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STARBUCKS STRATEGIC AUDIT

Strategic Audit Describe

Areas

: History
1. Industry situation – Coffee is a brewed drink prepared from roasted seeds, commonly
1.1. History, called coffee beans, of the coffee plant. It is thought that the
Development, Issues energizing effect of the coffee bean plant was first recognized in
Yemen in Arabia and the north east of Ethiopia, and the cultivation
of coffee first expanded in the Arab world. The earliest credible
evidence of coffee drinking appears in the middle of the fifteenth
century, in the Sufi monasteries of the Yemen in southern Arabia.
From the Muslim world, coffee spread to Italy, then to the rest of
.Europe, to Indonesia, and to the Americas

The earliest credible evidence of either coffee drinking or knowledge

of the coffee tree appears in the middle of the fifteenth century, in
the Sufi monasteries around Mokha in Yemen. It was here in Arabia
that coffee beans were first roasted and brewed, in a similar way to
how it is now prepared. although Ethiopian was been the first to
recognize the energizing effect of the coffee bean plant , It is
believed that the coffee beverage was first made and drunk was in
Yemen, and then the beverage went to Egypt. After that in started
. to spread rapidly all over the world

:Industry development
By the 16th century, it had reached the rest of the Middle East,
Persia, Turkey, and northern Africa. Coffee then spread to Italy,
.and to the rest of Europe, to Indonesia, and to the Americas

From the Muslim world, coffee spread to Italy. From Venice, it was
introduced to the rest of Europe. The first European coffee house
opened in Italy in 1645. Coffee was introduced in France in 1657,
.and in Austria and Poland after the 1683

In the same time coffee was becoming popular in America also, in

1668 coffee overtook beer as New York City's favorite breakfast
.drink
During the 18 century coffee had been introduced to Brazil in 1727,
although its cultivation didn't gather momentum until independence
.in 1822

Coffee also become very popular in America . The territory of San

Domingo (now Haiti) saw coffee cultivated from 1734, and by 1788
.it supplied half the world's coffee

Coffee Cultivation was taken up by many countries in Central

.America in the latter half of the 19th century

In the 20 century , new coffee beverage accurse. First, coffee

industry witnessed a big step by using steam pressure to produce
a drink called "espresso". The modern espresso machine was born
in Milan in 1945 by Achille Gaggia. and from there spread across
coffeehouses and restaurants across Italy and the rest of Europe
and North America in the early 1950s. An Italian named Pino
Riservato opened the first espresso bar, the Moka Bar, in Soho in
.1952, and there were 400 such bars in London alone by 1956
.Cappucino also was particularly popular among English drinkers

During this period, many coffee houses were opened and the coffee
industry becomes very popular. Most coffee houses were locals ,
some international houses and industries were produced such as: "
Starbucks" that began as a modest business roasting and selling
quality coffee beans in Seattle in 1971 and then become one of the
.most popular coffee industries over the world

:Industry issues

:Producers of coffee

The largest coffee producer in the world is Brazil, they produce 28%
of the worlds supply of coffee. Colombian coffee is extremely famous
but even so they only produce 16% of the worlds output. Indonesia
produces 7%, and Mexico is the fourth largest producer of coffee at
4%.

Coffee cultivation:

Coffee is usually propagated by seeds. The traditional method of

planting coffee is to put 20 seeds in each hole at the beginning of
the rainy season; half are eliminated naturally.

Coffee trees can be grown in a number of different locations,

however they are best when grown at locations with high altitude.

Brazil has a number of very large plantations that cover huge areas
of land. Hundreds of workers are employed to harvest and process
the beans. In Colombia most of the transportation of the beans is
done by mule or Jeep due to the treacherous conditions and poor
 economy. A more effective method of growing coffee, used in Brazil,
is to raise seedlings in nurseries that are then planted outside at six
to twelve months. Coffee is often intercropped with food crops, such
as corn, beans, or rice, during the first few years of cultivation.

