Balanced Scorecard Exercise for

Objectives Measures Targets Initiatives

Financial

How do customers see us?

Objectives Measures Targets Initiatives

To succeed financially, how should we appear to our stockholders?

How do we look to shareholders?

Objectives Measures Targets Initiatives

Customer
To achieve our vision, how should we appear to our customers?

Vision and Strategy

Objectives Measures Targets Initiatives

Business processes
To satisfy our shareholders and customers, what business processes must we excel at?

Learning & growth

How can we continue to improve? Page 1 1992 Kaplan and Norton

To achieve our vision, how will we sustain out ability to change and improve?

What must we excel at?

Lecture 5 660.340 Principles of Management Exercise Professor Crane

MKT 305

Definitions
Learning and Growth
Learning and Growth deals with measures of corporate success in relation to how it learns as it develops over time. So if the company makes mistakes in any way, then it must learn from them and there must be mechanisms in place to make sure that happens. Growth also includes the way in which it generates leaders for the future and equips employees with the necessary skills that will ultimately sustain its business. Examples include skills sets, employee relations and satisfaction, and staff competences.

Internal Business Processes

Internal business processes include all operations within the organization. The measures would cover whether or not value is being delivered to target segments, and the value chain is tracked. Innovation and new product development would also be measured. Examples of internal business processes include Information Technology, manufacturing, marketing operations (like customer service), procurement and quality processes.

Customers
We need to make sure customers are satisfied with every aspect of their experience with our organization. We need to make sure that we not only recruit more new customers, but that we also retain them and extend new products and services to them. We also need to make sure that we are meeting the needs of our target segments. So here, examples of customer measures include customer retention and recruitment, their satisfaction and so on.

Financial
Financial measures are vitally important for any business. A note of caution here, since traditional measures of financial success such as Return On Investment (ROI), and made secondary to 'shareholder value.' Shareholder value is the natural measure of success, and so it is prioritized. Information on customers, markets and technology is far more widely available today, so don't bogged down with old fashioned financial measures. Resources, individuals and teams within a business are then aligned with the scorecard objectives, measures, targets and initiatives for each of the four areas of measurement.
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660.340 Principles of

Lecture 5 Exercise

Strengths

Page 3

Other Info: SWOT details

Starbucks Corporation is a very profitable organization; its operating margin in 2008 was 13%.The company generated revenue of more than $10.4 billion in the same year. It is a global coffee brand built upon a reputation for fine products and services. It has almost 16,600 cafes in almost 40 countries. Starbucks is consistently one of the Fortune Top 100 Companies to Work For. The company is a respected employer that values its workforce. The organization has strong ethical values and an ethical mission statement as follows, 'Starbucks is committed to a role of environmental leadership in all facets of our business.' We arent in the coffee business, serving people. We are in the people business, serving coffee Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time. They tried a $1.00 cuppa and it failed. Instant Starbucks sucks. The organization has a strong presence in the US with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk. The organization is dependent on a main competitive advantage, the retail of coffee. They cant make a sandwich to save their freakin lives. Starbucks has been very good at taking advantage of opportunities. In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD. New products and services are retailed in their cafes, such as Fair Trade products, mugs, coffee machines, etc. The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations, even Italy! are beginning to emerge. Who knows if the market for coffee will grow and stay in favor with customers, or whether another of beverage or leisure activity will replace coffee in the future? Starbucks is exposed to rises in the cost of coffee and dairy products. Since its conception in Pike Place Market, Seattle in 1971, Starbucks' success has lead to the market of many competitors and copy cat brands that pose potential threats. Dunkin Donuts and McDonalds are right on their heels McDonalds is all over the coffee part with McCafe. And the sandwich part. Eating their lunch, actually. type entry

Weaknesses

Opportunities

Threats

MKT 305

Lecture 5 Exercise

1. 'Starbucks' mission statement is 'Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow. 2. Schultz's biggest idea for Starbucks' future came during the spring of 1983 when the company sent him to Milan, Italy, to attend an international house wares show. While walking from his hotel to the convention center, Schultz spotted an espresso bar and went inside to look around. The cashier beside the door nodded and smiled. The barista (counter worker) greeted Howard cheerfully, then gracefully pulled a shot of espresso for one customer and handcrafted a foamy cappuccino for another, all the while conversing merrily with those standing at the counter. Schultz judged the barista's performance as "great theater." Just down the way on a side street, he entered an even more crowded espresso bar, where the barista, was greeting customers by name; people were laughing and talking in an atmosphere that plainly was comfortable and familiar. Schultz's first few days in Milan produced a revelation: The Starbucks stores in Seattle completely missed the point. Starbucks, he decided, needed to serve fresh-brewed coffee, espresso, and cappuccino in its stores (in addition to beans and coffee equipment). Going to Starbucks should be an experience, a special treat; the stores should be a place to meet friends and visit. Re-creating the Italian coffee-bar culture in the United States could be Starbucks' differentiating factor. 3. Starbucks and CDs: The push into music is part of Starbucks Chairman Howard Schultz's broader ambitions to make its stores the "third place" in consumers' lives, after home and the office. As Mr. Schultz, 51 years old, sees it, music and other forms of entertainment help draw customers and, in turn, drive up sales of Starbucks's pricey coffee and food. 4. Starbucks and WiFi: Yea, give me a double latte, half-caf, extra whipped cream and... a Wi-Fi connection. Coffee giant Starbucks launched a nationwide campaign to put wireless access with T1 speeds in some 1,200 of its U.S. and European stores with about 2,000 of its stores but the end of the year. Lecture 5
Page 4 Exercise

Other Starbucks Factoids

Take Just This Piece

How should our customers see us?
Customer Perspective
Goals (objectives) Measures Targets Initiatives

Page 5

660.340 Principles of

Lecture 5 Exercise