1.

Starbuckss Existing Vision, Mission, Objectives and Strategies:

1.1. Vision
In a short, succinct statement, vision is To inspire and nurture the human spirit one person, one cup, and one
neighbourhood at a time.

1.2. Mission
The company further elaborates by stating the following guiding principles:

Our Coffee
It has always been, and will always be, about quality. Were 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
Were called partners, because its not just a job, its 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 customerseven if just
for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that.
Its 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. Its about enjoyment at the speed of lifesometimes 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 actionbringing together our partners,
customers, and the community to contribute every day. Now we see that our responsibilityand our potential for
goodis 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 Starbucksand everyone it
touchescan endure and thrive.

1.3. Objectives
1. To establish as the most recognized and respected brand in the world.
2. To establish as the premier provider of the finest coffee in the world.
3. To contribute positively to our communities and our environment.
4. To develop enthusiastically satisfied customers all of the time.
5. To yield an advantageous returns and satisfy shareholders.

1.4. Strategies
1.4.1. Porters Generic Strategy
Starbucks Coffee uses the broad differentiation generic strategy. In this generic strategy, the goal is to
make the company different from other competitors. It is such difference that makes Starbucks stand out. The
companys emphasis on specialty coffee easily differentiates Starbucks cafs from many other establishments that
offer coffee. However, the application of the broad differentiation generic strategy also extends to other areas of the
business. For instance, Starbucks uses its sustainable and responsible sourcing policy to differentiate its products
from competitors. This generic strategy is also manifested in the companys culture. While competitors like
McDonalds and Dunkin Donuts emphasize low cost, Starbucks Coffee emphasizes a warm friendly ambiance that
people enjoy.

An implication of the broad differentiation generic strategy is that Starbucks Coffee must continue innovating to
ensure differentiation in the long term. This generic strategy could lose its strength when competitors also find ways
to stand out. To address this issue, Starbucks keeps innovating its product mix and supply chain. In applying the
broad differentiation generic strategy, Starbucks focuses on specialty ingredients and products, such as baked
goods that do not have high-fructose corn syrup. Starbucks also innovates its supply chain to satisfy its generic
strategy through a continuing search for the most sustainable and finest ingredients. Thus, based on this generic
strategy, Starbucks Coffees strategic objective is to innovate products and its supply chain.

1.4.2. Specific Strategy

The Starbucks Corporation and its successful marketing strategies are definitely something that anyone
interested in business can learn about.

i. Perfect Cup of Coffee Starbucks history has shown that they place a huge emphasis on product
quality. Their coffee, even if priced slightly more expensive than expected, is notorious for satisfying
customers with its rich, delicious taste and aroma.

ii. Friendly-Atmosphere Place From the very beginning, the Starbucks marketing strategy has focused
on creating the place for everyone to go to between home and work. Creating this unique and relaxing
experience and atmosphere for people has been very important for the company as they have realized
that this is one of the strongest concepts attached to the company, to which customers have been
strongly attracted.

iii. Customer Satisfaction Customer satisfaction is a very important issue with Starbucks. From entrance
to the store to the very last drop of their coffees, it is a must that customers feel the uniqueness of
enjoying their Starbucks coffee experience. Starbucks knows the answer to the question "Why is
customer service important."

iv. Creating a Starbucks Community The Starbucks marketing strategy has even expanded to create a
community around their brand. On their website, individuals are encouraged to express their experiences
with Starbucks history, and the company strives to personally join in the discussions.

v. Smart Partnerships Starbucks Coffee Company has been known to create strategic partnerships that
demonstrate the fact that another way to grow your business is to partner smart. Over the years, the
Starbucks Corporation has greatly increased sales just by using this strategy.

vi. Innovation Through the years, the Starbucks Coffee Company has been known to think up creative
and innovative ideas to add to their products or services. Theyve added different flavors to their coffee,
more food on their menu, and even became one of the firsts to offer internet capability in their stores.

vii. Brand Marketing The Starbucks marketing strategy has always focused on word-of-mouth
advertising and letting the high quality of their products and services speak for themselves. For years, this
has been uniquely Starbucks, and it has played a huge part in making Starbucks Coffee Company a
 success. The definition of viral marketing speaks to this new word of mouth that Starbucks has run with,
and made their own.

2. Proposed Vision and Mission Statements:

2.1. Vision
To establish Starbucks as the most trusted, admired, and respected company in the industry and be a leader in
terms of innovation, services and quality.

