RUNNING HEAD: Starbucks

Starbucks Inc.
Ametta Roe
BAM479
Professor Harvel-Jenkins
February 20, 2016

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Table of Contents:

Mission Statement..........3
Vision Statement.........3
Mission Statement Components.....3
Mission/Vision Eval....3
Milestones....4
Case Statement.....7
External Factors...8
Internal Factors...10
SWOT Analysis..13
Porters Five Forces.....14
Rivalry among Competitors........15
New Competitors....17
Bargaining Power of Buyers...20
Bargaining Power of Suppliers...21
Substitute Products..21
SWOT Matrix..22
SO Strategies...22
ST Strategies.......23
WO Strategies.....24
WT Strategies.....25
Financial Analysis.26
Recommended Strategy.32
Implementation Strategy....34
Appendix A....41
Appendix B.....42
Appendix C.43
Appendix D.43
Appendix E.....44
Appendix F/G..45
References...46

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Starbucks Mission Statement:

To inspire and nurture the human spirit one person, one cup and one neighborhood
at a time.
Starbucks Vision Statement:
to establish Starbucks as the premier purveyor of the finest coffee in the world while
maintaining our uncompromising principles while we grow.

Mission Statement Components:

Organiza
tion

Custom
ers

Produc
ts or
service
s

Starbucks

No

No

Market
s

No

Technolo
gy

Concern for
survival,
growth, and
profitability

Philosop
hy

No

No

No

Selfconcept

Concer
n for
public
image

Concern
for
employe
es

No

No

No

Mission and Vision Evaluation:

There are several components that make up a good mission and vision statement,
although they are both slightly different, they both are very important. A vision statement
answers the question of what the company wants to achieve and become, while the mission
statement declares attitude and declaration for the business. When developing a mission or vision
statement to put into place for a company all managers should be involved in the process,
creating more people to become committed to the company. It has been studied that companies
with mission and vision statements in place have twice the average return on shareholders equity
than those firms without formalized statements.
Starbucks has put both a mission and vision statement in place; however the main focus
is not where it needs to be. Breaking down the Mission statement it does not explain the
importance of the customers, products, market, shareholders, nothing. Explaining the importance
of the customers considering they are the reason any company is making money surprises me. I

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believe that Starbucks needs to reevaluate its mission statement and make it enticing to both
customers and shareholders. I believe it should go something like this, We believe our number
one responsibility is to the personnel who continue to come back for our products, adding new
developments to the lineup as we are stores, inspiring, motivating and developing the character
and dedication to ensure a positive and friendly experience taking one sip at a time.
Although the mission statement is important the vision statement is also an important
aspect to any business as well. Starbucks has not yet stated an official Vision statement; however
they have been working on implementing one for some time now. The vision starting back when
Schultz began the first coffee shops in Seattle, visiting several different areas and seeing more
and more espresso bars, he had a plan to bring coffee bars to every neighborhood corner around
the world. However, looking at the current Vision statement that has been mentioned I believe it
says just that in the vision statement. Through this Starbucks has created a dream that is
attainable and showing where the company wants to go while caring for its customers and where
there target audience and markets will be; every corner.

Milestones:
Starbucks founded in 1971 by Jerry Baldwin, SevSiegl, and Gordan Bowker. The idea of
opening a coffee shop came from Alfred Peet, famous for the Peets Coffee Fame. The first store
they opened up in Seattle Washington, and began by selling coffee beans and coffee making
equipment (Starbucks History). Shortly after opening for business, they hired Howard Schultz as
the Director of Retail Operations who began to come up with a plan to sell drinks rather than just
the products to do so. His thinking fell through when the owners did not agree, resulting in
Schultz to open the second chain of II Giornale coffee bars in 1986.

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After becoming successful in the Gironale Coffee Bar business, Baldwin, Siegl, and
Bowker decided to sell Starbucks business to Schultz. Changing the name of his current chain to
Starbucks he began to use the beans and equipment to sell coffee drinks. Eventually beating out
the competition and showing people what Starbucks was all about making gourmet coffee drinks.
Starbucks began to expand all over the world, in North America and Tokyo. Today, Starbucks has
expanded the corporation owning 11,000 locations, 17,000 stores in 55 different countries.
Starbucks was once considered a small business and now is serving several people every day
now considered to be a Corporation. Not only is Starbucks known for its coffee but they also
own Hear Music Label and Ethos Bottled water (Starbucks History). Starbucks is now
considered the biggest coffee retailer expanding in now several areas around the world, selling
several different kinds of beverages, continuing to grow daily.
1971
Starbucks opens first store in Seattles Pike Place Market.
1982
Howard Schultz joins Starbucks as director of retail operations and marketing. Starbucks
begins providing coffee to fine restaurants and espresso bars.
1984
Schultz convinces the founders of Starbucks to test the coffeehouse concept in downtown
Seattle, where the first Starbucks Caff Latte is served. This successful experiment is the genesis
for a company that Schultz founds in 1985.
1987
Il Giornale acquires Starbucks assets with the backing of local investors and changes its name
to Starbucks Corporation. Opens in Chicago and Vancouver, Canada.
Total stores*: 17

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1994
Opens first drive-thru location.
Total stores: 425
1998
Extends the Starbucks brand into grocery channels across the U.S.
Opens in underserved neighborhoods through joint-venture partnership with Magic Johnson.
Launches Starbucks.com.
Establishes the CUP Fund emergency financial assistance fund for partners.
Opens stores in: England, Malaysia, New Zealand, Taiwan and Thailand.
Total stores: 1,886
2003
Acquires Seattle Coffee Company, which includes Seattles Best Coffee and Torrefazione
Italia coffee.
Opens roasting facilities in Carson Valley, Nev., and Amsterdam, Netherlands.
Opens stores in: Chile, Cyprus, Peru and Turkey.
Total stores: 7,225
2008
Chairman Howard Schultz returns as chief executive officer and begins transformation of the
company.
Acquires Coffee Equipment Company and its Clover brewing system.
Adopts new Mission Statement To inspire and nurture the human spirit one person, one cup
and one neighborhood at a time.
Launches My Starbucks Idea, Starbucks first online community. Also joins Twitter and debuts
Starbucks Facebook page.
Opens stores in: Argentina, Belgium, Bulgaria, Czech Republic and Portugal.
Total stores: 16,680
2013
Strengthens ethical sourcing efforts with coffee farming research and development center in
Costa Rica.

