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Starbucks Corporation - 2009Case Notes Prepared by: Dr. Mernoush Banton

Case Author: Sharynn Tomlin

A. Case Abstract

Starbucks Corporation !!!.Starbucks.co"# is a co"prehensi$e strate%ic"ana%e"ent case that inc&udes the co"pany's (isca& year-end Septe"ber 2)*200) +inancia& state"ents* co"petitor in+or"ation and "ore. ,he case ti"esettin% is the year 2009. Su++icient interna& and eterna& data are pro$ided toenab&e students to e$a&uate current strate%ies and reco""end a three-yearstrate%ic p&an +or the co"pany. ead/uartered in Seatt&e* ashin%ton*Starbucks Corporation is traded on the Ne! 1ork Stock chan%e under tickersy"bo& SB34.

B. Vision Statement Actua

,o inspire and nurture the hu"an spirit5one person* one cup* and onenei%hborhood at a ti"e.

C. Mission Statement Actua

Our Coffee

6t has a&!ays been* and !i&& a&!ays be* about /ua&ity. e're passionate aboutethica&&y sourcin% the +inest co++ee beans* roastin% the" !ith %reat care* andi"pro$in% the &i$es o+ peop&e !ho %ro! the". e care deep&y about a&& o+ this7our !ork is ne$er done.Our Partnerse're ca&&ed partners* because it's not 8ust a 8ob* it's our passion. ,o%ether*!e e"brace di$ersity to create a p&ace !here each o+ us can be ourse&$es. ea&!ays treat each other !ith respect and di%nity. And !e ho&d each other to thatstandard.Our Customershen !e are +u&&y en%a%ed* !e connect !ith* &au%h !ith* and up&i+t the &i$es o+

our custo"ers5e$en i+ 8ust +or a +e! "o"ents. Sure* it starts !ith the pro"ise o+a per+ect&y "ade be$era%e* but our !ork %oes +ar beyond that. 6t's rea&&y abouthu"an connection.Our Storeshen our custo"ers +ee& this sense o+ be&on%in%* our stores beco"e a ha$en* abreak +ro" the !orries outside* a p&ace !here you can "eet !ith +riends. 6t'sabout en8oy"ent at the speed o+ &i+e5so"eti"es s&o! and sa$ored* so"eti"es+aster. A&!ays +u&& o+ hu"anity.

Copyri%ht 20 Pearson ducation* 6nc. pub&ishin% as Prentice a&&.

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Our Neighborhood$ery store is part o+ a co""unity* and !e take our responsibi&ity to be %oodnei%hbors serious&y. e !ant to be in$ited in !here$er !e do business. e canbe a +orce +or positi$e action5brin%in% to%ether our partners* custo"ers* and theco""unity to contribute e$ery day. No! !e see that our responsibi&ity5and our

potentia& +or %ood5is e$en &ar%er. ,he !or&d is &ookin% to Starbucks to set thene! standard* yet a%ain. e !i&& &ead.Our Shareholderse kno! that as !e de&i$er in each o+ these areas* !e en8oy the kind o+ successthat re!ards our shareho&ders. e are +u&&y accountab&e to %et each o+ thesee&e"ents ri%ht so that Starbucks5and e$eryone it touches5can endure andthri$e.

Mission StatementProposed#

Our Coffee

6t has a&!ays been* and !i&& a&!ays be* about /ua&ity. e're passionate aboutethica&&y sourcin% the +inest co++ee beans* roastin% the" !ith %reat care* andi"pro$in% the &i$es o+ peop&e !ho %ro! the". e care deep&y about a&& o+ this7our !ork is ne$er done.2* ;#Our Partnerse're ca&&ed partners* because it's not 8ust a 8ob* it's our passion. ,o%ether*!e e"brace di$ersity to create a p&ace !here each o+ us can be ourse&$es. ea&!ays treat each other !ith respect and di%nity. And !e ho&d each other to thatstandard* ensurin% the &atest techno&o%y is i"p&e"ented +or producin% superiorproducts to our &oya& custo"ers.