The importance of coffee for the economy:

Coffee is deeply integrated into world economics, and not only in

the U.S. and Western Europe. Today, coffee is second only to oil on
the world market. More than 60 developing countries' economic
depends on coffee. In recent years revenues from coffee exports
have fluctuated around USD 10 billion with retail sales of around
USD 50 billion. for example Ethiopia’s economy depends heavily
upon the coffee market, and while the commodity has become
increasingly competitive.

One of the major problems:

Although coffee and its industry has this importance some people
has a wrong information about its effects in the health, this issue
was a major problem , many people say that aver years they drink
less coffee and when National Coffee Drinking Trends searched
about the reason 57% of the people were doing that6 because of
health concerns.

2. Company situation

2.1. History, development, 1971: Starbucks opens first store in Seattle’s Pike Place Market.
problems 1982: Howard Schultz joins Starbucks as director of retail
operations
and marketing.
1983: Howard travels to Italy, where he’s impressed with the
popularity of espresso bars in Milan. He sees the potential to
develop a similar coffeehouse culture in Seattle.
1984: Howard convinces the founders of Starbucks to test the
coffeehouse concept in downtown Seattle, where the first Starbucks
Caffè Latte is served.
1986: Schultz founded Il Giornale
1987: Giornale acquires the assets of Starbucks, and change the
company name to Starbucks corporation.
Starbucks opens first stores outside of Seattle area in Chicago
and Vancouver, British Columbia.
1988: Starbucks introduces a mail order catalog, with service to all
50 states.
 Offers full health benefits to full- and part-time employees.
1991: Becomes the first privately owned U.S. company to offer a
stock option program that includes part-time employees.
1992: Completes initial public offering (IPO), with common stock
being traded on the Nasdaq National Market under the trading
symbol “SBUX.”
1996: Joins with Pepsi-Cola North America to begin selling bottled
Frappuccino® coffee drink – our first ready-to-drink beverage.
Opens first store outside of North America in Japan.
1997: Establishes The Starbucks Foundation, benefiting local
communities.
2000: Howard Schultz moved from being the chairman and CEO of
Starbucks to being the chairman and chief global strategist. Orin
Smith was promoted and took Howard Schultz previous position.
Starbucks entered into a licensing agreement with TransFair USA to
market and sell Fair Trade CertifiedSM coffee.
2001: Introduces coffee-sourcing guidelines developed in
partnership with Conservation International.
Introduces the Starbucks Card.
Offer high speed wireless internet access in stores.
2002: Starbucks enters into licensing agreements with national Fair
Trade organizations to sell Fair Trade Certified™ coffee in the
countries where Starbucks does business.
Current problems:
- problems due to economic recession in countries such as
Switzerland, Germany, and Japan in the early 2000s, where it
experienced declining sales and revenues.
- real expectation of huge recession during the next year
due to the worldwide financial crisis may affect the company’s
results badly.
- Arab countries & Middle East rumors that Starbucks is sponsoring
the Jewish community against Palestinian crises.
- Arab boycott of American goods and services, after the war on Iraq
and because of close relationship between the United States and
Israel.
- The problem which appeared among the employees that they
started to feel unappreciated and felt that the prior management
had neglected them.

2.2. Present strategic In the following sub-sections (a, b, c, and d), analyze the current
posture vision/mission/goals/objectives/STRATEGIES/ structure& culture of
the firm

2.2. a. Current • Vision:

vision/mission To become an international company with values and guiding
principles that employee could be proud of.

• Mission:
“To inspire and nature the human spirit- one person, one cup
and one neighborhood at a time” throw:
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.
4- Roasting and fresh delivery of our coffee.
5
5- Develop enthusiastically satisfied customers all of the
time.
6- Contribute positively to our communities and our
environment, and recognize that profitability is essential to
our future success.
Application of these principles can be used as a guideline for
all employees from managers to workers to aim to achieve
the company’s goals, while maintaining a certain type of
standard.

2.2. b. Current Goals: To establish Starbucks as the most recognized and respected
goals/objectives brand in the world. The objectives of Starbucks are:

• To build a company that valued and respected its

people, that inspired them and that shared the fruits of
success with those who contributed to the company’s long
term value.
• To become the most respected brand name in coffee
and for the company to be admired for its corporate
responsibility.
• To open about 1300 new stores worldwide and to
have a sales growth of about 3-7%.
• To grow revenues by 20% and net earnings by 20-
25% annually for the next 3-5 year.