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Starbucks ceo Howard Schultz reinforces companys commitment to marriage equality at

companys Annual Shareholders Meeting.
Come Together petition urges U.S. elected leaders to reopen the government.
Opens stores in: Vietnam and Monaco.
Total stores: 19,767
2014
Enhances iPhone app with shake to pay and digital tipping.
Launches Starbucks College Achievement Plan with Arizona State University to offer
qualifying Starbucks U.S. partners the opportunity to complete a college degree through ASUs
online degree program.
Announces commitment to hiring 10,000 veterans and military spouses by 2018.
Opens first Starbucks Reserve Roastery and Tasting Room in Seattle.
Launches Starbucks Mobile Order & Pay.
Hosts first in a series of Partner Open Forums to discuss race relations in America.
Opens stores in: Brunei and Colombia.
Total stores: 21,366
Case Statement:
Starbucks currently a part of a huge competitive industry is facing higher product costs, a
demand for substitute products, reward program incentives, and updated technology to better suit
the clientele as well as Starbucks Corporation, one corner store at a time. As a result, Starbucks is
constantly challenged to create new strategies to stay ahead of the competition and retain market
share.

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External Factors:

Key External Factors

Weight

Rating

Weighted Score

Opportunities
1.

Use of technology to improve Profit (Apps)

.05

.20

2.

Brand Image

.05

.15

3.

Global Supply Chain

.05

.15

4.

Growing Population

.07

.28

5.

Acquired Subsidiaries

.03

.06

6.

Expand in Different Markets

.06

.18

7.

Partnerships with other firms

.04

.08

8.

Diversify the product mix

.04

.08

9.

Innovate unique products to diversify

.05

.15

10.

Change Currency in different locations

.03

.06

Threats
1.

Development of substitute products from competition

.06

.30

2.

Numerous companies selling the same products

.04

.16

3.

Environmental Disaster of Countries Producing

Coffee Beans

.06

.30

4.

Fluctuations in value of the dollar

.06

.24

5.

Caffeinated Laws and Regulations in Countries

.03

.06

6.

Employment laws

.03

.06

7.

Higher Prices for Coffee Beans

.08

.32

8.

Negative Publicity

.05

.15

9.

Trademark Infringements

.05

.15

10.

Saturated Markets in Developed Economies

.04

2
.08

TOTAL

1.00

3.21

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The increase of technology is a huge opportunity with current and future customers.
Having a tablet, Ipad or smart phone is starting to become the norm in todays society. Why not
focus on virtual savings to bring in the more tech savvy customers? The weight is above average
because this adaptation of how customers go about daily life has changed dramatically over the
years. The rating for Technology is at the top due to overall change in the way Starbucks
Incorporated has started to target its customers. Creating an App on smart phones to benefit
customers by providing discounts, takeout, and special promotions has really helped get
Starbucks out there and known by its customers.
The growing population all over the world is staring to become an even bigger
opportunity for most businesses, with a growing population comes a bigger profit as long as you
are targeting the right audience. By targeting different audiences comes expanding in different
markets. Growing population is only helping Starbucks Incorporated grow its product line by
creating more opportunity for Starbucks to sell product.
Expanding and growing the business outside of the country and letting different markets
can both be a threat and an opportunity. The opportunity to sell a new product in a new country
while it also can be a threat to begin preparing to sell in different markets with currency changes
and targeting the right audience. However, if Starbucks takes the opportunity of growing outside
of North America to establish its products elsewhere, although they will deal with the
competition already established in these countries. Starbucks can also rearrange the way they do
business in different areas of the world to meet the standards of the market they are entering and
creating a more savvy way of creating profit.

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The biggest threat to Starbucks Incorporated would have to be the development of

substitute products by its competitors. Like Starbucks there are several competitors that have the
opportunity to create similar but different products. McDonalds, Bigby, Caribou, and Dunkin
Donuts area all top competitors of Starbucks that have created several new frozen mix drinks and
coffee flavor products to put themselves aside from the norm of just regular coffee with creamer
making them stand out in the coffee market.
In conjunction with creating new substitute products, the disaster of the distribution of
coffee beans in a huge threat to Starbucks Incorporated. Like any company if you cannot get the
raw materials needed to produce your products, there is no way to make a profit, creating a huge
problem and threat to the company. Disastrous weather is huge in slowing down the production
of raw materials especially when the material is coming from a distance away.
In addition to the transporting of raw materials in treacherous weather, the fluctuation in
price of the coffee beans is also a huge threat to the company. Overall price of the product itself
when it is purchased from Starbucks Incorporated is based on the value in which they can
purchase the coffee beans. When the price they are purchasing the raw materials for goes up the
price of Starbucks products are going to go up, to keep profiting rather than losing on an item
sold.
Internal Factors:

Key Internal Factors

Weight

Rating

Weighted Score

Strengths
1.

Creditworthiness

.05

.2

2.

My Starbucks Rewards

.07

.14

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3.

Employee Management

.08

.24

4.

Growth Opportunity

.06

.12

5.

Management Structure

.06

.18

6.

Largest Coffee House Chain in America

.04

.16

7.

Products

.06

.24

8.

Advertising

.05

.15

9.

Discounts

.03

.06

10.

Revenues

.02

.06

Weaknesses
1.

Lost Productivity

.07

.14

2.

Trademark Awareness

.04

.07

3.

Short on Sales Staff

.03

.09

4.

Income after deductions (Net Income)

.02

.04

5.

Location

.10

.40

6.

Inventory Turnover

.04

.08

7.

Cleanliness

.02

.04

8.

Software Systems

.08

.24

9.

Deliveries

.06

.18

10.

Customer Wait Time

.03

.09

TOTAL

1.00

2.92

There are internal factors in any businesses and recognizing the strengths and weaknesses is only
going to help make the company earn a higher profit and continue to be successful. Creating a
plan to overcome the weaknesses of any company is very important. This can make or break any

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company and determine its success. The strengths in place are only going to benefit Starbucks in
the long run.
Loyalty cards that Starbucks offers called My Starbucks Rewards is accessible through
your phone number and email that offers points for each purchase that results in a free product.
Rating at the higher end of the spectrum, this benefits both the customers of Starbucks and the
business. My Starbucks Rewards creates customers to continue coming back, earning future
discounts, and free products on future purchases. Showing a higher priority rating compared to
some of the other strengths of Starbucks this is certainly important in the technology world
today.
Employees of any business are your backbone and very important to becoming
successful. The employees at Starbucks Incorporated have a higher rating considering the
importance of employees and how well they are performing for the company. The attitude of the
employees can dictate the response of the customers and whether they will continue to come
back or not. Making customers feel welcome with a contagious smile and being friendly are just
some ways to keep loyal customers coming back and respecting Starbucks. Employee
Management is a huge part of any company and making sure your customers feel respected and
satisfied will continually create a positive outlook.
Management structure also goes along with Employee Management making sure all
managers are structured and arranged to put the business plan into effect will help Starbucks
Incorporated grow. The rating goes to show how important this is. Maintaining raw materials,
employees and continually looking for growth opportunities for the business is the way

