Final Team 2 GC3 Strategic Plan

Running Header: BEST SOLUTIONS CONSULTING, LLC. – GREAT CUPS OF COFFEE
COMPANY STRATEGIC PLAN 1
Best Solutions Consulting, LLC.
Great Cups of Coffee Company Strategic Plan
IC495-V1WW: Team 2
Sandra Cain, Aquita Harkless, Ricardo Luera, Natalie Rindler, Sheri Steptoe,
Ashleigh Bromberg, Mira Cosgrove, Ashley Hutchinson, Kylie, Johnson,
Mariama Drame, Nicole George
Advisor: Professor Ted O’Flaherty
November 29, 2015

BEST SOLUTIONS CONSULTING, LLC.
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Great Cups of Coffee Company Strategic Plan
Best Solutions Consulting, LLC

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Table of Contents
Executive Summary – Natalie Rindler 11
Current Situation of Great Cups – Ashley Hutchinson 12
Definition of the Business – Ashley Hutchinson 12
Mission – Ashley Hutchinson 12
Objectives – Ashley Hutchinson 13
Strategies – Ashley Hutchinson 13
Corporate Policies – Ashley Hutchinson 13
Management Profile – Ashley Hutchinson 14
Environmental Scan and Industry Analysis 15
Introduction- Ashleigh Bromberg 15
Economic, Technological, Political-legal, and Sociocultural Forces 15
Economic – Mariama Drame 15
Technological – Mariama Drame 16
Political-legal – Ashley Hutchinson 16
Sociocultural – Ashley Hutchison 16
Who or What Drives Change in The Industry? – Aquita Harkless 17
Threat of New Entrants – Aquita Harkless 17
Bargaining Power of Buyers – Aquita Harkless 17
Threat of Substitute Products or Services – Aquita Harkless 18
Bargaining Power of Suppliers – Aquita Harkless 18
Rivalry among Existing Competitors – Aquita Harkless 18
Is the Coffee Retail Industry Growing or Declining? - Ricardo Luera 18
Current Trends in the Industry - Nicole George 20
Industry Business Demographics - Mira Cosgrove 21
Strategy Group Map - Natalie Rindler 22
Summary of Opportunities and Threats to Retail Coffee Chains - Sandra Cain 23
Conclusion - Sandra Cain 24
Industry Matrix - Sandra Cain 24
Competitive and Internal Analysis – Mira Cosgrove 26
Competitive Analysis of Starbucks, Dunkin’ Donuts, and Tim Hortons 26
Starbucks Corporation Competitive Analysis 27
History of Starbucks Corporation – Ricardo Luera 27
Starbucks’ Corporate Structure – Ricardo Luera 29
Starbucks’ Corporate Culture – Ricardo Luera 30
Starbucks’ Current Events – Sandra Cain 31
Starbucks’ Financial and Economic Indicators – Mariama Drame 33
Competitive Analysis of Dunkin’ Donuts 33
History of Dunkin’ Donuts – Natalie Rindler 33
Dunkin’ Donuts Corporate Structure – Natalie Rindler 34
Dunkin’ Donuts Current Events – Sandra Cain 35
Dunkin Donuts Financial and Economic Indicators – Mariama Drame 36

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Competitive Analysis of Tim Hortons 37
History of Tim Hortons – Ashley Hutchinson 37
Tim Hortons’ Corporate Structure – Sheri Steptoe 38
Tim Hortons’ Financial and Economic Indicators – Mariama Drame 39
Tim Hortons’ Current Events – Sandra Cain 39
Distinctive Competencies of Starbucks, Dunkin’ Donuts and Tim Hortons 40
Starbucks’ Distinctive Competencies – Ricardo Luera 40
Dunkin’ Donuts’ Distinctive Competencies – Ricardo Luera 41
Tim Hortons’ Distinctive Competencies – Ricardo Luera 42
Core Competencies of Starbucks, Dunkin Donuts’ and Tim Hortons 43
Starbucks’ Core Competencies – Sandra Cain 43
Dunkin’ Donuts’ Core Competencies – Sandra Cain 45
Tim Hortons’ Core Competencies – Sandra Cain 46
Sources of Strategic Advantage for Starbucks, Dunkin’ Donuts and
Tim Hortons 48
Starbucks’ Sources of Strategic Advantage – Aquita Harkless 48
Dunkin’ Donuts’ Sources of Strategic Advantage – Aquita Harkless 49
Tim Hortons’ Sources of Strategic Advantage – Aquita Harkless 49
HR Notables for Starbucks, Dunkin’ Donuts and Tim Hortons– Sheri Steptoe 50
Starbucks’ HR Notables – Sheri Steptoe 50
Dunkin Donuts’ HR Notables – Sheri Steptoe 50
Tim Hortons’ HR Notables – Sheri Steptoe 51
Value Chain Analysis of Starbucks, Dunkin’ Donuts and Tim Hortons 51
Starbucks’ Value Chain Analysis – Nicole George 51
Dunkin’ Donuts’ Value Chain Analysis – Nicole George 51
Tim Hortons’ Value Chain Analysis – Nicole George 52
Product Life Cycle of Starbucks, Dunkin’ Donuts and Tim Hortons 52
Starbucks’ Product Life Cycle – Nicole George 52
Dunkin’ Donuts Product Life Cycle – Nicole George 53
Tim Hortons’ Product Life Cycle – Nicole George 54
Strengths and Weaknesses of Starbucks, Dunkin’ Donuts and Tim Hortons –
Nicole George 55
Starbucks’ Strengths and Weaknesses 55
Dunkin’ Donuts’ Strengths and Weaknesses 56
Tim Hortons’ Strengths and Weaknesses 56
Marketing Mix for Starbucks, Dunkin’ Donuts and Tim Hortons –
Ashleigh Bromberg 57
Starbucks’ Marketing Mix 57
Dunkin’ Donuts’ Marketing Mix 58
Tim Hortons’ Marketing Mix 58
Starbucks, Dunkin’ Donuts and Tim Hortons: Communication Technologies and
Strategies – Ashley Hutchinson 59
Starbucks Coffee Shop Observation – Mira Cosgrove 60
Product Assortment and Prices 60
Atmospherics 62
Dunkin’ Donuts Coffee Shop Observation– Natalie Rindler 62

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Tim Hortons Coffee Shop Observation – Ashleigh Bromberg 63
Internal Analysis of Great Cups of Coffee Company 64
Company History – Ashley Hutchinson 64
GC3 Strategic Overview – Aquita Harkless 64
GC3 Financial Analysis – Mariama Drame, Nicole George 66
Financial Ratios 67
Liquidity 67
Quick Ratio 67
Asset Management 68
Fixed Assets 68
Inventory Turnover 68
Debt Management 69
Debt Ratio 69
Debt-Equity Ratio 69
Profitability Ratio 70
Internal and Sustainable Growth 71
Great Cups of Coffee Company Human Resources Department Competencies –
Sandra Cain 71
GC3 HR Responsibilities – Ricardo Luera 73
Corporate Structure of Great Cups – Sheri Steptoe 74
Great Cups Corporate Culture– Aquita Harkless 76
Strategic HR Issues and HRM Order – Natalie Rindler 77
Great Cups of Coffee Company’s Marketing Analysis 79
Positioning Strategy 79
Product Life Cycle 79
Value Chain Analysis 80
Summary of Strategic Marketing Issues for Great Cups – Nicole George 82
Summary of GC3’s Strengths and Weaknesses – Ricardo Luera 84
Competitive & Internal Analysis Conclusion – Ricardo Luera 84
Integrated Plan 85
Integrated Conclusions – Sandra Cain 85
Current Situation – Sandra Cain 85
Environmental Scan and Industry Analysis – Sandra Cain 87
Competitive and Internal Analysis – Sandra Cain 88
Alternative Strategic Choices/TOWS – Aquita Harkless 90
Franchise Options to Investors – Aquita Harkless 90
Taste Tests – Aquita Harkless 91
Sell the Company – Aquita Harkless 91
Integrated Strategies – Ashley Hutchinson 92
Revised Mission and Rationale – Ricardo Luera, Sheri Steptoe & Team 93
SMART Objectives for Great Cups – Natalie Rindler 93
Major Corporate Policies – Ricardo Luera 98
Detailed Organizational Chart – Sandra Cain & Team 102

