Strategic management analysis of Starbucks CoffeeFor assignment help please contact at help@hndassignmenthelp.co.uk and hndassignmenthelp@gmail.com

CoffeeThe 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 orientedmanagerial perspective that is outwardly focused, forward thinking and performance based.Strategic managers identify long-range targets, scan their operating environment, evaluate theirorganization structures and resources, match these to the challenges they face, identifystakeholders and build alliances, prioritize and plan actions and make adjustments to fulfillperformance objectives over time. This module will provide detailed explanation on how thebalancing of strategic management's outward, inward and forward looking functions would beused to develop a vision and strategies to move forward. The five key facets of strategicmanagement namely, goal setting, strategy analysis, strategy formation, strategyimplementation, and strategy monitoring will be introduced in stages. These are the integral

elements that, when applied together, would distinguish strategic management from lesscomprehensive approaches, such as operational management or long-term planning.In 1971 Starbucks opened operations in Seattle's Pike Place Markets with the future aim ofproviding coffee to a number of restaurants and surrounding bars. With the recruitment ofHoward 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 aftervisiting Italy tried to adapt the same principles in order to a strong bar culture. Schultz thenutilized Starbucks ability to provide quality coffee beans and opened up a new store called IlGiornale, which brewed coffee from these particular beans.* In 1987, Giornale had decided to take over the assets of Starbucks and also, further changedits name to Starbucks Corporation. By the end of the year, Starbucks had increased the numberof 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 headquartersand an increase in resources with the opening of a new roasting plant. Relationships and otherventures also took off during the early nineties as the company looked to developmentorganizations to further its progress.*In 1995, the company really established its name with the opening of the 676th store as wellas increasing the products in store with the addition of compact discs a result of a previouslypopular 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 withSazaby 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 ofproviding coffee to a number of restaurants and surrounding bars. With the recruitment ofHoward Schultz who led the marketing and retail efforts of Starbucks. In 1982, the company took a change in direction through the views of Schultz, whoafter 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 anew 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, furtherchanged its name to Starbucks Corporation. By the end of the year, Starbucks hadincreased the number of stores to 17 and furthered its location span by entering Chicagoand Vancouver.* In 1990, the company took further steps forward with expansion of the Seattle headquartersand an increase in resources with the opening of a new roasting plant. Relationships and otherventures also took off during the early nineties as the company looked to developmentorganizations to further its progress.*In 1995, the company really established its name with the opening of the 676th store as wellas increasing the products in store with the addition of compact discs a result of a previouslypopular 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 withSazaby Inc., which pushed through the development of coffee houses in Japan.Current situationThe current international situation for Starbucks seems to be an emerging part of their businessand the reorganization of this is proved by their aim to become a leading global companythrough making a difference in people's lives all around the world. This goal is quite close tobeing achieved as proved the Starbucks current locations in international markets and thesuccessfulness of these ventures. The current countries in which Starbucks are located in are:Australia, Bahrain, Canada, Hong Kong, Israel, Japan, Kuwait, Lebanon, Malaysia, NewZealand, Oman, Peoples Republic of China, Philippines, Qatar, Saudi Arabia, Singapore, SouthKorea, Switzerland, Taiwan, Thailand, United Arab Emirates, Egypt, United Kingdom, and theUnited States.Current performanceOverall, 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 toshare a partnership. This is all positive news for the company because it provides a strong basisfor future development of international markets, which further strengthens the mission tobecome one of the leading specialty coffee retailers in the world.However, the net revenuesincreased 3 percent to $2.5 billion for the fourth quarter of 2008, compared to $2.4 billion forthe fourth quarter of 2007. For the 13-week period ended September 28, 2008, Starbucksreported net income of $5.4 million, which included $105.1 million of restructuring chargesand other transformation strategy costs. Net income was $158.5 million for the same period ayear ago. The company actions announced in July of 2008 to close approximately 600company-operated stores in the U.S. and 61 company-operated stores in Australia, and reduceapproximately 1,000 open and filled positions within its leadership structure and