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management should be structured. Understanding the strengths and expertise of all managers to
help put the business plan into place will only help Starbucks grow and create a future.
Lost productivity is a huge weakness for any company looking to make a profit. Without
the production of raw materials, getting them there on time, to the employees preparing and
serving the coffee beverages; Starbucks needs to have high productivity to be successful. Due to
the negative effects Lost Productivity can have on the company as a whole, I rated this mid
range. Without the production of goods Starbucks cannot generate the beverages they are known
for, causing them to become weak and non-profitable.
A huge impact on any company is the location in which they sell its products. Rating this
at the highest on the scale for weaknesses, Starbucks just like any company cannot become
successful if they are not marketed in an area to make a profit. However, some people see this as
an opportunity and as a weakness. This is a weakness, due to businesses already in place and the
location in which they are, if other places are bettered located and in the heart of a city rather the
outskirts they will typically make more of a profit. Location is key and essential when it comes
to making a profit and becoming successful. Starbucks which started in the heart of Seattle
downtown made people want to stop in and see what the coffee business was all about. Locating
yourself in an area of people being able to walk around compared to an outlying building will
create opportunity rather than weakness for a company; however, without the space to open a
business, can overall weaken the company and create a loss for the future.
Software Systems is one of the highest ranked weaknesses. Making sure all software and
equipment are up to date, running fast and smooth for daily business activity, creates opportunity
for productivity to increase or decrease. Inefficient software systems can cause havoc in the

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workplace for employees, managers, and customers; leading to loss of productivity and higher
turnover and loss on sales. Registers at most stores today have changed more than ever before,
with updated technology features and the use of Apple Ipads with credit card scanners soon
enough people are going to checking out themselves. Starbucks has updated technology to be
more advanced them ever and make sure customers have a friendly, positive, and fast service
while visiting its stores.
SWOT Analysis:
One of the largest coffee retailers in the world with over 20,500 locations in 62 different
countries, Starbucks still has strengths, weaknesses, threats, and opportunities. Targeting several
audiences with different products other than coffee, like tea and having licensed trademarks,
Starbucks has certainly maintained profit and has become very successful over the years.
Creating a business for customers to benefit from purchasing a product is what is creating
customer retention. Being the fifth most admired company in 2015, Starbucks has certainly built
up a positive outlook for the future. However, innovation is Key to success in todays world
with updated technology and Starbucks certainly has not been on board with product
development and creativity. Starbucks has shown great success with current opportunities to
make a profitable future, expanding into several markets and evolving over time. The cost of
coffee continually growing is unfortunately making prices rise for retailers causing the price for
the beverage sold to go up as well. Will coffee evolve over time? This is a threat to Starbucks and
several coffee retailers not knowing if another company will come out with a new and improved
drink for consumers. Competitors in the market today has grown so much over time it is now
possible it may happen, so without the product development from Starbucks eventually they may
become less profitable. Although most companies as big as Starbucks have implemented

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business plans to overcome such doubt and continued to create up to date products and
technology to benefit the consumer.
Industry Analysis: (Porters Five Forces)
Several firms today use Porters Five Forces model for competitive analysis within current
industries. Starbucks has put this model into effect within the company to maintain competitive
advantage. Developed by Michael Porter, the five forces model analyzes the competitive
environment in which the company works, using internal and external factors. Today, external
factors are much more important to focus on than internal factors especially comparing to
determine competitive advantage. This will actually show the firm its competitive performance
in the industry. The Five Forces include: rivalry among competitors, the potential entry of new
competitors, the development of substitute products, bargaining power of suppliers, and
bargaining power of consumers. The combination of the different forces from Porters model
creates both advantages and risks. The effects each force has on Starbucks are discussed below.
Rivalry among Competitors:
Considered to be the most important factor out of Porters model, Rivalry among
Competitors is one of the most influential for any company. Taking the competitors rivalry into
consideration can help determine innovation for the company, quality of the finalized product,
and cost compared to the market. Looking at the overall market globally, Starbucks really does
not have huge competition in the industry that can truly compare with its size and revenue. Most
competitors to Starbucks compete regional or operate in a specified industry like Bigby, Caribou
Coffee and small shop coffee stops.

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One of the biggest issues Starbucks has addressed within competing companies is price
discounting on specialty coffees. This has started to be seen much more with bigger chain
restaurants like Dunkin Donuts and McDonalds. McDonalds recently introduced its new special
brand of coffee called the McCafe. McDonalds makes sure to discount this specialty to
consumers, creating a slight discount compared to competitor Starbucks. Like McDonalds, they
have created a special menu for the different items they sell and the McCafe is now a part of its
dollar menu. This is certainly creating a profit drop for Starbucks and McDonalds has made
sure to announce they plan to expand its brand, introducing more coffee drinks and smoothies
(O'brien, 2012).
Currently serving on average 68 million customers a day, operating 35,000 stores
worldwide, McDonalds is operating in 118 different countries compared to Starbucks that has
21,000 stores in 40 different countries, McDonalds currently is serving a much larger market
(Lepore, 2011). However, Starbucks is not looking to stop there, in recent news Starbucks is also
looking to expand worldwide with opening stores in China and seeing a Starbucks more
frequently or as much as you do in a big city here in the United States (Miller, 2011). Starbucks
in recent years has broadened its horizons by not only opening stores worldwide but also selling
Seattles Best Coffee a brand owned by Starbucks in Burger King, Movie Theaters,
Supermarkets, and coffeehouses across the country (Lepore). This strategic implementation
Starbucks has created to join with other businesses has created a plan much easier to compete
with McDonalds, escalating the rivalry between them.
Dunkin Donuts, another main competitor to Starbucks is certainly creating rivalry for
Starbucks. More often you hear on the news or see in the headlines that Starbucks has opened
another location and Dunkin Donuts shortly after has opened another location in a similar

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location as well. This has created more rivalry between Starbucks and Dunkin Donuts
considering they have followed suit making sure to create competition. Just like most businesses
Dunkin Donuts is not planning to stop at only serving coffee, they have made sure to announce
the introduction to new and upcoming products and have even included a most recent advertising
campaign, America Runs on Dunkin.
In addition to competing with several larger chain coffeehouses, Starbucks also has
smaller coffee maker rivalries as well such as Caribou Coffee. Although this is a smaller local
and regional company they sell high quality coffee, espresso beverages, different kinds of teas,
baked goods, and several other items as well. Caribou is currently operating in 18 different
states, and currently has 273 company-owned stores, although much smaller than Starbucks they
still are considered the second largest company-operated premium coffeehouse in the United
States (Company Information). Currently serving local and regional location, Caribou still is a
huge rival for Starbucks in these areas.
Potential Entry of New Competitors:
Competition with Coffee is relatively high compared to other industries due to the
amount of people that drink coffee compared to the brands and companies that sell different
coffee drinks. There are several barriers that affect the entry of competition in the market. The
cost of coffee beans for Starbucks and other coffee makers to produce product and for new
competitors to enter the market can make it much more difficult to introduce and handle
competition.
Many local and regional coffee chain stores in different areas have been struggling with
pricing a little more than the bigger chain coffee retailers like Starbucks. With increasing prices