2.2. c. Current strategies

The current Starbucks corporate strategy is stability in USA and
growth world wide, It follow concentric (related) diversification
- Corporate Strategy
strategy, where is focus at the high quality coffee industry which is
the main business and diversify to other some food product. Its
growth in coffee industry is horizontal where Starbucks serve so
many different kinds of high quality coffee and beans.

Starbucks corporate strategy has been to establish itself as-

the premier purveyor of the finest coffee in the world, while
maintaining their uncompromised principles as the growing. The firm
principles of the company are seen with its maintenance of a great
and proven work environment for every staff member in its retail
stores. It upholds diversity and promises the highest standards for
its products. The company satisfies customers and gives back to the
community and the environment. Also, Starbucks persists to be
profitable and it is. They live by a strict, slow growth policy
completely dominating a market before setting its sights further
abroad. This strategy has gained them the advantage of being one
.of the fastest growing companies in the country

To differentiate its products based on their unique features-

- Business Strategy
 and brand image it uses beans with high quality and highest style
coffee and it present in more than 55 countries. Starbucks also
offers variety of products which are specialized with the local
country’s needs.we can say that starbucks Embrace diversity as an
.essential component in the way that they do their business

- Functional Strategy Starbucks maintain an environment that fosters open and-

direct communication between managers and employees as the
most effective way to work together and resolve differences, and
respects its employees’ rights to participate in a collective
bargaining process should they so choose. In addition Starbucks
Apply maintain the highest standards of excellence to the
purchasing, roasting, and fresh delivery of their coffee. Starbucks
preserves its superior products in the industry by using the highest
.quality of supplies

-The current structure of Starbucks was about believing that its employees
2.2.d.Current corporate are one of their important assets, so their only sustainable advantage is the
structure/culture quality of their workforce. They have accomplished building a national retail
company by creating a pride in the labor produced through an empowering
of corporate culture, exceptional employees benefit and employees stock
ownership program.

-Employees are empowered by management to make decisions without

management referral and they are encouraged to think themselves as a
part of the business. Management stands behind these decisions. Starbucks
has avoided a hierarchical organizational structure and has no formal
organizational chart. The company has both functional and product based
divisions.
-Management has the largest influence in the company. With their positive
influence, and with the benefits they provide their employees, Starbucks
has reached the successful place that it is in today.
-There is a conflict In the corporate structure where some employees are
reporting to two different divisions which in some cases caused confusion
and overlapping.

The current culture: the chairman of Starbucks, Schultz decided to treat

employees as a family, and called them partners to give them the chance to
share the success of the company and feel the contributions they made.
Both employees (full time and part time job) could benefit from training and
health insurance. Starbucks paid some more salaries than competitors to
gain qualified employees. Starbucks had shared values with their employees
who made them proud to work in such successful company and this created
good culture.

-Schultz also decided to be honest and open with his employees, and let
them share the decision making process. Environment was important to
Starbucks. Starbucks gave a good attention to their suppliers by helping
them technically and financially as a part of their social responsibility. Also it
encouraged all the partners to share the company’s mission.

-Starbucks concerns the value to build a company with soul so it aims to do

this by “pursuing the perfect cup of coffee”. What is special about Starbucks
 is giving the customer what they want like nonfat milk products this was
done carefully so the quality of the products will not changed dramatically.
Also Schultz gives the employees programs that helped them to speak
freely without the fear of punishment.

3. SWOT Analysis
3.1. External environment
Analysis
3.1. a. Societal environment Opportunities Threats
(High/Moderate/Low) (High/Moderate/Low) Commen
ts
No opportunities -Starbucks political situation The weather
1. Political- Legal (P) was in threat because of and
coffee prices where subject economic
to considerable volatility and conditions
because of the weather and affect the
economic conditions, prices of
Countries tend to set up Starbucks.
new agreements that are And also the
related to import and export laws affect
quotes and execute periodic Starbucks
efforts to increase prices by import and
restricting coffee supplies. coffee
Starbucks only import all supplies
their coffee beans, so
possible threats could
include a change in import
laws and this will affect
many areas of production
for the company.

