Financial fluency for decision making PDF

Running head: FINANCIAL FLUENCY FOR DECISION-MAKING
Financial Fluency for Decision-Making
Name of the Student:
Name of the University:
Authors Note:

FINANCIAL FLUENCY FOR DECISION-MAKING
Table of Contents
Introduction:...............................................................................................................................3
1) The current business strategy analysis of Starbuck with appropriate theoretical framework3
2) The Value Chain Analysis:....................................................................................................4
3) The importance of the product life cycle of Starbucks:.......................................................10
Reference..................................................................................................................................13

FINANCIAL FLUENCY FOR DECISION-MAKING
Introduction:
Starbuck is one of most popular coffee companies in all across the globe. Originally
an American company Starbucks Corporation was founded in 1971 in Washington, United
States of America. The company over the years have used different business strategies as per
the requirements of the market place to achieve desired financial performance. The objective
of this document is to evaluate the business strategy, use product life cycle to improve the
quality of products and the value chain management of the company.
1) The current business strategy analysis of Starbuck with appropriate theoretical
framework
The business strategy of Starbucks is mainly used as diversity strategy but not based on the
cost leadership strategy. The differentiation in strategy is made to become the leader and new
standards are innovated. This is performed with the unique products as well as the services of
the company. The importance was placed on the need of the customers and the company’s
strategy was made around the perspective of customers. Whereas competitors of the company
have lacked such motivated efforts on the part of their management to satisfy the needs and
requirements of the customers. This is termed as the Starbucks strategy to achieve
organizational objectives of improving financial performance and achieve sustainable growth
in revenue. The customers with whom the values are shared provided with coffees of highest
quality to create a large and loyal customer base in all across the globe (Stewart et al., 2018).
The ever changing customer preference and demand have been given due importance by the
company and its management. Necessary changes in the products, i.e. coffee and other food
products of the company have been made on a regular basis to ensure that the customers are
happy and satisfied.
The price of special coffees offered by Starbucks within the coffee industry is not the primary
concern of competition within the rivals as the product differentiation of the company has

FINANCIAL FLUENCY FOR DECISION-MAKING
given the company extra leverage in pricing its products. The Starbucks entered into the
market with an aggressive expansion with the creation of a product that is different from the
stuff offered by others (Hintze et al., 2018). Another significant factor which has influenced
the industry attractiveness is the demographic maquila of the consumer base. The preferences
of the consumer shifted to specialty coffees from basic packaged coffees. The Starbuck
serves the highest quality of coffee. For ensuring this trend, the brewing system of the
Starbuck is continuously analysed and on a process of constant renovation. The company has
enhanced its image to be more environmental friendly. The developing positive sentiment of
the public has made every effort of becoming environmentally friendly (Tracy et al., 2017).
For encouraging the customers, the company has used porcelain cups which is offered to the
in-house drinkers where there is a discount offered to the customers on choosing porcelain
cups. Again, another important example of the Starbuck is that it has emotional bonding with
its customers. The customer feedback is encouraged by Starbuck for inducing the family like
feeling.
When President Trump had made an announcement to ban the entering of the refugees in US,
the company has announced a hiring of 10,000 refugees all over the world within the next
five years to wash off the accuse of political brainwashing. This is the strategic way of
attracting as well as retaining the employee engagement to get linked with the coffee chain.
The business strategy of the Starbuck is utilised in all the procedures as well as the
stakeholders beginning from the suppliers as well as the farmers. Difference has been made
in the path of source identification for example the coffee beans at the original locations.
They do rely on any secondary source. They also have opted for improving the life quality of
the farmers in the meantime. This helped them to get the good quality of the coffee beans.
Again, the employee of the Starbuck is treated in a different way form the others. The
employee is known as the partners (Katie & Knobf, 2015). The other most significant and

