Strategic management analysis of

Starbucks Coffee
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Coffee
The Strategic Management provide an indepth knowledge of the process for developing
and enacting business plans to reach a long-term goal that takes into account the
internal variables and external factors in the business environment. It encompasses an
integrated, future oriented
managerial perspective that is outwardly focused, forward thinking and performance
based.
Strategic managers identify long-range targets, scan their operating environment,
evaluate their
organization structures and resources, match these to the challenges they face, identify
stakeholders and build alliances, prioritize and plan actions and make adjustments to
fulfill
performance objectives over time. This module will provide detailed explanation on how
the
balancing of strategic management's outward, inward and forward looking functions
would be
used to develop a vision and strategies to move forward. The five key facets of strategic
management namely, goal setting, strategy analysis, strategy formation, strategy

implementation, and strategy monitoring will be introduced in stages. These are the
integral

elements that, when applied together, would distinguish strategic management from
less
comprehensive approaches, such as operational management or long-term planning.
In 1971 Starbucks opened operations in Seattle's Pike Place Markets with the future aim
of
providing coffee to a number of restaurants and surrounding bars. With the recruitment
of
Howard Schultz who led the marketing and retail efforts of Starbucks.
* In 1982, the company took a change in direction through the views of Schultz, who
after
visiting Italy tried to adapt the same principles in order to a strong bar culture. Schultz
then
utilized Starbucks ability to provide quality coffee beans and opened up a new store
called Il
Giornale, which brewed coffee from these particular beans.
* In 1987, Giornale had decided to take over the assets of Starbucks and also, further
changed
its name to Starbucks Corporation. By the end of the year, Starbucks had increased the
number
of stores to 17 and furthered its location span by entering Chicago and Vancouver.
* In 1990, the company took further steps forward with expansion of the Seattle
headquarters

and an increase in resources with the opening of a new roasting plant. Relationships and
other
ventures also took off during the early nineties as the company looked to development
organizations to further its progress.
*In 1995, the company really established its name with the opening of the 676th store as
well
as increasing the products in store with the addition of compact discs a result of a
previously
popular experiment with 'in-house' music.
* In 1996, the company kept on stretching its reach by entering into the market of
Japan,
Singapore and Hawaii. This was achieved through joint ventures including the one
formed with
Sazaby Inc., which pushed through the development of coffee houses in Japan.
In 1971 Starbucks opened operations in Seattle's Pike Place Markets with the future aim
of
providing coffee to a number of restaurants and surrounding bars. With the recruitment
of
Howard Schultz who led the marketing and retail efforts of Starbucks.
In 1982, the company took a change in direction through the views of Schultz, who
after visiting Italy tried to adapt the same principles in order to a strong bar culture.
Schultz then utilized Starbucks ability to provide quality coffee beans and opened up a
new store called Il Giornale, which brewed coffee from these particular beans.

 In 1987, Giornale had decided to take over the assets of Starbucks and also, further
changed its name to Starbucks Corporation. By the end of the year, Starbucks had
increased the number of stores to 17 and furthered its location span by entering Chicago
and Vancouver.
* In 1990, the company took further steps forward with expansion of the Seattle
headquarters
and an increase in resources with the opening of a new roasting plant. Relationships and
other
ventures also took off during the early nineties as the company looked to development
organizations to further its progress.
*In 1995, the company really established its name with the opening of the 676th store as
well
as increasing the products in store with the addition of compact discs a result of a
previously
popular experiment with 'in-house' music.
* In 1996, the company kept on stretching its reach by entering into the market of
Japan,
Singapore and Hawaii. This was achieved through joint ventures including the one
formed with
Sazaby Inc., which pushed through the development of coffee houses in Japan.
Current situation
The current international situation for Starbucks seems to be an emerging part of their
business

and the reorganization of this is proved by their aim to become a leading global
company
through making a difference in people's lives all around the world. This goal is quite
close to
being achieved as proved the Starbucks current locations in international markets and
the
successfulness of these ventures. The current countries in which Starbucks are located
in are:
Australia, Bahrain, Canada, Hong Kong, Israel, Japan, Kuwait, Lebanon, Malaysia, New
Zealand, Oman, Peoples Republic of China, Philippines, Qatar, Saudi Arabia, Singapore,
South
Korea, Switzerland, Taiwan, Thailand, United Arab Emirates, Egypt, United Kingdom,
and the
United States.
Current performance
Overall, the aim of becoming a worldwide global brand seems to be working in favor of
the