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e&e"ents ri%ht so that Starbucks5and e$eryone it touches5can endure andthri$e. ?#

. Custo"er2. Products or ser$ices

>. Markets 0.2 < 0.2) 2 0.0

Market Share 0.09 2 0.) < 0.>= 0.09

Product ua&ity 0.0) < 0.>2 2 0.= > 0.2 0.? < 0.20 2 0.0

Price Co"petiti$eness 0.0) 0.0) < 0.>2 2 0.=

(otal ).** +.,- -., +.)/

O!!ortunities. @our"et co++ee consu"ption rose !ith the drinker's educationa& &e$e&.

,hose !ho +inished co&&e%e bou%ht

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2. Siteen percent o+ the 3.S. adu&t popu&ation consu"ed specia&ty co++ee ona dai&y basis* !hereas => percent indu&%ed occasiona&&y

>. ,he %ro!th in popu&arity o+ specia&ty co++ees has increased* as on&y >percent and ?9 percent o+ peop&e reported dai&y and occasiona&consu"ption* respecti$e&y* in 2002

. Fo&ati&ity in the stocks and co++ee price cou&d i"pact the purchasin% po!er+or the buyers

2. Siteen percent o+ the 3.S. adu&t popu&ationconsu"ed specia&ty co++ee on a dai&y basis*!hereas => percent indu&%ed occasiona&&y

0.0) < 0.>2

>. ,he %ro!th in popu&arity o+ specia&ty co++eeshas increased* as on&y > percent and ?9

0.09 < 0.>=


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percent o+ peop&e reported dai&y andoccasiona& consu"ption* respecti$e&y* in 2002

0.>

?. Consu"ers are beco"in% "ore hea&thconscious and are &ookin% +or s!eats andsnacks that are &o! in carbs su%ar and ca&orie

0.0) < 0.>2

=. 6nternationa& "arket has a stron%er econo"yand accordin%&y* consu"ers !ou&d be ab&e topay pre"iu" price +or specia&ty or %our"etco++ee

0.09 > 0.2;

(hreats

. ,he 200;-2009 %&oba& recession ne%ati$e&ya++ected the specia&ty co++ee industry

0. 2 0.2

2. Eecent trends ha$e sho!n that so"e o+ theconsu"in% pub&ic is concerned about thenutritiona& $a&ue o+ such products as thoseo++ered by the specia&ty co++ee sector and ha$ee$en cha&&en%ed the correctness o+ the&abe&in% and ca&orie in+or"ation posted on theproducts a$ai&ab&e at retai& out&ets.

0.09 2 0.)

>. Fo&ati&ity in the stocks and co++ee price cou&di"pact the purchasin% po!er +or the buyers

0.0; 2 0. 0.2

0.Starbucks a&so encoura%es the use o+ its eb site!here custo"ers are ab&e to re%ister theirStarbucksG cards* recei$e nutritiona& in+or"ationabout StarbucksG products* shop on&ine* search +orcareers* and "uch "ore

0.0= > 0.)

&ea#nesses

. . MoodyGs 6n$estors Ser$ice recent&y do!n%radedStarbucksG credit ratin%s

0.0< 0.0

(otal ).** +.44


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%. S&O( Strategies

Strengths &ea#nesses

. Starbucks epects toadd approi"ate&y 20net ne! stores to its%&oba& store base in+isca&

2. 2009 by c&osin%approi"ate&y 20 netne! &icensed storesinternationa&&y

"i&&ion

>. Moody's 6n$estors

Ser$ice recent&ydo!n%raded Starbucks'credit ratin%s

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access* +or custo"ers!ho "i%ht need to usetheir MP> p&ayers or&aptop co"puters

). Starbucks' products can

be +ound in con$eniencestores* %rocery stores*depart"ent stores*"o$ie theaters*businesses* schoo&s*and e$en airports