Due to the Middle East -

(Arab and Israel )
problem, Starbucks
have closed down its
six stores in Israel

The factor is high

- Starbucks had two -Starbucks faced problems Comments
2. Economic (E) opportunities which are due to economic recession about
related to the economical in countries such as: opportunities
factors: Switzerland, Germany and The
- The first one Japan in the early 2000s, reputation of
is about the gourmet where it experienced Starbucks
coffee segment which declining sales and make it
is still raising all over revenues. much easier
the world which to attract
means that people So the economic recession more people
are turning to coffee could affect the customers and make
shops that provide of Starbucks so the profits them ready
gourmet coffee will decrease also the sales. to try new
because as long as products
Starbucks provides a This factor is out of control Comments
 gourmet coffee the because the economics of about
profit will gradually the country is related to the weaknesses:
increase. economics in all over the the economic
world so it's connected recession
- The other together. affect the
opportunity is about customer
Starbucks reputation, These factors are high behavior of
Starbucks had an Starbucks
international and make
reputation which the profit
gives it the decreases
opportunity to reach
new markets even
before opening the
store and it makes
the consumers ready
to try new products.

These factors are high

-Starbucks is committed a No threats - Starbucks

3. Social (S) role of environmental benefit from
leadership in all aspects of the
our business. As a result of increasing
Starbucks following their number of
objective, the company had a people who
list of principles that shows love coffee
us the company’s willingness by expanding
to make sure that its affect their market
the environment in positive share
way. It had two opportunities - Alcoholic
which are related to the start to turn
societal factor: to coffee as
a substitute
- The first one
is about the sudden
awareness of coffee
and increasing the
number of people
who loves coffee so
producers could take
an advantage of this
opportunity because
it gives them the
chance to expand
their market share.

- The second
opportunity is about
people who drink
alcohol are starting
to turn to coffee
products as a
substitute to help
 them to get rid of the
effects of alcohol.
“The coffee effect
held true for women
and men of various
ethnic backgrounds”.

- Sell and use

environmentally friendly
products.

These factors are medium

No threats Starbucks
4. Technological (T) -Starbucks is continually used the
searching for ways to a technology in
better customer experience: an efficient
way by
It had the selling their
opportunity of using coffee
websites to sell products in
products. They are many
selling selected websites
coffee products on And they use
many websites it to attract
including their people to
website .It improved spend more
customer service by time in their
Duetto Visa Card This coffee shops
classified as an which lead to
opportunity because increasing in
it allows the the profit
customer to have the
freedom to pay in the
way that the
customer prefer and
earn back 1% back in
Duetto Dollars, which
were automatically
loaded on their
Starbucks card after
each billing cycle
- The second
opportunity was
about the expansion
in the introduction of
WI-FI (internet) to
several Starbucks
shops. Starbucks was
clever because it
used the technology
to attract people to
spend more time in
their coffee shops
which results in more
consumption to their
 products.

These factors are high

Industry
3.1.b. Opportunities Threats Commen
environment (High/Moderate/Low) (High/Moderate/Low) ts
(Five forces
Analysis)
1. Industry Rivalry factors I think that
No opportunities Starbucks is facing a real of the more
rival competition due to its customers
uncompetitive price all over who are
the world and even in its satisfied, the
domestic market. Also the more profit
taste of Coffee had been will
judged by customers as an Starbucks
artificial taste especially in get so the
Japan. customer
loyalty is
-Other coffee chains. playing very
Examples include Coffee important
Bean & Tea Leaf, Gloria rule by
Jeans Coffee, Peet’s, and providing the
San Francisco Coffee House. customers
The buyers who likes to high quality
taste any new drink, they with lower
might be turn off to these prices.
coffee chains.

-Smaller privately owned

coffee houses. It means
when the small businesses
of coffee start to build their
business and grow it to
compete finally with
Starbuck (high).