company and is helping it to attract the attention of many major companies who would
like to
share a partnership. This is all positive news for the company because it provides a
strong basis
for future development of international markets, which further strengthens the mission
to

become one of the leading specialty coffee retailers in the world.However, the net
revenues
increased 3 percent to $2.5 billion for the fourth quarter of 2008, compared to $2.4
billion for
the fourth quarter of 2007. For the 13-week period ended September 28, 2008,
Starbucks
reported net income of $5.4 million, which included $105.1 million of restructuring
charges
and other transformation strategy costs. Net income was $158.5 million for the same
period a
year ago. The company actions announced in July of 2008 to close approximately 600
company-operated stores in the U.S. and 61 company-operated stores in Australia, and
reduce
approximately 1,000 open and filled positions within its leadership structure and nonstore
organization.
Strategic posture
1- mission
"To inspire and nurture the human spirit- one person, one cup, and one neighborhood
at a
time"
"The mission of Starbucks is to establish Starbucks as the premier purveyor of the finest
coffee
in the world while maintaining our uncompromising principles while we grow".

None of this success would have been possible without a set of goals that the company
aimed
to achieve and a set of principles, which governed the decision making process. The six
principles of Starbucks are stated as:
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.
4-Roasting and fresh delivery of our coffee.
5-Develop enthusiastically satisfied customers all of the time.
6-Contribute positively to our communities and our environment, and recognize that
profitability is essential to our future success.
Application of these principles can be used as a guideline for all employees from
managers to
workers to aim to achieve the company's goals, while maintaining a certain type of
standard. However, the net revenues increased 3 percent to $2.5 billion for the fourth
quarter
of 2008, compared to $2.4 billion for the fourth quarter of 2007. For the 13-week period
ended
September 28, 2008, Starbucks reported net income of $5.4 million, which included
$105.1

million of restructuring charges and other transformation strategy costs. Net income
was
$158.5 million for the same period a year ago. The company actions announced in July
of 2008
to close approximately 600 company-operated stores in the U.S. and 61 companyoperated
stores in Australia, and reduce approximately 1,000 open and filled positions within its
leadership structure and non-store organization. This mission statement along with the
set of
guidelines provides a focus for employees as they make strategic decisions. It not only
supports
the employees, but supports the customers as well, making a note that they should be
satisfied
all of the time. The mission shows alignment with the vision by stating how the company
plans
to reach the broad goals set by the vision statement. Another supporting sentence in the
mission
statement is that the "company applies the highest standards of excellence to the
purchasing,
roasting and fresh delivery of its coffee." This statement supports the idea thatStarbucks
uses
the best available resources to give it a recognized and respected name.
Objectives & Strategies:
Here are the following objectives ofStarbucks:
Our Coffee

It has always been, and will always be, about quality. We're passionate about ethically
sourcing
the finest coffee beans, roasting them with great care, and improving the lives of people
who
grow them. We care deeply about all of this; our work is never done.
Our Partners
We're called partners, because it's not just a job, it's our passion. Together, we embrace
diversity to create a place where each of us can be ourselves. We always treat each other
with
respect and dignity. And we hold each other to that standard.
Our Customers
When we are fully engaged, we connect with, laugh with, and uplift the lives of our
customers
- even if just for a few moments. Sure, it starts with the promise of a perfectly made
beverage, but our work goes far beyond that. It's really about human connection.

Our Stores
When our customers feel this sense of belonging, our stores become a haven, a break
from the
worries outside, a place where you can meet with friends. It's about enjoyment at the
speed of
life-sometimes slow and savored, sometimes faster. Always full of humanity.
Our Neighborhood

Every store is part of a community, and we take our responsibility to be good neighbors
seriously. We want to be invited in wherever we do business. We can be a force for
positive
action- bringing together our partners, customers, and the community to contribute
every day.
Now we see that our responsibility-and our potential for good-is even larger. The world
is
looking to Starbucks to set the new standard, yet again. We will lead.
Our Shareholders
We know that as we deliver in each of these areas, we enjoy the kind of success that
rewards
our shareholders. We are fully accountable to get each of these elements right so that
Starbucks
-and everyone it touches-can endure and thrive.
From all what mentioned above that Starbucks is aiming to success through quality of
product,
diversify in business and place, to satisfy customers and shareholders, through pleasant
and
nice existence nearly to everyone.
Financial Analysis
The general financial performance for Starbucks in 2008 was declining from the
previous years
dramatically. The following analysis will show this fact.
Investment Returns % Company Industry

