Comprehensive Strategic Analysis of Starbucks Corporation

This report provides a comprehensive strategic analysis of Starbucks Corporation. It begins with an introduction, followed by an examination of Starbucks' existing mission, vision, objectives, and strategies. The analysis includes a Porter Five Forces analysis to assess external opportunities and threats, and the construction of a Competitive Profile Matrix (CPM) and External Factor Evaluation (EFE) Matrix. The report also identifies internal strengths and weaknesses through an Internal Factor Evaluation (IFE) Matrix, and a SWOT matrix. Various strategic tools are used to evaluate Starbucks' strategic position, including the SPACE Matrix, BCG Matrix, IE Matrix, Grand Strategy Matrix, and Quantitative Strategic Planning Matrix (QSPM). Based on these analyses, the report recommends specific strategies, long-term objectives, and outlines the implementation of recommendations, including annual objectives, policies, and procedures for strategy review and evaluation. The report concludes with a detailed analysis of the company's strategic position and provides recommendations for future growth and market share enhancement.

Table of Contents
1.1 Introduction......................................................................................................................3
1.2 Existing Mission, Vision, Objectives and Strategies of Starbucks..................................3
1.3 Vision and Mission Statement for Starbucks:..................................................................4
1.4 Identify the organization’s external opportunities and threats.........................................4
1.4.1 Porter Five Forces Analysis......................................................................................4
1.5 Construct a competitive Profile Matrix (cPM).................................................................5
1.6 Construct an external Factor evaluation (eFe) Matrix.....................................................5
1.7 Identify the organization’s internal strengths and weaknesses........................................6
1.8 Construct an Internal Factor evaluation (iFe) Matrix......................................................6
1.9 SWOT Matrix...................................................................................................................6
1.10 Strategic Position and action evaluation (SPace) Matrix...............................................7
1.11 Boston consulting group (BCG) Matrix.........................................................................7
1.12 internal-external (ie) Matrix...........................................................................................7
1.13 Grand Strategy Matrix....................................................................................................8
1.14 Quantitative Strategic Planning Matrix (QSPM)...........................................................8
1.15 Recommend specific strategies and long-term objectives.............................................8
1.16 Implementation of Recommendations...........................................................................9
1.17 Annual Objectives and Policies.....................................................................................9
1.18 Procedures for strategy review and evaluation..............................................................9
Competitive profiling Matrix...........................................................................................11
Internal Factors Analysis (IFE)........................................................................................12

1.1 Introduction
Starbucks is operating at multinational level as the largest coffee chain services with more
than 22,000 stores in different countries of world.
1.2 Existing Mission, Vision, Objectives and Strategies of Starbucks
Starbucks have following mission statement: “To inspire and nurture the human spirit with
one person, one cup and one neighborhood at a time”.
The vision of Starbucks is to bring diversification in the operations in different countries of
the world and bring the consistency in the services to realize each Starbucks store as the part
of Starbucks community. Starbucks vision is to bring social conscience along with profit.
The Organizational objective in 2015 is to diversify Starbucks at multinational level, which
states that, “Starbucks is brand having recognized services and positive brand equity. To meet
this objective, the company have developed the plan to open stores in the US and other
developed countries such as China. Starbucks also have an objective to introduce new taste of
coffee and other product range. It also aims to bring consistency in the operations across all
the licensed and company operated stores. It also has a global responsibility strategy that
aims to bring positive image of the company by sourcing a high ethically sourced coffee with
a high quality.”
Starbucks utilizes range of strategies to meet the organizational objectives and customer
demands. It has the strategy to actively expanding business Starbucks Corporation and the
second is Global Responsibility strategy. Starbucks have developed its ethical standards
related to coffee extracting, sourcing and processing. Another strategy of the Starbucks is to
expand its business at multinational level, enhance the profit by increasing the sales and meet
the organizational objectives.