non-storeorganization.Strategic posture1- mission"To inspire and nurture the human spirit- one person, one cup, and one neighborhood at atime""The mission of Starbucks is to establish Starbucks as the premier purveyor of the finest coffeein 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 aimedto achieve and a set of principles, which governed the decision making process. The sixprinciples of Starbucks are stated as:1-Provide a great work environment and treat each other withrespect and dignity.2-Embrace diversity as an essential component in the way wedo 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 thatprofitability is essential to our future success.Application of these principles can be used as a guideline for all employees from managers toworkers to aim to achieve the company's goals, while maintaining a certain type ofstandard. However, the net revenues increased 3 percent to $2.5 billion for the fourth quarterof 2008, compared to $2.4 billion for the fourth quarter of 2007. For the 13-week period endedSeptember 28, 2008, Starbucks reported net income of $5.4 million, which included $105.1million 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 2008to close approximately 600 company-operated stores in the U.S. and 61 company-operatedstores in Australia, and reduce approximately 1,000 open and filled positions within itsleadership structure and non-store organization. This mission statement along with the set ofguidelines provides a focus for employees as they make strategic decisions. It not only supportsthe employees, but supports the customers as well, making a note that they should be satisfiedall of the time. The mission shows alignment with the vision by stating how the company plansto reach the broad goals set by the vision statement. Another supporting sentence in the missionstatement 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 usesthe best available resources to give it a recognized and respected name.Objectives & Strategies:Here are the following objectives ofStarbucks:Our CoffeeIt has always been, and will always be, about quality. We're passionate about ethically sourcingthe finest coffee beans, roasting them with great care, and improving the lives of people whogrow them. We care deeply about all of this; our work is never done.Our PartnersWe're called partners, because it's not just a job, it's our passion. Together, we embracediversity to create a place where each of us can be ourselves. We always treat each other withrespect and dignity. And we hold each other to that standard.Our CustomersWhen 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 madebeverage, but our work goes far beyond that. It's really about human connection.

Our StoresWhen our customers feel this sense of belonging, our stores become a haven, a break from theworries outside, a place where you can meet with friends. It's about enjoyment at the speed oflife-sometimes slow and savored, sometimes faster. Always full of humanity.Our NeighborhoodEvery store is part of a community, and we take our responsibility to be good neighborsseriously. We want to be invited in wherever we do business. We can be a force for positiveaction- 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 islooking to Starbucks to set the new standard, yet again. We will lead.Our ShareholdersWe know that as we deliver in each of these areas, we enjoy the kind of success that rewardsour 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 andnice existence nearly to everyone.Financial AnalysisThe general financial performance for Starbucks in 2008 was declining from the previous yearsdramatically. The following analysis will show this fact.Investment Returns % Company IndustryReturn On equity 12.6 25.8Return On Assets 5.6 13.2Both the ROE and ROA are lower than the industry's average, which means that the companyis not using both the equity and their assets properly to increase their revenue.Profit margins % Company IndustryGross Margin 16 27Pre-Tax Margin 4.4 13.2Net Profit Margin 3.03 8.5Starbucks 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 IndustryDebt / Quity Ratio 0.4 0.46Current Ratio 0.8 1Quick Ratio 0.48 0.7Starbucks generally manages their debs and liabilities wisely, and this considers a financialstrength for the company.Year 2008 2007 2006 2005sales 10383000 9411497 7786942 6369300Net income 315500 672638 564259 494467Corporate governanceBoard of directorsAs part of Starbucks mission they are committed to maintain their uncompromising principleswhile they grow. In this regard, their Board of Directors has adopted governance principles andcommittee charters to lead Starbucks governance practices. Currently, the board has 9directors, a substantial majority of whom meet all of the independence requirements ofNASDAQ and the U.S. Securities and Exchange Commission. Of the nine members ofStarbucks board, one is Latino, two are African American (one of which is female), and oneother female also serves on the board. Starbucks president and CEO Howard Schultz chair theboard.In Starbucks there are well-defined criteria for the selection of new board members, foremostbeing a clear demonstration of their own personal integrity and ethics. Board diversity issought in terms of members' personal and professional backgrounds, gender, race, ethnicity orother differentiating characteristics, enabling a wider range of opinions