Return On equity 12.6 25.8

Return On Assets 5.6 13.2
Both the ROE and ROA are lower than the industry's average, which means that the
company
is not using both the equity and their assets properly to increase their revenue.
Profit margins % Company Industry
Gross Margin 16 27
Pre-Tax Margin 4.4 13.2
Net Profit Margin 3.03 8.5
Starbucks margins are lower also that the industry's average,
especially in 2008 where the net profit margin reduced to 3.03 from 6.3 in 2007.
Financial Condition Company Industry
Debt / Quity Ratio 0.4 0.46
Current Ratio 0.8 1
Quick Ratio 0.48 0.7
Starbucks generally manages their debs and liabilities wisely, and this considers a
financial
strength for the company.
Year 2008 2007 2006 2005
sales 10383000 9411497 7786942 6369300
Net income 315500 672638 564259 494467

Corporate governance
Board of directors
As part of Starbucks mission they are committed to maintain their uncompromising
principles
while they grow. In this regard, their Board of Directors has adopted governance
principles and
committee charters to lead Starbucks governance practices. Currently, the board has 9
directors, a substantial majority of whom meet all of the independence requirements of
NASDAQ and the U.S. Securities and Exchange Commission. Of the nine members
of
Starbucks board, one is Latino, two are African American (one of which is female), and
one
other female also serves on the board. Starbucks president and CEO Howard Schultz
chair the
board.
In Starbucks there are well-defined criteria for the selection of new board members,
foremost
being a clear demonstration of their own personal integrity and ethics. Board diversity is
sought in terms of members' personal and professional backgrounds, gender, race,
ethnicity or
other differentiating characteristics, enabling a wider range of opinions and perspectives
to be
considered. This criterias of selection affected the company in a very good way that gave
it the

opportunity to succeed in the international market. That the diversified background,

education,
culture and gender in the board was one of the greatest Starbucks strong points.
There are three committees of the board are comprised of independent directors and
have
specific charters: Audit and Compliance,Compensation and Management Development
and
Nominating and Corporate Governance. In November 2007, the board amended the
company's bylaws to include majority voting to allow shareholders to play a more
meaningful
role in the election of directors. Director nominees must receive more "for" than
"against"
votes to be elected in an uncontested election. Additionally, the term of a nominee who
does
not receive a majority of the votes cast will end on the earliest of either: (1) 90 days after
the
date election results are certified; (2) the date the director resigns; or (3) the date the
board of
directors fills the position. This change demonstrates Starbucks ongoing commitment to
strong
corporate governance practices.
Shareholders and partners (employees) can provide recommendations and feedback to
the
board through the Business Conduct Helpline and the Audit line. In addition, written
correspondence can be sent to the board, an individual director or to any of Starbucks

independent board committees.

Committee charters, governance principles, director nominations policy (including
criteria for
board membership) and profiles on each board member are available in the corporate
governance section of Starbucks.com.
Starbucks formed a Policy Governance Council in fiscal 2006 to oversee and approve
governance tools at the global enterprise level, and to ensure they are well-defined,
consistent
with each other, current, stored for easy retrieval, and effectively communicated to
partners.
The Council is comprised of company leaders who represent multiple business units and
functions, and is supported by Starbucks Policy Office and staff.Starbucks stakeholders
include
partners (employees), customers, suppliers, farmers, shareholders, governments,
community
members, environmental groups, activists and many others. The company engaged
them to be
able to understand their concerns and gain their input on topics of mutual importance.
External Environment:
Opportunities and Threats
Starbucks international operation was one of the major aspects of their success. , in the
mid
1990s, with the market reaching saturation, Starbucks could no longer depend on the
U.S.

market for growth. To maintain its growth rates and to boost revenues, Starbucks had to
venture abroad. Starbucks international presence is now in more than 25 countries and
the
United States of America. This presence is formed in three modes in entry that are Joint
venture, licensing and wholly owned
subsidiaries. This became a burden on the mother company in a later stage. That those
types of
entry moods need a lot of training, supervising, management assistance and technology
transfer
for the partner. This is along with inability to engage in global strategic coordination.
However,
the success of Starbucks is not only to its aggressive expansion but also to its product
innovation. Starbucks came out with new products to attract customers on different
periods.
Also diversification was one of the factors that Starbucks started to apply even on a
small
initiated base. That along with serving coffee, Starbucks also sold merchandise. In 1995,
it
started selling CDs of its famous in-house music program. It also entered into alliances
with
various players such as Canadian Airlines, United Air Lines, Starwood Hotels, and
Barnes &
Noble, Inc., to serve Starbucks coffee.
Michael Porter's five forces