2. Bargaining power of The buyers

Buyers -Starbucks sells 2/3 of its -Starbucks sells 2/3 of its of
coffee in supermarkets (its coffee in supermarkets Starbucks
products in supermarkets (they cannot control how
have such a
increases its market share). the buyer prepares the
loyalty to
coffee at home or perceive
Another opportunity for - it) (medium).
Starbucks
Starbucks is that the because
customers are buying they have
‘experiences' and not coffee, in their
some are fiercely loyal to minds the
 Starbucks. People in general experience
prefer to buy a cup of coffee of
from Starbucks rather than Starbucks
buy it from a new store
over all
because they have confident
these
feeling about Starbucks and
that’s because the years of
years.
.experience of Starbucks Buyers now
have
slightly
-They have bargaining power more
when it came to premium bargaining
coffee such as Starbucks. power than
The huge scale of Starbucks’
they have
business reduces the
had in the
bargaining power of any
single group of buyers
past.
(medium).

3. Bargaining power of Starbucks strategy of -1 They are not dealing with It is good
Suppliers suppliers who don’t follow to have
diversifying its sources
geographically which enables the same environmental many
ethics that are for relations
it to reduce the risk of facing
Starbucks. This may lead with many
any major shortages in the
them to lose a good suppliers to
supply of coffee due to opportunity or deal with a increase
economic, politic, or weather supplier that they will not the benefits
conditions; The supply of deal with him. and the
coffee is affected by weather
positives of
-Also they dealing with Starbucks.
conditions, and the health of
small suppliers instead of And to get
.coffee trees dealing with limited the best
number of big power full products
The financial-2 suppliers are not giving from the
position of its suppliers which them real good deals for best
shows the fact that Starbucks
facilitates and prices suppliers.
provides financial incentives
(high).
and greater supplier status to
farmers who meet specific
health and quality conditions
could give it a positive
position with any potential
.supplier

3-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 so it is an
opportunity for Starbucks to
 diversify its products
(medium).

4. Threat of Substitute People in

Products Starbucks is constantly- The threat of new general,
innovating and showing products produced by the
like to try
strong product differentiation coffee manufacturers is
any new
in their industry. Starbucks' massive (By selling their
lead to become more coffees in supermarkets like taste even
differentiated. For example, Starbucks, they might turn for once, so
five months after Starbucks into a threat when they the new
introduced a prepaid provide lower prices and products of
Starbucks debit card, even sometimes better the coffee
Seattle's the best version of .(quality) (high will be a
the marketing product. This huge threat
industry differentiation is an
for
opportunity for Starbucks
Starbucks
-Although there are over
3,485 competitors, only a
few are large players. They
have succeeded by selling an
‘experience' as opposed to
simply specialty coffee
(medium).

5. Threat of New Entrants It is good to

into the Industry The new industries will try - protect the
to compete and provide business by
No opportunities keeping it
better quality and service,
update with
so the competition will grow the perfect
dramatically, so it will affect service and
the customer's loyalty the best
because the customer needs product. Also
is changing proportionately with keeping
with life needs and the
motivation of
(economic position(high
the
employees to
improve the
work
environment
 (EFAS Table)
External Factors Weight Ratin Weighte Comments
g d Score
Opportunities
• (O1) Starbucks Reputation 0.2 4.5 0.9 The
Starbucks
Reputation
play important
0.2 4.5 0.9 role in the
• (O2) Expansion in the introduction of
industry. In
WI-FI to several
fact, this is
related to the
0.1 3.5 0.35 product
• (O3) The huge scale of Starbucks’
differentiation
business
and the
innovating of
Starbucks.
0.1 3.5 0.35 Also providing
the suppliers
• (O4) Product Differentiation and a financial
Starbucks innovating to differentiate it's incentives and
Products. greater status
for its suppliers
0.1 3.5 0.35 which may
help to
• (O5) Financial incentives and motivate the
greater supplier status suppliers.