FINANCIAL FLUENCY FOR DECISION-MAKING
variant point is the responsibility of the environment, global and the community as like the
value that is shard which is mentioned by the CEO of the Starbuck.
2) The Value Chain Analysis:
The key aspects and the evaluation:
The value-chain analysis of the Starbucks is an analytical framework which helps in the
identification of the business actions where the value of the business is crated. This also acts
as a competitive advantage of the business.
The primary activity of the Starbuck:
Inbound logistics of the Starbuck:
In the year 2010, the inbound logistics as well as the supply chain of the Starbuck was
exposed to a theatrical reformation after the return of Howard Schultz to the role of the Chief
Executive Officer that is the CEO. The Starbuck’s reformation initiative about the inbound

FINANCIAL FLUENCY FOR DECISION-MAKING
logistics has involved the simplification of the management of the supply chain as well as the
formation of a unique global system of logistics (Hintze et al., 2018).
The unroasted coffee beans from the Arabica are transported towards US from Africa, Asia
and Latin America. It has also transported the coffee beans to Europe through sea. The green
coffee beans are purchased by the coffee chains from several regions that produces coffees
worldwide and are roasted by the customs (Tracy & Doucet, 2015). The delivery is processed
in six centres of regional distribution extending from 200,000 till 300,000 sq.ft in size. These
coffees are roasted first and then are packaged. After this the coffee are transported to the
middle distribution centres and are moved worldwide. In consort with coffees from regional
distribution centres, the centres of central distribution also obtain transfers from vendors for a
variety of products opening from coffee machines ending in napkins. The centres of Central
distribution perform more than 70,000 transfers in a week to 25085 stores of the Starbucks
positioned in 75 countries.
Recently, Starbucks is discovering the chances to produce its own coffee. Since the year 2013
Starbucks has its initial a private coffee firm of 240-hectar in PoasVolacno which is located
Costa Rica. Such a change in the tracking of products can upsurge the efficiency of new
product expansion creativities for the business. This ensures that the company will have a
fortuitous of examining with evolving new categories of coffee. Strategic relations with the
suppliers is a chief origin of value for inbound logistics of the Starbucks (Han et al., 2015).
The company functions eight farmer provision centres employed with agronomists as well as
the experts of sustainability who effort with the communities of coffee farming for the
promotion of the greatest performs in coffee manufacture which is intended for refining both
coffee quality as well as yields.
Starbuck Operations:

FINANCIAL FLUENCY FOR DECISION-MAKING
Over 75 countries the Starbuck operate its stores. The stores are comprised of two formats:
Company Operated Stores:
For any business, the company operated stores plays a vital role as the management is
enabled for observing shifts in the tastes of the consumers as well as the preferences. The also
collect information about the tendencies of the market as usual in a straight manner.
Licensed stores:
The licensed stores offer its customers more than that of the great coffee as well as the
handcrafted beverages as per the taste of the customer.
In the operation of the Starbuck, the chief source of the value is comprised of the stores
positioning in the locations of high-visibility as well as the locations of high-traffic.
Furthermore, the company can diverge the size as well as the stores format to discover them
in as well as nearby a variation of surroundings, comprising of the downtown as well as the
suburban retail centres, university campuses, office buildings and in excellent rural and the
locations which are off-highway (Hu et al., 2017).
The Starbuck experience is the place where the consumers are encouraged to spend quality
time alone as well as in the company which seems to be an additional point, where a value is
added by the company to its operations. The largest coffee retailer in the world value
operations with the providence of free Wi-Fi internet access within its stores (Han et al.,
2016).
Starbucks Outbound Logistics:
Customers are there to buying the products of Starbucks from the stores which are licensed
and are company-operated as well. Starbucks also applies the channels of online sales for
certain variety of products for example packaged coffee, drinkware, tea as well as the