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Marketing Plan 103
Target Market Analysis – Ashleigh Bromberg, Mira Cosgrove, Kylie Johnson,
Ashley Hutchinson 103
Primary Research Data 103
Dunkin’ Donuts Observation – Ashley Bromberg 103
Demographics – Ashley Bromberg 103
Psychographics – Ashley Bromberg 103
Consumer Behavior – Ashley Bromberg 104
Geographic – Ashley Bromberg 104
Starbucks Observation – Mira Cosgrove 105
Demographics – Mira Cosgrove 105
Psychographics – Mira Cosgrove 105
Consumer Behavior – Mira Cosgrove 106
Geographic – Mira Cosgrove 106
Survey – Ashley Hutchinson 106
Demographics – Ashley Hutchinson 106
Psychographic – Ashley Hutchinson 107
Behavior – Ashley Hutchinson 107
Geographics – Ashley Hutchinson 108
Secondary Research 108
Consumer Demographic – Kylie Johnson 108
Consumer Psychographic – Kylie Johnson 109
Consumer Behavior – Kylie Johnson, Mira Cosgrove 109
Consumer Geographic – Mira Cosgrove 110
Analysis 110
Primary Target Market – Mira Cosgrove 110
Secondary Target Market – Mira Cosgrove 111
Sales Forecast, Marketing Objectives and Marketing Strategies 111
Sales Forecast – Mira Hargrove 111
Primary Target Market SMART Objectives – Ashleigh Bromberg 112
Primary Target Market Marketing Strategies – Ashley Hutchinson 114
Secondary Target Market SMART Objectives – Kylie Johnson 115
Secondary Target Market Marketing Strategies – Kylie Johnson, Mira Cosgrove 116
Marketing Campaign, Tactical Plan & Sample Executions 117
Brand Positioning Strategy – Mira Cosgrove 117
Communication Objectives – Mira Cosgrove 119
Marketing Mix Tools – Mira Cosgrove 121
Product Plan – Mira Cosgrove 121
Naming Plan– Mira Cosgrove 122
Packaging Plan– Mira Cosgrove 122
Pricing Plan– Mira Cosgrove 123
Distribution Plan– Mira Cosgrove 123
Advertising Plan– Mira Cosgrove 124
Promotional Plan– Mira Cosgrove 124
Marketing Budget – Kylie Johnson 125
An Estimate of the Reach & Frequency – Ashleigh Bromberg 127

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Risk, Fit, & Value of Radio Advertisement – Ashley Hutchinson 130
Risk, Fit, & Value of Coupon – Ashley Hutchinson 130
Marketing Execution Plan – Kylie Johnson 131
Evaluation Plan – Ashley Hutchinson 132
Human Resources Plan 132
Introduction – Sheri Steptoe 132
Employee Forecast and Turnover Analysis – Ricardo Luera 133
Compensation Plan – Sheri Steptoe 138
Pay Philosophy – Sheri Steptoe 138
Market Comparison – Sheri Steptoe 138
Pay Structures – Sheri Steptoe 138
Job Evaluation Process – Sheri Steptoe 139
Incentives – Sheri Steptoe 140
Benefits Plan – Natalie Rindler 140
Mandatory Benefits – Natalie Rindler 141
Voluntary Insurance Benefits – Natalie Rindler 141
Retirement Benefits – Natalie Rindler 143
Additional Benefits – Natalie Rindler 144
Paid Time Off – Natalie Rindler 144
Recruiting Plan – Aquita Harkless 147
Training Plan – Aquita Harkless 151
Executive training/development – Aquita Harkless 152
Managerial training and development – Aquita Harkless 152
Front Line Employee Training – Aquita Harkless 153
Performance Management Approaches – Aquita Harkless 154
Management Performance appraisals – Aquita Harkless 156
Employee performance appraisal – Aquita Harkless 156
Compensation and Performance management – Aquita Harkless 157
Essential metrics and goals – Aquita Harkless 158
Budget – Natalie Rindler 159
Succession Plan, Development Process, and Procedures – Sandra Cain 160
The Succession Plan – Sandra Cain 160
The Development Process – Sandra Cain 164
The Procedures – Sandra Cain 166
Implementation Plan – Sandra Cain 167
Purpose – Sandra Cain 168
Major Tasks – Sandra Cain 169
Implementation Support – Sandra Cain 171
Implementation Approval – Sandra Cain 172
Communications Procedures – Sandra Cain 172
HR’s Role in Communicating the Strategic Plan – Sandra Cain 173
Corporate Culture – Ricardo Luera 176
Change Plan – Ricardo Luera 179
Purpose – Ricardo Luera 179
Change Model – Ricardo Luera 179

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Cost Savings and Avoidance – Natalie Rindler 184

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Financial Plan 185
Sources and Uses of Funds – Nicole George 185
Capital Equipment List Projections – Branding, Nicole George 185
Balance Sheet Projections – Inflation, Nicole George 186
Balance Sheet Projections – Sales, Nicole George 186
Management Financial Statement – Nicole George 186
Historical Records – Nicole George 187
Cash Flow Statement – Inflation, Mariama Drame 187
Cash Flow Statement – Sales, Mariama Drame 187
Profitability Ratios – Mariama Drame 187
Break Even Analysis – Mariama Drame 188
Break-Even Sales – Mariama Drame - 188
Debt and Recovery Strategy – Mariama Drame 189
Income Statement Based on Inflation – Mariama Drame 191
Discounted Cash Flow – Mariama Drame 192
Cash Deposits and Clearing Accounts – Mariama Drame 195
Garda Expense Budget – Mariama Drame 195
Suggested Pickup Routine – Mariama Drame 196
Projected Income Statement/Cash Flow by Year and Summary – Mariama Drame 196
MIS Plan and Expenses – Sheri Steptoe, Mariama Drame 197
Conclusion – Ashleigh Bromberg 198
Closing Comments – Sandra Cain 199
Call to Action – Natalie Rindler, Kylie Johnson 200
References – Editors 201
List of Appendices
Appendix A – By the Numbers 219
Figure 1. U.S. Coffee and Snack Shops Industry Total Revenue 2009-2016 219
Figure 2. Specialty Coffee Consumption: Consumers of Specialty Coffee (USA) 219
Appendix B - One Tree for Every Bag 220
Appendix C - Fake and Counterfeit Tim Hortons 221
Figure 1. Fake Tim Hortons Store 221
Figure 2. Counterfeit Tim Hortons Pre-packaged Coffee 221
Appendix D – Positioning Strategy 222
Appendix E – Sales Forecast Chart 223
Compensation Appendices 224
Compensation Appendix A – Job Description – Position of Barista 224
Compensation Appendix B – Job Description – Position of Store Manager 225
Compensation Appendix C – Job Description – Position of Director, HR 226
Appendix F – Current New Hire–Turnover (Corporate/Regional) 227
Appendix G – Current New Hire –Turnover – Ricardo Luera 232