2.2. Mission
The Mission Statement is often the most visible and public part of the strategic management process. It is vital that
it includes the following nine components but on the existing Mission Statement of Starbucks, some of the
components were not present. Refer to the table below:

COMPONENTS YES / NO
1. Customers Who are the firms customers? YES
2. Products or servicesWhat are the firms major products or services? YES
3. MarketsGeographically, where does the firm compete? YES
4. TechnologyIs the firm technologically current? NO
5. Concern for survival, growth, and profitabilityIs the firm committed to YES
growth and financial soundness?
6. PhilosophyWhat are the basic beliefs, values, aspirations, and ethical YES
priorities of the firm?
7. Self-conceptWhat is the firms distinctive competence or major competitive YES
advantage?
8. Concern for public imageIs the firm responsive to social, community, and YES
environmental concerns?
9. Concern for employeesAre employees a valuable asset of the firm? YES

The Developed Mission:

1. To provide a wide range of specialty coffee of choice made from the finest quality whole beans brewed and
process in the highest standards.
2. To provide our customers the sense of belongingness, homey atmosphere, and a haven to ease the
stresses and tensions from work.
3. To provide our customers the necessary amenities and technological innovation for them to connect and
reach out the world as they enjoy our coffee.
4. To embrace the diversity of culture, offering them the best coffee that suits their very needs.
5. To take good care of our human resource, providing them a work-friendly environment.
6. To be a part of the community and take responsibility to be serious good neighbour. Meeting the standards
that the world is looking for.
7. To preserve the Mother Earth by promoting the Reduce, Re-use, Recycle Policy.
8. To reward our shareholders with a one of a kind success so that Starbucks can endure and thrive.

3. External Opportunities and Threats:

3.1. Opportunities
3.1.1. Global Expansion Global Expansion makes it easier for Starbucks to enter and penetrate the international
markets. Starbucks has a great growth potential in further expanding into the emerging and developing
markets. Starbucks expects to add approximately 20 net new stores to its global store base in fiscal 2009.
This plan includes closing approximately 425 company-operated stores in the United States and adding of
 approximately 60 company-operated stores internationally. The company plans to open approximately 65 net
new licensed stores in the United States and approximately 320 net new licensed stores internationally.
Capital expenditures for fiscal 2009 are expected to remain unchanged, at approximately $600 million.
3.1.2. Expansion on Retail Markets - Starbucks currently sell its packed coffee products, iced beverages and
merchandizes through large box retailers. This markets potential is yet to be fully realized and this provides
Starbucks great opportunities for the future to future monetizes their brand. Research and development is
constantly in pursuit of the new products and service that are both trendy and stable. Starbucks products can
be found in convenience stores, grocery stores, department stores, movie theatres, businesses, schools, and
even airports.
3.1.3. Technological Advances - Starbucks has leveraged the use of mobile applications. This creates an ease of
use process for customers, aligns customer loyalty through reward programs. This is a growing field and
would drive more business to their stores as technology advances. Starbucks also encourages the use of its
Web site where customers are able to register their Starbucks cards, receive nutritional information about
Starbucks products, shop online, search for careers, and much more.
3.1.4. Brand Extensions - Starbucks carries a powerful brand image and it can leverage it to extend into horizontal
lines of its business and also venture into product diversification with keeping brand dilution risk in check.
Starbucks relies more on its image advertising than traditional advertising. Part of that image is how the
customer not only views the retail outlet but how responsible the company is to their communities and
employees.
3.1.5. Expansion of Product Offerings - Starbucks recently started to expand their product mix by venturing into the
Tea and fresh juice product offerings with a smart acquisition strategy. CPG operations sell a selection of
whole bean and ground coffees as well as a selection of premium Tazo teas through licensing arrangements
in U.S. and international markets. Global Consumer Products (CPG) operations also produce and sell ready-
to-drink beverages that include, among others, bottled Frappuccino beverages, Starbucks Double Shot
espresso drinks, and Discoveries chilled cup coffee, as well as Starbucks super-premium ice creams and
Starbucks Coffee and Cream Liqueurs, through its joint ventures and marketing and distribution agreements.