Threats
• (T1) Economic Recession 0.2 4.5 0.9

• (T2) New substitute products 0.05 3.0 0.15

• (T3) Starbucks competition 0.2 4.5 0.9

Total 1.0 31.8 3.58

 Strengths
3.2. Internal
(High/Moderate/Low)
environment
Analysis
-Starbucks have the
3.2.1. Corporate “Partner view” survey; it
Management and
is done annually and
management team
distributed to employees
to gain feedback from
them , about their
satisfaction with the
company roles.(low)
-The company has a Low
turnover rate which is a
result of their executive
efforts to make the
company an attractive and
caring place to work.
(high)
-Starbucks pays higher
salaries to the employees,
in comparison with other
companies specializing in
the same field. Their
employee benefits
program is also an
incentive for them to stay
in the company.(medium)
-The decision making
process is bottom – up
process, as the employees
are empowered to take
decisions without referring
to the top management.
This would eliminate the
fear of employees and
resulting in more
innovative feedbacks and
ideas from them.(low)
-Their achievement of
“100 best companies to
Weaknesses Comments
(High/Moderat
e/Low)
-“Just say yes” Comments
strategy, it is about
strengths:
considered as a
weakness as when a -The partner
customer came into view survey
Starbucks store and could help
demand low fat milk Starbucks to
products. Actually, avoid the things
this leads to a that doesn’t
conflict between the meet the
company satisfaction of
commitment to their employees,
quality and its goal leading to higher
to please customers satisfaction after
if this low fat milk is that.
not available.
(medium) -The low
turnover rate is
-Starbucks has a a high strength
strategy called: “The for the
customer is always Starbucks
right”, this strategy because it keeps
was a weakness also the experts
when a customer employees in the
came into Starbucks service of the
and demanded low company with
fat milk products. high productivity
(low) as he/she is
satisfied with it.
-Taking decision
without referring
to top manager
is strength
because it saves
time rather than
wasting it while
delivering the
problem to the
top
management,
however, it may
 work for” award. This was be sometimes a
acquired as a result of weakness but
positive employee with a low rate
management as the employee
relationships.(low) may take the
wrong decision.

-High salaries
also would keep
the employee
satisfied and it’s
a reason of the
low turnover
too.

Comments
about
weaknesses:
-Just say yes
strategy would
attract more
customers,
however it’s a
weakness
because
Starbucks may
default in some
situations as
with special
customers that
order a special
product which is
not available at
the store .So
they are losing
this kind of
customers.
-Starbucks established an -They have Comments
3.2.2. Corporate structure environmental committee established the about
that aimed to contribute “Starbucks Coffee strengths:
to local community International” to -Starbucks
environmental efforts. It expand and to start environmental
looks for several ways to building the committee is a
reduce, reuse and recycle Starbucks brand good strength as
waste.(high) name globally. it helps the
Although it company to save
-Its “stores of the future increased their money and
project team” which was market share, it was reduce the
established to raise only marginally environmental
 Starbucks design to a profitable.(medium) pollution as it
higher level and come up uses the recycle
with the next generation process.
of Starbucks stores.
(Low). -Reserving the
same quality and
-Starbucks avoided the store
franchising, because it characters
wanted to maintain quality anywhere in the
under control and to world would
preserve the same keep the
character in all its stores. Starbucks
(low) reputation high
and related to
the main Store
roles.

- Employees are included No weaknesses

3.2.3. Corporate/company in the decision making
Culture process without fear from
the upper management.
They are encouraged to
provide feedback on any
matter (whether positive
or negative). (medium)

-Starbucks believed in
quality, so they made it
part of the company’s
culture to “build a
company with a soul”.
This encouraged
employees to work hard to
find the best beans and
roasting them to
perfection.(high)

3.2.4. Corporate resources

-Starbucks had depended No weaknesses Comments
a. Marketing on “word of the mouth” to about
build their customer strengths:
loyalty “cup by cup” in the -Word of mouth
store instead of spending is a good
money on advertisement. marketing
(medium) strategy but
sometimes it
-Starbucks believes that would be against
each store represents a the expectation,
billboard for the company, in order of some
 therefore, it emphasizes unsatisfied
on the importance of customers. It’s
colors, artwork and the same for
design.(medium) keeping the
same colors and
-Starbucks created an in- decorations in all
house team of architects of the stores.
to ensure all stores would
convey the right image
and character.(low)