Michael Porter defines five forces impacting a firm's competitiveness- threat of

substitutes,
threat of new entrants in the industry, bargaining power of suppliers, bargaining power
of
customers, and the intensity of competition within the industry. A firm's strategic
decisions to
respond to these five forces are a source of risk also.
The company is facing a real threat of substitution from many other companies that
producing
the same product that is satisfying the same need. This is in its domestic market and
even in the
international market specially Europe and Middle East.
Also Starbucks is facing a real problem of rival competition due to its uncompetitive
price all
over the world and even in its domestic market.
Also the taste of Coffee had been judged by customers as an artificial taste especially in
Japan.
Suppliers bargaining power is really represent a threat for Starbucks. That they decided
to deal
with a 51% women or minority owned suppliers. Also they are not dealing with suppliers
who
don't follow the same environmental ethics that are for Starbucks. This may lead them
to lose a good opportunity or deal with a supplier that they will not deal with him. Also
dealing

with small suppliers instead of dealing with limited number of big power full suppliers is
not
giving them real good deals for facilities and prices.
Societal Environment
Economics
Economic factors are an important aspects that concern the nature and direction of the
economy in which a firm operates Starbucks also faced criticism from Non
Governmental
Organizations
(NGOs) that urged the company to acquire certified coffee beans,ensuring that those
coffee
beans were grown and marketed under certain economic and social conditions.
Furthermore,
Starbucks faced problems due to economic recession in countries such as Switzerland,
Germany, and Japan in the early 2000s, where it experienced declining sales and
revenues.
Moreover, a real expectation of huge recession during the next year due to the
worldwide
financial crisis may affect the company's results badly.
Technological
Starbucks is continuously searching for ways to better a customers'experience. With the
introduction of the Starbucks Card for example,

the Company has created the opportunity to improve customer service, shorten lines
and make
a customer's visit at Starbucks quicker and more convenient. Most if not all Starbucks
location
has WI-FI for consumer needs.
Political/Legal
Increasing tensions between the United States and the rest of the world, the business
environment, especially in the Middle East and Southeast Asia, was becoming
increasingly
volatile. After U.S. declaration of war on Iraq in early 2003 matters became worse for
the
company. This created serious problems for Starbucks. In July 2002, Arab students
called for a
boycott of American goods and services, due to the alleged close relationship between
the
United States and Israel. The boycott targeted U.S. companies including Starbucks,
Burger
King, Coca-Cola and Estee Lauder 2-In addition to these incidents, Starbucks topped the
list of
companies to be boycotted due to Schultz's alleged closeness to the Jewish community.
Till
now in the Arab countries & Middle East a lot of rumors that Starbucks is sponsoring
the
Jewish community against Palestinian
crises. Due to increasing security threats, Starbucks closed down its six stores in Israel.

Starbucks had two class action suits pending since 2001. The lawsuits entitled Carr vs.
Starbucks and Sheilds vs. Starbucks are challenging the status of Starbucks California
store
managers and assistant managers as exempt employees under California wage and hour
laws.
Starbuck's is denying all liabilities in these cases, however; the company has agreed to
the
settlement in order to take care of all of the plaintiffs' claims without having to get
involved in
any protracted
litigation.
Starbucks only imports all their coffee beans, so possible threats could include a change
in
import laws. A change in the status quo as far as imports go could greatly affect
numerous
areas of production for the company. For example, if it costs more to import or the
process is
made more difficult the result could ultimately be a change in price, which would affect
the
level of consumption for Starbucks coffees.
Social/Cultural
Environmental Mission Statement
(Starbucks is committed to a role of environmental leadership in all facets of our
business)

As a result of Starbucks closely following their objectives, the company

has installed a list of principles that further outline the company's willingness to make
sure that
its affect on the environment is as positive as possible. These principles are stated as:
1-Understanding of environmental issues.
2-Sharing information with our partners.
3-Developing innovative and flexible solutions to bring about change.
4-Striving to buy, sell and use environmentally friendly products.
5-Recognizing that fiscal responsibility is essential to our environmental future.
6-Instilling environmental responsibility as a corporate value.
7-Measuring and monitoring our progress for each project, and encouraging all partners
to
share in our mission.
Those can only be seen as a positive for the image of the company and shows that they
are
willing to utilize their resources in order to more than satisfy requirements.
Task Environment
Not only this but also, Starbucks organizing activities such as neighborhood clean-ups
and
walk-a-thons. Many examples are available on the web site of the company.
Policies that also have been implemented are the buying policies, which only allow the
company to purchase from those other businesses (suppliers) who follow the same

environmental strategy as Starbucks.