and perspectives to beconsidered. This criterias of selection affected the company in a very good way that gave it theopportunity 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 havespecific charters: Audit and Compliance,Compensation and Management Development andNominating and Corporate Governance. In November 2007, the board amended thecompany's bylaws to include majority voting to allow shareholders to play a more meaningfulrole 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 doesnot receive a majority of the votes cast will end on the earliest of either: (1) 90 days after thedate election results are certified; (2) the date the director resigns; or (3) the date the board ofdirectors fills the position. This change demonstrates Starbucks ongoing commitment to strongcorporate governance practices.Shareholders and partners (employees) can provide recommendations and feedback to theboard through the Business Conduct Helpline and the Audit line. In addition, writtencorrespondence can be sent to the board, an individual director or to any of Starbucksindependent board committees.Committee charters, governance principles, director nominations policy (including criteria forboard membership) and profiles on each board member are available in the corporategovernance section of Starbucks.com.Starbucks formed a Policy Governance Council in fiscal 2006 to oversee and approvegovernance tools at the global enterprise level, and to ensure they are well-defined, consistentwith each other, current, stored for easy retrieval, and effectively communicated to partners.The Council is comprised of company leaders who represent multiple business units andfunctions, and is supported by Starbucks Policy Office and staff.Starbucks stakeholders includepartners (employees), customers, suppliers, farmers, shareholders, governments, communitymembers, environmental groups, activists and many others. The company engaged them to beable to understand their concerns and gain their input on topics of mutual importance.External Environment:Opportunities and ThreatsStarbucks international operation was one of the major aspects of their success. , in the mid1990s, 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 toventure abroad. Starbucks international presence is now in more than 25 countries and theUnited States of America. This presence is formed in three modes in entry that are Jointventure, licensing and wholly ownedsubsidiaries. This became a burden on the mother company in a later stage. That those types ofentry moods need a lot of training, supervising, management assistance and technology transferfor 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 productinnovation. 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 smallinitiated base. That along with serving coffee, Starbucks also sold merchandise. In 1995, itstarted selling CDs of its famous in-house music program. It also entered into alliances withvarious players such as Canadian Airlines, United Air Lines, Starwood Hotels, and Barnes &Noble, Inc., to serve Starbucks coffee.Michael Porter's five forcesMichael 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 ofcustomers, and the intensity of competition within the industry. A firm's strategic decisions torespond to these five forces are a source of risk also.The company is facing a real threat of substitution from many other companies that producingthe same product that is satisfying the same need. This is in its domestic market and even in theinternational market specially Europe and Middle East.Also Starbucks is facing a real problem of rival competition due to its uncompetitive price allover 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 dealwith a 51% women or minority owned suppliers. Also they are not dealing with suppliers whodon't follow the same environmental ethics that are for Starbucks. This may lead themto lose a good opportunity or deal with a supplier that they will not deal with him. Also dealingwith small suppliers instead of dealing with limited number of big power full suppliers is notgiving them real good deals for facilities and prices.Societal EnvironmentEconomicsEconomic factors are an important aspects that concern the nature and direction of theeconomy in which a firm operates Starbucks also faced criticism from Non GovernmentalOrganizations(NGOs) that urged the company to acquire certified coffee beans,ensuring that those coffeebeans 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 worldwidefinancial crisis may affect the company's results badly.TechnologicalStarbucks is continuously searching for ways to better a customers'experience. With theintroduction of the Starbucks Card for example,the Company has created the opportunity to improve customer service, shorten lines and makea customer's visit at Starbucks quicker and more convenient. Most if not all Starbucks locationhas WI-FI for consumer needs.Political/LegalIncreasing tensions between the United States and the rest of the world, the businessenvironment, especially in the Middle East and Southeast Asia, was becoming increasinglyvolatile. After U.S. declaration of war on Iraq in early 2003 matters became worse for thecompany. This created serious problems for Starbucks. In July 2002, Arab students called for aboycott of American goods and services, due to the alleged close relationship between theUnited States and Israel. The boycott targeted U.S. companies including Starbucks, BurgerKing, Coca-Cola and Estee Lauder 2-In addition to these incidents, Starbucks topped the list ofcompanies to be boycotted due to Schultz's alleged closeness to the Jewish community. Tillnow in the Arab countries & Middle East a lot of rumors that Starbucks is sponsoring theJewish community against Palestiniancrises. 