Starbucks

Starbucks II. Starbucks Mission Statement Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow. The following six guiding principles will help us measure the appropriateness of our decisions. Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee.

Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success. III. Company’s goals and objectives Starbucks had some very good and professional goals for their company in the future. Not all goals were about dominating the market, but some were to earn the respect of customers and stockholders.

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Shultz wanted the company to become the most respected brand name in coffee and for the company to be admired for its corporate responsibility. He spoke of having a keystone value in the effort “to build a company with soul”. That keystone value was that the company would never stop pursuing the perfect cup of coffee. Shultz wanted Starbucks to be known as the best place to buy specialty coffee that did not add any artificial flavoring polluting their product. Along with earning the respect of customers, Shultz also wanted to keep the respect and treat his employees with care.

He wanted to offer Health benefits and stock options to all employees who worked 20 or more hours per week. Starbucks wanted to become a national company with values and guiding principles that employees could be proud of. Earning the respect of customers and employees were not the only goals of Starbucks, but like any other company, growth was also on the mind. One of the first goals and dreams of Shultz was to setup Espresso bars in all the stores like he had experienced in Italy. He felt that the friendly and pleasurable environment would help the company grow and make customers feel that coming to a Starbucks was a good time. Shultz also had a plan to open 125 new stores outside the Pacific Northwest and outside the United States in the next five years.

He wanted to open 15 stores the first year and five more each additional year. To keep the quality of coffee that Starbucks sold, Shultz felt that the store should only be company-owned and not franchised out. IV. Situation Analysis -Strengths and weakness, opportunities and threats Starbucks, like many other companies had some strengths and weaknesses. One of the best strengths that a company can have is a CEO who is not afraid to take a chance and try knew things. Before Shultz came over to Starbucks the company did not have any plans of major growth or product expansion. Companies should always have knowledge of what they are selling and that is what Starbucks did. They knew everything that there was to know about coffee and if they didn’t they would find out.

Starbucks always prepared all of their managers and employees by sending them to training seminars and classes to learn how to roast the perfect bean, brew the perfect cup and how to serve each customer correctly. Starbucks believed in quality of its products and the character and location of its stores. Companies all have strengths, but they also have weaknesses to. Weaknesses were very easy to see when the company was first put together. Baldwin and Bowker were very narrow-minded and had no desire to expand the company very far. The two were also afraid to try knew things such as starting an Espresso bar and a sit in area where people can sit around, talk and make new friends. Though after Shultz took over the company, it seemed as though the weaknesses started to dissolve and the opportunities began to grow. Shultz took advantage of the opportunity to expand the company into new areas and markets.

Entering new markets brought forward the idea of creating new product lines. They started by selling bakery goods at the espresso bars and along with selling their beans, they began to sell their Starbucks Barista home espresso machine. Opening the Espresso bar also enabled them to sell the CD’s that the company played while customers sat and drank. Partnering with Dreyer’s and Pepsi enabled Starbucks to put their name on ice cream products and the cold beverage market by creating Frappuccino. This all enables the company to earn an additional profit.

Expanding too fast is one of the most important threats that Starbucks may encounter. Opening all these new stores at such a drastic rate can cause the company to endure major debt. Debt can cause a series of chain reactions leading to lower wages, cutting benefits, closing stores and laying off workers. These are not major threats now, but at an uncontrollable rate, this is one of the main threats that can really affect the future of Starbucks Coffee. -Financial Ratio Analysis Comparing Starbucks financial ratios to that of the Industry can give us a general perspective of Starbucks financial strength.

This could also give some indication of stock price performance. Most of Starbucks ratios are in line with the industry average, but there are a few that could explain the poor stock performance recently experienced. Starbucks price to earnings ratio is well above the industry average, but this could be due to its relative high growth it has experienced. Return on equity is well below the average for the industry, and this could be an area of concern. This suggests that the investment made by shareholders in the firm has not produced a decent return when compared to the industry average.

Starbucks gross margin is also below the average for the industry, suggesting that it is not able to cover its operating expenses as well as other firms in the industry. -State of the Industry The face of the coffee industry has changed dramatically this decade. The number of coffee shops in operations has more than quadrupled since 1991. As of 1997 eight thousand specialty coffee outlets were in operation in the United States. Starbucks good fortune in this industry motivated many aspiring rivals in this industry to pursue a plan of expansion.

Analysts of this of the coffee specialty arena believe there is room for two or three major competitors. As of 1997 Starbucks closest competitor, Second Cup which is based mainly in Canada was less than a third of its size. As of August of 1999 Starbucks had opened 2,152 stores in the United States. Starbucks also opened 252 stores internationally. Most of Starbucks international stores were located along the Pacific Rim and the United Kingdom. During the fiscal year of 2000 Starbucks plans to open 600 new stores, 450 in the United States, the rest abroad.

-Competitors and their stance Starbucks may eventually encounter formidable competition. Before 1997 no adversary of Starbucks had as many as 250 stores. In contrast Starbucks had opened over 1500. However according to the Starbucks case analysis there were at least twenty different local and regional chains that wanted to become serious rivals of Starbucks. …

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