Module 7 Assignment 2: LASA 2—Capstone Strategic Audit

I will want you to use Starbucks as the Model Company and also use the contents of the attached files to complete the LASA 2 Capstone Strategic Audit. Please assit me in complete the Assignment posted belo and remember to pay close attention to the Rubric attached to help me get a better grade.

Module 7 Assignment 2: LASA 2—Capstone Strategic Audit

Unit 7: Module 7 – M7 Assignment 2

In this assignment students integrate all the pieces of work they have drafted and formally turn it into the capstone strategic audit.

In previous assignments, you performed multiple, specified analyses of your company (or any company of your choosing). Those individual analyses provide the needed research to successfully complete the following LASA:

Directions:Using the tools and framework learned in class and throughout the program, prepare a 15-page strategy audit of your company with a companion presentation. The strategy audit is a comprehensive analysis of the company’s business strategy and operating performance, and culminates in a series of recommendations for improving your company’s performance based on the findings and conclusions of your analysis.

A strategy audit involves assessing the actual direction of a business and comparing that course to the direction required to succeed in a changing environment. A company’s actual direction is the sum of what it does and does not do, how well the organization is internally aligned to support the strategy, and how viable the strategy is when compared to the external market, competitors, and financial realities. These two categories, the internal assessment and the external or environmental assessment, make up the major elements of a strategy audit.

In your strategy audit:

Provide a high-level analysis of the company’s business strategy and operating performance. Be sure to complete the following: Analysis of the company value proposition, market position, and competitive advantage External environmental scan/five forces analysis Internal environmental scan/organizational assessment SWOT Analysis Balanced scorecard/strategy scorecard Recommend specific tactics for improving your company’s strategic alignment and operating performance. Recommendations can include but are not limited to tactics in marketing, branding, alliances, mergers/acquisitions, integration, product development, diversification or divestiture and globalization (if you recommend your company go global, you must include a supply chain analysis and an analysis of your firm’s global capabilities). Explain how the recommendations will help the company achieve its strategy and vision.

You are to write this report as though you are a consultant to your company, and are addressing the executive officers of this company. You will collect and analyze a large amount of data in producing your report, but your final product will be condensed and focus on presenting your analysis findings and conclusions.

Your report should consist of the following sections in the given order.

Executive Summary (1 page): A concise and insightful summary of the significant findings of your analysis and the recommendations you have for your executive team. Strategic Issues and Recommendations (5 pages): Identify 5–7 most important strategic issues facing your business unit. Strategic issues arise from a mismatch between internal capabilities and external trends such that important opportunities are not being pursued or significant external threats are not being addressed under the current strategy.

The strategic issues list should integrate your SWOT analysis, your Five Forces analysis, and the organizational assessment and external environmental scan completed earlier during the course. These detailed analyses are the foundation for your final set of findings and recommendations presented to the executive team.

In developing your recommendations for addressing each strategic issue, consider misalignments that might be apparent in different operating areas:

Product Portfolio: Are there changes to the target market segment, value proposition, or positioning of the product or service line needed? Structure: Are the organizational roles and responsibilities, decision-making authority, skill requirements, and work assignments properly configured and aligned to support the strategy? Organizational Culture or Behavior: Does the organizational culture inspire behaviors that support the strategy? Are the mission, vision, and values clearly articulated and aligned with the strategy? What new behaviors are needed? Value Chain Activities: Does the organization value chain fully align with the strategy? Are their activities that should be added, eliminated, or modified significantly? Performance Measures: Do the organization’s performance measures focus on the key drivers of strategic success? Is there a strategy scorecard that ties the main elements of the strategy to specific operating capabilities, including goals and key performance indicators (KPIs) that give an indication of incremental or predictive progress toward reaching strategic goals?

Your recommendations should fall into these general categories, but be specific in terms of scope and expected impact.

These sections are completed earlier in the course, and should appear as appendices:

SWOT Analysis (2 pages—completed in Module 6): SWOT matrix illustrating strengths, weaknesses, opportunities, and threats. Balanced Scorecard / Strategy Scorecard (4 pages—completed in Module 6): Develop a Balanced Scorecard for your business unit that reflects the key drivers for your business strategy. Organizational Assessment (3 pages—completed in Module 5) External Environmental Scan and Five Forces Analysis (3 pages—completed in Module 3) Market Position Analysis (3 pages—completed in Module 2) Write your report in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M7_A2 .

Finalize the companion PowerPoint presentation that summarizes the audit and recommendations in a compelling manner that persuades senior management to explore and possibly implement your recommendations. The elements of the presentation should include the following:

Title Agenda Summary of audit Recommendations Key measurements Risks and benefits Call to action Next steps

Develop a 10-slide presentation in PowerPoint format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M7_A2.ppt.

Use information from your previous assignments to support your conclusions and recommendations and conduct additional research when needed. Make sure you properly reference and cite so that the location of information is clear.

This assignment is worth 360 points and will be graded using a rubric. Download and review the rubric to understand the expectations.

Unit 7: Module 7 – M7 Assignment 2

Assignment 2: LASA 2—Capstone Strategic Audit

In this assignment students integrate all the pieces of work they have drafted and formally turn it into the capstone strategic audit.

Directions:
Using the tools and framework learned in class and throughout the program, prepare a 15-page strategy audit of your company with a companion presentation. The strategy audit is a comprehensive analysis of the company’s business strategy and operating performance, and culminates in a series of recommendations for improving your company’s performance based on the findings and conclusions of your analysis.

In your strategy audit:

· Provide a high-level analysis of the company’s business strategy and operating performance. Be sure to complete the following:

· Analysis of the company value proposition, market position, and competitive advantage

· External environmental scan/five forces analysis

· Internal environmental scan/organizational assessment

· SWOT Analysis

· Balanced scorecard/strategy scorecard

· Recommend specific tactics for improving your company’s strategic alignment and operating performance.

· Recommendations

can include but are not limited to tactics in marketing, branding, alliances, mergers/acquisitions, integration, product development, diversification or divestiture and globalization (if you recommend your company go global, you must include a supply chain analysis and an analysis of your firm’s global capabilities).

· Explain how the recommendations will help the company achieve its strategy and vision.

Your report should consist of the following sections in the given order.

· Executive Summary (1 page): A concise and insightful summary of the significant findings of your analysis and the recommendations you have for your executive team.

· Strategic Issues and Recommendations (5 pages): Identify 5–7 most important strategic issues facing your business unit. Strategic issues arise from a mismatch between internal capabilities and external trends such that important opportunities are not being pursued or significant external threats are not being addressed under the current strategy.

In developing your recommendations for addressing each strategic issue, consider misalignments that might be apparent in different operating areas:

· Product Portfolio: Are there changes to the target market segment, value proposition, or positioning of the product or service line needed?

· Structure: Are the organizational roles and responsibilities, decision-making authority, skill requirements, and work assignments properly configured and aligned to support the strategy?