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 storemanagers 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 thesettlement in order to take care of all of the plaintiffs' claims without having to get involved inany protractedlitigation.Starbucks only imports all their coffee beans, so possible threats could include a change inimport laws. A change in the status quo as far as imports go could greatly affect numerousareas of production for the company. For example, if it costs more to import or the process ismade more difficult the result could ultimately be a change in price, which would affect thelevel of consumption for Starbucks coffees.Social/CulturalEnvironmental 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 companyhas installed a list of principles that further outline the company's willingness to make sure thatits 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 toshare in our mission.Those can only be seen as a positive for the image of the company and shows that they arewilling to utilize their resources in order to more than satisfy requirements.Task EnvironmentNot only this but also, Starbucks organizing activities such as neighborhood clean-ups andwalk-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 thecompany to purchase from those other businesses (suppliers) who follow the sameenvironmental strategy as Starbucks.This may push the company to lose an opportunity of good deal, because the supplier doesn'tfollow the company environmental policiesFinally, to integrate these policies to newemployees, Starbucks has employed the services of a few partners which congregate togetherto create a "Green Team," which installs the environmental views into trainees as well ascoming up with inventive ways of helping the environment.Summary of External factors TOHowever, it was found that the success of Starbucks was due to its profitable domesticoperations. It was reported that most of Starbucks' international operations were running intolosses. In May 2003, Starbucks' Japanese operations reported a loss of $3.9 million (Japanconstituted the largest market for the company outside the United States), and the companyalso 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 observedthat the volatile international business environment made it difficult for the company toeffectively manage its international operations.Internal Environment: Strengths and WeaknessesCorporate StructureStarbuck has no formal organization chart and does not work with hierarchy structure. Itconsists of to main departments, functional department consists of marketing, supply chain,operations, financeand human resources, and cross functional teams, consisting of local store marketing andmarketing campaigns. The decision making process in Starbucks is bottom - up process, wherethe employees are empowered even to take decisions without referring back to themanagement. There is a conflict in the corporate structure where some employees are reportingto two different divisions which in some cases causing confusion and over lapping.Corporate cultureThe Chairman of Starbucks, Schultz decided to treat employees as family, and called thempartners. Both full time and part time employees could benefit from training and healthinsurance. Starbuckspaid 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 suchsuccessful company, and this created good culture. Schultz decided also to be open and honestwith his employees, and let them share in the decision making process. He gave extensivetraining to employees especially barista employees to give careful attention to customers.Environment was important to Starbucks. Using this concept Starbucks gave good attention totheir suppliers by helping them technically and financially as part of their corporate socialresponsibility. Also it encouraged all partners to share in the company's mission. Starbuckshas deep tacit knowledge, which is difficult to be imitated by competition.Functional strategiesMarketingThe main marketing strategy and position for Starbucks is for customers to consider it as theirplace after home and work, this will guarantee customers visiting the shops several times.However it alsocustomizes 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 notgenerally 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 fortheir high revenues, which could be risky from competition. However it seems to be the marketleader when it comes to new products and ideas.Starbucks has found more success advertising on a local level rather than to the nation as awhole. The Company advertises a lot through print mediums, as Starbucks' target market tendsto 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 asenvironmentally friendly and focus on its corporate social responsibility, one example isbuying Ethos-Water Company and they also plan to donate $ 10 million to help countries underdeveloped lacking clean water.R&DThe R&D role in Starbucks is to make a R&D mix and mainly consists of the