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Starbucks Official

Strategic Management Capstone Starbucks Strategic Recommendations Presentation 3
by

Jim Stites

on 10 June 2010

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Transcript of Starbucks Official

Checkpoint #3
Group #2
MGMT 4970
12:30PM
Spring 2010

Matt Newman
Meredith Salefski
Jonathon Stern
Brad Stevens
Jim Stites
Myles Weaver
Dane Zentgraf
Starbucks Strategic Recommendations Strategic Recommendations
SWOT Matrix
Abreviation Codebook
SH= Strategic History
SG= Strategic Group
5F= Five Forces
ME= Macroenvironmental
VRIO= VRIO/Core Comepetencies
OS= Organizational Structure
FR= Financial and Ratio
BS= Brainstorming
5S= 5S Analysis
OC= Organizational Culture

1. Company Culture- strong mission statement (OC)
2. Brand Loyalty (VRIO)
3. Global Presence (SH)
4. Ethical sourcing for coffee beans (OC)
5. Strong sense of community within the company (OC)
6. Employee diversity (VRIO)
7. Strong ethical values (OC)
8. Financial strength (FR)
9. Quality products (Arabica coffee beans) (ME)
10. “Coffee Experience” (SH)
11. Distribution and Roasting processes (5F and VRIO)
12. Taken innovative steps to “go green” (BS)
13. Strategic partnerships (5S)
14. Product innovation and research (SH)
1. Increased competition in specialty coffee industry (5F)
2. Product pricing (SG)
3. Lack of internal focus (OS)
4. Dependence on main competitive advantage, the retail of coffee (VRIO)
5. Overexpansion (OS)
6. No individualism in stores (OC)
7. Heavy reliance on Arabica coffee beans (5F)
8. Reputation as a “bully” in the coffee industry (BS)
9. Heavy dependence on Unites States market (5F)
10. Market saturation, high prices, and long waits in shops (BS)
11. Confusing names of products and sizes (BS)
12. Lack of substantial food menu that is compatible with their service model (BS)
13. Becoming an undifferentiated product by selling pre-packaged lower perceived
quality products. (BS)

Strengths Weaknesses 1. Continue expansion into the pre-packaged coffee industry (Via instant) (BS)
2. Current downward trend in sugar prices, cheaper for Starbucks (BS)
3. Branch out to more products with strong brand loyalty (BS)
4. World prices paid to growers for coffee beans have been at record lows (FR)
5. Consumers value the “Green Movement” (ME)
6. Connecting with consumer with Social Media (BS)
7. Locations and product allow coffee stores to partner with the community(OC)
8. Underdeveloped international differentiated coffee market (BS)
Opportunities 1. Risk of new entry by the Fast Food strategic group (SG)
2. Consumers becoming more price sensitive in economic
times and switching to a substitute product (SG)
3. Change in consumer preferences (BS)
4. Political instability of countries selling Arabica Coffee beans (FF)
5. Healthy alternatives of tea and other substitute products (SG)
6. Overexposure of the company can threaten its exclusivity, and further
diversification can endanger the brand (BS)
7. Food safety issues such as rBGH in milk has been linked to cancer (BS)
8. Resistance from some communities favoring historical architecture
and culture (OS)
Threats 1. Use strategic partnerships, distribution channels, and brand loyalty to
increase market share in the pre-packaged coffee industry. (S2, S11, S13, O1)
2. Use their strength in strategic partnerships to create better experiences with
social media (S13, O6)
3. Increase recycling opportunities to improve brand image and customer loyalty
(S4, S7, O5)
SO Strategies 1. Avoid cannibalization of Starbucks’ products while expanding into new
product markets such as Via. (S10, S14, T6)
2. Use coffee experience and an emphasis on product quality as the
differentiating factor to fend off attacks by companies such as McDonalds
(S9, S10, T6)
3. Use financial strength to offer lower priced coffee as a means of helping out
buyers and serve the community in the economic recession (S5, S8, T2)
4. Use brand loyalty to move into other areas as consumer preference changes
(S2, T3)
5. Use green movement to help out the community and strengthen brand
reputation (S2, S12, T7)
ST Strategies 1. Become more conservative in US expansion (W1,W5, W9, W10, O8)
2. Develop intelligent research plans to expand into profitable
international markets (W5,9 O8)
3. Find partnership opportunities with communities (Book clubs, coffee
education, etc.) (W4, W6, O7)
4. Use the opportunity of recycling movement to set up competitions
amongst similar stores. Encourage store employees and customers to
design the competition. (W6 O7)
WO Strategies 1. Provide a better quality food selection to compete against competitors and
bring in more customers (W1, W4, T1)
2. Strive to make continuous improvements on product quality to fend off new
entrants (W1, T1)
3. Work to lower product pricing through continuous store and channel improvements
to fend off new entrants (W2, T1, T2)
4. Develop individual ideas for stores to relate better to the community it is in
(W6, T8)
5. Encourage stores to adapt interior and exterior design to congeal with local
architecture (W6, T8)
6. Return to two-way communication between store managers and executives. (W3, T1)
WT Strategies Brainstorming Strategic Recommendations Overview Strategic Thinking Strategy Making
SWOT Matrix
1. Company Culture- strong mission statement (OC)
2. Brand Loyalty (VRIO)
3. Global Presence (SH)
4. Ethical sourcing for coffee beans (OC)
5. Strong sense of community within the company (OC)
6. Employee diversity (VRIO)
7. Strong ethical values (OC)
8. Financial strength (FR)
9. Quality products (Arabica coffee beans) (ME)
10. “Coffee Experience” (SH)
11. Distribution and Roasting processes (5F and VRIO)
12. Taken innovative steps to “go green” (BS)
13. Strategic partnerships (5S)
14. Product innovation and research (SH)
Strengths 1. Increased competition in specialty coffee industry (5F)
2. Product pricing (SG)
3. Lack of internal focus (OS)
4. Dependence on main competitive advantage, the retail of coffee (VRIO)
5. Overexpansion (OS)
6. No individualism in stores (OC)
7. Heavy reliance on Arabica coffee beans (5F)
8. Reputation as a “bully” in the coffee industry (BS)
9. Heavy dependence on Unites States market (5F)
10. Market saturation, high prices, and long waits in shops (BS)
11. Confusing names of products and sizes (BS)
12. Lack of substantial food menu that is compatible with their service model (BS)
13. Becoming an undifferentiated product by selling pre-packaged lower perceived
quality products. (BS)

