Influencing Organisational Strategy: A Starbucks Report

This report provides a comprehensive analysis of Starbucks' organisational strategy, examining its approach to achieving long-term goals. It delves into Starbucks' core strategies, including rapid store expansion, product line development, and coffee purchasing practices. The report assesses Starbucks' financial performance using income statements, balance sheets, and key financial ratios, highlighting its ability to manage assets, liabilities, and generate profits. Furthermore, it explores the connection between Starbucks' strategies and its internal and external environments, utilizing a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. The report also examines Starbucks' operations in relation to stakeholder and shareholder value, and concludes by summarizing the key challenges and strategic responses. This report offers a detailed overview of Starbucks' business operations and strategic decision-making processes, providing valuable insights into the company's success and challenges.

Influencing
Organisational Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1.) Strategy of Starbucks..................................................................................................................1
2. Assessment of Starbucks strategies in relation to: ......................................................................4
a) Starbucks financial performance........................................................................................4
b) Connection of Starbucks strategy in position of internal and external environments........8
3. Starbucks operations in the value of stakeholder and shareholder..............................................9
4. Threats which are faced by Starbucks ......................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Organisational strategy means a plan to accomplish the set aim and objectives of firm in a
systematic and best possible manner. An organisational strategy is the total of actions that
company intents to take in order to achieve its long term goals. The project is based on strategies
which are followed by Starbucks. It presents the plan through assessing financial performance
and internal as well as external factors that affect the business environment of Starbucks
(Ackermann and Eden, 2011).
This report is totally based on the strategies which are adopted by the Starbucks for
operating its business in domestic as well as international territories. Further, it covers financial
performances of a company as well as coherence of the schemes that are related with internal and
external environment. At last, this assignment will highlight some threats which are faced by an
organisation during their business because of changes in different factors.
1.) Strategy of Starbucks
The word strategies is a abused term. As it is observed that, strategies are associated with
the success of business plan. The major aspects of Starbucks is to inspire and nurture the human
spirit not only to become an excellent coffee making company but also to combine customers at
an emotional level. As the major strategies of Starbucks was based on Schultz concepts of
Starbucks Experience. These are based on various factors which are explained underneath:
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Illustration 1: Common element of successful strategy
(Source: Himawan Nugroho, 2015)
It is categorised into four parts those are connected with the successful strategies. The
most effective part under this charts is effective implementation. There is requirement of long
term goals. The goal of Starbucks must be consistence as, it need to have certain target and plan
in order to achieve all those targets (Angus-Leppan, Metcalf and Benn, 2010). The other
elements in successful strategy is knowledge of competitive environment. It is associated with
the external atmosphere. Last element is “objective appraisal of resources”. As we know that
resources are scarce so, it need to be used in more effective manner.
Strategy framework of Starbucks:
It has been observed that Starbucks is a leading coffee industry which is associated with
delicious drinks and other products. It deals in product line which consist of beverages, pastries,
whole coffee beans and merchandise such as mug, CDs.
The strategies of Starbucks are categories into various segments. Such as:
Rapid store expansion strategies: In 1992, Starbucks developed an expansion strategy
that are based on focusing on domestic region with most pleasing demographic profile. It is
related with company's infrastructure to support and provide service to them. The company
global expansion was begun in 1995, which was based on providing licenses and to formulate a
joint venture with local company. Its expansion reached in different parts of Japan, Taiwan and
Singapore etc (Yarbrough and Yarbrough, 2014).
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Product line strategy: This strategy help the company to avail customers a wide range
of product choices. Special product promotion are done by the company to promote its main
product more in market so that maximum number of people can grab it. Starbucks cards and e
Gift are one of the great aspect to treat a friend to buying a coffee and drink for other customers
(Booth, 2015).
Coffee purchasing strategies: Searching out different varieties and sources that are best
for Starbucks standards. They are using fixed- price purchase loyalty and gaining coffee future
contracts. It help to contribute to sustainability of coffee producers and also help in conservation
of environment.
Current strategies: Starbucks strategy represent an organisation solution to such
business problems which are related with single business or develop a diversify set of business.
