Starbucks Strategy

Formulation and Evaluation

ABOUT STARBUCKS

2
ABOUT STARBUCKS

1971: First Store in Seattle

1982: Howard Schultz Joined
2015: 70 Countries - 22,519 Stores

MISSION STATEMENT
To inspire and nurture the human spirit one
person one cup and one neighborhood at a time.
STARBUCKS INTERNAL
AND EXTERNAL
ENVIRONMENT
SCANNING

4
EFAS 3.7
Opportunities Weight Rating Weighted Comments
25
Score
O1: Globalization 0.20 4.0 0.8 Easier to Enter New Markets

O2: Demography 0.10 3.0 0.3 Growing Target Age Group

O3: Growing Middle 0.05 2.5 0.125 More Purchasing Power

Class
O4: Technology 0.10 4.0 0.4 Easier to Connect with Partners, Customers, and
Suppliers

O5:Growing Coffee 0.05 3.0 0.15 Increasing Potential Customers

Culture

Threats Weight Rating Weighted Comments

Score
T1: Increasing 0.20 4.5 0.9 Very high at Local Levels
Competition
T2: Increasing Cost 0.15 4.0 0.6 Affecting Pricing Strategies

T3: Increasing Health 0.05 4.5 0.225 Health Groups fighting Reputation
Concerns
T4: War on Terrorism 0.05 2.5 0.125 Lower Marginal Propensity to Consume

T5:Racial & Political 0.05 2.0 0.1 Negative Image at Frequent Incidents
Sensitivity
Total 1.0 3.725
 3.9
IFAS 5
2
Strength Weight Rating Weighted Comments
Score
S1:Integrated Supply Chain 0.20 5.0 1 Total Control over Input Variables through
Acquisitions and Partnerships
S2:Brand 0.10 4.5 0.45 Number 1 Brand
Highest Market Share
S3:Strong Financial Position 0.10 3.5 0.35 Supports Further Acquisitions and Attraction
to Investors
S4:Company-Performance-Based 0.05 3.0 0.15 Employees share the success of the overall
Incentives company
S5:Product Diversity 0.05 2.5 0.125 Sufficiently Covering all Components of the
target experience
Weaknesses Weight Rating Weighted Comments
Score
W1:Higher chances of imitation 0.20 3.0 0.6 Products easy to copy. There is little
technicality about producing coffee.
W2:High prices of products 0.05 4.5 0.225 differentiate their products with highly quality
couple with the whole ‘Starbucks Experience’
W3:Overdependence on revenues 0.10 4.5 0.45 U.S. is the most important market for the
from the United States market company generating at more than 71.5% of its
total revenue.
w4:Only American/European 0.10 4.0 0.4 Starbucks coffee is not customized to local
coffee culture tests
middle east for example
w5:Coffee dominant business 0.05 3.5 0.175 Need to diversity

Total 1. 0 3.925
 STRENGHS WEAKNESSES
• Core and Distinctive Competency : Unique
Experience • Imitability
• Diverse Business Model: Coffee, Beverage, • Overpriced Coffee
Food, Merchandize • Overdependence on revenues from the
• Strong Marketing Mix United States market
• Customer Focused Organizational Structure • Business Dependent on Coffee
• Strong Financial Position
• Strategic R&D: Farmer support center
• Strong Supply Chain
• Stock Options for Employees
• Brand
OPPORTUNITIES THREATS

• Globalization : opportunity for expansion • Increasing Competition

• Demography: Target Segment age of • Increasing Health Concerns
20-40 • Increasing Costs
• Growing Middle Class • War on Terrorism
• Growing Coffee Culture • Sensitive Situation Against Racism
• Technology Development –BitCoin, • Sensitive Situation Against Political
Stance
STARBUCKS STRATEGY
FORMULATION

8
 STARBUCKS STRATEGY
FORMULATION

Corporate Business Functional

Strategy Strategy Strategy

9
STARBUCKS STRATEGY
FORMULATION

Corporate Busines
s Functiona
l

Strategy Strateg
y
Strategy

10
STRATEGY-FORMULATION FRAMEWORK
POSITION MAP
 SFAS MATRIX
Strategic Factors Weight Rating Weighted Comments
Score
S1:Integrated Supply Chain 0.10 3 0.3

S2:Brand 0.10 4 0.40 Most valuable brand in the

coffeehouse segment
S3:Strong Financial Position 0.10 3 0.30 Increase profitability
W1: Higher chances of imitation 0.10 4 0.4

W4:Only American/European coffee culture 0.05 2 0.1

O1: Globalization 0.10 4 0.4

O2: Demography 0.10 3.5 0.35

O3:Technology 0.07 4 0.28

T1: Increasing Competition 0. 10 2.5 0.25 Lower price and product Varity of
compotators
T2: Increasing Cost 0.10 1.5 0.15 Higher price compered with
compotators.
T3: Increasing Health Concerns 0.08 3.5 0.28
Total 1.0 3.21
 TOWS MATRIX
Strengths Weaknesses
1. Core and Distinctive 1. Imitability
Competency 2. Overpriced Coffee
2. Diverse Business Model 3. Overdependence on revenues from
3. Strong Financial Position the United States market
4. Strong Supply Chain 4. Business Dependent on Coffee
5. Brand 5. Only American/European coffee
culture