Weaknesses 1. Continue expansion into the pre-packaged coffee industry (Via instant) (BS)
2. Current downward trend in sugar prices, cheaper for Starbucks (BS)
3. Branch out to more products with strong brand loyalty (BS)
4. World prices paid to growers for coffee beans have been at record lows (FR)
5. Consumers value the “Green Movement” (ME)
6. Connecting with consumer with Social Media (BS)
7. Locations and product allow coffee stores to partner with the community(OC)
8. Underdeveloped international differentiated coffee market (BS)
Opportunities 1. Risk of new entry by the Fast Food strategic group (SG)
2. Consumers becoming more price sensitive in economic
times and switching to a substitute product (SG)
3. Change in consumer preferences (BS)
4. Political instability of countries selling Arabica Coffee beans (FF)
5. Healthy alternatives of tea and other substitute products (SG)
6. Overexposure of the company can threaten its exclusivity, and further
diversification can endanger the brand (BS)
7. Food safety issues such as rBGH in milk has been linked to cancer (BS)
8. Resistance from some communities favoring historical architecture
and culture (OS)
Threats Strategic Analysis SWOT Analysis Strategic Recomendations

SWOT Analysis Strategic Recommendations

SWOT Matrix Strategic
Recommendations Strategic Recommendations

Brainstorming
Weakness Opportunities Strategic Recommendations - Weakness
Dependence on main competitive advantage,
the retail of coffee (VRIO)
No individualism in stores (OC)

- Opportunity
Locations and product allow coffee stores to
partner with the community(OC)

- Find partnership opportunities with communities (Book
clubs, coffee education, etc.) (W4,W6,O7)
WO Strategy Strategic
Recommendation 1 Strategic Recommendations 2 Strategic
Recommendation 1 2 3 4 5
Weakness Threats - Weakness
No individualism in stores (OC)

- Threat
Resistance from some communities favoring historical
architecture and culture (BS)
Encourage stores to adapt interior and exterior design to
congeal with local architecture (W6, T8)
WT Strategy Coffee Break What would be the first book you would
recommend Starbucks to place on its list?
Would you frequent Starbucks more if it was
tailored more to your individual community? Coffee Break
Strength Threats Strategic Recommendations - Strength
Brand Loyalty (VRIO)

- Threat
Change in consumer preferences (BS)
ST Strategy Use brand loyalty to move into other areas as consumer
preference changes (S2, T3)
Strategic
Recommendation 3 4 5 Strategic
Recommendation Strategic
Recommendation Strategic Recommendations - Strengths
Brand Loyalty (VRIO)
Distribution and Roasting processes (5F and VRIO)
Strategic partnerships (5S)

- Opportunities
Continue expansion into the pre-packaged and food
service coffee segments (Via instant) (BS)


Strength Opportunities SO Strategy Use strategic partnerships, distribution channels, and brand loyalty to increase market share in the pre-packaged and food service coffee segments. (S2, S11, S13, O1)

Coffee Break Coffee Break
Strengths Threats Strategic Recommendations - Strength
Quality products (Arabica coffee beans) (ME)
“Coffee Experience” (SH)

- Threat
Overexposure of the company can threaten its exclusivity, and further diversification can endanger the brand (BS)
Use coffee experience and an emphasis on product quality as the differentiating factor to fend off attacks by companies such as McDonalds (S9, S10, T6) ST Strategy Engage the Community Don't trick them Questions?
Full transcript