In order to attain maximum number of customers the company need to target a particular
segment of market. Each organization is working with the motive to gain maximum advantages
from its product and services. The Starbucks experiences combine with different component that
are associated with the business operation. In 2007-09, a downfall was seen because of slow
growth in sales and operating profits. In order to overcome these situation Schultz's strategies
are based on two initiatives. First one is related with retrenchment: Under this strategy Schultz's
decided to cancel all new opening of stores and stated to revised operational practices to
maintain and control its cost efficiency. The results of this decision has made huge impact which
laid down of 600 US stores and around 6000 jobs were lost. It help them to save operating costs
of $500 m. The up front decision taken by Schultz was made huge impact on individual level.
The second strategies was the reaffirmation of starbucks value and business principles, it consist
of starbucks experiences and reconnecting with its customers.
Essential strategy used by Starbucks:
 It support in decision making. It is basically considered as general leadership process
process with the aim of specific objectives to compelling the other aspects of leadership.
 Strategy is working as a coordinating device. It is one of the important aspect of decision
making challenges for member's of Starbucks. The statements which are related with
strategy planning deals in planning.
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 It provide a target to a company (Brewster and Hegewisch, 2017). IT help to provide
well specific experience and inspiration to people to use products and services of the
company (Bryson, 2011).
2. Assessment of Starbucks strategies in relation to:
a) Starbucks financial performance
In order to assess the financial performance of Starbucks, we need to go through with
different financial statements of the company. From financial statements investors can create
there valuable investment decision's. Income statements are consist of various cost and expenses
which are incurred by the company during a financial year.
Income statement
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From the above income statement Starbucks total sales during the current year is around
22,400m. The total gross profit in current year is 12,805m. The total operating expenses incurred
by the company 8,633m which is comparatively highest from past years. After meeting all its
outstanding debts and liabilities they are getting net income of 2,818 million in 2016 (Chen and
et. al., 2010). After making proper analysis, it has been founded that company has enough cash
to meet out its liabilities and pay-off its total debts. Other the other hand, net earning per share is
1.91 per share.
Balance sheet
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With the help of balance sheet statement of Starbucks the financial position of the
company is been analysed. As per this,
Current ratio: Current assets / Current liabilities
: 4,761 / 4,547 = 1.04
Quick ratio: Current assets – (stocks+ Prepaid expenses) / current liabilities
: 4761 – (1379 + 350) / 4547 = 0.67
Financial leverage: Total debts / Total equity
: 2.44
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Illustration 2: Starbucks sales growth rate
(Source: Starbucks Ends The Fiscal 2015 With Stronger Comparable Store Sales, 2015)
The above chart of Starbucks is based on quarterly growth rate from the past few year. It
has been seen that in 2015, the maximum increase in sale is 18%. The major idea of replicating
Italian coffee bars was to adopted to the American, English and French way of doing business.
As they are providing standing coffee to its customers. In addition, to this they are decided to
give Wi-Fi facilities in order to make that place more useful for social as well as work purpose.
It is one of the important tools for making strategies in terms of short and long term investment
plan. Current ratio of the company are 1.04, it means that company is able to balance its assets
and liabilities portions (Conrad and Poole, 2012). If it come out to be 2: 1 then, it must be more
ideal for the company. Financial leverage of the company is around 2.44 it means that debts of
the company are maximum and it remain volatile.
After analysing both the statements, it has been found that company is much more
balance and strong in terms of financial capabilities. The net profit generated by Starbucks are
enough to meet out its expenses and control extra costs. However, company do have the
sufficient cash to pay-off its debts and to gain competitive advantages from other. (De
Chernatony, 2010).
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b) Connection of Starbucks strategy in position of internal and external environments
It has been observed that company major focuses was on customers experience and its
attention to one aspect and that is what makes Starbucks one of the largest coffee house chain at
international level. They are managed to delivered wide range of customers satisfaction by
serving quality products, unique design that fits in every locations. It has been observed that the
way it remain constant with its strategies are remarkable. In response to the ever- changing
business environment. With implementing “Starbucks experience” in each stores and activities
without an over detailed process after process. The implementation of the plan are done through
the use of all resources those are developed over time. Such as appointment of well competent
employees for delivery good products and services. It is use to develop harmonious relationship
with the suppliers for perfect coffee.
In 2008, there are so many fear arise after bringing of Starbucks to is main belief. One of
the huge complaints is the dropping of coffee quality, through the bringing of instant coffee.
There is sight about the brand new opened chain in Romania where, separate from design that
fits according to every locations (Freeman, 2010). They are not socially progressive, employees
of company are badly treated, unprepared and rude with its behaviours. In order to analyse
company internal environment the strength and weakness are considereed to evaluted properly.