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for coffee beans come increased prices for coffee from retailers. Bigger retailers like Starbucks,
Bigby and McDonalds who sell coffee this is not such a huge issue; they can afford the increased
prices from profiting so much from overall sales amount on its products. This is great news when
it comes to competition for Starbucks and other larger coffee retailers. As a result the larger
coffee retailers like Bigby and McDonalds can slowly start to offer coffee at discounted and
much lower prices than Starbucks.
As a result, Starbucks has partnered with so many different retailers around the world,
making it more difficult for new competitors to enter the market. Starbucks certainly is a
company that can say they have capitalized and benefitted from having a vast amount of buyers
in different markets. Starbucks has partnered with so many different retailers from Delta Airlines
to Barnes and Noble and different colleges around Seattle the coffee offered is Starbucks blend.
Starbucks also partners with different clothing retailers, hotels and fast food restaurants creating
more competition for bigger coffee retailers, placing its products well within markets (Starbucks
Company Information). Starbucks has caused more people to start drinking Starbucks brand
coffee and creating smaller chain coffeehouses to possibly enter a specific area. The product
placement of Starbucks coffee in different locations has made an impact on consumers and made
them continue to return to Starbucks, creating more competition.
Starbucks has an advantage over McDonalds profiting from a higher brand coffee.
Starbucks is the biggest coffee retailer in the United States and like McDonalds Starbucks has
high brand recognition as well. Starbucks in total sales compared to McDonalds has a slight
disadvantage with the amount of items on its menu; however the demand for Starbucks coffee
has created Starbucks to be number one worldwide (Top 10 Largest Coffee Chains). Starbucks
position in the market compared to the competition is something they certainly take advantage

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of. The overall size of Starbucks around the world has created a high demand for Starbucks
brand of coffee. Most retailers other than a slight few that are relative in size can match the
amount of production Starbucks does. The number of stores Starbucks has worldwide and the
amount of sales they do each day has kept other coffee retailers from entering the market.
Starbucks has also made its brand get noticed by consumers and ranking its brand image the
most recognizable (Tepper). McDonalds who is also name on the brand recognition list, is not
solely known for McCafe coffee, creating another advantage for Starbucks. Starbucks in the most
recent years has seemed to make its brand one people will not forget to name when talking about
coffee. This identification in Starbucks specific brand has again created a barrier for new entrants
into the market.

Opening any business introduces costs, and the cost to run a business is a huge factor to
think about when deciding to open. Like Starbucks they require a vast amount of fixed costs.
Such as purchasing or renting a place to open a business, purchasing operating equipment, and
supplies for the business are just some of the few expenses that go into a purchasing and opening
up a coffee house (Starbucks Company Information). Starbucks big enough now and in business
for such a long period of time owns its own coffee bean farms and plants, whereas other small
businesses to join the market would have to outsource. Also having to create a distribution center
to receive and maintain the product as well.

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Location is key, a phrase everyone has heard at some point in life is certainly important
when it comes to new and larger chain retailers. Targeting customers and making it convenient
for customers to get into the store is very important and goes along with location. Starbucks will
be located on every corner this was brought up by Starbucks chairman Howard Schultz once
said after only having 8,000 stores open (Starbucks Company Information). Creating a store to
be open on every corner will create a much higher profit for Starbucks, like the several
partnerships Starbucks has created to get its brand of coffee out there more as well. Like
Starbucks, McDonalds also has several locations. McDonalds with a much more elaborated
menu and drive thru options has created a much more convenience to customers also. This has
created a huge threat to Starbucks and has now enticed Starbucks to start opening a drive thru
option as well.

Bargaining Power of Buyers:

Starbucks, a company with several customers both individuals and companies has created
a slight bargaining power for them but unfortunately because some key factors are not in place,
this has created it to not be very high. Larger corporations would have a much higher advantage
than those who are smaller, with those who have a large number of buyers compared to millions
of buyers creates a much higher advantage for a corporation. Starbucks has had some tax related
issues in the past, and Starbucks listened and overcame it. A large customer base like Starbucks
creates the capabilities of them to lower the bargaining power of its customers by giving the

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customers a variety of products on the menu and creating different products from the
competitors.
Starbucks offers a higher quality coffee such as the Arabica Beans compared to other
smaller coffee retailers that use the coffee beans that they can afford. While customers are
sensitive to price and the money they are willing to spend so is Starbucks. Starbucks is greatly
affected by the price changes created from different economic conditions around the world.

Bargaining Power of Suppliers:

The number of suppliers in the market is what will determine the amount of bargaining
power a business will have. Suppliers alone on average have more bargaining power with a
smaller number of firms in the industry or if the supplier is the owner of the supplies needed to
be distributed to produce a product. Pertaining to the coffee industry, suppliers do not have much
bargaining power typically with most coffee retailers like Starbucks they work with small farms
to get its supplies, causing less bargaining power for suppliers. Starbucks working with smaller
farms creates a relationship creating room for negotiation, and helping them secure the resources

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they need. The relationships built not only help the farmers create a lifelong income for farmers
but also benefits the country Starbucks is using the resources from.
Potential Development of Substitute Products:
Starbucks being a coffee retailer has several advantages and disadvantages to the creation
of substitute products. However, coffee is what Starbucks is known for and there are several
other retailers who sell coffee as well. This is where the development of substitute products
comes into play. Like McDonalds they offer McCafe a brand of coffee created by McDonalds
however they also offer several other menu options as well such as breakfast and lunch food
items and other beverage items. An example of substitute products is like taking your car over
riding your bike. Although this is not the case with Starbucks, consumers see Starbucks brand as
more than just coffee. It is a caffeinated drink that gives people energy, stimulating our bodies
and preparing us for the day ahead. However, some see coffee as just a drink to overcome a
parched mouth, but like coffee there are several substitutes that are available or that can be made
available. Energy drinks are one example of a drink people replace coffee with for the
caffeinated, and energy boosting effect. There are other ways to substitute coffee as well by
making teas or smoothies with this same stimulant people enjoy every day that Starbucks could
create before one of its competitors does.
SWOT Matrix:
Strengths
1.Employee Management
2.Starbucks Rewards
3.Growth Opportunities
4. Management Structure