Opportunities S3-O1: Expansion more W1- O2 : Free Cups after x

1. Globalization : opportunity for and opening new shops number of visits
expansion S5-O5: create new W1- O3: expansion in new
2. Target Segment age of 20-40
3. Growing Middle Class business line& innovation markets
4. Growing Coffee Culture for work system
5. Technology Development

Threats S4-T3: minimize W5-T1: Create unique flavors

1. Increasing Competition production cost and Great Service
2. Increasing Health Concerns S3-T1: product& market W1-T2: Create products
3. Increasing Costs
4. War on Terrorism development. related to Health concerns
5. Sensitive Situation Against Political
Stance
 THE SPACE MATRIX (1)
Internal Strategic Position External Strategic Position
Financial Position (FP) Stability Position (SP)
Cash Flow +4 Price Range of Competing Products -4
Liquidity +5 Barrier to Entry -5
Leverage +5 Competitive Pressure -2
Working Capital +6 Risk involved in Business -3

Average +5 Average -3.5

Competitive Position (CP) Industry Position (IP)
Product Quality -2 Profit Potential +6
Market Share -3 Growth Potential +5
Technology Know How -4 Financial Stability +5
Control Over Distributor -2 Ease of Entry into Market +5
Average -3.5 Average +5.2
5
 THE SPACE MATRIX (2)

Starbucks is a +7 -
financially Conservati +6 - Aggressi
ve +5 - ve
strong +4 -
Company that +3 - (2.5,
achieved major +2 - 1.75)
competitive -7 -6 -5 -4 -3 -2 -1 +1 - +1 +2 +3 +4 +5 +6 +7
advantage in a

-
-

-
-
-

-
-

-
-
-

-
-

-
- -1
growing and - -2
stable industry --3
-- 4
Defensi - -5
- -6 Competitiv
ve e
- -7
BCG MATRIX
INTERNAL – EXTERNAL MATRIX (IE
MATRIX)
*Grow& Build
- Backward ,
Forward, or Total weight IFAS=
Horizontal 3.9
integration
- Market Penetration Strong Average Weak
- Market 3.0 to 2.0 to 1.0 to
Development
- Product 4.0 2.9 1.9
Total weight

Development
EFAS= 3.72

High
3.0 to
4.0

Medium
2.0 to
2.9
Low
1.0 to
1.9
 GRAND STRATEGY MATRIEX

Rapid Market
Growth
Market Development* Market development*
Market penetration* Market penetration*
Quadrant Product development* Product development*
II Horizontal integration* Forward integration*
Divestiture* Backward integration*
Liquidation*
Horizontal integration* Quadrant I
Related diversification*
Weak Strong
competitive competitive
Position Retrenchment* Position
Related diversification*
Related diversification* unrelated*
Unrelated* diversification
diversification Quadrant IV
Quadrant Joint ventures*
Divestiture*
III
Liquidation*

Slow Market Growth

 Quantitative Strategic Alternative
Quantitati Strategic Alternative
Strategic planning
ve Strategic option Strategic Strategic option Strategic
Strategic 1 option 2 1 option 2
Product Market Product Market
planning development penetration
development penetration
Key factor AS TAS AS TAS
Key factor Wight AS TAS AS TAS Strength Wight
Opportunities S1:Integrated Supply Chain 0.20 3 0.6 4 0.8
O1: Globalization 0.20 S2:Brand 0.10 4 0.4 4 0.4

0.10 S3:Strong Financial Position 0.10 2.5 0.25 3.5 0.35

O2: Demography
S4:Company-Performance-Based 0.05 2 1 2.5 1.25
O3: Growing 0.05
Incentives
Middle Class
S5:Product Diversity 0.05 4 0.2 3.5 0.175
O4: Technology 0.10
Weaknesses Weight
O5:Growing Coffee 0.05
W1:Higher chances of imitation 0.20 3.5 0.7 2.5 0.5
Culture
W2:High prices of products 0.05 2 0.1 2.5 0.125
Threats Weight
W3:Overdependence on revenues 0.10 2 0.2 4 0.4
T1: Increasing 0.20 3 0.6 2.5 0.5 from the United States market
Competition
w4:Only American/European 0.10
T2: Increasing Cost 0.15 2 0.3 0.3 0.375 coffee culture
T3: Increasing 0.05 w5:Coffee dominant business 0.05
Health Concerns
T4: War on 0.05 S1:Integrated Supply Chain 0.20
Terrorism
T5:Racial & 0.05 1.0
Total
Political Sensitivity
Total 1.0
 QSPM MATRIX

https://www.scribd.com/document/348068876/
starbucks-sm
 STARBUCKS STRATEGY
FORMULATION

Corporat
e
Business Functiona
l
Strateg

Strategy
Strategy
y

23
 STARBUCKS STRATEGY
FORMULATION

Corporat
e
Business
Functional
Strategy

Strategy
Strategy

25
STARBUCKS EVALUATION
& CONTROL

27
THANK YOU