This may push the company to lose an opportunity of good deal, because the supplier
doesn't
follow the company environmental policiesFinally, to integrate these policies to new
employees, Starbucks has employed the services of a few partners which congregate
together
to create a "Green Team," which installs the environmental views into trainees as well as
coming up with inventive ways of helping the environment.
Summary of External factors TO
However, it was found that the success of Starbucks was due to its profitable domestic
operations. It was reported that most of Starbucks' international operations were
running into
losses. In May 2003, Starbucks' Japanese operations reported a loss of $3.9 million
(Japan
constituted the largest market for the company outside the United States), and the
company
also performed badly in Europe and the Middle East. Analysis pointed out that
Starbucks'
international operations were not as well planned as its U.S. operations. It was also
observed
that the volatile international business environment made it difficult for the company to
effectively manage its international operations.
Internal Environment: Strengths and Weaknesses

Corporate Structure
Starbuck has no formal organization chart and does not work with hierarchy structure.
It
consists of to main departments, functional department consists of marketing, supply
chain,
operations, finance
and human resources, and cross functional teams, consisting of local store marketing
and
marketing campaigns. The decision making process in Starbucks is bottom - up process,
where
the employees are empowered even to take decisions without referring back to the
management. There is a conflict in the corporate structure where some employees are
reporting
to two different divisions which in some cases causing confusion and over lapping.
Corporate culture
The Chairman of Starbucks, Schultz decided to treat employees as family, and called
them
partners. Both full time and part time employees could benefit from training and health
insurance. Starbucks
paid some more salaries than competitors to gain highly qualified employees.
Starbucks relied on its baristas and other frontline staff to a great extent in creating the
'Starbucks Experience' which differentiated it from competitors.
Employees had option to stock chare according to their base salaries.

Also Starbucks had shared values with their employees who made them proud to work
in such
successful company, and this created good culture. Schultz decided also to be open and
honest
with his employees, and let them share in the decision making process. He gave
extensive
training to employees especially barista employees to give careful attention to
customers.
Environment was important to Starbucks. Using this concept Starbucks gave good
attention to
their suppliers by helping them technically and financially as part of their corporate
social
responsibility. Also it encouraged all partners to share in the company's mission.
Starbucks
has deep tacit knowledge, which is difficult to be imitated by competition.
Functional strategies
Marketing
The main marketing strategy and position for Starbucks is for customers to consider it
as their
place after home and work, this will guarantee customers visiting the shops several
times.
However it also
customizes its positioning for each store individually according to the specific location it
is in.
Another important part of Starbucks'

positioning over competition is that they are environmentally friendly. Starbucks does
not
generally offer promotional prices on its products. It has a reputation for having pricey
drinks;
furthermore, Starbucks brand is too expensive. The company mainly depends on the
brand for
their high revenues, which could be risky from competition. However it seems to be the
market
leader when it comes to new products and ideas.
Starbucks has found more success advertising on a local level rather than to the nation
as a
whole. The Company advertises a lot through print mediums, as Starbucks' target
market tends
to be educated people who do more reading than the average person. In 2005, Starbucks
spent
$87.7 million on advertising, or 1.4% of revenues. Starbucks also market itself as
environmentally friendly and focus on its corporate social responsibility, one example is
buying Ethos-Water Company and they also plan to donate $ 10 million to help
countries under
developed lacking clean water.
R&D
The R&D role in Starbucks is to make a R&D mix and mainly consists of the following
activities:
Coffee Science

New Technology
Equipment Technology
Product Development
Menu Development
Coffee Quality Assurance
Sensory Science
The introduction of the Starbucks Card for example, Starbucks has created the
opportunity to
improve customer service, shorten lines and make a customer's visit at Starbucks
quicker and
more convenien. Starbucks is continuously searching for ways to better a customers'
experience. The company spent 7.2 Million in 2008 for new technologies related to food
and
equipment.
Operations and logistics
The main operation for Starbucks divided into local operation in USA and international
operation. Starbucks depended mainly on their employees to manage operation, that's
why they
focused on training employees as they are the main asset in the company. They are
managing
all stores in USA, however, they are in the international operation sometimes manage
their
store, or give licenses, or get into joint ventures with existing companies.