FINANCIAL FLUENCY FOR DECISION-MAKING
equipment which are drink-related (Sunaga et al., 2016). Additionally, a very restricted range
of products from Starbucks for example 3-in-1 coffees that are available in sachets can be
bought from a set of foremost supermarket chains like the Tesco, Wal-Mart and Sainsbury’s.
Away from each other from the chains of supermarket that delivers restricted range of the
products of the company, the absenteeism of mediators like the resellers as well as the
wholesalers those are the chief source of Starbucks outbound logistics value. The company
bakes its products in-house. The products are sold on its individual company-operated as well
as licensed stores. Therefore, the margin is kept which otherwise would have moved to
wholesalers as well as the resellers (Noonan et al., 2017).
The sales and the marketing of Starbucks:
Customarily, the company Starbucks was not intense for marketing investment. For years,
cost-effective word-of mouth are the forms of marketing which is relied on top most
excellence of products as well as high standards of customer services has become the
foremost channel for endorsing the brand. Yet, the senior management is motivated to
revaluate the marketing strategy because of the rapid increasing level of competition. The
marketing budget of Starbucks has been steadily growing during the last five years (Maule &
Maule, 2016).
Maximum level of incorporation of social media as well as the technology within the sales
processes signifies solely about the rigid sources of Starbucks Coffee value. The company
has effectively applied mobile order as well as pay method for its products. These days, about
8% of all the orders which are placed are done with the help of mobile phones (Orquin &
Kurzban, 2016).
Starbucks Service:

FINANCIAL FLUENCY FOR DECISION-MAKING
Higher customer services appear as the fundamental basis of Starbuck competitive benefit
and this specific primary action enhances a massive value as the brand image. The baristas of
Starbucks are always graciously polite. They greet their steady customers with their names.
Sporadically, regular customer may achieve their regular coffee that is free of charge at the
pleasure of baristas that is counted as a good gesture. This act upsurges the discernment of
the quality of the service to a significant extent (English & Carstensen, 2015).
Additionally, amongst ever-intensifying confused nature about the lifestyle as well as the
cumulative rapidity of the establishment of customer services, the service at the Starbucks is
never hurried.
Identification of the aspects of the value chain that could possibly be improved to
enhance competitiveness in the future and suggestions about the improvements which is
to be implemented.
The company Starbuck has convinced with the business diversification. Apart from the coffee
it started concentrating on the consumer products good segment as well as food. It also
invented some novel and innovative stuffs like the substituting diary with almond milk, soy
milk etc. the store traffic of the Starbuck has considerably improved in the coming months
despite of the slowing of the industry of restaurant. All this subsidized towards dispersing
some of the adverse sentiment that had moulded round the company (Hafenbrädl et al.,
2016).
Product Innovation:
The competitive advantage of the Starbuck has been maintained always with the leader in the
innovation of the products. Recently the company has relaunched a product named as
Pumpkin spice latte. This launch has followed over 150,000 incremental appointments within

0 FINANCIAL FLUENCY FOR DECISION-MAKING
the first two days. This has resulted the share of Starbuck in the national QSR market that is
roughly increased through 30 basis points to 6.96%.
Capitalizing on the changing preferences of the consumer:
Starbucks has preserved its acceptance through time with its flexible nature. It can adapt the
changing tastes of the consumer and the preferences. Its suppleness is also a matter that is the
reason behind the succession of the company in the tough tea-drinking market of China.
Therefore, the innovation of almond milk in its provisions, along with the other non-dairy
substitutes for instance the coconut milk as well as the soy milk which has come as no
astonishment (Sutterer et al., 2016). The bend in the direction of the products that are dairy-
free can be understood with some research.
Focus on Food:
The sale of food now represents 20% of the revenue of the Starbucks and have been reliably
causal nearly a percentage fact to comps. Additionally, the company that each day fragment
is far beneath its level of saturation regarding the food offerings founds it. To abundantly
influence the gaining admiration of its complementary coffee as well as the food menu, the
company is now practising for creating partnerships and production of food that is one of its
chief driver for the future growth. Again, Starbucks has broadcasted its entrance into the
business of brunch.
No franchisee:
Though most restaurants are intent on whirling their model in the direction of one with 100%
franchisees, it is refused by the company Starbucks to franchise its stores. As per the
Starbucks, a franchise model is meant to permit the franchisor to farm out risk on its personal
capital that can lead to considerable higher limitations than a restaurant that is company
operated. Again, through improved store development speed, the company has enabled the