-It participated in fair

trade certified coffee, to
ensure growers sell their
beans directly to
importers roasters and
retailers at guaranteed
fair prices.(medium)

b. Finance -Starbucks avoided -Schultz (Starbucks -Avoiding debt is

financing debt as much as founder) had made a good strategy
they were able to; it relied many investments as it reduces the
on equity capital to in dot-com fact of
finance new stores so that companies. These bankruptcy and
it could avoid any companies mainly it keeps the
liabilities. (high) resulted in company in a
bankruptcy and a good financial
shutdown their condition. An
operations. example of the
bad effect of the
debt is clear in
the weaknesses
Colum as
Schultz has used
a debt to finance
a part of
Starbucks
activities but it
results in a lose
for it.
-Its use of Trial-and-error. No weaknesses
c. Operations To guarantee consistency -Trial and error
of the flavor, standard and strategy has
quality of the coffee, helped
Starbucks used this Starbucks in so
method through many ways as
computerized roasters to this helped to
make sure everything was increase the
 perfect.(high) customer
satisfaction and
-Starbucks tried to find a to build a strong
way to extend the shelf customers for
life of packaged the stores. Also,
Starbucks to 26 weeks. it leads to a high
This was done by using a quality product.
one-way valve technology.
(high)

-Starbucks relied on
licensing agreements to
expand its market share
in places where it didn’t
have the ability to open
outlets in, by this it could
increase its sales while
maintaining the
appropriate quality and
style of the first Starbucks
Company.(low)

-There is roasting No weaknesses -Training the

d. Human resources personnel, as employees employee before
are trained intensively entering the real
before and during the market would
period of their work hours. result in a high
For regular employees, it’s productivity and
a requirement that they more profits for
are trained for 24 hours in the company ,
their first 2-4 weeks. also it can saves
Managers are required to time as the
take classes that are employee
usually 8-12 weeks long. become more
(high) familiar with the
company
-Starbucks have a Fringe activities.
Benefit Program. Through
this program, employees
were provided health care,
life insurance, paid
vacations and more.(high)

-Being a part of No weaknesses -Emerging with

e. R&D Conservation International an existing
Partnership. This company is a
partnership protected good strategy to
biodiversity and expand as it
maintained a healthy saves money
environment during coffee and provides an
 cultivation.(medium) opportunity for
the company
-It expands to different brand name to
markets with new and be more
innovative products. An popular.
example of this is when
Starbucks entered into a
joint venture with PepsiCo
to create new coffee-
related products for mass
distribution through Pepsi
channels.(medium)

-Starbucks also partnered

up with Dreyer’s Grand
Ice Cream to supply
coffee extract for a new
line of coffee ice cream.
(medium)

-Starbucks store is No weaknesses

f. M I S developed on a computer
using software that
actually allows costs to be
estimated as the design
evolved, this leaded to
save time and money.
(high)

(IFAS Table)

Internal Factors Weight Rating Weighte Comment

d Score
s

Strengths

• (S1) Low turnover

0.2 4.5 0.9
Low turnover rate is one of
rate the strongest
factors in
• (S2) 0.05 3.0 0.15 Starbucks.
Starbucks pays As a result
higher salaries we decided
to the that it would
employees. be 20%
weighted as
0.1 3.5 0.35 strength for
• (S3)Envi the
ronmental company.
committee that The rating
aimed to has been
contribute to done by
local evaluation
community also and it
environmental 0.05 3.0 0.15 should be in
efforts. between 1 to
5 points. As
• (S4) the low
part of the turnover rate
company’s has a high
culture is to weight, it
“build a also has a
company with a high rating
soul” 0.1 4.0 0.4
(4.5) out of
5 points. In
addition, the
weighted
score has
• (S5) been done
Starbucks by a simple
avoided formula
financing debt 0.2 4.0 0.8 which is
as much as (Rating *
they were able weight).
to. It’s the same
procedure
for the
• (S6) 0.1 3.0 0.3 remaining
factors, but
Use of Trial-
the
and-error.
difference is
the
0.1 3.8 0.38
importance
for each one.
• (S7) Coming to
the total
Using a one-
row, we
way valve
should have
technology.
a total of
1.00 for the
• (S8)
weight
 Roasting column ,
personnel. while a total
of ( 1 to 5 )
for the
weighted
score column
as it tells
about the
overall
performance
of the
company if it
is poor
( score1).
Average
(score 3), or
outstanding
(score 5).
For
Starbucks
company it is
above
average
performed
company.
This reflects
the strong
activities of
the company
and its
continuous
working to
reach the
top.