Weaknesses
1.Location
2.Software Systems
3.Lost Productivity
4.Deliveries

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Opportunities
1.Growth in Population
2.Expand in Different Markets
3.Diversity Products
4. Brand Image

Threats
1.High Prices
2.Substitute Products
3.Environmental Disasters
4.Economy

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SO Strategies
1. Grow to expand markets and
capture lifelong customers. (S3, O1)
2. Create Reward systems to offer
discounted or free product. (S2, S3,
O4)

ST Strategies
1. Create a system to give back to
repeat customers and those less
fortunate. (S2, S3, T1, T4)
2. Bulk purchase supplies. (S3, S4,
T3, T4)

WO Strategies
1. Add locations convenient for
customers. Ex more college
campuses. (W1, W3, O1)
2. Create a mobile app for cell
phones to expand the market. (W2,
O1, O3)

WT Strategies
1. Create a system to benefit
customers ex. Mailing coupons, &
free product vouchers. (W2, T1, T4)
2. Create substitute drinks to differ
from competitors. (W3, T2)
3. Create more efficient way to
transport product. (W4, T3)

SO Strategies:
Starbucks has done a great job with expanding its market over the years and are currently
the biggest coffee retailer in the world. However, when expanding its markets around the world
Starbucks also needs to focus on keeping these customers and creating them to a lifelong
Starbucks customer. Although Starbucks currently has stores in 62 different countries, there are
still some countries they do not have one, making sure to continue to grow its market and be the
best like they are now is crucial (Top 10 Largest Coffee Chains).
The customers that are now a huge part of Starbucks and even new customers that join
Starbucks market need to be rewarded or noticed for shopping and becoming a customer with
Starbucks. Like many companies they offer special discounts, punch cards, and drawings to be
rewarded for shopping at its stores. Although Starbucks has in the past few years incorporated
My Starbucks Rewards offering specials after a certain amount is spent in store, they are still
not competing with the discounted prices Starbucks competitors are presenting to the market.
The easiest way for Starbucks to achieve the overall title of having a good reward system would

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24

be to implement something that is going to both benefit the customer and the store. For example,
McDonalds uses a dollar menu to discount certain products offered, like food, ice cream and
drinks. An item specifically targeted on this discounted list is a small coffee; this is huge for
Starbucks to compete with since they currently do not have a discounted menu or product.
ST Strategies:
Prices on coffee beans recently have risen, meaning that it will cost Starbucks more to
purchase the beans. This means more money spent out of Starbucks pocket the more that will
need to be made up with the purchase of its menu items resulting in overall higher prices for
customers to pay for a cup of coffee. However, Starbucks is not the only coffee retailer paying a
higher wage for beans. Starbucks being a larger corporation has a relationship with farmers they
get beans from working out deals for loans and deliveries. But as I mentioned similarly above,
paying higher wages for beans results in higher coffee beverage prices, making customers want
to just make coffee from home than spend the 5 dollars on one cup at Starbucks. This is when
Starbucks needs to come together with the management team and structure a way with the
employees to offer discounted items and reward customers for coming in rather than going to
another coffee retailer.
On another note, with costs rising for beans and Starbucks purchasing from farmers,
creating a way to purchase more beans in bulk at a discounted rate would be efficient. Rather
than Starbucks paying the higher wage for a smaller package, if they can purchase beans in bulk
that would help the farmer and the coffee retailer. Having management implement things such as
buying in bulk and discounting and making sure customers continue to come back are huge for
any retail company and this is just a couple of the items Starbucks needs to think on.

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25
WO Strategies:

Creating locations easily accessible to get in and out plays a big factor on if a customer
wants to visit the store while driving by. Starbucks slowly accepting some change, needs to
implement a drive thru option to compete not only with competitors, but also to make it that
much more convenient for easily accessible to customers. Starbucks has partnered with several
other retailers to present locations in conjunction with others, placing its products great. But with
some locations being located in other retail stores, it is not convenient for the customer to come
into a store when they can go across the street to another coffee retailer and go through its drive
thru. I believe more Starbucks locations should be added into more college campuses. These
would certainly benefit both Starbucks and the students, some campuses already have Starbucks
locations but adding more around the world would be a great fit as well.
In conjunction with adding more locations to college campuses, Starbucks needs to
revamp and make sure to update customer friendly application. With the My Starbucks
Rewards it is more used to see points you have earned from the money spent and to cash them
in. I feel like an application that is put out there for people to know about before coming in is a
great idea to show how important and beneficial the application can be to consumers.
WT Strategies:
Everyone loves free products from store, regardless if it is a key chain. Creating less loss
productivity from customers, it is better to consider the things you can do to keep people coming
back and making a profit than to let people start going to another coffee retailer. Like Bigby one
of Starbucks main competitors, they have intrigued customers with a mobile application called
E-way to earn points towards free menu items, also offering nutritional information of each menu

Starbucks Plan

26

item and directions to the nearest Bigby to the consumer (BIGGBY COFFEE). This is a great
way to target a specific audience and continue to make a profit benefitting both the consumer and
the store. The best way to get consumers to come back in your door is to send a friendly invite
with a free product voucher, example a free cookie with a beverage purchase. Also, having a
rewards program that Starbucks does seeing which customers have been active within the last six
months compared to those who have not and inviting them back in, is not only a great advertising
technique but also a great way to get customers to start coming back in.
Creating ideas and bettering service is the only way retailers will continue to
make a bigger profit than competitors. One way Starbucks can excel in making a higher profit
and continue success is by substituting drinks and continually adding new drinks to its menu.
Implementing a monthly sales list to see which drinks are being bought and which ones are not,
is a good way Starbucks can decide which drinks to get rid of and where they can add new drinks
in. Although they already make teas, coffee drinks and smoothies, adding different flavors and
new food products can help Starbucks be different from the competition and benefit greatly.
Transportation a huge part to becoming a successful retail company is something
Starbucks needs to look further into and put a new plan together on deliveries. One of the best
ways Starbucks can change current transportation system is to add a fifth farming location to the
four they already have in the United States. Current locations producing coffee beans are located
in: Kent, Washington, Minden, Nevada, York, Pennsylvania, and Columbia, South Carolina
(Cooke). Adding another location centrally somewhere in the United States will not only help
with getting deliveries out on time and to stores on time, but will also cut down on the work time
for both the truck operators and farms. This will help with making sure product is available to
make the drinks on Starbucks menu and not have to result in telling the customer they do not

Starbucks Plan

27

have the supplies to make a specific drink. This will save time and energy for employees and
farmers the beans are coming from.
Financial Analysis:
Starbucks Fiscal year ends on Sundays closest to September 30 every year. The 2015
fiscal year demonstrated Starbucks continued strength with global business and successfully
made disciplined investments within the business and with current shareholders. Starbucks total
net revenue had increased to 17% or $19.2 billion in 2015 compared to $16.2 billion in 2014s
fiscal year. Increasing benefits and salaries to employees due to Starbucks current investments
globally has helped the sales leverage significantly in the American market. Throughout 2015
Starbucks opened 612 new stores in the Americas, with continued success in substituting
different beverages and trying new food items, Starbucks revenue grew 11% to $13.3 billion.
Starting with the expansion in bigger cities, Starbucks has certainly begun opening smaller stores
in rural cities also, hoping to increase revenue by 10% in 2016s fiscal year.