3.2. Threats:
3.2.1. Intense Competition - This is by far the biggest threat that Starbucks faces with the market being at a mature
stage, there is increased pressure on Starbucks from its competitors like Dunkin Brands, McDonalds, Caribou
Coffee, Peets Coffee, Krispy Kreme Doughnuts (KKD) and pop specialty coffee stores. Firms such as
McDonalds and Dunkin Brands desire to lure all Starbucks customers away to cheaper cups of coffee.
3.2.2. Increase of Pricing in Global Coffee Markets - There has be significant fluctuations in the market prices of
high quality coffee beans, which Starbucks cant control. In response to recent economic times, the company
has also adjusted prices on certain of its more popular products in an effort to show responsiveness to the
more budget-conscious consumer.
3.2.3. Market Saturation on Developed Countries - Starbucks derives a significant amount of its revenue from the
development markets and there is increased market saturation. International operations sell coffee and other
beverages, complementary food, whole bean coffees, and coffee brewing equipment and merchandise
through company-operated retail stores in the United Kingdom, Canada, and nine other markets. Specialty
operations in International primarily include retail store licensing operations in nearly 40 countries and
foodservice accounts, primarily in Canada and Japan. Many of Starbucks International operations are in early
stages of development that require a more extensive support organization relative to the current levels of
revenue and operating income in the United States.
3.2.4. Consumer Lifestyles and Tastes Changes - The shift of consumers toward more healthy products and the risk
of coffee culture being just a fad represent a threat for Starbucks going into the future. Another trend that has
surfaced in the past decade has been consumer requests for organic coffees, and more emphasis was placed
by retailers on the growing environment of the beans. Starbucks was addressing the concern proactively,
going directly to the source to ensure better quality coffee by opening a Costa Rican support office for coffee
farmers and rewarding environmentally responsible farms through its CAFE Practices program.
 Starbucks McDonalds Dunkin Donuts
Key Factors Weight Rating Score Rating Score Rating Score
1. Advertising 0.05 2.00 0.10 3.00 0.15 3.00 0.20
4. 2. Product Quality 0.20 4.00 0.80 2.00 0.40 3.00 0.60
3. Product Variety 0.10 3.00 0.30 4.00 0.40 3.00 0.30
4. Financial Position 0.05 3.00 0.15 4.00 0.20 3.00 0.15
5. Customer Loyalty 0.10 2.00 0.20 3.00 0.30 4.00 0.40
6. Global Expansion 0.10 3.00 0.30 4.00 0.30 4.00 0.30
7. Customer Service 0.10 4.00 0.40 4.00 0.40 3.00 0.30
8. Price Competitiveness 0.20 2.00 0.40 4.00 0.80 2.00 0.40
9. Employee Benefits 0.10 4.00 0.40 2.00 0.20 2.00 0.20
Total 1.00 3.05 3.15 2.85
Competitive Profile Matrix (CPM):

Caribou Coffee Peets Coffee and Tea Krispy Kreme Doughnuts (KKD)
Rating Score Rating Score Rating Score
3.00 0.15 4.00 0.20 3.00 0.15
2.00 0.40 2.00 0.40 3.00 0.60
2.00 0.20 1.00 0.10 2.00 0.20
2.00 0.10 1.00 0.05 2.00 0.10
2.00 0.20 2.00 0.20 2.00 0.20
2.00 0.20 1.00 0.10 2.00 0.20
3.00 0.30 2.00 0.20 3.00 0.30
3.00 0.60 2.00 0.40 3.00 0.60
3.00 0.30 2.00 0.20 3.00 0.30
Total 2.45 1.85 2.65

Starbucks placed second highest score due to several factor that affects its ratings of success. In terms of product
quality, Starbucks scored the highest among its competitors since product quality garnered the most important item in
the list of critical success factors with a score of 0.80. With regards to employee benefits, global expansion and
customer service, Starbucks gave high importance on this items for the reason that it constitute a big role in obtaining
success. Starbucks ranked last in advertising because it does not constitute a high level in rank in its critical success
factors as Starbucks primarily rely on its powerful brand image than on traditional advertising, but does releases
valuable information in comparison to their competitors in the CPM.

5. External Factors Evaluation (EFE) Matrix:

KEY EXTERNAL FACTORS Weight Rating Weighted Score

OPPORTUNITIES
1. Global Expansion 0.15 4 0.60
2. Expansion on Retail Markets 0.10 3 0.30
3.Technological Advances 0.10 3 0.30
4. Brand Expansion 0.10 3 0.30
5. Expansion of Product Offerings 0.15 4 0.60
THREATS
1. Intense Competition 0.20 4 0.80
2. Increase of Pricing in Global Coffee Markets 0.10 3 0.30
3. Market Saturation on Developed Countries 0.05 2 0.10
 4. Consumer Lifestyles and Tastes Changes 0.05 3 0.15
TOTAL 1.00 3.20
Weight of Total Weighted Score of Opportunities (TWSO)
= [ (0.60 + 0.30 +0.30+ 0.30 + 0.60) / (0.10 + 0.15 + 0.10 + 0.10 + 0.15) ]
=2.10 / 0.60
=3.50