· Organizational Culture or Behavior: Does the organizational culture inspire behaviors that support the strategy? Are the mission, vision, and values clearly articulated and aligned with the strategy? What new behaviors are needed?

· Value Chain Activities: Does the organization value chain fully align with the strategy? Are their activities that should be added, eliminated, or modified significantly?

· Performance Measures: Do the organization’s performance measures focus on the key drivers of strategic success? Is there a strategy scorecard that ties the main elements of the strategy to specific operating capabilities, including goals and key performance indicators (KPIs) that give an indication of incremental or predictive progress toward reaching strategic goals?

Your recommendations should fall into these general categories, but be specific in terms of scope and expected impact.

These sections are completed earlier in the course, and should appear as appendices:

· SWOT Analysis (2 pages—completed in Module 6): SWOT matrix illustrating strengths, weaknesses, opportunities, and threats.

· Balanced Scorecard / Strategy Scorecard (4 pages—completed in Module 6): Develop a Balanced Scorecard for your business unit that reflects the key drivers for your business strategy.

· Organizational Assessment (3 pages—completed in Module 5)

· External Environmental Scan and Five Forces Analysis (3 pages—completed in Module 3)

· Market Position Analysis (3 pages—completed in Module 2)

Write your report in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M7_A2 .

· Title

· Agenda

· Summary of audit

· Recommendations

· Key measurements

· Risks and benefits

· Call to action

· Next steps

Develop a 10-slide presentation in PowerPoint format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M7_A2.ppt.

By Wednesday, August 14, 2013, deliver your report and power point presentation to the M7: Assignment 2 Dropbox.

This assignment is worth 360 points and will be graded using a rubric. Download and review the rubric to understand the expectations.

For assistance with any problems you may have when completing this assignment—OR—to offer your assistance to classmates, please use the Problems and Solutions Discussion area located through the left side navigation link.

Rubric for Grading Module 7 Assignment 2

LASA 2—Capstone Strategic Audit

/ 60 pts

Unsatisfactory

70 – 77%

(C- to C)

Emerging

78 – 82%

(C+ to B-)

Proficient

83 – 89%

(B to B+)

Exemplary

90 – 100 %

(A- to A)

Score

To calculate score:

(% / 100) x max pts.

e.g.

(80% / 100) x 12 = 9.6

Summarize the significant findings of your analyses. A concise and insightful summary of the significant findings of your analysis findings and the recommendations you have for your executive team.

(Course Objective [CO] 1, 3)

Executive summary is unclear or incomplete throughout. The overview only addresses some of the findings from the analyses, or the findings discussed are inaccurate.

Executive summary is somewhat unclear or is slightly incomplete. It provides a broad overview of the findings from the analyses.

Executive summary is clear, complete, and provides an accurate overview of the most significant findings from all the analyses.

Executive summary is clear, thorough, and concise. It provides an insightful overview of all significant, both apparent and subtle, findings from all the analyses.

/ 52 pts

Identify the most important Strategic Issues facing your business unit.

CO 1,3

Too many apparent Strategic Issues are missing, or issues identified are inappropriate to the business or too vague.

Examples, evidence, and information gathered in previous assignments are present, but they do not clearly support issues identified and/or they are inappropriate in relation to Strategic Issues.

Most of the apparent Strategic Issues are identified, but some are missing. Many are specific, but some are slightly vague.

Examples, evidence, and information gathered in previous assignments are used, but how they support issues identified and/or their explanation must be inferred.

The most apparent Strategic Issues are identified. They are specific and detailed in a brief explanation.

Specific examples, evidence, and information gathered in previous assignments are appropriately used to support issues identified and/or their explanation.

The most important, but apparent and subtle, Strategic Issues are identified. They are insightful, focused, and detailed in a brief explanation.

Specific examples, evidence, and information gathered in both the previous assignments and in external research are used to illustrate or support issues identified and/or their explanation.

/ 60 pts

Represent all misalignments found in the following categories: Product portfolio, Structure, Organizational culture/behavior, Value chain actions, Performance measures

CO 1,4

Identifies a few strategic misalignments appropriately, but many are either missing or inaccurate. It describes elements of the organization that do not align with the strategy, but some are inaccurate or severely incomplete. Too many misalignments are missing relevant facts or findings from the research; its impact on organizational performance is stated but inaccurate or unreasonable.

Collectively, the misalignments address many of the following categories, but they do not represent an appropriate or complete review: product portfolio, structure, organization culture/behavior, value chain actions, and performance measures.

Examples, evidence, and information gathered in previous assignments are present, but they do not clearly support misalignment diagnosis and analysis and/or they are inappropriate.

Identifies most strategic misalignments appropriately and describes elements of the organization that do not align with the strategy, but more specificity is needed. Most misalignments are diagnosed using relevant facts and findings from the research, and its impact on organizational performance is stated, but is unclear or incomplete.

Collectively, the misalignments represent a broad review of the following categories, but more specificity is needed in a few: product portfolio, structure, organization culture/behavior, value chain actions, and performance measures.

Examples, evidence, and information gathered in previous assignments are used, but how they support misalignment diagnosis and analysis must be inferred.

Identifies strategic misalignments and describes elements of the organization that do not align with the strategy. Each misalignment is diagnosed using relevant facts and findings from the research and previous assignments, and its impact on organizational performance is clearly stated.

Collectively, the misalignments represent a complete review of the following categories: product portfolio, structure, organization culture/behavior, value chain actions, and performance measures.

Specific examples, evidence, and information gathered in previous assignments are appropriately used to support misalignment diagnosis and analysis.

Identifies strategic misalignments describes elements of the organization that do not align with the strategy. Each misalignment is diagnosed using relevant facts and findings from previous assignments or external research, and its impact on organizational performance is clearly stated.

Collectively, the misalignments represent a critical review of the following categories: product portfolio, structure, organization culture/behavior, value chain actions, and performance measures.

Analysis demonstrates strong systems thinking that sees organizational performance as the result of group behavior that is shaped by the work setting and the elements that create it.

Specific examples, evidence, and information gathered in the previous assignments, the course material, and in external research are used to support misalignment diagnosis and analysis.

Provide recommendations for Strategic Issue and explain how it will resolve the issue.

CO 2, 3

Recommendations for each Strategic Issue are present, but too many are unclear in their explanation. Many recommendations are inappropriate for either the issue or the business at hand.

Explanation of how the recommendation will resolve the issue is present, but unreasonable or severely incomplete.

Examples, evidence, and information gathered in previous assignments are present, but they do not clearly support recommendations and their effect and/or they are inappropriate.

Recommendations for each Strategic Issue are present, but some are either too vague or not clearly explained. Most recommendations are appropriate for both the issue and the business at hand.

Explanation of how the recommendation will resolve the issue is present and reasonable, but is unclear or somewhat incomplete.

Examples, evidence, and information gathered in previous assignments are used, but how they support recommendations and their effect must be inferred.

Recommendations for each Strategic Issue are specific, focused, and clearly explained. Each is appropriate for both the issue and the business at hand.