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Appendix H - Primary Research Supporting Data 235
Appendix I – What is Your Age Range? 236
Appendix J – Which Describes Your Relationship Status Recently? 237
Appendix K – Which Describes Your Employment Status? 238
Appendix L – What is Your Highest Level of Education Completed? 239
Appendix M – What Influences You To Go To A Coffee Shop? 240
Appendix N – What Activities If Any Do You Do While At Coffee Shop? 241
Appendix O – What Is Your Typical Budget Per Cup of Coffee? 242
Appendix P – Which of These Factors Is Most Important When Choosing a Coffee
Shop? 243
Appendix Q – How Many Cups of Coffee Do You Drink Per Day? 244
Appendix R – What Time of Day Are You Most Likely To Visit A Coffee Shop? 245
Appendix S – From Your Current Location, How Far Would You Travel to
Coffee Shop? 246
Appendix T – What is Your Method of Transportation When Going to Coffee
Shop? 247
Appendix U – In What Area Would You like the Coffee Shop 248
Appendix V – Job Posting 249
Appendix W – Training Online 250
Appendix X – Performance Review Guide 251
Appendix – Financials – Nicole George, Mariama Drame 253
Appendix A – Income Statement- Inflation 253
Appendix B – Balance Sheet- Inflation 254
Appendix C – Cash Flows- Inflation 255
Appendix D – Income Statement- Sales 256
Appendix E – Balance Sheet- Sales 257
Appendix F – Cash Flows- Sales 258
Appendix G – Historical Records 259
Appendix H – Probability Ratios 260
Appendix I – Discounted Cash Flow Analysis 262
Appendix J – Balance Sheet-2015 264
Appendix Y – Stewardship Agreement 265
List of Figures
Figure 1. Strategic Map 23
Figure 2. Industry Matrix 24
Figure 3. Tim Hortons Training Model 47
Figure 4. Starbucks Value Chain 51
Figure 5. Dunkin’ Donuts Value Chain 52
Figure 6. Tim Hortons Value Chain 52
Figure 7. Starbucks’ Product Life Cycle Curve 53
Figure 8. Dunkin’ Donuts Product Life Cycle Curve 54
Figure 9. Tim Hortons’ Product Life Cycle Curve 55
Figure 10. Planogram of Starbucks’ Product Display 60
Figure 11. Great Cups’ Gross Profit Margin 71
Figure 12. GC3 Organizational Chart 75

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Figure 13. M. Porter’s Value Chain Example 81
Figure 14. Great Cup of Coffee Company Regional Map 86
Figure 15. SMART Objectives 98
Figure 16. Detailed Organizational Chart 102
Figure 17. Key Descriptors 118
Figure 18. Marketing Budget 126
Figure 19. Marketing Calendar 126
Figure 20. Marketing Payback Analysis 127
Figure 21. 2015-16 Promotional Schedule 130
Figure 22. Marketing Execution Plan 132
Figure 23. HR Staff Costs 159
Figure 24. HR Expenses 160
Figure 25. Succession Plan Model 163
Figure 26. Succession Timeframe 167
Figure 27. Factors Supporting Effective Implementation Plan 172
Figure 28. Kotter’s Eight-Step Model 180
Figure 29. Strategy Map and HR Scorecard 183
Figure 30. Calculated Break-Even for Upcoming Years 188
Figure 31. Income Statement Based on Inflation 192
Figure 32. Detailed Figures of Discounted Cash Flow 194
Figure 33. Estimated Budget for Funds Pick up 195
Figure 34. Garda Pick up Schedule 196
List of Tables
Table 1 – Current New Hires – Turnover (All Stores & Corporate Regional HQ) 134
Table 2 – Current Costs Due to Turnover 135
Table 3 – Projected New Hires in Current Year, Year 1 through 3 136
Table 4 – Projected Annual Savings over the Next Three Years 137
Table 5 – Benchmark Positions and Pay Grades 139
Table 6. – Implementation Schedule 170

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GC3 Select Strategic Plan
Executive Summary (Natalie Rindler)
Great Cups brings a unique and quality blend of services to its consumers. It is a place to
get “a great cup of coffee at a great price”, and has found a niche in the coffee retail industry.
From its beginnings the founders of the company have been forward thinking in continuing to
expand the business, develop products, and provide a quality service while continuing to keep
their prices low. As with many small companies that expand, the risk is in how to manage the
expansion. After reviewing the company’s history and current situation Best Solutions
Consulting has determined that Great Cups definitely has the opportunity to not only stay in
business, but to bring about many progressive changes that will see a positive shift in company
culture, a significant increase in profit, and continue to grow. The potential is there to become
competitive in its regional areas with the larger coffee retailers, like Starbucks, Dunkin’ Donuts
and Tim Hortons.
To create these changes Best Solutions recommends four areas of strategic focus.
Because the company expanded quickly and bought locations that had formerly sold other
products there has been a challenge in identifying what Great Cups really is and what they
provide. Are they a coffee shop, ice cream shop, or deli? This identifies the first initiative which
is creating one brand identity in all stores. This will allow customers to identify their favorite
coffee place and brings cohesiveness to employees. The second focus is doing a complete
organizational restructure. Employees do not currently identify with Great Cups. They identify
with the store, or region, they are in. This lack of identity, and value for employees, is causing
extremely high turnover rates. The third element of focus is one that the company has already
shown initiative in, which is developing new products. The coffee industry, and consumer

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preferences are constantly changing and Great Cups must stay current with these trends. The
final initiative that is critical to the infrastructure of the company, and in being pro-active in
identifying areas of concern is purchasing and implementing new financial software. This is the
glue that will impact how the first three initiatives will move forward, or change, depending on
what the reporting information provides.
Best Solutions Consulting is ready to provide the foundation to bring these initiatives to
action for Great Cups. The coffee retail industry is a growing market and Great Cups needs to
grab onto the handle of this trend by strengthening itself from the inside out.
Current Situation of Great Cups (Ashley Hutchinson)
Definition of the Business (Ashley Hutchinson)
Great Cups began in Columbus, Ohio with three friends and started doing really well
when they had one distinct goal. That goal was to sell quality coffee, their motto: “A Great Cup
of Coffee, at a Great Price,” (Great Cups Narrative, p. 3, 2015). In the beginning the company
was doing really well, the three friends were focused on one single idea. As the years went by
they wanted to branch out and try different products such as ice cream and a deli along with their
premium coffee. While they were good ideas it was a rough transition to handle. Best Solutions
Consulting will be coming into change the outcome of this company with rebranding all of the
businesses, get profits where they should be, as well as ensure the employees are working to their
best of their ability for Great Cups.
Mission(Ashley Hutchinson)
Great Cups of Coffee first began with a single idea; to serve a “larger size cup of
premium quality coffee” (Great Cups Narrative, p. 3, 2015). They would serve different blends
of coffee in larger sizes then their competitors. At first this mission worked for their company,

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but over time they branched out and their mission was no longer a single idea. That was when
their company started falling apart.
Objectives (Ashley Hutchinson)
Great Cups of Coffee went from Columbus to expanding throughout the country. There
are now locations in not just Columbus, but Chicago and Pittsburg as well. With new locations
there are new products such as an ice cream shop and deli. They first started out with wanting to
sell premium quality coffee at a low price, since the company branched off into new locations
and now have different products they face a challenge with their identity and mission of the
overall company.
Strategies (Ashley Hutchinson)
Great Cups has always strived to sell, “a great cup of coffee at a great price” (Great Cups
Narrative, p.3, 2015). Along with ensuring that motto there were several strategies.
 Sell larger cups of coffee than their competitors and at a lower price.
 Always striving to take on new opportunities (ice cream, deli).
 Began with a hands-on approach to teaching their employees.
 Has a great target market and wide variety due to their location being in larger cities.
Corporate Policies (Ashley Hutchinson)
Great Cups of Coffee has made policies for all locations to put into effect to ensure they
are always performing their best. Polices can provide, “guidance for decision making and
actions throughout the organization” (Hunger, Wheelen, p.117, 2011). These polices are put into
place to provide guidance to everyone within the company and help those in training for the
company.
 Follow the motto, “A Great Cup of Coffee at a Great Price”.