Weight of Total Weighted Score of Threats (TWST)

= [ (0.80 + 0.30 + 0.10 + 0.15) / ( 0.20 + 0.10 + 0.05 + 0.05) ]
=1.35 / 0.40
=3.38

External Factors Evaluation (EFE) Matrix is composed of two (2) important factors namely, Opportunities and
Threats. These two factors were rated from 1 to 4. 1 being the lowest and 4 being the highest. The highest weight is
designated to the most important factor(s). May it be an opportunity or a threat. In this case, with regards to the result of the
total weighted scores over the total weight between the opportunities and threats, the most important factor is the
opportunity.
Based on the key external factors, the most critical factor was the intense competition because the competitors of
Starbucks desire to lure all Starbucks customers away to cheaper cups of coffee.
The factors which carried the most weights were the factors that most to be addressed. Global Expansion makes it
easy to enter the international market is an advantage for Starbucks. The above calculation showed that Starbucks was
more effective in addressing the Opportunity factors than the Threat factors. Still, Starbucks must find a way to reduce
threats in order for them to focus onto more important challenges they face.

6. Internal Strengths and Weaknesses:

6.1. Strengths:
6.1.1. Product Quality Starbucks produces a high quality coffee made up of well-selected whole coffee beans and
premium Taza teas acquired through licensing arrangements in United States and International markets. They
give the highest importance to the quality of their products and avoid standardization of their quality even for
higher production output.
6.1.2. Monopolistic Advantages over Competitors Starbucks took over the market by acquiring 129 of Seattles
Best Coffee Houses to prevent others from controlling the market. Starbucks set a strong product
differentiation among others.
6.1.3. Great Working Environment Starbucks ensures a great working environment because they believe that
customers must not only view the physical appearance of the retail outlet but how responsible the company is
to their community and employee. Starbucks is known for its highly knowledge base employees. They are the
main assets of the company and they are provided with great benefits like stock option, retirement accounts
and a healthy culture. This effective human capital management translates into great customer services.
Starbucks is rated by ten Fortune as one of the best top ten places to work.
6.1.4. Customer base loyalty Starbucks greatly values its regular customers by offering loyalty-based programs to
drive loyalty with the Starbucks Rewards programs and Starbucks Card. The Starbucks Card is a value card
program that provides convenience, support gifting, and increase the frequency of store visits by cardholders
with the hope of strengthening customer loyalty by improving service.
6.1.5. Product Innovation Starbucks continues to be the coffee house of choice for many domestic and
international consumers. Starbucks always ensures to introduce something new to their products so
customers would not eventually be fed up of tasting the recurring products. Starbucks strives to elevate its
products compare to others to new level to overthrow competitions.
6.1.6. Technological Advancements Starbucks provides electrical outlets, and in some cases, wireless internet
access for customers who might need to use their laptop computers or mp3 players.
6.1.7. High total assets turnover The total assets turnover of Starbucks increases from 17.6 in 2007 to 18.3 in
2008. This indicates that Starbucks is managing their assets well.
 6.1.8. Location and Aesthetic appeal of its Stores Starbucks has stores in some of the most prime and strategic
location across the globe. They target premium, high-traffic, high-visibility locations near a variety of settings,
including downtown and suburban retail centers, office buildings, university campuses, and in select rural and
off-highway locations across the world. This has earned them a significant competence and advantage to be
able to penetrate prime markets and tap into customers convince factor. Their stores are visually appealing
and have a cool factor attached to it with being designed to reflect the unique character of the neighborhood
they serve in and environmentally friendly.