Explanation of how the recommendation will resolve the issue is clear, complete, and reasonable.

Specific examples, evidence, and information gathered in previous assignments are appropriately used to support recommendations and their effect.

Recommendations for each Strategic Issue are specific, insightful, thoughtful, and clearly explained. Each is appropriate for both the issue and the business at hand.

Explanation of how the recommendation will resolve the issue is clear, thoughtful, and reasonable.

Specific examples, evidence, and information gathered in previous assignments, in external research, and material gathered in class, are used to illustrate or support recommendations and their effect.

Executive Summary and Recommendations Synthesis and Presentation:

CO 1,2,3

Arguments and supporting facts are not clearly linked nor presented in a logical sequence.

Arguments not supported by relevant data. Contradictions in argument and data appear.

Most material is properly referenced and cited according to APA standards. Errors are infrequent, isolated, and minor.

Arguments not fully supported by relevant data, or contain broad assumptions not supported by facts.

Executive Summary exceeds prescribed page length.

Arguments and supporting facts are not always clearly linked and presented in a logical sequence, leading to confusion.

Most material is properly referenced and cited according to APA standards. Errors are infrequent, isolated, and minor.

Arguments and supporting facts are presented logically and in a natural sequence.

Summary presents and follows a consistent theme and style

Writing style is concise, fact-based and eliminates clutter such as jargon, overly descriptive adjectives and dramatic phrases.

All material is properly referenced and cited according to APA standards.

Arguments and supporting facts are presented logically and in a natural sequence.
Summary presents and follows a consistent theme and style

Presentation includes simple tables, graphs, or other visuals that simplify complex or large amounts of information.

All material is properly referenced and cited according to APA standards.

/ 48 pts

Academic Writing

Writing is unclear and disorganized and rereading to solidify understanding is frequently necessary. Although an attempt at ethical scholarship is attempted, it is sloppy or incomplete throughout. Spelling, grammar, or punctuation errors severely interfere with readers’ comprehension.

Writing is somewhat clear and is somewhat organized, although rereading to solidify understanding is occasionally necessary. It demonstrates an attempt at ethical scholarship in accurate representation and attribution of sources, but errors are occasional or minor. Writing has good spelling, grammar, and punctuation, but errors somewhat interfere with readers’ comprehension.

Writing is clear, concise, and in an organized manner; demonstrates ethical scholarship in accurate representation and attribution of sources; and displays accurate spelling, grammar, and punctuation.

/ 36 pts

PowerPoint Presentation

PowerPoint presentation is unclear or incomplete throughout. Only addresses some of the findings and recommendations or those addressed are inaccurate.

Does not include all of the required elements: Title, Agenda, Summary of Audit, Recommendations, Key Measurements, Risks and Benefits, Call to Action, Next Steps.

PowerPoint presentation is somewhat unclear or is slightly incomplete. It provides a broad overview of the findings and recommendations.

Includes most of the required elements: Title, Agenda, Summary of Audit, Recommendations, Key Measurements, Risks and Benefits, Call to Action, Next Steps.

PowerPoint presentation is clear, complete, and provides an accurate summary of the audit and recommendations of the most significant findings from all the analyses.

Includes all of the required elements: Title, Agenda, Summary of Audit, Recommendations, Key Measurements, Risks and Benefits, Call to Action, Next Steps.

Power Point Presentation summarizes the audit and recommendations in a compelling manner that persuades senior management to explore and possibly implement recommendations.

Includes all of the required elements: Title, Agenda, Summary of Audit, Recommendations, Key Measurements, Risks and Benefits, Call to Action, Next Steps.

/44 pts

Total

/ 360 pts

Page 1 of 6

Solutions to Organizational Challenges: A Capstone Experience in Integration and Strategy

Page 6 of 6

Solutions to Organizational Challenges: A Capstone Experience in Integration and Strategy
©2012 Argosy University Online Programs

Running head: INTERNAL ENVIRONMENT SCAN/ORGANIZATIONAL ASSESSMENT
1

INTERNAL ENVIRONMENT SCAN/ORGANIZATIONAL ASSESSMENT

Internal Environmental Scan/Organizational Assessment

Kenawa E. Jigba

Module 5 Assignment 1

B6028 Solutions to Organizational Challenges: A Capstone Experience

Argosy University

Instructor: Dr. Andrea Banto

Due July 31, 2013

Starbucks Internal Environmental Scan/Organizational Assessment

Introduction

Internal environmental scan, also referred as organizational assessment is whereby companies and organizations take a step back to reflect on, as well as look at the various regions of the company or organization, in regards to what is currently working or what could be different (Aaker & Joachimsthaler, 2000). It is important to carry out an organizational assessment as it helps create an objective perspective of a company’s or organization’s present reality according to its work flow processes, organizational structure, board development among others (Keller, 2001).

The environment of any given organization is inclusive of both external and internal factors. It is therefore important for organization management to regularly scan the environment so that they can determine development as well as forecasts of factors that would possibly influence organizational success (Kim & Kang, 2001). Environmental scanning must be in a position of identifying various threats as well as opportunities that exist in the environment.

Starbuck’s Mission, Vision and Values

Starbucks Corporation is considered to be one of the largest retail coffee companies in the world. From what has been observed in the past, the mission, vision and values statement of companies tend to be different in that they distinctively define their culture, brand and customer experience (Aaker & Joachimsthaler, 2000). Each of these factors is as different as the companies themselves. Similar to any other company, Starbucks possesses a mission, vision and organizational values. The company’s mission and vision statement is to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time (Keller, 2001). A value proposition refers to a marketing or business statement that usually gives a summary of reasons why customers should buy a product or use a particular service (Kim & Kang, 2001). For Starbucks, customers should buy their product as it is of the highest quality and has originality. No other company has so far matched Starbuck’s quality standards in as far as coffee is concerned. The Company’s long-term goal is becoming the world’s most recognized and respected brand of coffee (Aaker & Joachimsthaler, 2000). It has so far firmly established itself as a leader in the area, having an estimated 1,000 locations in more than 30 markets. Starbuck also has a competitive advantage in that it is able to offer innovative products as well as services using espresso bar set up in its retail shops (Keller, 2001). It is also currently able to utilize different techniques in providing superior products in addition to customer service
.

Strategy Clarification

As is the case with any given company or organization, there are certain unwritten rules and shared values that tend to govern the behaviors in the company or organization. Starbucks is no different. The company acts as enablers to the strategy since it consists of a diverse population of employees who hail from different cultural and ethnic backgrounds.

Starbucks Company has a strategic way of locating the youths because normally it is positioned in or near colleges where students meet to socialize with each other or write term papers. With respect to adults, Starbucks’ main audience includes women and men that are older and whose age frame range between 26-41. In addition, 49% of the company’s total supply goes to adult consumers. The company on the other hand tries its best to appeal to this class of customers through adverts and a kind of contemporary design that best works at attracting the older customers.