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 Serve a premium quality coffee, larger cups than competitors at a lower price than the
competitors.
 Local stores will have managers overseeing the day to day operations.
 Upper management needs to teach a hands-on approach so all locations are on the same
page and staying consistent.
 GC3 keeps the roasting, it adds a uniqueness factor.
 No cutting corners, the company only uses premium Arabica coffee beans.
 All locations provide various blends of coffee, yet still have a few that are the same
original blends.
 GC3 is always coming up with new ideas and being innovative.
All of these policies are subject to change and are in no way set in stone. They are to only
provide a starting point for the employees at any of the Great Cups locations.
Management Profile (Ashley Hutchinson)
Great Cups of Coffee in Columbus began with three friends Tony, Bruce, and Bonnie.
They started out at Coffee Hut then went out on their own an acquired the Coffee Hut stores and
transformed them into what is now known as Great Cups of Coffee. The three friends were all
about the hands on approach and each had a specific task so it didn’t get confusing. Tony was in
charge of overlooking the finances, Bruce was in charge of the marketing, and Bonnie was in
charge of human resources (Great Cups, 2012, p.2).
The three managers started seeing how well Great Cups of Coffee was doing they
decided to expand locations to outside of the Columbus area. Not just expansion of the coffee
stores but also acquiring different businesses as well. Rod’s Cones ice cream chain was bought
by them and they renamed it Great Scoops and a deli chain as well called DaDeli.

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While they have the right attitude to be innovation and branch out, it took its toll when
they just jumped right in and took over chains that were completely different than their original
chain which was the coffee shop. They lost their hands on approach and their motto when they
took on more than they could handle, and lost their way in a sense. They need to bring back their
original approach and rebrand to bring Great Cups back to the forefront of the industry.
Environmental Scan/Industry Analysis (Ashleigh Bromberg)
Introduction
While everyone views the coffee industry as a strong monetary effect on the economy, the public
only sees when the consumer pays for that cup of coffee at the local coffee shop. However,
what’s not being seen are the forces that are in play before that coffee is even produced. The
coffee industry is always changing, which is mostly due to the overall residual effects of the
following four forces; economics, technology, political-legal, and sociocultural forces.
Therefore, looking into each of these will give a much better perspective into the coffee industry.
Economic, Technological, Political-legal, and Sociocultural Forces
Economic. Economic forces in the coffee industry have an effect on expenditure in a
significant way. The economy affects the coffee industry in terms of employment, inflation, and
demographic changes, exchange rate, interest rate, and other economic growth indicators
(Makos, 2014). These economic indicators lay an outsized weight on the United States.
According to Randy Krum (2010), “the volume of coffee production has remained constant over
the past decade, but the value has increased steadily over the past few years.” The impact that
the coffee industry has on our economy is much larger than what most believe. Employment,
entrepreneurial opportunities, and changes in local economy can happen due to the introduction

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of small businesses based on the coffee industry; “coffee is the second-most traded commodity
with oil being the first” (Carrier, 2013).
Technological. Technology, such as the internet and management information systems
(MIS), affect the way the coffee industry is going to stay competitive with others industries.
According to Jim Makos (2014), “technological factors an organization faces include
technological changes, R&D activity, obsolescence rate, automation and of course, innovation.
If an organization does not look out for technological changes, it can lag behind its competitors.”
MIS and manufacturing equipment have become more advanced over the years, which cause
many industries to go through a decisive process of choosing their specific products. For
example, if new manufacturing equipment is created, benefits and effectiveness must be studied
before implementing any new industry technology. The Internet is another technological factor
affecting the coffee industry as it allows businesses to know what their competitors are doing
because the information is limitless. Moreover, it will help reach all kinds of customers and help
a company to be heard in its own market.
Political. Politics are a part of every business whether beneficial or not, according to an
article by David Pohl (2011), “among the few things within politics there is usually some sort of
political instability.” Within that instability price changes occur, which can prove troublesome
for the farmers or the buyer producing the coffee. Both have a large job regardless as they take
into account price fluctuations and climate changes profits can turn to loss.
Sociocultural. Sociocultural forces are a massive determinant in the coffee industry as
well. Due to coffee being heavily imported, businesses mostly buy their beans from other
countries and they must understand the differences in culture. There could be several different
factors that come into play when dealing with different countries such as knowing their

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language, their rules of business (production, exporting, and more). Some countries may be
overrun by the corruption of non-governmental organizations, such as a cartel. Consequently,
this brings up another great point of discussion as to who or what drives change in the coffee
industry?
Who or What Drives Change in The Industry?
According to Hunger and Wheelen (2007), “Michael Porter, an authority on competitive
strategy, contends that a corporation is most concerned with the intensity of competition within
its industry. Basic competitive forces determine the intensity level”, (p. 39). These forces; the
threat of new entrants, the bargaining power of buyers, the threat of substitute products or
services, the bargaining power of suppliers, and the rivalry among existing competitors are
deciding factors of the intensity level. The strength of these forces determines the company’s
ability to raise prices and ultimately make a greater profit. Weak forces can be seen as
opportunities and strong forces can be interpreted as threats.
Threat of new entrants. The threat of new entrants in the coffee industry is becoming
increasingly high. Market share is dominated by a few major coffee shops but the preference for
specialty coffee offers easier entry, especially for small business.
Bargaining power of buyers. “Buyers affect and industry through their ability to force
down prices, bargain for higher quality or more services, and play competitors against each
other” (Hunger and Wheelen, 2007, p. 41). The buyer has a lot of options when it comes to
coffee, they can make the coffee at home and with developing technologies such as k-cups it is
getting much easier to do so. Buyers also have the option to purchase coffee from competitors as
there are an increasing number of coffee shops, convenient stores, and fast food restaurants to
choose from that offer all of the same things as Great Cups, sometimes at a better price.

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Threat of substitute products or services. A substitute product is one that is different,
but is able to satisfy the same need. In the case of Great Cups, “tea can be considered a
substitute. If the price of coffee goes up high enough, coffee drinkers will slowly begin
switching to tea. The price of tea puts a price ceiling on the price of coffee.” (Hunger and
Wheelen, 2007, p 41). Other substitutes for coffee include energy drinks.
Bargaining power of suppliers. “Suppliers can affect an industry through their ability
to raise prices or reduce the quality of purchased goods and services.” (Hunger & Wheelen,
2007, p. 42). Great Cups purchases Arabica coffee beans to make their products. The
bargaining power of suppliers is low because companies in the coffee industry have a high
ability to switch to other suppliers. The suppliers also do not have substantial ability to change
prices due to the fact coffee is purchased largely on a commodities market and must remain
competitive with the market price. Another factor in the coffee industry is weather, which can
directly affect the production of coffee beans. In turn this leaves suppliers vulnerable with their
bargaining power greatly reduced.
Rivalry among existing competitors. This is perhaps one of the largest threats for Great
Cups across all of their product offerings. Hunger and Wheelen (2007) states, “in most
industries, corporations are mutually dependent. A competitive move by one firm can be
expected to have a noticeable effect on its competitors.” (p. 40). Starbucks, McDonalds and
Dunkin Donuts have a large share of the coffee industry with many other entrants trying to stake
their claim. Great Cups has a pronounced responsibility to remain competitive and offer
innovative products and services that put them ahead of their competitors. Hence, this raises the
question if the coffee retail industry is growing or declining in today’s marketplace?
Is the Coffee Retail Industry Growing or Declining?