9. Starbucks is rated byFortune as one o+ thebest top 0 p&aces to!ork

0.Starbucks a&so

encoura%es the use o+its eb site !herecusto"ers are ab&e tore%ister their Starbucks'cards* recei$e nutritiona&in+or"ation aboutStarbucks' products*shop on&ine* search +orcareers* and "uch "ore

do!n H?9.; "i&&ion* or2. percent* co"pared!ith the sa"e period&ast year* pri"ari&y dueto the i"pact o+ a

stron%er 3.S. do&&arre&ati$e to the Britishpound and Canadiando&&ar

). @&oba& Consu"erProducts @roup CP@#tota& net re$enuesdecreased by 2 percentto H9

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increased* as on&y >percent and ?9 percento+ peop&e reported dai&yand occasiona&consu"ption*

respecti$e&y* in 2002**I=#

(hreats S=( Strategies &=( Strategies

. ,he 200;2009 %&oba&recession ne%ati$e&ya++ected the specia&tyco++ee industry

2. Eecent trends ha$esho!n that so"e o+ the

consu"in% pub&ic isconcerned about thenutritiona& $a&ue o+ suchproducts as thoseo++ered by the specia&tyco++ee sector and ha$ee$en cha&&en%ed thecorrectness o+ the

. 6"p&e"ent "arketpenetration strate%y bypro"otin% additiona&&icensin% retai& dea&s.,his "ini"iJes the risksand capita& ependitures

+or Starbucks S2* S>*S

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&abe&in% and ca&oriein+or"ation posted onthe products a$ai&ab&e atretai& out&ets.

>. Fo&ati&ity in the stocks

and co++ee price cou&di"pact the purchasin%po!er +or the buyers

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7. SPACE Matrix

%inancial Stabilit3 0%S1 En"ironmental Stabilit3 0ES1

Eeturn on 6n$est"ent 2 3ne"p&oy"ent -?

e$era%e ? ,echno&o%ica& Chan%es -2

i/uidity 2 Price &asticity o+ De"and ->

orkin% Capita& ? Co"petiti$e Pressure -?

Cash (&o! ? Barriers to ntry -2

%inancial Stabilit3 0%S1 A"erage -., En"ironmental Stabilit3 0ES1 A"erage =-.

Com!etiti"e Stabilit3 0CA1 6ndustr3 Stabilit3 06S1Market Share -2 @ro!th Potentia& ?Product ua&ity - (inancia& Stabi&ity Custo"er oya&ty - ase o+ Market ntry 2Co"petition's Capacity 3ti&iJation -> Eesource 3ti&iJation


(S

CA

S

6S=?2

Conser"ati"e Aggressi"e

Com!etiti"eDefensi"e

2

>

-

-2

-

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Com!etiti"e Stabilit3 0CA1 A"erage =)., 6ndustr3 Stabilit3 06S1 A"erage -

1-ais: (S S O >.) ->..0# O .2

>. 7rand Strateg3 Matrix

. Ee&ated di$ersi+ication2. 3nre&ated di$ersi+ication>. oint $entures


&ea#Com!etiti"e

Position

Quadrant II Quadrant I

Quadrant IVQuadrant III

Strong

Com!etiti"ePosition

'a!id Mar#et 7ro8th

Slo8 Mar#et 7ro8th

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6. (he 6nternal=External 06E1 Matrix

(he 6%E (otal &eighted Score

Stron%>.0 to .0 to >.99

6 66 666

Mediu"2.0 to 2.99

6F 6F

Starbuc#s Stores?6nc.

F6

o!.0 to .99

F66 F666 64

@. SPM

CreatePro"otiona&Strate%iesSuch As

QStarbucksCo"boQ IrEeduce ,he

Price ByH0.?0 PerDrink InPopu&arDrinks

De$e&opNe!

Productsith BetterNutritiona&

Fa&ue

pand6nternationa&&yBy Ipenin%Additiona&

00 icenseEetai&ers

,hrou%h ointFentures

2e3 %actors &eight AS (AS AS (AS AS (AS


(he E%E (otal&eighted

Score

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O!!ortunities

@our"et co++ee consu"ption rose!ith the drinkerGs educationa& &e$e&.,hose !ho +inished co&&e%e bou%ht 0.2; < 0.>= 2 0.)