Growth Rates:
Sales Revenue:

Listed at the top of the income statement and one of the most important

factors in business, the sales revenue (which companies should always be looking to increase) is
from the selling of goods and/or services. For Starbucks Incorporated the industry grew 2.01% in
the 2015 fiscal year while Starbucks grew very well as a company at 11.90% in 2015. A

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28

continued growth in the company has certainly lead Starbucks to rise to one of the top companies
compared to the industry, as well as with the financial aspect of the overall company.
Net Income: Income after deductions, or a companys total earnings or profit from the previous
year, Net Income, is calculated by taking the total revenues while adjusting for the years cost of
doing business such as depreciation, interest, taxes and other company expenses. Starbucks Net
Income dominating the industry grew very well to 33.30% compared to the industry which was
in the negatives and down 1.29% for 2015 fiscal year. This is a huge change in recent years for
Starbucks with a huge fall in Net Income from 2012 to 2013. There was a substantial drop in the
manufacturing and selling of goods and services from Starbucks causing Net Income to drop
from $1,383,800 in 2012 to $8,300 in 2013. Since this huge drop, Starbucks has expanded and
opened several stores while changing the menu. While looking at individual quarter sales for
Starbucks compared to the industry, Starbucks fell to the competition. A decrease for the 2015
single quarter, Starbucks fell -30.10% compared to the industry that increased .79% for the
quarter. Unfortunately, this shows that overall throughout the quarter, Starbucks Incorporated
could not maintain expenses, and gross income was negative after all expenses and taxes were
deducted; causing Net Income for the quarter to drop below the industry.
P/E Ratio:

The price-to-earnings ratio (P/E ratio) is calculated as a stocks current share price

divided by its earnings per share for a twelve-month period. Companies with higher P/E ratios
can be overpriced. However, this does not mean that a stock with a lower P/E is a better
investment. Earnings per share (EPS) determine the yield of net income for each share of
common stock. Starbucks has a P/E ratio of 36.23 with earnings per share of 1.82. This is
interpreted of yielding 1.82 of Starbucks Net Income for each share of Common Stock.

Starbucks Plan

29

Starbucks return on investment is not overly high but with an average return on investment
around 20% this shows Starbucks stock prices are not considered to be overpriced but normal.
Profit Margins:

Profit margins are generated quarterly throughout the year. According to

Investopedia, an operating profit margin of approximately 25% or better is considered favorable

by most market analysts. Margins above 25% indicate financial efficiency and stability.
Starbucks with a Profit Margin of below 25% at 12.48% is operating below average. It is
important to compare this margin to the industry average and its closest competitors. Starbucks
industry is currently operating just higher than Starbucks at 14.53%, both are considered unstable
and under the average.
Financial Condition:

Starbucks financial condition has greatly changed in the past few

years due to several new locations and advancing current products. Overcoming the fall in Net
Income from 2012-2013 was huge for Starbucks and making sure to continue to sell goods and
make a profit is what has helped Starbucks get to where they are now in 2016. A steady increase
in Profit Margin is great for any company; however with an average rate being around 25%
Starbucks fell short although competition did to Starbucks needs to update pricing, watch the
amount they discount and review gross profit margin. Many companies today have come up with
discount cards for customers and discount suppliers when they purchase from them in bulk,
however this could be hurting Starbucks and could be the reason for the Profit Margin being
unstable and below average.
Investment Returns:
Return on Equity- This amount measures a corporations profitability by showing how
much profit a company generates with the money shareholders have invested. This is calculated

Starbucks Plan

30

by dividing Net Income for the fiscal year before dividends are paid to common stock holders
and after dividends are paid to preferred stock holders by Shareholders Equity. Shareholders
Equity is total Assets minus Liabilities. This amount is financed through common and preferred
shares in a company. This information comes from the money that is originally invested, any
additional investments in the company and Retained Earnings which is the money profited that is
kept with the company and not paid out to shareholders. Starbucks with a percentage of 41.88%
has a lower percentage than the industry at 44.87%. This means Starbucks shareholders are
receiving less of a return compared to the industry, whose shareholders are getting a slightly
higher return.
Return on Assets- This shows how profitable a company is compared to total assets. This
number shows overall how well a company manages its assets and how well it uses assets to
generate earnings. This is calculated by dividing Annual Earnings by its Total Assets. The higher
the percentage or number for a company the better, this shows that the company in this case Kate
Spade & Company is earning more money on less money invested. Starbucks compared to the
industry or its competition in the area does a good job at converting its assets to income for the
company. With a 19.47% on Return on Assets for Starbucks and 13.49% for the industry this
shows Starbucks competitors do not do as good of a job at converting its assets to income. So as
a management team at Starbucks they need to continue accounting for all of assets and make sure
they are continuing making wise choices when allocating resources. Starbucks is doing a great
job with this portion compared to the industry; however they still have room to create a more
drastic change in numbers compared to competitors.
Return on Capital- This is a return on an investment but is not considered to be income for the
company. This is when some or all of the money an investor has in an investment that is paid

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31

back and then decreasing the value of the investment. With Return on Capital this is an account
that is not taxed until the amount exceeds the original investment amount. For Starbucks at this
point in time looking on the previous year having a higher percentage than the competitors in the
industry this shows that management for Starbucks is more efficient at utilizing its equity base,
creating a better return to investors. Return on Capital is calculated by taking the Net Income
divided by the Average Shareholders Equity. Starbucks had a 21.95% in 2014 compared to 2015
they now are at 29.98% compared to the industry now at 17.48%.
Management Efficiency:

Management effectiveness can be measured with the investment

return ratios. The performance is described as a process that uses the lowest amount of inputs to
the greatest amounts of outputs. These ratios should be used to measure the effectiveness of a
companys management. Minimizing the waste of resources such as physical materials, like
energy and time, while achieving the desired output. Starbucks management compared to the
competition is doing a good job and working efficient. The higher the ROA number the more
efficient the business is. There could be improvements made in ROA to be in line with the
competition, but this is slight and does not affect the success of the company.
Strategic management decisions that promote efficiency tend to be aimed at reducing the
use of resources through maximizing return. Any action taken to reduce inventory waste, for
example, would be a strategic management decision aimed at greater efficiency. Efforts to
increase productivity would be included in this category.
Ten Year Summary: Starbucks began with lower stock prices near the 9 dollar per stock,
fluctuating from year to year it started to go down much quicker than they thought. Starting to go
up in 2011 is when Starbucks major stock prices began to rise and head for a continued up rise

Starbucks Plan

32

into the most recent years. Although stock prices now in 2015s fiscal year has not steadily risen
from day to day they have maintained above 50 dollars per day and are staying in line with the
its closest competition. Within the next couple years Starbucks has planned to open around 1800
stores, expecting sales revenue to grow and increase by 10%, this is certainly going to contribute
to the success of Starbucks and will help increase overall company outlook. By 2020 Starbucks
is planning to extend the duration of credit facility and increase the maximum commitment
amount by an additional 750 million dollars. Continually updating and measuring liquidity and
funding needs in the business is anticipate if they should issue long term debt in 2016 to provide
better financial flexibility for Starbucks. A weakness for Starbucks cash flow is a huge
achievement from 2014 to 2015, due to lapping the prior year payment of $2.8 million for the
Kraft arbitration matter. This caused Starbucks cash provided to operating activities to increase
from $607.8 million in 2014 to $3.7 billion in 2015. With the difference due to an increase in
earnings, offset by the working capital accounts because of timing.

Recommended Strategy:
Starbucks certainly is aggressive in its current market, meaning they are financially stable
and have a major competitive advantage in a steadily growing industry. Due to the expansion of
this industry they should certainly continue expanding into the industry further and make up
more of the market around the world. Considering Starbucks is both very competitive and in a
stable and growing industry, this shows how much opportunity Starbucks has to grow as a

Starbucks Plan

33

corporation. Learn from a variety of different markets around the world, advance in technology
in stores with products and services, and encourage customers to join Starbucks loyalty club for
more coupons and discounts to be granted. Starbucks needs to analyze the threats and continue to
create better solutions to problems they run into. An increasing number of competitors,
substituting products, and the change in the international market are all things affecting
Starbucks right now. Looking at all the strengths and weaknesses of the overall company is only
going to help them grow in the future.
The strengths, weaknesses, threats and opportunities of Starbucks all need to be
continually recognized and analyzed to continue success in the future. More issues Starbucks
face year after year is the price of the coffee beans affecting the cost of Starbucks products.
Starbucks does use a higher quality coffee bean from different farms around the world, so getting
beans quickly and selling them at a happy medium price for customers is what has hurt them.
Selling a higher quality coffee, requires higher quality beans to brew it, but when customers
refuse to pay the higher price that leads them to go to one of Starbucks competitors that have
lower brand coffee. However, there are several ways to overcome these weaknesses especially
the price aspect. Putting in the time and money to buy a lower priced bean would allow
Starbucks to offer a lower price coffee for those that do not want to pay the higher price for a
better quality coffee. Starbucks needs to implement a more liable and resourceful way to offer
discounts and coupons to customers. Making a day every week to offer half off coffee or a lower
amount of coffee of certain sizes would benefit Starbucks to generate more traffic, revenue and
new customers expanding the market. Continuing to keep the brand image everyone recognizes,
and offering a better marketing technique to show the competition, what Starbucks is capable of
doing. Expanding into new markets, developing new substitute products and advancing the

Starbucks Plan

34

overall technology of the store will not only help Starbucks advance in the market but will make
more customers want to continually come back to Starbucks. Currently Starbucks needs to
review their current resources and see just how much capital they are willing to sell to gain more
cash to purchase farm land to produce its own coffee beans in different areas they market in.
QSPM- Strategic Alternatives:

Internal Strengths

Weig
ht

Advancing
Technology

Product Development

Market Development

AS

AS

AS

TAS

TAS

TAS

Creditworthiness

0.05

0.2

0.2

0.2

Advertising

0.05

0.2

0.15

0.2

Discounts

0.03

0.1

0.09

0.1

0.1

0.04

Cleanliness

0.02

0.08

0.1

Customer Wait Time

0.03

0.1

0.12

0.1

0.2

0.2

Weaknesses
Location

External Factors

Opportunities
Technology

0.05

0.2

Brand Image

0.05

0.2

0.2

0.2

Growing Population

0.07

0.3

0.21

0.3

Substitute Products

0.06

0.2

0.24

0.2

Pricing

0.08

0.3

0.32

0.3

Environmental Disasters
Total Sum of
Attractiveness Score

0.06

0.2

0.12

0.2

Threats

1.97

2.1

Implementation Strategy:
Marketing:

Offer coupons and Promotions to better compete with the market currently competing in
Market Starbucks products differently depending on culture

Research & Development:

Starbucks Plan

Research the different markets to understand and set Starbucks products apart from the

competitors
Develop a plan to create low cost coffee for different areas
Strategize how to implement digital access for all cell phone users globally through

35

applications
Financing:

Obtain necessary funding to acquire a low cost coffee bean and new farm land
Obtain necessary funding to develop new marketing strategies globally using digital

options and coupon paper options

Obtain funding to expand the market globally

There are several opportunities Starbucks has to implement strategies and solve
corporations issues. Starting off by offering a lower priced coffee for the portion of the market
that is worried more about price than quality while also purchasing farm land to produce its own
coffee beans. However, an issue that has risen in the past few years was over Starbucks pricing.
Although Starbucks offers a higher brand coffee bean compared to the competition like
McDonalds who offers a dollar menu coffee item to the market. Buying a lower priced coffee
bean and offering it on Starbucks menu is one way to compete with its competitors and bring
more of the market back that were not willing to pay the higher price. Offering more coupons
and promotions to customers will also help to defeat this problem by allowing those customers
that could not afford the higher priced coffee to now be able to purchase. Coupons and
promotions will also help Starbucks bring in new customers and expand its current market. One
issue with Starbucks is advertising, competitors today beat them out of the market because they
use profit to market its product, and Starbucks on the other hand is a company you rarely if at all