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In today’s fast-paced and sophisticated world, the coffee retail industry is consistently
growing due to the increase in avid and habitual coffee drinkers that enjoy a great cup of coffee
throughout their busy day. For instance, according to Today’s Coffee Consumer Food Service
Handbook (2015), “an average of 84% of consumers visits a coffee shop at least monthly for
beverage occasions only.” (p.82). It appears that today’s coffee lovers consume their hot or cold
beverage of choice in a coffee or donut-shop prefer the best quality of coffee by 43% and 44%,
respectfully (Food Service Handbook, 2015, p.82). Interestingly, while coffee roasters are still
dominating market share in today’s global markets, large retailers such as Wal-Mart, Costco,
Starbucks, McDonald’s and Dunkin’ Donuts are driving the market for higher grade specialty
coffee which meet voluntary sustainable production standards (Elder, Lister, & Dauvergne,
2014, p.78). Conversely, in 2000, Starbucks initially took the lead on being the first coffee
company who agreed to start selling Fair Trade certified coffee, which led a coalition of other
organizations to follow and support this initiative in the coffee business. Moreover, this business
strategy eventually opened up doors to reputable organizations having their own specialized
coffee products, such as Starbucks, Sam’s Choice, and Dunkin’ Donuts coffee.
Remarkably, due to this rapidly, growing consumer interests, coffee cafés are steadily
expanding in today’s marketplace and eventually producing well-known coffee roasters,
marketers and retailers of specialty coffee worldwide (Orta, von Feigenblatt, Lemus, & Rivero,
2015, p.29). As coffee products successfully and steadily rise due to consumer consumption,
many business coffee roasters and retailers are developing innovative deliverables that are
aligning with their business strategies. These business strategies allow their employees to
expand their knowledge and at the same time satisfy the organization by offering great quality
customer service (Orta, von Feigenblatt, Lemus, & Rivero, 2015, p.33). As a result of these

21
business strategies, organizations involved with the coffee industry will continue to be successful
and competitive in today’s business world. Subsequently, here are some trends noticed in the
coffee industry that are currently been observed compared to recent years.
Current Trends in the Industry
There are so many options when it comes to brewing a cup of Joe. The United States is
the largest importer of coffee closely followed by Germany, Italy, Japan and France. The United
States coffee industry has surpassed 10 million in revenues, with 70 percent of industry revenues
coming from the top 50 coffee enterprises out of approximately 20,000 coffee shop businesses
(Duff, n.d). With that being said, the trends are high and are making a huge impact on the coffee
industry. More and more companies are coming out with their specialty drinks and flavors. The
traditional black or non-gourmet coffee is slowly being put on the back burner. For 2014, the
National Coffee Association found that daily consumption of gourmet coffee among adults is up
to 34 percent, a 3 percent rise over last year, while daily consumption of non-gourmet is down
four points to 35 percent (Brown, 2014).
Furthermore, responses to brewing options have also increased dramatically in the last
few years. For instance, individuals are wanting in home single-cup systems. Single-cup
systems are perfect for on the go at home servings, which consumers can conveniently make.
According to Nick Brown (2014), “twenty-nine percent of respondents who drank coffee within
the past day said they used a single-cup brewer, an increase nearly 50 percent from last year.
Meanwhile, 15 percent of respondents said there is a single-cup system in their home (over 12
percent last year), and 25 percent of respondents who do not currently own a single-cup brewer
said they plan to buy one within the next six months.” Conversely, even though most of the time
coffee is only to be thought of as a hot beverage, in recent studies the “cold brew” is making its

22
breakthrough. Many consumers are switching preferences to ice coffee instead of a hot coffee.
Henceforth, coffee continues to increase its dominance over soft drinks, with 61 percent of adults
drinking coffee daily (Brown, 2014). Next, listed below are the coffee industry business
demographics that affect many coffee roasters in today’s coffee industry.
Industry Business Demographics
Establishing a clear view of the market make-up yields a better grasp on reaching new
objectives. Understanding how the industry’s standards may be changing helps create a more
strategic plan to attain these goals. Looking at the retail coffee shop industry, it can be assessed
that on-the-go and other coffee shops continue to grow in consumer popularity. The industry is
composed of chain retailers and private, local businesses. According to the Specialty Coffee
Association of America (2015), “chain locations make up 45% of the entire market share of the
coffee shop industry; the other 55% belongs to locally owned coffee shops.” Of the chain
retailers, Starbucks and Dunkin Donuts own almost half the market share at a combined 48.7%
(Statista, 2015). There are 14 other major key players that make up the rest, including emerging
competition from Tim Horton’s and McDonald’s.
The majority of coffee produced is imported from Brazil (Statista, 2015). It was recorded
that Brazil produced nearly 3 million metric tons in 2012. The statistics then show Vietnam,
Indonesia, and Columbia are the next largest producers following Brazil (SCAA, 2015). Brazil
also ranks high in consumption, beating the Unites States with 780 cups per capita per year vs
369 cups per capita; Finland and Sweden actually top the list of coffee consumption per capita.
However, the U.S. consumes and imports the most coffee overall (Statista, 2015).
The average price of coffee and coffee drinks has been on the rise in the last seven years.
With coffee being a primarily imported product, coffee shops suffer from fluctuating commodity

23
prices. Yet, from 2007 to 2013, advertised coffee shop prices have increased 13% to maintain a
higher profit margin (Packaged Facts, 2014). It is important to protect profits, but it is essential
to not raise prices too much too quickly in a price sensitive consumer market. The U.S. coffee
shop industry is anticipated to generate over 31 billion dollars in revenue for this year; which
includes a 5% growth from 2013 (Statista, 2015). Coffee shop income sits a little higher in
growth from beverage markets. These markets include luxury goods and commodities such as
beer, wine, and soft drinks, which anticipate .1%, 2.5%, and 2.1% respective growth (U.S. Food
& Drink Report, 2013). Listed below is the Great Cups of Coffee Company strategy group map.
Strategy Group Map
The below strategy group map provides a snapshot of how Great Cups looks in the coffee
shop industry based on number of total employees and total number of stores. Three of the
largest chain coffee shops were used in comparison. These are Starbucks, Dunkin Donuts and
Tim Hortons. While these companies have a diversified product other than coffee they are the
leaders in coffee based products for overall sales. Since Starbucks and Tim Hortons have
locations outside of the United States only U.S. stores were included for comparison.
Strategic Map

24
Figure 1. Strategic map. The map reflects the company’s position within the industry.
Summary of Opportunities and Threats to Retail Coffee Chains
More than ever, the coffee industry is brimming with new opportunities. The retail
coffee chains are attracting new entrants at a rapid pace. Growth is accompanied by
opportunities as well as threats that force the need for strategic and creative business
management. Aside from stiff competition among major retail channels and coffee houses;
outlets, such as kiosks, carts, and drive thru window franchises, are sharing sizable profits. The
start-up costs for such franchises are considerably less than brick-and-mortar stores and cafés
(Franchise Direct, 2009). The opportunities are as diverse as the many varieties of coffee. Thus,
the owner of a franchise is not limited to a single footprint in the market. As reported by
Nicholas Upton (2014), the total revenue for coffee and snack shops “is forecast to rise to $32.6
billion by 2016” as shown in Appendix A; Figure 1.
Retail coffee chains are faced with many challenges ranging from unpredictable elements
affecting coffee growth and production to changes in consumer trends (Franchise Direct, 2009).
The industry has proven to be resilient in light of the recent recession; especially, for specialty

25
coffees as shown in the Appendix A; Figure 2. In 2010, a trend in cold specialty drinks emerged
as 14.5 million surveyed indicated a preference to cold drinks over hot (Upton, 2014, p. 12).
Hence, shop owners such as Great Cups of Coffee Company should consider capitalizing on
such opportunities for a competitive advantage.
Although threatened by substitutes, and anti-coffee movements, coffee has remained a
powerful commodity that has changed economical, ecological, and political structures in the
countries where the beans are produced. Amid price wars and “new advances in coffee
technology” retailers continue the search for that special blend which will differentiate their
product and rank them among the leaders in the industry (Franklin University, 2015).
Conclusion
In conclusion, the retail coffee chains in the coffee industry continue to expand
significantly; remaining responsive to the impacts of environmental and competitive forces.
Globalization and advances in technology constantly change the manner in which retailers must
strategically manage operations for sustainable profitability. Owners and operators who take a
proactive approach are most likely to attain success in future business. Changing demographics,
regulatory mandates, consumer preferences, weather patterns, and other global events drive
retailers to seek many opportunities for competitive advantage. Environmental scanning and
industry analysis are the most critical tools retailers can utilize in successfully meeting the
challenges posed by threats to the industry.
Industry Matrix
In the coffee industry, much like many others, there are key or critical success factors
which contribute specifically to the “overall competitive positions of the companies” (Hunger &
Wheelen, 2011, p. 45). In order to capture a bird’s eye view of how such factors compare among