Cultural Assessment

Considering the fact that it has branches all over the world, Starbucks Company possesses a cultural information sharing and collaboration that allows it to respond quickly across structural boundaries to solve problems for its customers. Thanks to the Internet and other technological advancements, Starbucks can comfortably trust its designated staff in various parts of the world to communicate and share information regarding customer preferences, tastes, concerns as well as current trends in the ever changing business environment (Kim & Kang, 2001).

The Starbucks culture has also infiltrated almost every part of American society as the most successful coffee chain in the nation. Informal mechanisms such as letters tend to be rather slow and communication between the company staff and their customers takes longer than usual. Therefore, structural behavior has allowed the corporation to have successful communication upward, downward, and laterally with its employees
.

Value Chain Analysis

In Starbucks Company, there are a few direct and indirect activities that bring about and also deliver their product to their customers. Some of the direct or primary activities that the company involves itself with are marketing and sales, service, inbound logistics and operations (Aaker & Joachimsthaler, 2000). The indirect or support activities that it deals with are Human Resource Management (HRM), technological development, infrastructure and procurement (Keller, 2001). By understanding how the company brings about value as well as looking for ways to add more value, Starbucks has grown to learn how to develop a competitive strategy. While primary activities directly deal with the physical creation, sale, maintenance and support of a particular product, support activities generally support the primary functions (Kim & Kang, 2001). Currently, there is an area where the business may be at a competitive disadvantage. Starbucks is experiencing competition from upcoming businesses that are taking the risk of venturing into the same product
.

Summary of Findings

From what has been discussed above, Starbucks is still the largest coffee chain in the world. It has a few strengths as well as weaknesses that have made it what it is today. Some of its strengths include the fact that it still has the capability of capturing potential customers through its innovativeness and uniqueness. The company has also gained positive reputation which it has maintained until now. No matter where one is across the globe, they are sure to enjoy quality coffee from Starbucks. Apart from these strengths, certain weaknesses are also present within the company. One of these weaknesses is that following recent modifications to the organizational structure of the company, Starbucks may experience financial declines. Additionally, expansion of the company means the need for more human resource to function. The Company may not have enough funds to sponsor more human resource. Due to the current competition in this particular field, customers want to differentiate between Starbucks and other vendors. If the company does not seriously consider such weaknesses, it may find itself at a competitive disadvantage where its hard earned reputation will be ruined
.

References

Aaker, D.A., & Joachimsthaler, E. (2000). The Brand Relationship Spectrum: The Key to the Brand Architecture Challenge. California Management Review, 42(2). Pp. 8 – 23.

Keller, K.L. (2001). Building Customer-Based Brand Equity. Marketing Management, 1092). Pp. 14 – 19.

Kim, Y.K., & Kang, J. (2001). The Effect of Ethnicity and Product on Purchase Decision Making. Journal of Advertising Research, 41(2). Pp. 39 – 48.

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�Center the first level headings

�You must provide a quaotation of the mission, vision and values of the company. These were not clearly identified.

�This section does not describe the culture of the company. What are the unwritten rules and shared values?

�The value chain activities were not described specifically for Starbucks. You are conducting an analysis of this company.

�Good job overall. Other aspects could have been identified. You should discuss the strengths in one section and the weaknesses in another.

�Not bold.

STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD

MODULE 6 – ASSIGNMENT 2

Kenawa E. Jigba

B6028 BLO Solutions to Organizational Challenges: A Capstone Experience

Argosy University

Instructor: Dr. Andrea Banto

Due: August 7, 2013

Starbucks SWOT Analysis and Strategic Scorecard

SWOT ANALYSIS

STRENGTHS

· The organizations vision is to be a catalyst of change.

· Brand recognition and customer loyalty

· Diverse product portfolio catering to all tastes and ages, including non-coffee beverages and food items

· Excellent customer service and the value of the Starbucks experience

· Licensing relationship with top-brands such as Pepsi-Cola and Kraft that minimize costs and leverage the strategic advantages of those companies

· Strong employee relationships

· Economies of scale providing superior distribution networks and supplier power

· Primly-located retail stores

· Positive image attributed to social responsibility

WEAKNESSES

· Saturation of the market diminishes long-term growth prospects

· No monetary switching costs for customers

· Negative large corporation image

· Pay 23% more for coffee than market prices

· Potential limitations of international expansion due to cultural clashes with American coffee experiences

OPPORTUNITIES

· Appealing to students and creating inviting drink sensations that would motivate a special visit and acceptance of a higher price.

· There is great support politically for the company to venture in new markets. In all the countries that the company is targeting, there has been good will and support from such countries.

· Have the ability to reduce premiums paid for coffee

· Room for international expansion (75% of revenues came from the United States in fiscal 2007 and international same-store sales growth is strong)

· Room to compete on multiple fronts including quality and price

· Increase licensing relationships to further utilize brand strength to capture profits at little cost to the company

· There has also been great support from the traditional investors as well as the new ones. All the stakeholders have shown great support for the company so far. Support from the media has made the company to make a great leap.

· Communities in the new markets have received the company very well and have supported the company greatly.

THREATS

· External forces such as unstable governments especially in some parts of Africa have posed considerable threat to the growth and expansion of the company (Kurtz, 2009).

· There have been other challenges such as poor understanding; lack of interest and attitudinal issues especially from the local communities among the target groups has posed threats to the expansion of the company (Tasker, 1997).

· In some parts especially in the new markets, there has been a challenge in accessing the targeted groups due to poor infrastructure.

· Increasing coffee and diary prices

· Intense competition in the specialty coffee beverage business

· Unfavorable economic conditions that lower the demand for expensive beverages

· Community resistance to store expansion

· The possibility that the demand for specialty coffee is a fad

· Further diversification of fast food restaurants that cuts into market share

Starbucks SWOT Analysis and Strategic Scorecard

The proposed scorecard strategic objectives are shown attached (last page; Appendix 1) and are based on my SWOT analysis. Kaplan & Norton Balanced Scorecard show that the perspectives would interact with each other, with learning and growth improving both internal business process and customer satisfaction for example. Then, in turn, the improved business process and customer satisfaction would impact and improve the financial perspective. These relationships are shown below as Exhibit 1.1 (Buggey, 2007).

Two strengths and opportunities discussed in my SWOT analysis are appealing to students and creating inviting drink sensations that would motivate a special visit and acceptance of a higher price. I have proposed two objectives. First, that Starbucks aggressively create new distinctive recipes, such as the Chip Coffee, that establish Starbucks as the drink innovator in the industry. Currently other brands create “knock offs” of Starbucks drinks. I propose that Starbucks continue to create drinks that create “knock off” envy. The initiative is to create an email and tweet campaign among Starbucks card users (most loyal customers) to suggest new flavor sensations. Give awards for most creative, most non-coffee like and so forth. The measure would be number of introductions with the goal being at least two major innovations a year.

The second strategic objective in learning and growth would be to offer “study friendly” drinks for the student population. This would entail offering free “extra shots” with an exam schedule and more advertising the week before midterms and finals on campus. The measure will be to share with the student drink market and the goal is 20% or more.

