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Business Strategy Assignment 1

In: Business and Management

Submitted By varsha58
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Final Strategic Plan: Starbucks
Debbie Pryer, MGT578 Strategy Formulation and Implementation
University of Phoenix Table of Contents
Executive Summary 3
Company Background 4
Vision Statement 4
Recommended Vision Statement 5
Mission Statement 5
Values Statement 7
Environmental Analysis 7
Long Term Objectives 14
Strategic Analysis and Choice 15
Plan Goals and Implementation 18
Financial Projections and Analysis 20
Critical Success Factors 24
Controls and Evaluation 25
Conclusion 26
References 28

Executive Summary
Starbucks Coffee Company, Seattle, Washington, is in an enviable position – high growth, few competitors, strong financials, loyal customers, talented management and employees, and brand recognition – so why create a strategic plan? The company faces many threats and opportunities, and if Starbucks wants to continue its success story, a strategic plan will help them continue to achieve stellar results.
Starbucks’ vision is to have coffeehouses in every neighborhood around the world, and will continue to grow by finding and delivering the world’s best coffee to the world’s best customers without compromising our world-class principles. An internal analysis shows Starbucks has more strengths than weaknesses, while an external analysis points to several threats and many obvious opportunities. The key is in choosing the right strategies to minimize threats and maximize opportunities.
Starbucks should focus on the following three strategies: (1) expand the U.S. market, (2) broaden the product line, and (3) expand the China and Eastern Europe markets. Dedicating resources to the three recommended strategies will require significant financial commitments that will put a strain on the company’s cash position, but the rewards will be phenomenal.
Implementing the strategic plan will take a Herculean effort, but we have the right team and capital in place. Measuring and monitoring results will be instrumental in reaching our strategic goals. You will find Starbucks secret recipe for success in the following strategic plan, so grab a cup of java and enjoy! Company Background
Starbucks purchases and roasts coffee beans and sells them, along with beverages, pastries, and coffee-related accessories and equipment – primarily through their 8,500+ company-owned and operated stores. Additionally, the company sells coffee products through a specialty sales group and supermarkets. Starbucks is often touted as one of the world’s most successful companies and a great place to work, while also being credited with creating an entire industry sector almost single-handedly. On the other hand, critics pontificate that Starbucks has reached market saturation, cannibalized its products, and opened too many stores.
Starbucks maintains that, in order to achieve their goals, they plan to “continue to rapidly expand its relation operations, grow its specialty sales and other operations, and selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products and the development of new distribution channels” (Starbucks, 2005). To maintain its phenomenal growth and continued success, Starbucks must have a core purpose and values that remain fixed, while their strategies and practices must continually adapt to change. A vision statement is the logical starting place for a Starbucks’ formal strategic plan.
Vision Statement
An organization’s vision should be the dream – where the company wants to go, what it wants to be. A vision statement might be seemingly unattainable or always just out of reach, because the mission statement will show how the organization plans to achieve the vision. Starbucks vision harkens back to CEO Howard Shultz’s 1983 visit to Italy, where he witnessed espresso bars on nearly every corner, likened to “extensions of the front porch in each neighborhood,” and each coffeehouse had bartenders, called baristas, who had strong bonds with their customers (Ioannou, 1998). Today, Starbucks operates in nearly 10,000 locations worldwide and serves over 33 million customers each week (Starbucks Company Profile, 2005).
Recommended Vision Statement
Starbucks currently does not have an official vision statement; rather, their vision is wrapped into their mission statement. It is this author’s recommendation that Starbucks officially adopt the following vision statement: Starbucks’ vision is to have coffeehouses in every neighborhood around the world.
Mission Statement
An organization’s mission is analogous to a compass, guiding the organization to a destination (or vision) that will forever be pursued but never really reached. A mission statement defines an organization’s core purpose – or why they exist – and acts as a beacon for the work being done. The mission statement should be a cross between a memorable slogan and an executive summary. Starbucks’ mission statement is shown in Exhibit 1. Exhibit 1. Starbucks Mission Statement (Starbucks.com, 2005).
Recommended Mission Statement
Starbucks mission statement could be more simple, clear and concise; it is not easily understandable, nor is it memorable. In this author’s opinion, Starbucks’ mission statement could do a better job of saying who the company is, what they do, what they stand for, and why they do it; additionally, their mission statement seems to be so lengthy that neither stakeholders, customers, nor employees will remember the mission statement. It is this author’s recommendation that Starbucks adopt the following mission statement: Starbucks will continue to grow by finding and delivering the world’s best coffee to the world’s best customers without compromising our world-class principles.
Values Statement
An organization’s values are just as complex as they are simple, as values are more than written words or slogans. Values are developed and displayed by organization’s and people’s behaviors in the context of “corporate culture, brand identity, service standards, codes of conduct, and individual’s core ethics” (Celemi.com, 2005).
A value is an orientation or an idea that an individual considers correct and important. Corporate values represent the common denominator, in an organization as in a company, or that which people consider worth striving for in this context. Corporate values determine business aspects, policies and strategies, all relevant management processes, as well as the daily cooperation of employees within the company and/or with customers, suppliers, and contractual partners (Duetsche Post AG, 2004).
Recommended Values Statement
The guiding principles contained in Starbucks’ mission statement serve as the company’s value statement, and determine how the company will “measure the appropriateness of [their] decisions” (Starbucks.com, 2005). Starbucks six guiding values are: (1) great work environment, (2) embrace diversity, (3) high standards for coffee, (4) customer satisfaction, (5) communities and the environment, and (6) profitability. It is this author’s recommendation that Starbucks’ current guiding principles remain unchanged.
Environmental Analysis
The purpose of an environmental analysis, in the context of strategic planning, is to identify ways that changes in the business environment can directly influence an organization. The following paper examines Starbucks’ internal and external environment, strengths, weaknesses, opportunities, threats, and trends. Several major expected environmental changes and their impact on Starbucks over the next ten years will be presented, along with a set of long-term objectives for the company.
Successful strategic management depends on an accurate and thorough evaluation of an organization’s environment, recognizing internal strengths and weaknesses as well as external opportunities and threats. Additionally, forecasting future trends is critical to develop a clear sense of market opportunities and threats.
Internal Analysis
An analysis of Starbucks’ internal environment focuses on resources and core competencies to determine strengths and weaknesses. Resources refers to “inputs to production that can be accumulated over time to enhance the performance of the firm,” while core competencies means “something a company does especially well relative to its competitors” (Bateman-Snell, 2003). The internal analysis for Starbucks will focus on the five resource areas shown in Exhibit 2.

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