimize Solid Waste •Number of customers using their own

mug (Both)

•Internal audit of solid waste (Lagging) •Percentage of products packaged in recycled/recyclable materials (Leading)

•Strategy 2

Initialize Quality Assurance •Randomly take temperatures of hot drinks (Both)

•Test employees product knowledge (Leading)

•Strategy 1, 4

Maintain a Clean, Safe, and Orderly Store

•Perform and document cleaning and maintenance inspections hourly (Leading) •Injury rate per hours worked (Lagging)

•Strategy 1, 4

LEGEND Starbucks Store Strategy

1. Quality products/service 2. Contribute to communities 3. Great work environment 4. Profitability

FINANCIAL PERSPECTIVE

Goal Measure Strategy Alignment Achieve Profitable YoY

Growth

•YoY net revenue growth (Lagging)

•YoY Operating Margin Growth (Lagging) •Revenue per employee (Lagging)

•Strategy 1, 3, 4

Make a Meaningful Contribution to the Community

•Measure % of net revenue going to community

(Leading)

•Strategy 1, 2, 3

LEGEND Starbucks Store Strategy

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Causality Relationships for Strategic

Objectives

Contribute positively to our communities and environment

Financial Customer Internal Learning/ Growth Contribution to the community Minimize Solid Waste Continuous Community Involvement Profitable Growth Employee Satisfaction

Causality Relationships for Strategic

Objectives

Provide a great work environment and treat each other with respect and dignity

Financial Customer Internal Learning/ Growth Knowledgeable employees Employee Satisfaction Maintain a clean, safe, and

orderly store Profitable growth Customer Satisfaction-Service

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Objectives

To provide a clean and comfortable store environment with consistent quality products and service

Financial Customer Internal Learning/ Growth Customer Satisfaction-Product Knowledgeable employees Employee Satisfaction Maintain a clean, safe, and

orderly store Profitable

growth

Minimize Solid

Waste Initialize Quality_Assurance Customer

Satisfaction-Service

Causality Relationships for Strategic

Objectives

Recognize that profitability is essential to success.

Financial Customer Internal Learning/ Growth Knowledgeable employees Maintain a clean, safe, and

orderly store Profitable

growth

Minimize Solid

Waste Initialize Quality_Assurance Customer

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Consequences and Behavior Changes

RELEVANT STAKEHOLDERS

• PARTNERS/EMPLOYEES

– Conflict between commitment/expectations of employees and

compensation

• ex. A barista getting paid minimum wage may not feel the need to put forth extra effort/time into community service

• SHAREHOLDERS

– Setting profitability as a strategy illustrates to shareholders that

Starbucks is keeping them in mind

• CUSTOMERS

– BSC will ensure consistent quality for the customer for each visit

Questions…

FINANCIAL • Achieve Profitable YoY Growth • Make a meaningful contribution to the community

LEARNING & GROWTH

• knowledgeable employees • employee satisfaction

CUSTOMERS

• customer satisfaction- product mix • customer satisfaction- product

(drinks, pastries, etc.)

• customer satisfaction- service • continuous community involvement

INTERNAL

• mi ni mi ze sol id wa ste • initialize quality assurance • maintain a clean, safe, and