Starbucks case study

Presented by:

Kenza CharafMouna Gourram

Omar BouzoubaaIliass El AssalIsmail Slaoui

Outline• Vision & Mission• Proposed Mission Statement• Six principles of Starbucks• Objectives & Strategies• SWOT analysis• Matrices• EFE matrix• IFE matrix• SWOT matrix• Space matrix

• Outcomes of Space Matrix• Strategies• Financial Ratios

Vision & Mission

• The Vision statement :

“To inspire and nurture the human spirit— one person, one cup, and one neighbourhood at

a time”

• The mission of Starbucks:

“To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising

principles while we grow”

Proposed Mission Statement

• “Establish Starbucks as the foremost provider of the deluxe coffee in the world and also to be established as the most employee appreciated company even as maintaining our uncompromising principles as we grow mutually with hi-

tech advances”

six principles of Starbucks

• The six principles of Starbucks are stated as:• Provide a great work environment and having

engaged employees--another part of the Starbucks experience.• Bet on the diversification.• High quality of purchasing raw materials.• Roasting and fresh delivery of our coffee.• Creating an experience and develop satisfied

customers in order to earn customer loyalty.• Contribute positively to our communities and our

environment, and recognize that profitability is essential to our future success.

Objectives :

• Our coffee• Our partners

• Our customers• Our stores • Our neighbourhood• Our Shareholders

SWOT analysis

Strengths Weaknesses

High brand equity

High end coffees

Very good experience

Enormous number of locations

strong ethical values

Exclusive coffee products

High prices

Offer one flavor

Acting just on the coffee industry

Coffee being a product of

dependency

Opportunities Threats

Coffee market growing worldwide

Product diversification to food and

nonfood items

Selling to other companies

Develop international business

Diversifying their business

More competitors focusing on coffee

products (McDonalds, dunkin

donuts…)

Supplier’s dependency and rising in

the cost of coffee and dairy

products.

Financial crisis and recession

Financial Ratios2008 2007 2006

Current Ratio 0.8 0.787 0.79

Quick Ratio 0.48 0.466 0.461

Total Liabilities to total assets

0.56 0.57 0.496

Profit Margin 3% 7.1% 7.2%

Equity Ratio 0.44 0.43 0.5

Debt to Equity 1.28 1.34 0.98

Inventory Turnover

14.98 13.6 12.23

Sales Growth 10.3% 20.8% NA

Net Income -53% 19.2% NA

Matrices

EFE matrix

Key External Factors Weight Rating Weighted Score

Opportunities

Product diversification to food and smoothies 0.2 4 0.8Selling to other companies 0.06 2 0.12Develop international business 0.1 4 0.4Diversifying their business 0.13 2 0.26

ThreatsCoffee Products (Macdonald's, Dunkin Donuts…) 0.24 4 0.96Volatile business environment 0.08 3 0.24Financial crisis and recession 0.19 2 0.38

Total 1 3.16

IFE matrix• See the hard copy

SWOT matrix• See the hard copy

Space Matrix

X axis

Competitive position (CP) --2 Product quality --3 Market capital share --4 Technological know how --2 Control over distributors Average=2.75

Industry position (IP) +6 Profit potential+5 Growth potential+5 Financial stability+5 ease of entry into market Average= 5.25

Yaxis

Financial position (FP) +4 Cash flow from operations+5 Liquidity+5 Leverage+6 Working Capital+4 Cash Flow from Operations Average= 4.8 X axis= 2.50

Stability position (SP) --4 Price range competing products--2 Barriers to entry--2 Competitive pressure--5 Barriers to exit--3 Risk involved in Business Average= 3.2Y axis= 1.6

Outcomes of Space Matrix• Aggressive Profiles:

The space Matrix shows aggressive response of Starbucks. So, the company has to follow these strategies:

• Horizontal integration, • Market penetration• Market development