2.

1 Vision Statement

;Starbucks vision statement is

To establish Starbucks as the most recognized and respected brand in the world and ”
become a national company with values and guiding principles that employee could
“ be proud of

:Conclusion

The vision statement clearly describes the dream or the future of the company that is to be
the worlds most well known coffeehouse and also to be the most appreciated and positively
graded brand by all levels of people around the world. The company also focuses its vision
.to employee satisfactions, so that the employees will be happy

2.2 Mission Statement

;Starbucks Mission Statement is

Establish Starbucks as the premier purveyor of the finest coffee in the world while “
”.maintaining our uncompromising principles while we grow

:The six principles are

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, roasting and
fresh delivery of our coffee.
4. Develop enthusiastically satisfied customers all of the time
5. Contribute positively to our communities and our environment
6. Recognize that profitability is essential to our future success.
Analyzing the Mission Statement Component
Starbucks mission statement is needed to be analyzed to see the total number of mission
.component it has

YES/NO COMPONENT NO

Yes Customers .1

Yes Products or services .2

Yes Markets .3

No Technology .4

Yes Concern for survival, profitability and growth .5

Yes Philosophy .6

Yes Self-Concept .7

Yes Concern for public image .8

No Concern for employees .9

This is a good mission statement. This mission statement lacks of 2 components:

Technology and Concern for employees. The company must evaluate whether it is
technologically advanced and even though the company’s vision is concern to employee, it
still have to add it in mission statement.
2.2.1 Proposed Mission Statement

Establish Starbucks as the premier purveyor1 of the finest coffee in the world and also to be
established as the most employee valued company while maintaining our uncompromising
.principles as we grow together with technological advances

:The six principles are

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, roasting and fresh
delivery of our coffee.
4. Develop enthusiastically satisfied customers all of the time
5. Contribute positively to our communities and our environment
6. Recognize that profitability is essential to our future success.

:Porters five Forces

1
Porter’s Five Forces Table

Porters Details Industry

five profitability
Forces

Rivalry Among Competing Firm There is intense competition in the coffee

market amongst established coffee shops that
are fighting to get customers. There are local
coffee shops offering specials to lure potential
customers in. Restaurants are opening earlier LOW
HIGH
and closing later to accommodate customers on
the go. With the 85% North American customers
taking their coffee to go, convenience is a major
factor

Potential of new competitors There is a great deal of risk of entry by potential

competitors due to the low start up costs.
McDonalds is able to add specialty coffee to
HIGH their existing services to tap into the specialty
LOW
coffee market. There is potential of $125,000
per year in revenue to be made by each store if
they are able to successfully enter the specialty
.coffee market
Potential development of Water is a substitute which is healthy for us and
substitute products HIGH it is free. The option to buy bottled water is also LOW
inexpensive compared to coffee. With the focus
.on healthier living, water is the ultimate choice

Bargaining power of suppliers There is more bargaining power for

suppliers of technological innovations such
as automated coffee machines, latte and
HIGH LOW
espresso machines, etc because there are
not as many suppliers for such equipment
as there are for coffee beans
Bargaining power of consumers Customers did not really have bargaining power
HIGH when it came to premium coffee such as LOW
Starbucks. The sheer scale of Starbucks’
business reduces the bargaining power of any
single group of buyers.

Competitive Profile Matrix

Gloria Jean’s Caribou coffee Starbucks

coffee

WT RATING WT RATING WT RATING WEIGHT CRITICAL

SCORE SCORE SCORE (WT) SUCCESS
FACTOR

0.30 3 0.40 4 0.40 4 0.10 Advertising

0.40 2 0.60 3 0.80 4 0.20 Product Quality

0.15 3 0.15 3 0.10 2 0.05 Price

Competitiveness

0.24 3 0.16 2 0.24 3 0.08 Management

0.10 2 0.15 3 0.15 3 0.05 Financial position

0.20 2 0.20 2 0.30 3 0.10 Customer loyalty

0.30 2 0.30 2 0.60 4 0.15 Global expansion

0.20 2 0.20 2 0.40 4 0.10 Employee benefits

0.34 2 0.34 2 0.51 3 0.17 Customer Service

2.23 2.50 3.50 1.00 TOTAL

Starbucks shown highest score and the second highest were Caribou Coffee and Gloria
Jean’s coffee shows the lowest Score. The competitive profile matrix (CPM) weighs product
quality. The product quality (0.20) and is the most important item on the list of critical
success factors. Starbucks score on this factor as the highest in comparison to their two
chief competitors, Caribou and Gloria and reflecting a distinctive competitive advantage in
the market. Customer service 0.17, Employee benefits 0.10 and global expansion 0.15
replicates a high level of importance on the CPM. The advertising weight, 0.10, on CPM
does not reflect a high level in ranking the critical success factors, but does release valuable
information in comparison to their competitors on the CPM. Starbucks rates and scores the
.lowest on the price competitiveness factor