6.2. Weaknesses:
6.2.1. Weak Financial Standing
6.2.1.1. Low Current Ratio
Current ratio of Starbucks is 0.79 in 2007 and 0.80 in 2008. Current liabilities are not sufficiently covered
by those assets expected to be converted to cash in the near future. This signals that Starbucks is having
financial difficulty, which typically begins to pay its accounts payable more slowly and to borrow more from
its bank, both of which increases current liability. The firm has too much old inventory that will have to be
written off and too many old accounts receivable that may turn into bad debts.
6.2.1.2. Low Quick/Acid Test Ratio
Quick ratio of Starbucks is 0.47 in 2007 and 0.48 in 2008. This signals that Starbucks is incapable to
pay off short term obligations without relying on the sale of inventories. If the accounts receivable can be
collected, the company cannot pay off its current liabilities, given that if Starbucks has or has no trouble
of disposing its inventories.
6.2.1.3. Low Average Collection Period
Average collection period in 2008 increases by 82% from 16.9 days in 2007 to 19.82 days in 2008. This
indicates that Starbucks customers, in average, are not paying their bills on time. This deprives the
company of funds that could be used to reduce bank loans or some other type of costly capital. This
reinforces that Starbucks credit manager should take a better steps to collect receivables faster.
6.2.1.4. Low Inventory Turnover
The 2007-2009 global recession negatively affected the specialty coffee industries. The emergence of
low-cost coffee offered by the competitors makes it harder for the Starbucks to dispose of their
inventories faster. The turnover of Krispy Kreme (Starbucks competitor) is 24.63x in 2008 while
Starbucks has only 14.99x, much lower than the industry. This suggests that it is holding too much
inventory. Excess inventory is of course, unproductive and represents an investment with a low or in
worst case scenario, has a zero rate of return.
6.2.1.5. The Ratio of Total Debt to Total Assets Raises a Red Flag
Starbucks debt ratio is 57% in 2007 and 56% in 2008, which means that its creditors have supplied
more than half of its total funds, this will make it relatively costly for Starbucks to borrow additional funds
without first raising more equity. Creditors will be reluctant to lend the firm more money, and
management would probably be subjecting the company to too high risk of bankruptcy if it sought to
borrow a substantial amount of additional funds. In fact, Moodys Investors Service recently downgraded
Starbucks credit ratings.
6.2.1.6. Low Profit Margin
The profit margin of Starbucks decreases from 7% in 2007 to 3% in 2008. This decrease in profit margin
occurred for two cases. First, Starbucks operations was low because of the firms high operating costs.
Second, the profit margin was negatively impacted by Starbucks heavy use of debts. Those interest
charges pull down its net income, and with a fluctuating sales, the result is a relatively low profit margin.
Starbucks operating inefficiency and high debt ratio combines to lower its profit margin.
 6.2.2. Prices of coffee is high Competitors like McDonalds are trying to attract all Starbucks customers by
lowering the prices of their coffees. Cheaper cups of coffee lure customers from Starbucks and in return
decreasing Starbucks sales.
6.2.3. Greatly affected by Economic Recession The worldwide economic recession that hit last 2007 leads
Starbucks to close 600 underperforming stores in the United States and a rapid decrease in its sales.
Competitions entered the coffee business big time by trying to lure all Starbucks customers away to cheaper
cups of coffee.
6.2.4. Less marketing and advertising on its products Starbucks usually do not broadcast their product on
televisions and billboards unlike other coffee business. Starbucks depends on the quality of their product and
their services to attract customers a gain their loyalty.

7. Internal Factor Evaluation (IFE) Matrix:

KEY INTERNAL FACTORS Weight Rating Weighted Score

STRENGTHS
1. Product Quality 0.15 4 0.60
2. Monopolistic Advantage over Competitors 0.075 3 0.225
3. Great Working Environment 0.025 2 0.05
4. Customer-based Loyalty 0.025 3 0.075
5. Product Innovation 0.10 3 0.30
6. Technological Advancement 0.05 2 0.10
7. High Total Asset Turnover 0.025 1 0.025
8. Location and Aesthetic Appeal of the Store 0.025 3 0.075
WEAKNESSES
1. Weak Financial Standing 0.35 4 1.40
2. Prices of coffee is high. 0.10 3 0.30
3. Greatly affected by economic recession 0.05 3 0.15
4. Less Marketing and Advertising on its Product 0.025 2 0.05
TOTAL 1.00 3.35
Weight of Total Weighted Score of Strengths (TWSS)
= [ (0.60+0.225+0.05+0.075+0.30+0.10+0.025+0.075) / (0.15+0.075+0.025+0.025+0.10+0.05+0.025+0.025) ]
= 1.45/0.475
=3.05
Weight of Total Weighted Score of Weaknesses (TWSW)
= [ (1.40+0.30+0.15+0.05) / (0.35+0.10+0.05+0.025) ]
= 1.9/0.525
=3.60

Internal Factor Evaluation (IFE) Matrix is a summary step in conducting an internal strategic-management audit.
This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of
business and it also provides a basis for understanding, identifying, and evaluating relationship among those area. Based
on key internal factor, the most advantageous factor is Starbucks product quality. Their coffees are made up of finest coffee
beans, satisfying the needs of its customers. Global economic recession made a great impact in Starbucks financial
standing thus Starbucks management must focus and prioritize their weak financial standing in order to strive and continue
its operations.
Since the total weighted score is 3.35, generally Starbucks is effective in addressing its CFS that exists in the
current environment. But still, its weaknesses is relatively high at an amount of 3.60, this means that Starbucks must take
corrective actions regarding their management decisions and operations.