Another trend that has sur+aced in thepast decade has been consu"erre/uests +or or%anic co++ees* and"ore e"phasis !as p&aced byretai&ers on the %ro!in% en$iron"ento+ the beans

0. 2 0.2 < 0.< > 0.>

Consu"ers are beco"in% "ore hea&thconscious and are &ookin% +or s!eatsand snacks that are &o! in carbs su%ar and ca&orie

0.0) 0.0) < 0.>2 > 0.2 0.2; < 0.>=

(hreats ,he 200;-2009 %&oba& recessionne%ati$e&y a++ected the specia&tyco++ee industry

0. < 0. 0.>0

Eecent trends ha$e sho!n that so"eo+ the consu"in% pub&ic is concernedabout the nutritiona& $a&ue o+ suchproducts as those o++ered by thespecia&ty co++ee sector and ha$e e$encha&&en%ed the correctness o+ the&abe&in% and ca&orie in+or"ationposted on the products a$ai&ab&e atretai& out&ets.

0.09 < 0.>= 0.09 > 0.2;

Fo&ati&ity in the stocks and co++ee pricecou&d i"pact the purchasin% po!er +orthe buyers

0.0; --- --- --- --- --- ---

S"a&&er co"petitors are epandin%their "arkets as !e&& as their product&ine o++erin%s

0. 2 0.20 > 0.>0 < 0.

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Co"petitors such as McDona&dGs andDunkin Donuts are beco"in% stron%erin o++erin% specia&ty co++ee a&on% !ithother co"p&e"entary products

0. < 0. 0.>0 2 0.20

(O(A ).** +.) +.,, +./)

Strengths

Starbucks epects to addapproi"ate&y 20 net ne! stores to its%&oba& store base in +isca&

0.0= < 0.2< > 0.) 2 0.2

2009 by c&osin% approi"ate&y 20 net ne! &icensedstores internationa&&y

0.0; > 0.2 2 0.< < 0.2)

Capita& ependitures +or +isca& 2009are epected to re"ain unchan%ed* atapproi"ate&y H=00 "i&&ion.

0.0= --- --- --- --- --- ---

icensin% re$enues increasedpri"ari&y due to hi%her product sa&esand roya&ty re$enues as a resu&t o+openin% ) ne! &icensed retai& storesin the &ast 2 "onth

0.0; 0.0; > 0.2 < 0.2)

Stron% "arketin% and pro"otiona&ca"pai%n such as product p&ace"entin "a8or ,F series

0.09 < 0.>= > 0.2; 2 0.)

Starbucks a&so pro$ides e&ectrica&out&ets and* in so"e stores* !ire&essaccess* +or custo"ers !ho "i%htneed to use their MP> p&ayers or&aptop co"puters

0.0= --- --- --- --- --- ---

StarbucksG products can be +ound incon$enience stores* %rocery stores*depart"ent stores* "o$ie theaters*businesses* schoo&s* and e$enairports

0.0; 2 0.< < 0.2) > 0.2

Starbucks is rated by (ortune as oneo+ the best top 0 p&aces to !ork

0.0< --- --- --- --- --- ---

Starbucks a&so encoura%es the use o+its eb site !here custo"ers are ab&eto re%ister their StarbucksG cards*recei$e nutritiona& in+or"ation aboutStarbucksG products* shop on&ine*search +or careers* and "uch "ore

0.0= --- --- --- --- --- ---

&ea#nesses

0.2 2 0. !eeks endedMarch 29* 2009* do!n H?9.; "i&&ion*or 2. percent* co"pared !ith thesa"e period &ast year* pri"ari&y due tothe i"pact o+ a stron%er 3.S. do&&ar

re&ati$e to the British pound andCanadian do&&ar.

0.0< > 0.2 2 0.0) 0.0

David Sm13e Cn 13

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