Weaknesses

• (W1)
0.05 1.0 0.05
Schultz
(Starbucks
founder) had
made many
investments in
dot-com
companies.
0.05 2.0 0.1
• (W2)
They have
 established the
“Starbucks
Coffee
International”.

Total 1.00 31.8 3.58

(SFAS Matrix)
SFAS Weight Rating Weighted Comments
Factors Score
• (O1) 0.2 4.5 0.9
Starbucks
Reputation

• (T1) 0.2 4.5 0.9

Economic
recession

• (T3)
0.1 3.5 0.35
Starbucks
competitio
n

• (S1) 0.2 4.5 0.9

Low
turnover
rate 0.1 3.5 0.35

• (S5)
Starbucks
avoided
financing
debt as
much as
they were
able to.

Total 1.0 31.8 3.58

4. Recommendations Describe
5.1.Review vision/mission

• Mission and Vision

Explanation
Starbucks is very popular with the taste of coffee it serves and also
other drinks. We found that the principles are good enough and they
are covering the most important points regarding employees and the
.work environment also the customer’s satisfaction and services
Products that Starbucks provide are of a high level and unique
quality and these products should be spread over the world, keeping
the values and the principles of the company that makes employees
proud of and happy with. These values will reflect the quality of the
products and thus it will also make the customers satisfied with
.what they are being provided and served

In our opinion becoming a model in developing a great work will

5.2.Review goals/objectives
attract many talented people and creative workers. This will help the
company in developing new ideas which attracts more customers.
This will reflect a good image and help the brand name to be at its
.highest level

5.3.Strategic
Alternatives( Corporate, • Corporate:
Business, Functional)
To grow through international expansion by preserving the
mission and principles of the company, maintaining the image
and the brand name. To achieve this while keeping in mind the
.importance of reducing risks and losses

• In the old corporate strategy Starbucks way of expanding is

either by opening a company owned or operated or by licensing,
what we think is that it can grow internationally in any way that
keeps the brand name and reputation at the highest level and as
it was known. The company should take into consideration the
risk that it may face when it will go international, trying to
reduce it in order to spread the high quality products in the best
 way and keeps the level that it is known by.

• Business

• Starbucks should offer a variety of products especially when

it expands internationally. When it will open companies in
different countries it will face different tastes and customers,
diversifying of products will satisfy different customer tastes and
needs. Those who may not like coffee and find it unhealthy and
maybe those who prefers the drinks to be with low fat milk, they
should try to have products that meets those needs. They will
face also different cultures and they can study the culture that
the company is dealing with and offer products that satisfy the
customers the culture they are coming from.

• Functional

• Here we mentioned maintaining a free environment for

employees which will help them being innovative and makes
them feel free to express their feelings toward any product. They
can observe the reaction of the customers toward the new
products and they can tell if the product needs any
improvement. Keeping respect among them will makes them
even more satisfied with the work environment because
everyone should understand that each one of them has his/her
own opinion and view which will help the company to succeed
even more because it will be respected by all kind of people.

• It is important to test the strategy and

5. Strategy its implementation.
• Starbucks never really sure that you have it right.
Implementation
• The expansion of the product line is a wise decision
because of the ease of adoption to Starbucks reputation for
quality as well as the low cost of implementation

• Product Starbucks is known for providing superior

products and services. Consumers have enjoyed the
6. Strategy experience they encounter at Starbucks.
Evaluation and
Control Standards • Continue to provide and create new products
perceived of higher value to buyers create a new products
business unit for streamlined product development
introduction analyze current economies of scale to reduce
costs continue to develop and motivate there ―partners‖ as
they are there best assets. continue closing of under
performing stores as needed increase global presence in
prime locations to wash out weakening domestic economy
issues Evaluation and Control Starbucks should evaluate
these goals