For the internal business process, I recommend three strategic initiatives. First, I believe Starbucks needs to stick to its “perfect” drink commitment to maintain its quality image and price point. This requires backing up the promise with rework and redemption coupons. Secondly, I believe that Starbucks must compete during the rush hour by offering a better drink but not at the expense of getting to work on time. During rush hour, the most experience baristas will serve at the window and being the shift is fully stocked. Finally, the third strategic objective will be to offer more access to Starbucks items at non-Starbucks locations. This will be achieved through partnerships with local event venues with the goal of having an event monthly and one event for every 30,000 of the population.

The customer perspective has two strategic initiatives in addition to add to the benefits that will accumulate from the strategic moves suggested in the learning and growth and internal business process perspectives. First, Starbucks will position themselves as the “affordable treat” in the downturn. What I am simply implying in this concept is that if you can afford a brown new car or go on vacation, or even get away, in this downturn economy, then it is eminent that you can also get away with Starbucks products for less than $5 and have a great time doing it. The second thing is that, Starbucks would start offering cell phone advertisements and tweet coupons to regular customers to try the new innovative drinks and get free coupons if any of their flavors are adopted. This would appeal to the technologically-advanced market segment.

Finally, the financial perspective should enjoy the benefits of the strategic initiative and objectives in the other three perspectives. To make sure the benefits cascade into financial results, I propose two measures that are classics. First, return on sales. Even though we offer targeted discounts, we have to maintain a certain margin to offer a reasonable return on equity to our owners. So, we have to maintain our average margins. We will do this by limiting discounts to those opportunities where we are creating new customers, or new “addictions” to high margin untried flavors. The goal is to create a new solid customer base that will continue and grow through the economic recovery. Secondly, the strategic objective is to create additional transactions without added “bricks and mortar” by offering Starbuck drinks at local venues. The measure is return on assets and should exceed cost of capital by a historical margin. Overall, the strategic objectives that are suggested create ideas that capitalize on strengths and support areas of weakness as noted in the SWOT analysis.

Starbucks Balanced Scorecard

The balanced scorecard requires that the organization be viewed from four main perspectives (Hefner, 2011). These perspectives include learning and growth, financial, internal business process and finally the customer perspective. The need to look at an organization from the four perspectives is to develop metrics, collection and interpretation of data relating it to all the four perspectives (Hefner, 2011).

Learning and Growth

Given this cause-and-effect relationship among the perspectives, I started with the learning and growth section. At this stage, there is need to focus at the employee training. Employees at Starbucks are trained with the objective that they are going to reach their full potential. Mediocrity and procrastination are avoided so that employees can realize what they are best at in a personal level and the potential the organization has (Hefner, 2011). The company therefore insists on timely and quality deliveries to its employees during the training period. The employees are made to understand that they do not need to package themselves to what they are not but rather they are given room to develop themselves to be what they want to be (Kurtz, 2009). Learning goes on even after the basic orientation. Employees are made to understand that learning is a lifetime process and the only way for the company to be a step ahead of their competitors is through having a human resource that is knowledgeable. Information is therefore an important tool in the business. It is for this reason that the company has created a culture of information sharing. Employees are encouraged to share information to improve them and as a result improve the organization as a whole.

Internal business

It refers to the internal business processes. Managers interested in this perspective use metrics to measure the performance of their business, whether the company services and products do conform to the customer’s requirements. Managers at the Starbucks Corporation (SBUX) make sure that they develop metrics within the organization that are meant to measure these processes.

Customer

Starbucks Corporation has realized the need to value their customers from the very start. It is for this reason that one of the core values of the company is service excellence. Customer satisfaction is paramount since this induces repeats and referrals and hence more profits. To measure customer satisfaction, Starbucks Corporation (SBUX) is keen on several indicators. These indicators include customer repeats and referrals. If a customer is not satisfied, he or she will find another supplier who will meet their needs. It is therefore important to consider such indicators since their occurrence may mean decline in profits in future even when the current financial status looks just fine (Kurtz, 2009).

Managers at the SBUX Company have therefore designed metrics for customer satisfaction whereby the customers are analyzed. In this regard, customers are analyzed as individuals, the kind of processes through which the company is providing a service or a product to those particular customers.

Financial

Funding data is a major priority at the SBUX Company. The data has to be timely and accurate. The SBUX has implemented a corporate data base making sure that more of the data processing is centralized and automated. From past experiences, SBUX realized that more emphasis on financials led to the unbalanced situation with regard to all the other perspectives. It is for this reason that SBUX decided to include additional related financial data. Good examples would be the risk assessment not forgetting the cost benefit data.

For Starbucks Corporation to succeed in achieving its objectives, it has come up with a strategy. The strategy is mapped in such a way that the company highlights the need to improve performance in the objectives that are found in the learning and growth perspective which forms the bottom row. Improved performance at this level has enabled the company to improve in its internal process objectives which form the second row up. Consequently, this has led the company to come up with desirable results to its customers and finance which forms the top row.

Starbucks Corporation has not only focused on its goals as an organization but has also created a 360 degree in the way its employees think. This has ensured that people do not just think in a particular way but they instead explore on their way. This has been possible through the sharing of information and the freedom that the employees are given to utilize the knowledge acquired in practice without the fear of making mistakes. This way, the company can be said to have made giant leaps over the last few decades while at the same time improving its employees at an equal rate.

References

Buggey, T. (2007, Summer). A Picture Is Worth…. Journal of Positive Behavior Interventions, 9(3), 151-158. Retrieved December 14, 2007, from Academic Search Premier database.

Buggey, T. (2007, Summer). Storyboard for Ivan’s morning routine. Diagram. Journal of Positive Behavior Interventions, 9(3), 151. Retrieved August 6, 2013 from Academic Search Premier database

Hefner, L. (2011). Network Balanced Scorecard . White Plains, NY: New York

Kaplan, R. S., & Norton, D. P. (2007, Jul). Using the balanced scorecard as a strategic management system. Harvard Business Review, 85, 150-161. Retrieved from http://search.proquest.com/docview/227841808?accountid=34899

Kurtz, S. (2009). Balanced Scorecard Basics. New York: Cambridge University Press, New York

Starbucks Corporation (SBUX) (2010). Form 10-K. United States Securities and Exchange Commission, Washington D. C. Starbucks Corporation, Seattle Washington. Financial Content.http://markets.financialcontent.com/stocks/quote/filings/quarterly?Symbol=SBUX. Retrieved 11-05-11.

Sun, V. (2008). What is SWOT analysis. Englewood Cliffs, N. J.: Prentice Hall, Inc.

Tasker, F. (1997). SWOT analysis . Englewood Cliffs, N. J.: Prentice Hall, Inc.