26
competitors, an industry matrix can be constructed. The industry matrix is a valuable tool as it
allows each factor to be ranked and weighted “based on the probable impact on the overall
industry’s current and future success” (p. 45). For example, the weights can range on a scale of
0.0 (least important) to 1.0 (most important). However, the total of all added weights must equal
to 1.0. The ratings scale, for example, can range from 1(poor) to 5 (outstanding). The rates are
indicators of how successfully a company is responding currently to the key factors selected.
The industry matrix below compares Great Cups of Coffee Company with one of its
competitor, Starbucks’. However, it could be expanded to include more information by adding
desired columns and competitors. A total of eight success factors were chosen based upon
external and other “economic and technological characteristics of the industry” (Hunger &
Wheelen, 2011, p. 45). The factors also serve as basis for which companies strategically plan for
profitability and sustainability in the marketplace. The total weighted score reflects the strength
of the company’s position. Great Cups of Coffee Company scored at 2.40 and Starbuck’s at 3.00.
In order for a company’s position to be considered as strong, the total weighted score must be
higher than 2.50 when using a range of 1.0 (low) to 4.0 (high). Hunger & Wheelen state, “An
average company should have a total weighted score of 3.0” (2011, p. 46).

27
Industry Matrix
Key Success
Factors Weight
Great Cups
Rating
Great Cups
Weighted Score
Starbucks
Rating
Starbucks
Weighted
Score
Customers
Employees
Expansion
Finances
Innovation
Marketing
Product
Technology
0.12
0.12
0.12
0.15
0.12
0.12
0.13
0.12
3
3
2
3
1
2
3
2
0.36
0.36
0.24
0.45
0.12
0.24
0.39
0.24
4
4
3
3
3
2
3
2
0.48
0.48
0.36
0.45
0.36
0.24
0.39
0.24
Totals 1.00 2.40 3.00
Figure 2. Industry matrix. The matrix analyzes a range of factors impacting the company,
employees, and the industry.
Competitive/Internal Analysis (Mira Cosgrove)
Competitive Analysis of Starbucks, Dunkin’ Donuts and Tim Hortons
When creating a business there comes a point in time when one needs to look into the
competitors. Currently, the top three leading coffee competitors for Great Cups of Coffee
Company are Starbucks Corporation, Dunkin’ Donuts and Tim Hortons. The following is an
overview of Great Cup’s internal affairs and researched competitors’ activities. In Section 1 of
this paper, the competitor activities will be discussed in greater detail and will include the
following analysis: organization’s history, structure, culture, financial and economic indicators,
current events, distinctive and core competencies, sources of competitive advantages, Human
Resource Departments notables, value chain and product life cycles, competitor’s strengths and
weaknesses, marketing mix and communication technologies and strategies and lastly, personal
coffee shop observations conducted by teammates of Best Solutions Consulting Firm.
In Section 2, the following overview and internal analysis of Great Cups of Coffee
Company will be discussed: GC3 history, strategic overview (including distinctive and core

28
competencies and sources of competitive advantages; a Financial analysis (including a ratio
analysis, a review of financial performance, and identification of strategic financial issues for the
company; a HR analysis (including HR department competencies, HRM responsibilities, HRM
order, corporate structure, and corporate culture as well as identification of strategic HR issues
for the company; a Marketing analysis (including marketing mix, positioning strategy, value
chain analysis, product life cycle information, and summary of strategic marketing issues for the
company); an EMarketing analysis (including a critique of the current web site and analysis of
the company’s current eMarketing strategies and tactics) and lastly, summary of the company’s
strengths and weaknesses.
Starbucks Corporation Competitive Analysis
History of Starbucks’ Corporation
Starbucks opened its first store on March 30, 1971, in Seattle, Washington. Intriguingly,
the founders Jerry Baldwin, Zev Siegl and Gordon Bowker intended Starbucks not as a place to
drink freshly brewed coffee, but as a place to buy freshly roasted beans (Marshall, 2015). Its
company logo and theme started off as a brown mermaid, which the founders friends from the
University of San Francisco, (all instructed in the art of roasting by Peet’s Coffee and Tea) had
created. Founder Alfred Peet, drew the theme of their new coffee company from nautical
mythology, commissioning that first version of the company’s signature siren and picking a
name out of Herman Melville’s Moby-Dick – Starbucks having narrowly pipped the second-
place contender, Pequod (Marshall, 2015). In 1982, Howard Schultz was hired to manage retail
sales and marketing. Five years later in 1987, Howard Schultz becomes Chief Executive Officer
(CEO) and buys the six-unit Starbucks chain from the original owners for $4 million, merges
them into Il Giornale, renames his company Starbucks Corporation, and begins a national

29
expansion; Baldwin remains president of the now separate Peet's Coffee and Tea business
(Reference for Business, n.d).
“Starbucks’ greatest period of expansion began in the early 1990s: having already
opened money-losing branches in the US-Midwest and British Columbia, it then moved
profitably into California in 1991, making its initial public offering on the stock market
the following year. Starbucks seemed unstoppable throughout that decade and most of
the next, opening on average two new stores every day until 2007. But the increasingly
globalized company’s fortunes started to mirror those of the global economy, and the
following year saw Starbucks shutter hundreds of locations, a grim necessity unthinkable
just a decade earlier” (Marshall, 2015).
Schultz, who had stepped down from day-to-day operations several years before, returned as
CEO in 2008 and began a massive overhaul of the company. He shut down 900 of its poorest-
performing stores, retrained employees, renovated shops and reintroduced processes that brought
back the coffee aroma customers loved. Today, as Starbucks enters another period of rapid
growth that includes a push into new countries, new products, new brands and new outlets such
as grocery stores, what’s to prevent the company from once again losing its way? “There are lots
of safeguards in place,” Schultz says (Helm, 2014).
Currently, Starbucks Corporation logo is a green mermaid and it is the leading roaster,
retailer, and marketer of specialty coffee in the world. Its operations include upwards of 7,300
coffee shops and kiosks in the United States, and nearly 3,000 in 34 other countries, with the
largest numbers located in Japan, Canada, the United Kingdom, China, Taiwan, South Korea, the
Philippines, Thailand, Malaysia, Mexico, Australia, Germany, and New Zealand. In addition to
a variety of coffees and coffee drinks, Starbucks shops also feature Tazo teas; pastries and other

30
food items; espresso machines, coffee brewers, and other coffee- and tea-related items; and
music CDs. The company also sells many of these products via mail order and online at
starbucks.com. It also wholesales its coffee to restaurants, businesses, education and healthcare
institutions, hotels, and airlines (Reference for Business, n.d).
Starbucks’ Corporate Structure
The Starbucks’ organizational structure is not an uncommon one. Starbucks executives
oversee the company from its headquarters in the city of its birth, Seattle, Washington. Around
the country, district managers oversee regional groupings of stores. These district managers
report directly to the Starbucks Corporation. At each store, a store manager acts as the chief.
Under this store manager are collections of shift supervisors who act as managers on duty when
the store manager is out. The shift supervisors are the rest of the employees, referred to as
baristas (Schreiner, n.d). Furthermore, according to Business Wire Starbucks’ Investor Relations
Finance Release, “Starbucks retail business is currently structured as Starbucks U.S. and
Starbucks Coffee International (SCI), which encompasses 54 markets outside the United States
(Business Wire, 2011).
Starbucks will move to a new three-region organizational structure. A president for each
region will oversee the company-operated retail business, working closely with both the licensed
and joint-venture business partners in each market. They will also work closely with Starbucks
Global Consumer Products and Foodservice team to continue building out Starbucks brands and
channels in each region.” In the China and Asia Pacific Region, John Culver has been named
president. In the Americas Region, Cliff Burrows will expand his current role as president,
Starbucks U.S. to president, Americas, with responsibility for the United States, Canada, Mexico
and Latin America. Lastly, in the Europe, United Kingdom, Middle East, Russia and Africa