Starbucks Plan

36

see on television. Coupons and promotions for customers will also help Starbucks with
advertising by showing off its products and what menu items they have to offer to the market.
This will allow customers to feel out Starbucks environment and let them try the product for
themselves while not having to worry about putting a hole in a customers pocket over a cup of
coffee.
Currently Starbucks has entered the supermarket business by offering its brand of coffee
in bags on the shelves to make at home, while benefitting from this Starbucks could add more
products to stores and offer recipes for different drinks on the bags. This is another example
Starbucks could use to market its product. These are some solution options Starbucks can benefit
from by slowly taking a portion of profit to buy a coffee bean lower than the current price of the
Arabica coffee they pay $1.11 for. Starbucks can also benefit by researching several plots of land
around the United States and overseas to create farm land for coffee bean production. Creating
more area to farm beans can continually help Starbucks make a profit and eventually look into
combining and farming new coffee blends. Also allocating their resources and benefitting from
the production of beans at the expense of Starbucks rather than unknown farmers. This helps
Starbucks know exactly where the beans are coming from and can potentially help control the
delivery of the product to stores. Having their own farmland to produce the beans can also be
used as a marketing technique.
More locations causes more marketing, this will certainly put several individuals in
charge of implementing and approving more marketing for stores. Things such as coupons, and
training operations managers and employees to up sell product and tell customers about
Starbucks rewards and how to receive Starbucks coupons. Starting with the Chairman and

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37

President of Starbucks Howard Schultz, to approve of changes and help implement ideas to gain
a profit. Schultz is onboard with updating Starbucks Corporation and helping to better the
business. Approval of advancement from the CEO then moves to the Global Chief Strategy
Officer Matt Ryan. Ryan helps to strategize and help Starbucks continually grow and gain a
profit in different areas of the world and in different markets, so far with Starbucks implemented
5 year plan, Starbucks is to grow to nearly $30 billion in annual revenue with more than 30,000
stores around the world. Help from Starbucks partners like employees, coffee and corporate
reputation will help to gain long term brand loyalty. Starbucks has look at strategies for growth
within employees, coffee brands, new marketing ideas to visit stores, and extend digital
engagement. Putting the ideas in the hands of Adam Brotman the Chief Digital Officer for
Starbucks to help maintain and strategize ways to keep up to date with technology. Brotman
recently has been looking into the idea of mobile order and pay options through Starbucks App.
Approval to continue to expand in different areas of the world and open several new locations
this will only help benefit Starbucks to get customers in and out more quickly. Also meeting and
getting feedback from all the Presidents in global markets around the world. However, while
considering expanding and adding such up to date technology to Starbucks all these things cost
money, Scott Maw the Chief Financial Officer for Starbucks has managed the finances and
maintained a steady profit from performance in recent years by doubling cash and dividend pay
outs. Maw plans to maintain core focus: the best in class of revenue growth; capital investment
efficiency; total return to shareholders (Starbucks Details Five-Year Plan). Although there are
several higher ranked individuals responsible, every manager and barista is also responsible to
help create positive change for Starbucks in every area. This portion will be costing around $200
million. The marketing portion of Starbucks strategy will cost around $150-200 million dollars

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38

while the research and development of these products and training employees will most likely
cost Starbucks around $400 million dollars. Money well spent on training processes lasting
around 24 hours on separate occasions including hands on training in every area of the
workplace. Drink stations, coffee brand classes, and customer service are vital and can be put in
place by Human Resources. Help from everyone a part of the firm, executives, managers and
baristas will only help to increase customer loyalty and profit for Starbucks.
Both financial statements located in the appendix for Starbucks in 2015 are decent but not
the best but do show that Starbucks has liquidity. Revenue continually increasing is great for
Starbucks however with Expenses continually increasing over the years is not helping the
company financially. Overall Starbucks EPS has fluctuated up and down over the past few years
due to an increase in spending causing this value to remain unsteady. However it is expected the
financial ratios for Starbucks Corporation will improve over the years. The financial ratios are
what help firms establish their strengths and weaknesses and establish them against competitors.
The liquidity ratios measure a firms ability to pay short term obligations. The above charts show
the projected financial statements and ratios for Starbucks Corporation. The current ratio status
showing 1.07 for 2015 shows Starbucks can liquidate its assets if it is needed to cover their
liabilities. These statements currently show Starbucks is remotely stable in the current market
they are competing in; selling stocks for capital will also show Starbucks is continually growing
and showing profit. While Starbucks is looking to sell stock and gain capital, the business will
also be gaining more control of the business and its shareholders. One main reason Starbucks can
take full advantage of selling stock in the business is to provide extra cash to purchase goods,
new locations for business, and new farm land to produce its own coffee beans.

Starbucks Plan

Appendix A:

39

Starbucks Plan

Appendix B:

40

Starbucks Plan
Appendix C:

41

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42

Appendix D:
Financial Statements:

STARBUCKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
(unaudited)

Sep 27,

Sep 28,

2015

2014

ASSETS
Current assets:
Cash and cash equivalents

$ 1,530.1 $ 1,708.4

Short-term investments

81.3

135.4

Accounts receivable, net

719.0

631.0

1,306.4

1,090.9

Prepaid expenses and other current assets

334.2

285.6

Deferred income taxes, net

381.7

317.4

Total current assets

4,352.7

4,168.7

Long-term investments

312.5

318.4

Equity and cost investments

352.0

514.9

4,088.3

3,519.0

Deferred income taxes, net

828.9

903.3

Other long-term assets

415.9

198.9

Other intangible assets

520.4

273.5

Inventories

Property, plant and equipment, net

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43

Goodwill

1,575.4

TOTAL ASSETS

856.2

$12,446.1 $10,752.9
LIABILITIES AND EQUITY

Current liabilities:
Accounts payable
Accrued liabilities

684.2 $

533.7

1,760.7

1,514.4

Insurance reserves

224.8

196.1

Stored value card liability

983.8

794.5

3,653.5

3,038.7

2,347.5

2,048.3

625.3

392.2

6,626.3

5,479.2

1.5

0.7

41.1

39.4

5,974.8

5,206.6

Total current liabilities

Long-term debt
Other long-term liabilities
Total liabilities
Shareholders equity:
Common stock ($0.001 par value) authorized, 2,400.0 shares; issued and outstanding, 1,485.1 and 1,499.1 shares,
respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income/(loss)
Total shareholders equity
No controlling interest
Total equity
TOTAL LIABILITIES AND EQUITY

Appendix E:

(199.4)

25.3

5,818.0

5,272.0

1.8

1.7

5,819.8

5,273.7

$12,446.1 $10,752.9

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Appendix F:

44

Starbucks Plan

Appendix G:

45

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46
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http://www.nytimes.com/2011/03/13/business/13coffee.html?pagewanted=all

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O'brien, K. (2012). How McDonalds Came Back Bigger Than Ever. Retrieved March 29, 2016,
from http://www.nytimes.com/2012/05/06/magazine/how-mcdonalds-came-back-biggerthan-ever.html?_r=0
Starbucks Corp. (n.d.). Retrieved March 1, 2016, from http://www.msn.com/enus/money/stockdetails/financials/fi-182.1.SBUX.SWX
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