Running head: STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD 1

STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD 13

Appendix 1 : Starbucks Balance Scorecard Objectives	Measure	Target	Initiative
Financial
			1	Profitable transactions	Return on sales	Return on sales will be 9% or higher	Limit discounts to special flavors and high transaction customers.
			2	Leverage assets with non-store profits	Return on assets	Return on assets will exceed cost of capital by 5% or more	Event sales will increase transactions without increasing assets employed
Customer
Be the “affordable treat” in a down market	Percent increase in number of servings	5% increase in sales volume	Advertise the “affordable get-away”: a Starbucks visit
Appeal to the technology savvy, educator buyer	Number of coupons redeemed from tweets and cell phones	15% redemption rate	Offer discounts on particular new flavors using tweet coupons and cell phone coupons
Internal Business Process
Perfect drink every time	Number of re-made drinks or redemption tickets distributed	Rework/redemption tickets are below 1% of drinks served	Offer redemption ticket or rework for any drink that is not perfect.
Quick drive through during rush mornings	Drive through orders completed in two minutes or less	95% of drink-only orders completed in two minutes	Put experienced baristas on drive-through during 6-9 am rush. Have all stations stocked prior to 6am.
3	Create access to Starbuck products at social, sporting and fun events	Number of non-store events offering Starbucks each month	One event for every 30,000 in the population per month	Create partnerships with event suppliers in area
Learning and Growth
Create new taste sensations — be the drink innovator of the industry	Number of new drinks introduced each year	Two major innovations a year (or more)	Solicit customers for ideas; offer rewards for flavor suggestions
Offer trendy “study friendly” drinks for student	Share of market of student population	20% or more of student market	Advertise on campus the week before midterm and final exams. Offer free extra shots with final exam schedule.

Running head: STARBUCKS EXTERNAL ENVIRONMENTAL SCAN

Starbucks External Environmental Scan

Kenawa E. Jigba

Module 3: Assignment 2

Solutions to Organizational Challenges: A Capstone Experience | B6028 BLO | SU213 |

Argosy University, Atlanta

Instructor: Dr. Andrea Banto

Due July 17, 2013

Introduction Comment by Andrea Banto: The running head is incorrect. Repeat the title of the paper before writing your response.

The Starbucks is being affected by the environmental influences or factors and to analyze these influences, we first need to apply the analysis of Michael’s Porters Five Forces. Porter’s Five Forces represent theoretical framework that is used for industry analysis and strategy development. Specifically, the five forces shaping competition within the industry consist of the intensity of rivalry among the competitors, the risk of entry of new competitors, the bargaining power of buyers, bargaining power of suppliers and the threat of substitute products and services (Sinkovics and Ghauri, 2009).

Michael’s Porters Five Forces of Starbucks

Threat of New Competition:-Starbucks is the leading retailer, roaster and brand of specialty coffee in the world operating about 40 countries in the world. The Starbucks key success is innovating, modernizing, aggressive store openings and strong product differentiation in the coffee industry that limits the new entrant’s entrance in the coffee industry. For instance, free Wi-Fi access to enable customers to surf internet, prepaid Starbucks card, card rewards and Starbucks gold card , improving its coffee line to offer smaller, cheaper cups, using new technology that create one cup at a time individually so that the taste remains the fresh. Comment by Andrea Banto: This section should focus on new competition.

However, Starbucks has the major threats from fast food chain like McDonald’s, Burger Kings and Dunkin Donut’s where the capital requirements are not the big problem could be the potential entrants. The economies of scale within coffee industry have risen as the size of fast food chains has varied. The fast food chains (McDonald’s, Burger king, and Dunkin’ Donuts) have very low cost national distribution channels in comparison to the new entrants whose distribution system is not such developed. This group of fast food chain is able to maintain its economies of scale by negotiating long term contracts with farmer & buying the coffee beans in the large quantities at discounted prices. There is various cost disadvantages for the new entrants. For instance, the stabilized company in the market tries to get the high quality coffee beans and for new entrants to access those distribution channels are very difficult. The favorable larger metropolitan store locations have already been occupied by the current specialty coffee industry (Adamy, Venti Changes at Starbucks, 2008).

Threat of Substitutes:- The Starbucks has quite good range of competing substitutes in beverages and food product line like soda, juice, smoothies, fruit, beer, alcoholic drinks, burritos, sushi, burgers and snack food etc. It is necessary for the Starbucks to innovate and differentiate its coffee, beverage and food product line simultaneously in the competitive landscape. Whereas the majority of coffee consumer does not easily substitute away from coffee or coffee related beverages like blended drinks or espresso and the closest substitute of coffee is the tea which is being sold out by Starbucks under Tazo Tea Brand. Moreover, the Starbucks is offering its own branded coffee at many grocery stores locations to hedge the threat of substitutes. The recent study has shown the consumer preference that the beverages like carbonated soft drinks consumption has declined in contrast to the coffee. This gradually gained preference over carbonated soft drinks shows the health concerns and coffee is healthier choice (Harding, 2000). To conclude, Starbucks focus on fresh and tastier baked goods and Starbucks does not need to diversify its food selection as it’s enough to satisfy the customers (Starbucks, 2008).

Bargaining Power of Buyers/Customers:-Starbucks set the price according to the purchasing power of its customer and the prices at their competitors coffee houses. At Starbucks the prices are not negotiable due to its high product differentiation, enormous selection of coffees, uniqueness and high quality perception perceived power. This is the reason the opportunity for the Starbucks may sell at higher prices (Starbucks, 2008).

Whereas, there is no switching cost to customers to switch due to enormous selection of coffee houses except the minor indirect cost and may take away the patrons from Starbucks. Secondly, the customers have the ability to make their own coffee and Starbucks is trying to remove this threat by offering directions on how to make the perfect brewed cup of Starbucks Coffee at home, known as the “Four Fundamentals of Coffee” (

www.Starbucks.com

Therefore, it is clear that the customers bargaining power have been increased due to the availability of information in regards to market variables and Starbucks should focus on the product competition rather than focusing on the consumer demands to exist in market leadership (Starbucks, 2008).

Bargaining Power of Suppliers:– The Starbucks being the world largest importer of the coffee beans may face the rise in prices of coffee beans due to the unmatched between the twin market forces i.e. high demand and low supply, overcrowded market and high quality coffee sought may result in favour of suppliers bargaining power. There is no substitute for the coffee beans that Starbucks may buy. For Starbucks, this is the huge threat because coffee quality sought by the Starbucks is high and previously Starbucks has paid premium on green coffee about $1.20 per pound (starbucks.com). In 2001, Starbucks announced coffee purchasing guidelines for suppliers, developed in partnership with The Centre for Environmental Leadership in Business (starbucks.com) and were based on the grounds of the quality baselines, environmental concerns, social conditions and economic issues. Recently in 2005, the company paid 23% more than the market price for the coffee xvii to abide by the rules and commitments in purchasing the Fair Trade Certified Coffee (Farmers who sells the coffee are united by an initiative known as Fair Trade Certified Coffee, organized by the Trans Fair USA to assess the farmers are paid fairly for their crops and that has exert more bargaining power over the buyers). Thus, there are more substitutes available in the competitive saturated market for the coffee beans except the technological innovations (such as automated coffee machine, latte and espresso machines has more bargaining power) if Starbucks agrees to buy at different rates and this is true that the Starbucks power lies in the hand of the suppliers.