1.3 Vision and Mission Statement for Starbucks:
The mission statement is, “We aim to bring the highest customer satisfaction by providing
consistency in the ethically obtained coffee.” The organizational vision is to maximize the
customer satisfaction with the positive experience in all the Starbucks coffee chain service
providers.
1.4 Identify the organization’s external opportunities and threats
1.4.1 Porter Five Forces Analysis
This model provides the opportunities and threats for the Starbucks with the relevance to
external environment.
1.4.1.1 Threat of New Entrants
Starbucks have diversified itself and it have more than 22,000 stores around the globe in
2015. Company have a high brand equity and brand loyalty that determines that Starbucks
have no threat of new entrants in the Market. Starbucks have innovative marketing strategies
that is the reason of success of Starbucks.
1.4.1.2 Bargaining power of Buyers
Starbucks enjoys a high loyalty of the customers. It has positioned itself as the premium
coffee service provider that differentiates the product from the competitors. As the company
is providing its services in a consistent approach and enjoy the customer loyalty, therefore,
customers have low bargaining power for the Starbucks products.
1.4.1.3 Bargaining power of Suppliers
Starbucks have diversified network of Suppliers and always focused on quality coffee beans.
In the past company have faced challenges related to Supply chain as many suppliers have
provided a lower quality of coffee beans that resulted in loss. To overcome this issue,

Starbucks have defined the Supply chain and production rules and monitoring services.
Overall, a moderate threat of Suppliers exists in the market for Starbucks.
1.4.1.4 Threat of Substitutes
Starbucks have a high threat to substitute as the large number of coffee service providers are
available in the market. No doubt, Starbucks enjoys a high customer loyalty but the
Competitors such as, Dutch Bros and Peet’s coffee can bring a challenge for the company. In
the retail sector, Nestle Nescafe is also a challenge for Starbucks.
1.4.1.5 Competitive Rivalry
Starbucks have increased rivals for the Coffee services. Starbucks offers its services in the
coffee and bakery sector that is largely accessible for the people. It determines the moderate
competitive rivalry of Starbucks.
1.5 Construct a competitive Profile Matrix (cPM)
The CPM determines the strengths and weakness of the organization and provides the
comparison to the other major competitors in the same industry. Main competitor of
Starbucks is Peet’s Coffee, Dunkin Donut and The Coffee beans & Tea Leaf. Based on the
analysis of Starbucks in 2015, 3.8 is the CPM value of Starbucks whereas, Peet coffee have
3.0, Dunkin Donalds have 3.2. Based on this CPM, the Starbucks has a high customer ratio
and competitiveness compared to the competitors.
1.6 Construct an external Factor evaluation (eFe) Matrix
The external opportunities and threats are evaluated in external factor evaluation matrix
(eFe). The opportunities and threats of Starbucks have been provided in the appendix and
these threats have been rated which represents each factor’s weightage score. After the

careful evaluation, a total weightage score is obtained i.e. EFE. The finalized EFE score is
2.5.
1.7 Identify the organization’s internal strengths and weaknesses
This section determines the weaknesses and strength of Starbucks. Starbucks enjoys a high
customer loyalty and the positive brand equity that determines the strength of company. It
utilizes the range of strategies to strengthen its brand identity. Starbucks is considered as the
wonders of American entrepreneurial capitalism with $18 billion worth in 2015. It offers
premium coffee services with the luxurious environment that results in high customer loyalty
and lower bargaining power of customers. Starbucks have exceptional customer services that
helped to achieve the excellence in the market.
Conversely, Starbucks have a weakness that it targets only premium customers, and the
competitors are capturing the market share by offering their services in economical and
affordable rates. The competitors are offering their services in the other product sectors also
which brings a challenge for the company to compete with the customer demands. SWOT
matrix is provided in appendix which shows that Starbucks can turn the weakness into
opportunities by competing with different strategies.
1.8 Construct an Internal Factor evaluation (iFe) Matrix
The internal weaknesses and strengths have been analyzed which provides the overview of
the challenges faced by Starbucks. IFE matrix evaluates each risk by assigning a weight to
every challenge and evaluates it with the total weight score. The average of these scores
describes the extent to which Starbucks responds to the internal challenges. A total IFE
matrix shows the score i.e. 2.6.
1.9 SWOT Matrix

SWOT matrix determines the strength, weakness, opportunities and the threat for the business
environment. Starbucks enjoys a high loyalty rate and the customer satisfaction because of
consistency in the services. However, the company is facing challenges from the competitors
as they are capturing the market share in the emerging economies that pose to be a threat for
Starbucks. Starbucks can turn this threat and use the opportunity to expand its business in
China and other Asian countries that will help it to grow and achieve the market share.
SWOT Matrix have been provided in the appendix.
1.10 Strategic Position and action evaluation (SPace) Matrix
A Space matrix is classified in four quadrants i.e. Conservative, aggressive, competitive and
defensive. X-axis score have been evaluated the score of 2.6, and the y-axis has scored 0.8. It
allocates the resources in the aggressive quadrant and the Starbucks should utilize market
penetration strategy, Diversification, Market and product development that will help the
company to boost the market share.
1.11 Boston consulting group (BCG) Matrix
BCG matrix has classified the product into four quadrants i.e. Cash cow, Star, Dogs and
Question mark. In the cash cow, the product has high market share but lower growth rate.
Question mark shows a high Growth rate and lower market share. In contrast to this, the dog
products have lower market share and low growth rate. Star products have high market share
and high growth rate. Starbucks have a high market share with a high growth rate. As the
case study reveals the interest of Starbucks in expanding its business in different states of
USA and expansion in the global market. However, some products of Starbucks have a high
growth rate but lower market share. Appendix shows the growth rate and market share of
Starbucks.
1.12 internal-external (ie) Matrix