31
(EMEA), Michelle Gass has been named president. All three new regional presidents, Burrows,
Culver and Gass, along with Hansberry and Young-Scrivner will report to Schultz (Business
Wire, 2011).
Starbucks’ Corporate Culture
According to McShane and Von Glinow, “organizational culture consists of the values
and assumptions shared within an organization. It defines what is important and unimportant in
the company and, consequently, directs everyone in the organization toward the right way of
doing things” (McShane & Von Glinow p. 252). Starbucks CEO Howard Schultz is a proponent
of the strategic choice idea. Since Schultz became involved with Starbucks in 1983, his guiding
vision has defined the company’s direction and goals, working to build a close-knit organization
that embraced a set of the values that closely matched his personal ethical code: “Whatever your
values, your guiding principles, you have to take steps to inculcate them in the organization so
that they can guide every decision, every hire, every strategic objective you set” (Schultz &
Jones Yang, 1997, p. 81).
Therefore, Starbucks Corporation throughout the years significantly has exceeded in
taking care of their employees by implementing the high-road employer model towards their
employees’ benefits. For instance, Starbucks’ employees receive higher minimum wages, offers
health insurance and medical benefits to their employees, to include their part-time employees.
This business strategic effort has built motivation and commitment in their employees, which in
return has permitted Starbucks to be an exceptional and effective competitor in the coffee
industry (Walker and DeBusk, 2008, p.3). Furthermore, “Starbucks takes great pains to project
the image of a high-road employer by soliciting official company literature, advertising
campaigns, public communications and statements to shareholders” (Walker and DeBusk, 2008,

32
p.8).
Despite this strategic effort, in recent Starbucks’ case studies some employees appear not
being fully committed or satisfied on how this organization’s management treats them (Walker
and DeBusk, 2008, p.12).” Regrettably, this type of human behavior occasionally does have
some impact to the organization’s culture. Walker and DeBusk (2008) state, “Starbucks has
moved away from a high-road model emphasizing normative control and has moved toward
more remunerative and coercive mechanisms of control.” (p.27). Although Starbucks has
implemented some changes to their business strategy over the years, it continues to be a strong,
prominent business competitor in the coffee industry compared to other coffee roasters, such as,
Great Cups Coffee Company, Dunkin Donuts and Tim Hortons.
Starbucks Current Events
Starbucks celebrated in the spirit of giving back and will extend its efforts through
September 2016. A coffee tree will be donated “to a farmer who has been impacted by coffee
rust, a plant fungus that impacts billions of coffee trees worldwide” (Schoenfeld & Scott, 2015)
for each bag of coffee purchased.
On a grander scale, Starbucks opened its 500th store in Mexico. The new store falls on
the heels of a campaign launched by the company in 2014 centered on tree revitalization. The
campaign includes a program, called “Todos Sembramos Café” (We All Grow Coffee). The
program aids farmers with improving the quality of their crops through education and training in
sustainable agriculture (Starbucks Newsroom, 2015). As mentioned earlier, the initiative was
sparked by need for combatting the spread of coffee leaf rust. Coffee consumption in Mexico is
expected to rise by 60% from 2005 to 2016. The advertisement for Starbucks’ One Tree for
Every Bag campaign can be seen in Appendix A. The Starbucks retail chain spans across “more

33
than 22,000 stores in 68 countries” (Karuletwa, Suppa, Rivera-Acuna, Sefu, Thi Anh Chi, Cho,
& Resani, 2015).
Starbucks’ most recent venture will encompass a strategic move in the area of social
media through mobile order and pay in Canada. Lemus, Von Feigenblatt, Orta, & Rivero
identified three
“major innovative steps that Starbucks had implemented over the years:
a) deploying social media to effectively support the branding and marketing position
of the product,
b) understanding the role of a new channel to use the social media, and
c) relying on effective strategies to protect consumers’ engagement with the
products” (2015, p. 27).
The mobile app will allow customers to order their favorite food and beverage, and pick it up at
the nearest location participating in the plan. Additionally, the app includes a loyalty program.
The service will begin on October 13, 2015 in 300 of Canada’s Greater Toronto Area and expand
to other cities in 2016 (CNW Group, 2015). The launch was successful in US stores prompting
further expansions.
Starbucks also plans to expand its “quick-turn business” (Foroohar, 2015, p. 24) by using
coffee trucks for locations and used shipping (cargo) containers to build stores. The company’s
CEO, Howard Schultz expressed concerns about direct competition with McDonald’s, Dunkin’
Donuts, and “budget outfits like 7-Eleven” (2015, p. 22). Changes in the economic landscape
are triggering a demand for products tailored to meet the needs of Starbucks low-end consumers.
Additionally, Starbucks’ competitor, McDonald’s recently announced it will start serving all-day
breakfast nationwide beginning October 6, 2015.

34
Starbucks’ Financial and Economic Indicators
Starbucks Corp., which is one the largest coffee industry in the world, is operating very
well; their financial and economic indicators have demonstrated it. Their sales have increased
enormously in the past year from 10.71B (billion) to 16.45B which means that their net income
has increased due to their high sale volume (Annual Financials for Starbucks Corp., n.d).
Moreover, the sales growth has improved 4.9% in 2014 from the previous year sale (Annual
Financials for Starbucks Corp., n.d). Their net income for the year of 2014 was 2.07B; it has
grown a lot from the previous year (2013) net income of 8.3M. Their profitability for the past
five years is doing great because Starbucks has had a positive number of net incomes.
Based on Starbucks financial results, the company has a long-term ability to pay off its debts
obligations off and survive challenges because its current ratio was 1.37 in 2014 (Annual
Financials for Starbucks Corp., n.d). In 2014, its debt ratio was 50.96%, their account
receivables (AR) grew 12.40% and AR turnover ratio ended up at 26.06 (Annual Financials for
Starbucks Corp., n.d). The company itself is performing their activities efficiently. Overall,
Starbucks is doing well; their assets and expenses are controlled proficiently.
Competitive Analysis of Dunkin’ Donuts
History of Dunkin’ Donuts
In 1946, Rosenberg had started his own food truck business serving industrial workers.
He noticed that his main source of sales were coffee and donuts. He decided to open his own
shop in 1948 called the Open Kettle where he only served coffee and donuts. He soon changed
the name to Dunkin’ Donuts in 1950 in Quincy Massachusetts. His early success allowed him to
open a few more stores, and in 1955 he licensed the first franchise. By 1963 there were 100

35
shops with sales of $10 million per year. The company grew by 40 percent per year and went
public in 1968.
The start-up of service supporting centers like the Dunkin’ Donuts University and
franchise owner advisory council continued the success for the company. The first international
shop opened in 1970 in Japan. A franchise-owned purchasing cooperative was created in 1974
which allowed franchises to receive heavy volume discounts. Regional distribution centers were
then established, new product lines developed and by 1990 the company was acquired. Dunkin’
Donuts continues to redesign itself to stay ahead of its competitors. Some of these initiatives are
co-branding with Baskin Robbins with both stores being in one building, new shop layouts and
offering freshly baked bagels (Molishever, 1996).
Dunkin’ Donuts Corporate Structure
The company structure begins with Dunkin' Brands Group being the parent company of
Dunkin' Donuts and Baskin-Robbins. They fall under the category of franchisors of quick
service restaurants (QSR) serving hot and cold coffee and baked goods, as well as hard-serve ice
cream. The top management layer has a Chairman/CFO at the top, seven board members,
followed by a senior management team to include Chief Information and Strategy Officer, Chief
Supply Officer and Senior Vice President, Chief Communications Officer and Senior Vice
President, Chief Legal and Senior HR Officer, President of Global Marketing and Innovation,
President of Baskin-Robbins U.S. and Canada, President of Dunkin' Donuts U.S. and Canada
and Vice President of Product Innovation and Executive Chef (Company Report, 2015).
In an article from the HR Magazine Dunkin’ Brands ties the employee training incentives with
its business goals (Krell, 2013). Franchise owners and store managers can choose to use these
training programs for their employees. These incentives include recognition such as certificates