A SWOT valuation is an important tool to analyse company performance and its competitive
insufficiency that are exist in the market. While , external aspects are threats and opportunity of
the company.
Strength: Positive aspects of the company is associated with internal source and are
designated as most appropriate with Starbucks to reach its set objectives.
Weakness: Starbucks works are divided among operational areas. More expansive
products are been offered by company to its customers. The premium prices of these products are
weakness for it to achieve success in other developing countries.
Opportunity: Expanding product mix by venturing into the tea and juice product with
the smart acquisition strategies (MacIntosh and Doherty, 2010). The big opportunities, in terms
of total stores, Starbucks has opened almost 800 stores in greater china, 400 in the mainland. In
other countries, like India they have decided to capture market with joint venture with Tata
global Beverages to determine a chain of network as coffee house.
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Threats: These are concern with those areas which is prime concern in external
environment. It can affect the performance of Starbucks and the coffee industry because of the
strategies implemented by other competitors.
Being a leader in the this sectors, Starbucks is one of the steadfast product innovation,
ability to entry into new segment at global level. In previous year, the performance of Starbucks
has decrease, because of high intensity of competition and economic crisis (Internal and
External Factors Affecting Starbucks, 2017). But after facing all those difficulties they are still
dominant player in coffee sectors.
3. Starbucks operations in the value of stakeholder and shareholder
For any organisation shareholders and partners are one of the important parties which are
associated with the company directly or indirectly. There are some of the important tactics that a
company uses in order to create value to its customers, suppliers and other related parties.
Shareholders value can be increase through various ways:
 In relation to built-in value, shareholders interest is the Net present estimation of the line
of profits that fall to its owners those are discounted at the cost of belief.
 In general terms of market value, shareholders interest is the present stock market value
of the firm's total shares (Pache and Santos, 2010).
As long as the market values of stocks is efficient in evaluating the firms total returns,
present value of stocks at market valuations which seems to be perfect indicators of inherent
value. In 2011, Starbucks has approximately 22,000 shareholders on an records. The most
effective ways through which a company can communicated with its shareholders through
mailing. Like wise, stakeholders are indirectly linked to the cited company in order to generate
their values to the company. The shareholders value maximisation is aligned with long term
interest of shareholders. It is an important to have proper attention not wholly on company's
market share price (Selznick, 2014).
Employees: It has been found that, Starbucks is different from another. It has been
calculated that around 2 lacs employees are operating in delivering services to customers in
Starbucks. They are having high level of satisfaction from the company,because of health
insurance schemes.
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Customers: They are well known for the unique coffee with its quality of serving coffee
to its customers. As there names are written on it. It identified brand desire in the mind of
customers to enjoy a cup of coffee in Starbucks.
Franchisees: Around 47% of all company's stores are licensed stores, which are mostly
operated by franchisees. Franchisees pay some sort of loyalty commission to Starbucks for using
its logos, recipes and other advantages form its marketing campaigns.
4. Threats which are faced by Starbucks
Starbucks is one of the largest brand in all over the country. The company with growing
population of loyal customers who always wants best quality and branded products. The
company has a wide networking chain of suppliers. The firms has also acquired businesses as a
auxiliary, such as Seattle's best coffee and Teavana (Suppiah and, Singh-Sandhu, 2011). It will
affect the business growth and market position in comparison to other competitors. There are
some threats to Starbucks coffee operation's which are:
Competition from lower cost coffee sellers: Some of the company's like Mc Donald's and
Dunkin Donuts are contend against those products and services which are offered by Starbucks.
Many of the company are operating in the same business line. With the common policies which
are carried by the company.
Independent coffee house regulation: It has been found that company are growing with
a social movement in support of independent coffee house and hostile wide coffee house chains.
Such as Starbucks. In other to lower down the company business most of coffee serving industry
are operating as independent body (Van der Heijden, 2011). So that to gain maximum
competitive advantages in coming future.
Imitated: Some of the companies can reproduce the businesses. Many of the company
are tried to copy Starbucks policies and get succeeded in it. It is one of the important attitude and
behaviour of the other parties which are used by the company's.
In the above mentioned threat which are associated with development of Starbucks are
need to be utilised in more effective manner. So that more competitive advantages should be gain
from the market. The products making strategies are totally secrete which no any company
wants to share with any other (Watson, 2013).
To counter these threats Starbucks are using some of the techniques:
There are various ways through which a company can counter its threats. Some of them are:
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