The IE matrix evaluates the scores from the EFE and IFE matrix (Provided in Appendix).
The strategic position of Starbucks is explored in the 9 quadrants of IE matrix. EFE matrix is
shown into Y-axis and the IE matrix into x-axis. The EFE score of 2.5 is shown. The
classification of these scores determine the growth rate of Starbucks and it places the
Starbucks in Quadrant 5. Starbucks have the high growth rate and the market share, and
based on the case analysis of 2015, it is deduced that Starbucks require a market growth at
some other countries to increase the market share.
1.13 Grand Strategy Matrix
Grand strategy matrix provides the analysis of the competitive market and the market growth
rate of the Starbucks. The speed of the market growth is also determined in the Grand
Strategy matrix. Starbucks have been ranked in the first quadrant because of increased growth
and market share, which shows that the Stable growth of Starbucks in the International
market. It also determines the horizontal integration and the diversification of the Starbucks
products. The Grand Strategy Matrix have been shown in the appendix.
1.14 Quantitative Strategic Planning Matrix (QSPM)
QSPM determine the score of product and market development to each product according to
a firm’s internal and external environmental factors. It also calculates the opportunities and
the threats accordingly. This score provides the guideline about the strategy which the
Starbucks should focus to increase the market share and the growth in the market. Starbucks
have scored 4.82 in the product development and the market development have provided a
score of 5.02. It determines the diversification of the market. But the company can also
increase the market share by introducing its services in the developing countries.
1.15 Recommend specific strategies and long-term objectives

Initially, Starbucks have competed with the Italian coffee service provider, by introducing the
WIFI in the Coffee shops. Starbucks can bring innovation by introducing the advanced
technologies such as, augmented reality that can provide the complete information about the
extraction, manufacturing and the processing of Starbucks coffee. It will also bring the
opportunity to determine the ethical sources of Coffee at Starbucks.
Starbucks can use range of option to bring excellence in the product. No doubt, Starbucks
have always strived excellence with consistent taste, but the increased rates of Starbucks
coffee is a threat because the competitors are offering the services at affordable rates.
Starbucks should also introduce the products that are affordable for the customers that will
help to retain the positive brand equity. The company should develop an objective to provide
the innovative and advanced experience with the artificial intelligence for the customers that
will help it to successfully compete with the other competitors.
1.16 Implementation of Recommendations
Starbucks have diversified network of coffee shops around the globe. The company can use
artificial intelligence and a mobile application that will help to grab the attention of the
customers with the innovation in the ordering of Coffee from Barista. Starbucks have
introduced mobile application, but with the advanced features, an enhanced experience can be
provided to customers. Starbucks should also introduce its products in the retail market that
will help to attract the customers towards its unique taste. The customers who cannot afford
the coffee at the restaurant can make their Cup of coffee at home by Starbucks instant coffee.
It can implement these recommendations in the Q1 of next year.
1.17 Annual Objectives and Policies

Starbucks should introduce its products in the retail sector and meet the maximum customer
satisfaction with the innovative technologies till Q4 of 2020. It should also introduce the
innovation in the production sector with the revolutionized HRM policies.
1.18 Procedures for strategy review and evaluation
The company can determine the basis of firm’s strategy. Management should also review the
current results and compare the results with the expected results. Moreover, to address the
identified gaps, the corrective actions can be taken for the strategy review. The company
should also implement the innovative management and leadership strategies that will help
boost performance of Starbucks.