followingactivities:Coffee ScienceNew TechnologyEquipment TechnologyProduct DevelopmentMenu DevelopmentCoffee Quality AssuranceSensory ScienceThe introduction of the Starbucks Card for example, Starbucks has created the opportunity toimprove customer service, shorten lines and make a customer's visit at Starbucks quicker andmore 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 andequipment.Operations and logisticsThe main operation for Starbucks divided into local operation in USA and internationaloperation. Starbucks depended mainly on their employees to manage operation, that's why theyfocused on training employees as they are the main asset in the company. They are managingall stores in USA, however, they are in the international operation sometimes manage theirstore, 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 withinternational small suppliers. Starbucks made good deals with their suppliers to supply coffeewith fixed prices rather than using the Fair Trade Coffee.They mainly use non-smoking restrictions in their stores, however in some countries becauseof culture conflicts they had to have either smoking rooms or smoke areas in the air. One of themain 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 ResourcesStarbucks paid considerable attention to the kind of people it recruited. So the company hiredpeople for qualities like adaptability, dependability and the ability to work in a team. Starbuckswas one of the few retail companies to invest considerably in employee training and providecomprehensive training to all classes of employees, including part-timers Company depends ontheir personnel in their high revenue, which is very risky as if they lost some of the keypersons. Early 2000s, the company began to show signs that its generous policies and highhuman resource costs were reflecting on its financial strength. Although the company did notreveal the amount it spent on employees, it said that it spent more on them than it did onadvertising While the industry turnover rate is about 200 percent, Starbucks maintains aturnover rate of only 60 percent. Due to this low turnover, Starbucks has lowered their trainingtime 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 SystemStarbucks is following this major trend of moving towards multimedia Direct MarketingSolutions 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 servicessuch as the Starbucks "Taste Matcher" tool, which interactively recommendsspecifics coffee roasts and blends bases on customer's preferences. Moreover in late November2001 Starbucks Debit card was introduced in US. Its introduction has increased customerloyalty as well as attracted new customers to Starbucks stores. Most if not all Starbuckslocations have WI-FI for consumer needs. The MIS department affects Starbucks partnerswhenever they open a store cash register, use computer software or send voice mail messages.The IS department in Starbucks focuses mainly on:Business Applications DevelopmentProduction ServicesRetail Business SystemsStrategic ArchitectureReviewing mission and objectiveMission Statement: Starbucks should keep their mission statement as it reflects the currentsituation as well, expect for changing the product scope to include products more than thecoffee for good diversification.Objectives: The Company can keep the same current objects as it serves the current situation ofthe company. Just one object should be added which is:Invest in other product for either related or unrelated business to maintain the success.Review strategiesCorporate StrategyThe corporate strategy should continue in Retrenchment as they started in July 2008 closestores to reach 600 by the end of 2009. One more strategy should be added to Diversify inrelated business tosecure the company, as they depend only on coffee products.Business strategyDomestic Business Unit: Should focus on more differentiation to face the hard localcompetition.International Business Unit: Should focus on reducing costs to reduce prices; this will help inentering new low cost markets and gain more profits. Also continue with alliances in countriesto reduce management focus and concentrate more on the Domestic Market.Functional StrategiesMarketingStarbuck 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 marketsand maintain current customers.Research and DevelopmentStarbuck can continue in their R&D strategy by being the Technological leader in the coffeeretail business.Operation StrategyStarbuck can continue in the current strategy for depending on employees in management andto make good deals with suppliers to reduce costs.Human ResourcesThe company should continue in developing and motivating employees as they are their bestassets.Information SystemThe company should continue in developing their Information System to help the companyincreasing profitability.ImplementationThe 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 productsgroupstructure.They should reduce cross functional tasks to reduce confusion between employees and increaseefficiency.Depend on the outsiders of their board to get potential new investments in new businesses.Evaluation and ControlStarbucks should evaluate their performance quarterly in 2009 to avoid any accumulativelosses and to take quick corrective actions.The best evaluation method for Starbucks will befinancial 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.