Intensity of Competitive Industry Rivalry:– Rivalry among existing competitors is high within the industry Starbucks operates in with major competitors like Costa, McDonald’s, Caribou Coffee, and Dunkin Donuts and thousands of small local coffee shops and cafes. As the specialty beverage industry only grows more competitive, Starbucks’ dominant positioning with a large market share is continuously under pressure. Since its inception, Starbucks has stimulated the overall market, creating a positive spillover effect that increased the demand for quality coffee beverages. Therefore, even though Starbucks has rapidly expanded, so have local coffeehouses and ‘mom‐and‐pop’ stores. Thus, elasticity has increased with the variety of substitutes available to consumers offering the same product: premium coffee, friendly staff, and a comfortable milieu. For this reason, recent trends indicate industry stagnation within the domestic market as coffeehouses are now ubiquitous. Though the trend has peaked domestically, coffee and coffeehouses are still ingrained in the American culture leaving this market profitable. Comment by Andrea Banto: Good job with this section.

Key Factors and Trends in Other Areas Affecting Starbucks

The other key factors and trends in other areas that is affecting Starbucks beside Porter’s Five Forces, includes: Political, Economic, Social, and Technological factors.

Political:-The Starbucks business environment especially in Middle East and South Asia was changing rapidly and unpredictably towards worse for the company, due to the declaration of the war on Iraq in early 2003 by the United States. In July 2002, the Arab students called for a boycott of American goods and services, due to the close relationship between United States and Israel, caused the U.S Company Starbucks sales swift downwardly.

Moreover, the Starbucks was boycotted at the top list due to Shultz close relationship to the Jewish Community and the rumours sponsoring the Jewish Community against the Palestine crisis. Thus, cause the Starbucks to closed down six stores in Israel for security threats. Comment by Andrea Banto: A paragraph should have 3 or more sentences.

Starbucks had two class action suits pending since 2001. The lawsuits entitled Carr (Store Manager) and Sheilds (Assistant Manager) at California as exempt employees under California wage and hours laws. The Starbucks is ignoring all its liabilities in these cases, but the company has accepted to the settlement in regards to take care of all of the plaintiffs’ claims without involving in any protracted litigation.

Starbucks is based on importing all their coffee beans, so other possible threat could be change in import laws, could affect the various areas of process and production for the company and could finally lead to change in price, which might impact the level of consumption or sales for the company.

Economical:- The Starbucks also experienced the criticism from Non-Government Organizations that wanted the company to get certified beans and those coffee beans should be grown and marketed under some economic and social conditions. In addition, the economic recession in European countries such as Switzerland, Germany, and Japan in the early 2000s and worldwide financial crisis affected the sales and revenue declining for the company. Comment by Andrea Banto: Please revise this section.

Social: – In regard to the Starbucks Environment Mission Statement that “Starbucks is committed to a role of environmental leadership in all facets of our business” On the basis of their objective, the Starbucks has announced a list of principles that reflects the company’s willingness to make sure its impact on the environment is positive as possible. These principles are: Comment by Andrea Banto: What other social trends may influence the company?

1) Understanding of environmental issues.

2) Sharing information with our partners.

3) Developing innovative and flexible solutions to bring about change.

4) Striving to buy, sell and use environmentally friendly products.

5) Recognizing that fiscal responsibility is essential to our environmental future.

6) Instilling environment responsibility as a corporate value.

7) Measuring and monitoring our progress for each project and encouraging all partners to share in our mission.

The above Environmental principle reflects that the company is more conscious and interested in utilizing their resources in regards to the friendly environment operations.

Technological:-The Starbuck, to earn the profit rapidly and serve more customers quickly rather than focusing on the quality enables the management to replace labour operated machine La Marzocco (which required barista’s to grind & press coffee for every cup) with the Verismo automatic machine (where the barista’s work was reduced to pressing a button) and later barista’s grinding complained of being de-skilled. Thus, the coffee quality result in poor coffee house experience, customer experience and overpriced coffee than competitors led existing and potential customers coming through its doors felt down rather than rising. Shultz to achieve the best result spend ten millions of dollars on new coffee machine namely “Clover” (for making brewed coffee that requires both more beans and more labour) and another machine namely “Mastrena” (smaller and prettier than the Verismo machine, for making espressos where baristas are still required to push a button for grinding and for each fresh cup of the coffee). The Starbucks needs to re-evaluate what the brand stands for, what it sells and what the consumer experience and values should be. Comment by Andrea Banto: Not caps.

SWOT ANALYSIS Comment by Andrea Banto: Only the opportunities and threats were required. These should be very specific to the company. Some of the items indicated are too broad.

Strengths:

Expansion of Products and Services

· Starbucks gift cards: The surge in the sales of Starbucks gift cards is developing into a

very promising ordeal for the company. For the first quarter of 2007, the aggregate volume stored on Starbucks Cards was 40% higher than the first quarter of the previous year.

· Expansion of food items: Starbucks is further expanding their lunch menu which includes

prepackaged sandwiches and salads.

Strong Financials: Starbucks’ net revenues increased 22% in 2006 fiscal year for a total of $7.8 billion. Their earnings increased 18% from the previous year from $494 million in 2005 to $581 million.

Brand Image:- Over the years , Starbucks has developed a brand image that has transitioned customers into the “coffeehouse culture.” It offers its customers a “third place to go after work and home.

Weaknesses

Higher Cost of Sales A mixture of increasing costs of distribution, and increased rent related to a growth in store openings has recently lowered Starbucks’ EBIT margins. In fact Starbucks’ cost of sales increased 26.6% in the first quarter of 2007 versus the first quarter of 2006.

Uncontrolled Expansion As much as the expansion and increase of its retail stores is good for profits, they must make sure that they have initiated a rapid growth plan in place in order to manage existing operations and maintain consistent performance.

Opportunities

Overseas Expansion As of the first quarter of 2007 Starbucks has 13, 168 locations worldwide. Their management team sees long term potential for over 40, 000 locations worldwide. According to Robert W. Braid & Co,, it is expected that the near –term growth of their locations will be 17-20% per year.

Product Line Extension Starbucks ‘commitment innovation and invention has not gone unnoticed and unrewarded. Product line expansion is crucial to the company’s growth and success.

Threats

The World Economy The state of the economy, particularly consumer spending, may pose a threat to Starbucks’ overall sales growth. Some factors include the increased debt service levels resulting from adjustable-rate mortgages and interest rates, the slowdown in the housing market, and the potential spike in gas and oil prices. Factors such as these will affect discretionary spending.

Consumer Preference and Health Concerns: Health –related concerns regarding caffeinated beverages could easily dampen the demand for coffee.