3.1.4 External Factor Evaluation Matrix (EFE)

Key External Factors

Weighted Ratin Weigh Opportunities

Score g t

0.60 4 0.15 Globalization makes it easy to enter international

market

0.30 3 0.10 .People are looking for cheap internet connections

0.20 2 0.10 Express foods are getting famous to reduce time to be

.spent

0.30 3 0.10 .Demand for non-chemical and healthy products

Threats

0.45 3 0.15 Increase in the inflation rates creates a demand in

.lower priced products

0.60 3 0.20 Many companies are pricing their products cheaper to

.impress customers

0.20 2 0.10 Increase in hypermarkets and economical

supermarkets

2.55 1.00

Internal Factor Evaluation Matrix

Weighted Score Rating Weight Key Internal Factors

Strengths

0.84 4 0.21 1. Huge market expansion to China,

Brazil, India and Russia
0.40 4 0.10 2. Provide a great work environment

0.30 3 0.10 3. Apply the highest standards of

excellence in services.
0.30 3 0.10 4. Starbucks has monopolistic
advantages over its competitors.
0.48 4 0.12 5. Purchased Ethos healthy water for
8 million and also does not use
chemical flavor for coffee.
0.24 3 0.08 6. Launching the sales of
Frappuccino in Japan and Taiwan.

Weaknesses

0.20 2 0.10 1. Price of coffee is high at Starbucks

0.14 2 0.07 2. less marketing and advertising its

product
0.24 2 0.12 3. Starbucks products are not
available at supermarket

3.14 1.00 TOTAL

SWOT ANALYSIS:

WEAKNESSES STRENGTHS

Huge market expansion to China, Brazil, India and Russia

less marketing and advertising its product

.Apply the highest standards of excellence in services

Starbucks products are not available at supermarket

.Starbucks has monopolistic advantages over its competitors

Purchased Ethos healthy water for 8 million and also does not use chemical flavor

Launching the sales of Frappuccino in Japan and Taiwan

WO Strategies SO Strategies OPPORTUNITIES

W1,W2,O1,O3 S1,S3,O1,O2,O3 .O1

Globalization makes it easy to enter

Reduce the price and Advertise the Do advertisements about the FREE
international market
.products all over the places internet connections and the excellent
.service they provide .O2
W1,W3,O3
People are looking for cheap internet
S5,O4
connections
Do R&D to sell products at
supermarkets without reducing the Starbucks shall increase the healthy .O3
quality with cheap price products into market as the demand
Express foods are getting famous to
.for it is high
reduce time to be spent

.O4

Demand for non-chemical and

healthy products
THREATS
.T1

Increase in the inflation rates

creates a demand in lower
ST Strategies .priced products

S2,S3,S4,T1,T2 .T2

Many companies are pricing

Starbucks needs to change its market strategy by reducing the
their products cheaper to
.price to compete with the competitors
.impress customers

WT Strategies .T3

Increase in hypermarkets and

W1,W2,T1,T2
economical supermarkets

Create new complementary products which contain good quality

.and lower price to attract more customers

W3,T3

Starbucks needs to analyze the way to reduce the risks of selling its coffee products at supermarkets
.as customers are demanding for it

3.2.4 Space Matrix

FINANCIAL STRENGTHS
RATING

A Starbucks asset is financed through equity and is safe if creditors

5 start to demand repayment of debt. Long term debt-to-equity ratio is only 0.0017.

Starbucks Return on Asset ratio shows that in year 2005, the

4 efficiency of using assets to generate earning has increased from 12% to 14%.

Starbucks net income increased to $494.5 million in the year 2005

4 compared with $388.9 million in 2004. There is an increase of 21.3% in the
income of Starbucks.
13

INDUSTRY STRENGTHS

RATING
Starbucks Coffee Liqueur was the top selling new spirit product,
4 grossed sales over $8million annually.

Starbucks agreed to serve Starbucks Coffee in all United flights.

3

“Starbucks Everywhere” approach has increased foot traffic for all the
5 stores in area. This makes customers easy to fine Starbucks all the places in
town.

12

worst =1+ best = 6+

ENVIRONMENTAL STABILITY

RATING

Starbucks products prices are high compared with competing coffee

4-
houses. They price their products several dollars below then Starbucks price.

Demand for Starbucks products to be supplied in supermarkets

2- increase. But, doing that will put Starbucks business in risk as customers don’t know
the way to brew the coffee.
Increase in world coffee bean price in 2001, forced Starbucks to
3-
increase its beverages and coffee sold at retail.

9-

COMPETITIVE ADVANTAGES

RATING

Starbucks coffee and beverages are high in quality brewed by well

1-
trained employees.

Starbucks teamed up with T-mobile WI-Fi service to provide internet

1- access to all over Starbucks Coffeehouse
There are 16,120 Starbucks coffeehouses worldwide and plan to open
2-
another 1800 stores.

Starbucks is a customer oriented Coffeehouse.

2-

6-