1 FINANCIAL FLUENCY FOR DECISION-MAKING
model to stay profitable as well as to develop (Triebel et al., 2016). Regardless of the
benefits, the strategy is opposed by the Starbucks as it trusts that the value of the company as
well as the culture are the things which continuously drives the company in the forward
direction, in advance of its peers.
3) The importance of the product life cycle of Starbucks:
The coffee products of the Starbucks are in the matured segment of product life cycle. In this
segment, the aim of the management is to preserve the sales as well as the revenues and
endure with the minimization of the cost. There has been a minimization in the cost with the
adoption of recyclable cups which are returned by the customers for a definite payback. It is
understood by the customers about the products which are offered by Starbucks. This is
observed that the customers are placing order for diverse blends of the ingredients of coffee
because the customers are better to understand (Han et al., 2016). Thus, it can be settled that
the customers have an improved understanding about the products. This assistance the
management to improve customer consummation because the requirement of the customers is
fulfilled by the management.
At this segment of the life cycle of the product, there is an additional comprehensive
knowledge. The rival companies retain monitoring on the strategies of each other, thus, at this
segment of a product, the passages of further companies are known which appears not to be
favourable for Starbucks as it upsurges competition with rival firms.
During the innovation of any new product the product life cycle plays a vital role. At the time
of the introduction in the market, there resides numerous things which is to be performed but
the most beginning and foremost one is letting everyone to know about the product of the
company. Informative promotion is required to be offered by the Starbuck to make the
customer understand about the product and its uses (Fumagalli et al., 2015). At this period,

2 FINANCIAL FLUENCY FOR DECISION-MAKING
money is required to be invested by the Starbucks on the location, the product and the
promotion. At this point of time the sales of the company is lowered as the customers have
less knowledge about the product. At the time of the market growth the company Starbucks
will begin to get revenues. As the company notices an increment in the sales, a competition is
visualised by them on the similar products. The rival companies will start to innovate similar
kinds of drinks and will try to introduce the products better than that of the Starbucks with
less price.
The competition will rise highly as well as the sale reduces. At this point of time, for
attracting the customers, persuasive promotions are to be performed for buying the Starbucks
coffees. They also arrange sessions to show the reason behind their coffees quality is higher
than that of the competitors. There is an advantage of the products of Starbuck rather than
that of the competitors because of its loyal customers (Jollant et al., 2016).

3 FINANCIAL FLUENCY FOR DECISION-MAKING
Reference
Burgio, F., Delazer, M., Meneghello, F., Pertl, M. T., Semenza, C., & Zamarian, L. (2018).
Cognitive training improves ratio processing and decision making in patients with
mild cognitive impairment. Journal of Alzheimer's Disease, (Preprint), 1-14.
English, T., & Carstensen, L. L. (2015). Does positivity operate when the stakes are high?
Health status and decision making among older adults. Psychology and aging, 30(2),
348.
Fumagalli, M., Marceglia, S., Cogiamanian, F., Ardolino, G., Picascia, M., Barbieri, S., ... &
Priori, A. (2015). Ethical safety of deep brain stimulation: A study on moral decision-
making in Parkinson's disease. Parkinsonism & related disorders, 21(7), 709-716.
Hafenbrädl, S., Waeger, D., Marewski, J. N., & Gigerenzer, G. (2016). Applied decision
making with fast-and-frugal heuristics. Journal of Applied Research in Memory and
Cognition, 5(2), 215-231.
Han, S. D., Boyle, P. A., Arfanakis, K., Fleischman, D., Yu, L., James, B. D., & Bennett, D.
A. (2016). Financial literacy is associated with white matter integrity in old
age. NeuroImage, 130, 223-229.
Han, S. D., Boyle, P. A., James, B. D., Yu, L., & Bennett, D. A. (2015). Mild cognitive
impairment is associated with poorer decision‐making in community‐based older
persons. Journal of the American Geriatrics Society, 63(4), 676-683.