Competition from Fast –Fast Services: In recent statement, McDonalds announced that it will be piloting the addition of espresso and cappuccino machines in locations throughout New York, New Jersey, and Michigan. Dunkin Donuts was recently labeled as “the hottest coffee chain” in a customer loyalty survey performed by major marketing firm brand key. Fast food chains are aiming to gain market share in the market for coffee and coffee-products such as espresso and cappuccino, and with substantial financial, marketing and management resources, they could be very successful.

Conclusion

Starbucks is still the leading retailer, roaster and brand of specialty coffee in the world. Regardless of the fact that there are external environmental factors affecting the organization, the potential for growth remains remarkable. With proper strategic planning, marketing, and management, the sky will be the limit for the potential expansion and strength Starbucks have as a company to combat the weakness and as well as the threat.

References:

Adamy, J. (2008), Venti Changes at Starbucks http://knowledgeputeri.wordpress.com/articles/starbucks-corporation/ ‎

Sinkovics, R. & Ghauri, (2009), P, 277-319. New Challenges to International Marketing

Starbucks, (2008), www.studymode.com/subjects/starbucks-2008-page3.html

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Running head: MARKET POSITION ANALYSIS
1

MARKET POSITION ANALYSIS
6

Market Position Analysis

Kenawa E. Jigba

Module 2: Assignment 2

Solutions to Organizational Challenges: A Capstone Experience | B6028 BLO | SU213 |

Argosy University

Instructor: Dr. Andrea Banto

(Summer II 201 )

Introduction

The following paper presents a market position analysis of Starbucks Company, the analysis of the target customers, the wants/ needs of the customers, and why customers chooses Starbucks as a company. The competitive advantage and sustainability of the company as well as the Five P’s of Marketing will be addressed.

Starbucks Company is a global firm that has come to woo customers of every kind from each corner of the globe. In the year 1971, this company was officially launched in Washington, DC to start operations as a drinks-producing firm. It should be further noted that Starbucks’ name came into existence as a result of retail chains of coffee, tea, and spices. Majorly, this firm put more emphasis on the quality of coffee that the consumers were served. In recent times, the company has greatly expanded since it has stalls in not less than forty countries worldwide. Consequently, Starbucks deals with beverages and pastries as it continues to make it big in the global industry amidst the stiff competition in play. Examples of pastry that Starbucks deals in include: fudge, cakes, cupcakes, cookies, and bread among others.

Description of the target market

Starbucks has got three market targets: teens and young kids, adults, and young adults. With respect to adults, Starbucks’ main audience includes women and men that are older and whose age frame range between 26-41 years. In addition, 49% of the company’s total supply goes to adult consumers. The company on the other hand tries its best to appeal to this class of customers through adverts and a kind of contemporary design that best works at attracting the older customers.

The second class of audience is the young kids and teens. This group ranges 12-17 years of age and the same accounts to almost 2% of the total supply made. In addition, the company supplies kids with milk that is caffeinated and sugary not forgetting coffee drinks. On the other hand, there are the young adults whose maximum age goes up to 24 years. Furthermore, this class of audience constitutes close to 5% of the total sales made by Starbucks Company. Moreover, this firm has a strategic way of locating the youths because normally it is positioned in colleges where students meet to socialize with each other or write term papers.

Identifying Competitive advantage and Sustainability

With regards to the competitive advantage of this company, they came with 3 strategic components. The first component was the coffee itself whereby the company provided coffee drink that was of high quality compared to any other competing firm. This attracted most consumers owing to the fact that Starbucks hade many retail outlets in operation. Secondly, the company used another component that involved extraordinary and good services that kept customers glued to this company. Some of these services involved remembering the names of customers not forgetting the orders they had made. This in a great way influenced the customer’s perception for the better. Thirdly, a very ideal component was the atmosphere whereby, the company provided a wonderful and attractive atmosphere that kept consumers around even after they had finished their drinks.

The company has proven to be sustainable in that, the position of this company was originally started in Washington but later spread to many countries in the globe. On the other hand, the source of competitive differentiation in Starbucks was from interactive segments such as the social platforms like twitter and Facebook.

Application of the five P in marketing the product

As a manager, I will put effort to satisfy the customer’s by using the five variables normally referred to as 5 P’s of marketing or marketing mix. These variables are controlled by the management in order for the managers to meet the needs and wants of the target market group (Kalb, 1993).

Product – Starbucks is the leading retailer, roaster and brand of specialty coffee in the world operating about 40 countries in the world. The Starbucks key success is innovating, modernizing, aggressive store openings and strong product differentiation in the coffee industry that limits the new entrant’s entrance in the coffee industry.

Price– Starbucks set the price according to the purchasing power of its customer and the prices at their competitors coffee houses. At Starbucks the prices are not negotiable due to its high product differentiation, enormous selection of coffees, uniqueness and high quality perception perceived power. This is the reason the opportunity for the Starbucks may sell at higher prices (Starbucks, 2008).

Promotion- Starbucks key success in promotion is through the company’s innovating, modernizing, aggressive store openings and strong product differentiation in the coffee industry. For instance, they offer free Wi-Fi access to enable customers to surf internet. Prepaid Starbucks card, card rewards and Starbucks gold card , improving its coffee line to offer smaller, cheaper cups, using new technology that create one cup at a time individually so that the taste remains the fresh. The use of social media such as Facebook has been a great tool for promotion.

Place this is the place where the business will be located and where the business will manage to sell it products. The placement decision will consider the channels of distribution that ensures the product reaches the customers. Therefore, the distribution channel will involve market coverage, logistic, service level and channel member selection. Starbucks has 13, 168 locations worldwide. Their management team sees long term potential for over 40, 000 locations worldwide.

People– Starbucks recognizes the loyalty that their consumers give them. Therefore, the environmental principle reflects that the company is more conscious and interested in utilizing their resources in regards to the friendly environment operations. The company will ensure that the workers are honest and helpful to the customers and have a positive attitude and a pleasant appearance. Since customers also have the ability to make their own coffee and Starbucks is trying to remove this threat by offering directions on how to make the perfect brewed cup of Starbucks Coffee at home, known as the “Four Fundamentals of Coffee” (

www.Starbucks.com

Conclusion

In all three interviewed that were conducted, it seem that all the senior managers agreed that innovation is necessary to advance in competition. When Senior Vice President Craig Russell and CFO Troy Alstead were asked if they were threaten by Dunkin Donuts, they jokily laughed with a statement, “We have no reason to be threaten, if for any reason Dunkin should be the one to be threaten not us.” All interviewed seemed to have the same common response (See Appendix)

Reference

Lunny, D. (1994). Checklist for going into business. Toronto: Productive Publications.

Kalb, I. S. (1993). Marketing your legal services. Los Angeles: K&A Press.

Starbucks, (2008), www.studymode.com/subjects/starbucks-2008-page3.html

Schultz H. & Yang J. (2011). Put your heart into it: how starbucks built a company one
cup at a time. New Jersey: Prentice Hall.

http://www.starbucks.com/

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