But they focus on their operation on the quality of their coffee Starbucks deals with
international small suppliers. Starbucks made good deals with their suppliers to supply
coffee
with fixed prices rather than using the Fair Trade Coffee.
They mainly use non-smoking restrictions in their stores, however in some countries
because
of culture conflicts they had to have either smoking rooms or smoke areas in the air. One
of the
main advantages Starbucks has is the accumulative experience of their employees in
operation,
this is due to the low turn over they have and their focus on employee satisfaction.
Human Resources
Starbucks paid considerable attention to the kind of people it recruited. So the company
hired
people for qualities like adaptability, dependability and the ability to work in a team.
Starbucks
was one of the few retail companies to invest considerably in employee training and
provide
comprehensive training to all classes of employees, including part-timers Company
depends on
their personnel in their high revenue, which is very risky as if they lost some of the key
persons. Early 2000s, the company began to show signs that its generous policies and
high
human resource costs were reflecting on its financial strength. Although the company
did not

reveal the amount it spent on employees, it said that it spent more on them than it did
on
advertising While the industry turnover rate is about 200 percent, Starbucks maintains
a
turnover rate of only 60 percent. Due to this low turnover, Starbucks has lowered their
training
time and costs. Furthermore, 82% of the partners rated being "very satisfied" and 15%
as
"satisfied" with their jobs when asked by outside audit agencies 5.3.5 Information
System
Starbucks is following this major trend of moving towards multimedia Direct Marketing
Solutions and Web-based models. Customers visit its web site to buy coffee products
and gifts,
and to learn more about the art of roasting and brewing coffee. The site also offers
services
such as the Starbucks "Taste Matcher" tool, which interactively recommends
specifics coffee roasts and blends bases on customer's preferences. Moreover in late
November
2001 Starbucks Debit card was introduced in US. Its introduction has increased
customer
loyalty as well as attracted new customers to Starbucks stores. Most if not all Starbucks
locations have WI-FI for consumer needs. The MIS department affects Starbucks
partners
whenever they open a store cash register, use computer software or send voice mail
messages.

The IS department in Starbucks focuses mainly on:

Business Applications Development
Production Services
Retail Business Systems
Strategic Architecture
Reviewing mission and objective
Mission Statement: Starbucks should keep their mission statement as it reflects the
current
situation as well, expect for changing the product scope to include products more than
the
coffee for good diversification.
Objectives: The Company can keep the same current objects as it serves the current
situation of
the company. Just one object should be added which is:
Invest in other product for either related or unrelated business to maintain the success.
Review strategies
Corporate Strategy
The corporate strategy should continue in Retrenchment as they started in July 2008
close
stores to reach 600 by the end of 2009. One more strategy should be added to Diversify
in
related business to

secure the company, as they depend only on coffee products.

Business strategy
Domestic Business Unit: Should focus on more differentiation to face the hard local
competition.
International Business Unit: Should focus on reducing costs to reduce prices; this will
help in
entering new low cost markets and gain more profits. Also continue with alliances in
countries
to reduce management focus and concentrate more on the Domestic Market.
Functional Strategies
Marketing
Starbuck should continue in their existing marketing strategy for promotion and
advertising.
Starbuck should make strategy of good price reduction strategy in order to enter new
markets
and maintain current customers.
Research and Development
Starbuck can continue in their R&D strategy by being the Technological leader in the
coffee
retail business.
Operation Strategy
Starbuck can continue in the current strategy for depending on employees in
management and

to make good deals with suppliers to reduce costs.

Human Resources
The company should continue in developing and motivating employees as they are their
best
assets.
Information System
The company should continue in developing their Information System to help the
company
increasing profitability.
Implementation
The company can implement the above strategies by:
Use the best of their Economies of scale to reduce costs.
Start new independent Business Unit for New products, with decentralization for
productsgroup
structure.
They should reduce cross functional tasks to reduce confusion between employees and
increase
efficiency.
Depend on the outsiders of their board to get potential new investments in new
businesses.
Evaluation and Control
Starbucks should evaluate their performance quarterly in 2009 to avoid any
accumulative

losses and to take quick corrective actions.The best evaluation method for Starbucks will
be
financial evaluation by measuring the following:
1- ROI for any new investment they made and for the old investments as well.
2- Net profit for each store to separate between profitable and non profitable stores.
3- Net profit for each country to separate between profitable and non profitable
countries.