4 FINANCIAL FLUENCY FOR DECISION-MAKING
Han, S. D., Boyle, P. A., James, B. D., Yu, L., Barnes, L. L., & Bennett, D. A. (2016).
Discrepancies between cognition and decision making in older adults. Aging clinical
and experimental research, 28(1), 99-108.
Hintze, J. M., Wells, C. S., Marcotte, A. M., & Solomon, B. G. (2018). Decision-making
accuracy of CBM progress-monitoring data. Journal of Psychoeducational
Assessment, 36(1), 74-81.
Hu, X., Uhle, F., Fliessbach, K., Wagner, M., Han, Y., Weber, B., & Jessen, F. (2017).
Reduced future-oriented decision making in individuals with subjective cognitive
decline: A functional MRI study. Alzheimer's & Dementia: Diagnosis, Assessment &
Disease Monitoring, 6, 222-231.
Jollant, F., Richard-Devantoy, S., Ding, Y., Turecki, G., Bechara, A., & Near, J. (2016).
Prefrontal inositol levels and implicit decision-making in healthy individuals and
depressed patients. European Neuropsychopharmacology, 26(8), 1255-1263.
Katie, S. L., & Knobf, M. T. (2015). Primary Breast Cancer Decision-making Among
Chinese American Women: Satisfaction, Regret. Nursing research, 64(5), 391-401.
Maule, A. J., & Maule, S. (2016). Aiding lay decision making using a cognitive competencies
approach. Frontiers in psychology, 6, 1884.
Noonan, M. P., Chau, B., Rushworth, M. F., & Fellows, L. K. (2017). Contrasting effects of
medial and lateral orbitofrontal cortex lesions on credit assignment and decision
making in humans. Journal of Neuroscience, 0692-17.
Orquin, J. L., & Kurzban, R. (2016). A meta-analysis of blood glucose effects on human
decision making. Psychological Bulletin, 142(5), 546.

5 FINANCIAL FLUENCY FOR DECISION-MAKING
Stewart, C. C., Yu, L., Wilson, R. S., Bennett, D. A., & Boyle, P. A. (2018). Correlates of
healthcare and financial decision making among older adults without
dementia. Health Psychology.
Sunaga, T., Park, J., & Spence, C. (2016). Effects of lightness‐location congruency on
consumers’ purchase decision‐making. Psychology & Marketing, 33(11), 934-950.
Sutterer, M. J., Bruss, J., Boes, A. D., Voss, M. W., Bechara, A., & Tranel, D. (2016).
Canceled connections: Lesion-derived network mapping helps explain differences in
performance on a complex decision-making task. Cortex, 78, 31-43.
Tracy, J. I., & Doucet, G. E. (2015). Resting-state functional connectivity in epilepsy:
growing relevance for clinical decision making. Current opinion in neurology, 28(2),
158-165.
Tracy, V. L., Basso, M. R., Marson, D. C., Combs, D. R., & Whiteside, D. M. (2017).
Capacity for financial decision making in multiple sclerosis. Journal of clinical and
experimental neuropsychology, 39(1), 46-57.
Triebel, K. L., Novack, T. A., Kennedy, R., Martin, R. C., Dreer, L. E., Raman, R., &
Marson, D. C. (2016). NEUROCOGNITIVE MODELS OF MEDICAL DECISION
MAKING CAPACITY IN TRAUMATIC BRAIN INJURY ACROSS INJURY
SEVERITY. The Journal of head trauma rehabilitation, 31(3), E49.