Competitive profiling Matrix
Starbucks
Corporation
Peet’s Coffee Dunkin Donald’s
Critical Success
Factor
Weight
Rating
Weighted Score
Rating
Weighted Score
Rating
Weighted Score
Product Range 0.10 3 0.5 2 0.4 4 0.6
Quality of Goods 0.15 4 0.6 3 0.6 4 0.2
Ethical Standards 0.05 3 0.5 2 0.2 2 0.4
High Quality
Goods
0.15 4 0.4 2 0.4 2 0.4
Brand Loyalty 0.15 3 0.4 2 0.2 2 0.6
Brand Equity 0.15 4 0.6 2 0.2 3 0.2
Operating Cost 0.10 3 0.2 2 0.4 3 0.4
Expansion Cost 0.10 3 0.4 2 0.2 2 0.2
Growth 0.05 2 0.2 2 0.4 1 0.4
Total 3.8 3.0 3.2

External Factors Analysis (EFE)
External Factors Analysis (EFE)
Key External Factors Weight Rating Weight Score
Opportunities
New Products Entrance 0.05 3 0.15
Global Expansion 0.10 2 0.10
Partnership with firms 0.05 4 0.20
Domestic Expansion 0.10 2 0.20
Entering New Markets 0.05 2 0.10
Growing Product Demand 0.10 2 0.20
Threats
Low Cost competitors 0.10 3 0.30
International Difficulties 0.15 2 0.30
Rising Market 0.05 3 0.15
Imitating Competitors 0.05 4 0.20
Other differentiating products 0.10 3 0.30
Competitive Strategy 0.10 3 0.30
1.00 2.5

Internal Factors Analysis (IFE)
Key Internal Factors Weight Rating Weight Score
Strengths
Premium Quality Coffee 0.10 3 0.30
Product Range 0.5 2 0.10
Brand Loyalty 0.10 4 0.40
Excellent Customer Service 0.10 2 0.20
Brand Equity 0.10 2 0.20
Ethical Standards 0.10 2 0.20
Weaknesses
High Operating Cost 0.10 3 0.30
High Product Price 0.15 2 0.30
Growth Difficulty 0.05 3 0.15
Lack of Internal Focus 0.05 4 0.20
High Expansion Cost 0.05 2 0.10
Focus on specific Customers 0.05 3 0.15
1.00 2.6
Internal Factors Analysis (IFE)

SWOT Matrix
Strength Weaknesses
1.Premium Quality Coffee 1.High Operating Cost
2.Product Range 2.High Product Price
3.Brand Loyalty 3.Growth Difficulty
4.Excellent Customer
Service
4.Lack of Internal Focus
5.Brand Equity 5.High Expansion Cost
6.Ethical Standards 6.Focus on specific Customers
Opportunities SO, Strategies WO Strategies
1.New Products Entrance
2.Global Expansion
3.Partnership with firms
4.Domestic Expansion
5.Entering New Markets
6.Growing Product Demand
Threats ST Strategies WT Strategies
1.Low Cost competitors
2.International Difficulties
3.Rising Market
4.Imitating Competitors
5.Other differentiating products
6.Competitive Industry

SPACE Matrix
Internal Strategic Position External Strategic Position
Competitive Advantage (CA) Industry Stability (IS)
Customer Loyalty -3.00 Profit Potential 5.00
Market Share -4.00 Growth Potential 4.00
Brand Image -2.00 Entry into Global Market 3.00
Product Quality -4.00 Financial Stability 4.00
Product Life Cycle -2.00 Industry Rivals 3.00
Average Average
Total X-Axis Score
is
Financial Strength (FS) Environmental Stability (ES)
Profit margin 4.00 Demand Variability -4.00
Inventory Turnover 5.00 Price of Competition -3.00
Current Ratio 4.00 Increase Price of Coffee Beans -3.00
Return on Assets 3.00 Competition Pressure -4.00
Return on Equity 4.00 Risk of International Expansion -4.00
Average Average

BCG Matrix
Internal External Matrix
EFE Score=2.5 IFE Score=2.6
Grand Strategies Matrix

Quantitative Strategic Planning Matrix
Quantitative Strategic Planning
Matrix
Market
Development
Product
Development
Key Factors Weight AS TAS AS TAS
Opportunities
New Products Entrance 0.05 3 0.15 3 0.15
Global Expansion 0.10 3 0.30 2 0.20
Partnership with firms 0.12 4 0.48 4 0.48
Domestic Expansion 0.12 3 0.36 2 0.24
Entering New Markets 0.05 3 0.15 2 0.10
Growing Product Demand 0.10 3 0.30 2 0.20
Threats
Low Cost competitors 0.10 3 0.30 3 0.30
International Difficulties 0.15 2 0.30 2 0.30