36
or trophies. They can also be cash awards, money that can be used for gifts, or even a chance to
meet with the executive chefs of Dunkin' Donuts or Baskin-Robbins. The company incentivizes
their employees to learn more about the store and rewards these employees with gifts that the
employee values. Dunkin’ Brands promotes their reward and recognize program utilizing the
company newsletters. The company also involves store managers and employees in selecting the
training incentives. By providing the training face to face corporate is able to know their
employees better and understand what motivates that particular store (Krell, 2013).
Dunkin’ Donuts Current Events
Dunkin’ Donuts ignited sporadic movement in the stock market with its recent public
announcement about closing 100 stores. The stores are under ownership of the “Speedway gas
station and convenience store chain” (La Monica, 2015). In addition, the company’s CEO, Nigel
Travis, expressed outrage over a heated debate surrounding the increase of minimum wage to
$15.00 per hour. La Monica reports Dunkin’ Donuts shares plummeted by more than 12% in
response to the news. In light of the Speedway store closings, the company has plans to open
more stores in California and internationally. Dunkin’ also faces challenges related to the spike
in egg prices brought on by the spread of the avian, or bird flu outbreak. Rivalry among
competitors has intensified immensely.
On July 21, 2015 Dunkin’ Donuts announced it would sign an agreement to enter the
market in Poland. The company plans to open 44 stores in the upcoming years. Paul Twohig,
President of Dunkin’ Donuts, believes Poland is an ideal venture because of its “rich coffee and
culture and a growing coffee market” (Drake, 2015). The number of stores currently under the
Dunkin’ Donuts chain totals 11,400 restaurants locations in 39 countries. On September 22,
2015 Dunkin’ announced plans to enter into Switzerland. The retailer will develop 30

37
restaurants over a seven-year period (Cronin, 2015). Twohig contributes the success of the plan
to the “wealth of local retail and business experience” (Cronin, 2015) of the franchise group for
Switzerland.
Dunkin’ Donuts works diligently to improve its menu offerings by responding to the
demands of its customers. The company has partnered with Reese’s to add new peanut butter
squares to its menus, and will also add pumpkin cheesecakes squares this fall. In an effort to sell
its iced coffees this summer, and reach the 18 – to 34-year-old segment, Dunkin’ launched an
initiative called “DD Summer Soundtrack” (Heine, 2015). The chain sponsored a series of five
concerts and promoted the music and products via “Spotify, Snapchat, Instagram, YouTube,
Twitter, Vine, Facebook and Periscope” (2015). The company plans to look for other
opportunities to expand in the music venture by incorporating other performers.
September 29, 2015 marked a special occasion for retail coffee chains throughout the
coffee industry. Retailers and purveyors proudly promoted their goods with flare in celebration
of National Coffee Day. Some stores, such as Dunkin’ Donuts and Wawa, offered free 12- to
24-ounce cups of coffee; while others offered deals such as 50% off on iced coffees. Other deals
included texting a promo code for free coffee or discounts on online coffee items. Krispy Kreme
upped the ante with free coffee and a glazed donut (Yagoda, 2015). Another retailer, Caribou
Coffee, did not offer free cups of coffee. However, the chain celebrated by donating one cup of
coffee to nurses and families in cancer centers for every cup of Amy’s Blend coffee that was sold
(Yagoda, 2015).
Dunkin Donuts Financial and Economic Indicators
Dunkin Donuts, which is also considered as one of the competitors of Great Cup Coffee,
has also good financial and economic indicators to consider for comparison. The company has

38
generated a net income of 176.36M, which came from 4.9% sale growth in the year 2014
(Annual Financials for Dunkin' Brands Group Inc., n.d). Their profit had been increasing
extremely in the past five years. It grew from 26.86M in 2010 to 176.36M; the company is
doing well in terms of generating a high net income (Annual Financials for Dunkin' Brands
Group Inc., n.d).
On the other hand, Dunkin Donut had a current ratio 1.24, account receivable growth of
31.71% and AR turnover of 7.13 for the year of 2014, and a debt ratio of 88.20%, (Annual
Financials for Dunkin' Brands Group Inc., n.d). Their current ratio is acceptable because it
shows that Dunkin Donut has the ability to pay their debt obligations on time. However, the
company needs to be very conscious about their liabilities since their debt ratio is pretty to close
100%. This is not good for any companies to attain because they may have problem to borrow
money. Based on their balance sheet of 2014, their total liabilities have been controlled in the
last five years and they haven’t had any short-term debts in the past three years.
Competitive Analysis of Tim Hortons
History of Tim Hortons
Tim Hortons first opened in 1964 by a famous Canadian professional hockey player, Tim
Horton. The first shop was in Hamilton, Ontario and only served coffee and freshly made
donuts. Ron Joyce owned one of the franchises and soon became a full partner in the company.
Following Tim Horton’s untimely death in an auto accident many years ago, Ron Joyce took
control of the company and led it to the giant of a QSR that it is today. Joyce ran the company
for the first 30 years of its life where the company became a Canadian icon. Joyce sold Tim
Hortons in 1995 to Wendy’s International (Maich, 2006). In 2006, Tim Hortons completed its
initial public offering and became a separate company. In December of 2014 Tim Hortons

39
became owned by Restaurants Brand International, which includes Burger King (Tim Horton’s,
2015).
TDL Group Corporation is the licensing company for the Tim Hortons franchises. They
employ over 1800 employees in their principal and regional offices, distribution centers and
manufacturing plants. The franchised stores have over 96,000 employees. The chain receives
support from the following corporate departments; development, legal, construction, franchising,
human resources, operations, research and development, purchasing, finance, distribution,
marketing and corporate communication, and information technology. A franchise advisory
board made up of 16 restaurant managers meets quarterly to provide input on the most
challenging issues facing the company (Tim Hortons, 2015).
Tim Horton’s Corporate Structure
Tim Horton’s corporate culture is mixed at best. The company has good programs
ingrained in its culture including its sustainability program and socio-responsibility program.
The sustainability program was ranked in the top 50 for best corporate citizenship in the 2015
Corporate Knights ranking. This is for their work in waste recycling, use of water and energy.
Their executive pay is linked to corporate responsibility targets, called paylink, and the company
has its own sustainability department (Simon, 2015).
Since the company came under Restaurant Brands International this area is in question as
to whether it will continue based on financial cuts needed. The company has always had a good
reputation in charitable organizations especially their well known, Tim Hortons Children’s
Foundation, which allows thousands of kids to go to camps every year along with many other
organizations (Tim Hortons, 2015). In recent years, Tim Hortons has struggled with its identity,
deciding where locations should be set up, breakfast and lunch items, and even in Canada the

40
market is changing. For the first time in years this Canadian national symbol in the food industry
is seeing sales going down (Barmak, 2013). One area that hasn’t changed is its focus and pride
that this is a family friendly store and that even though it is an international chain each store feels
like its own small town donut and coffee shop (Philip, 2014).
Tim Hortons Financial and Economic Indicators
Tim Hortons Inc. preserved same-store sales growth of 6.8% in the U.S., based on their
third quarter annual report of 2014 (Quarterly Report, 2014). They had an operating income of
$7.4M (million) in United States. It has augmented by $4.7M from the previous report of 2013
(Quarterly Report, 2014). Their income growth has benefited from a unique business model that
includes revenue streams from distribution sales, rent and royalties, and franchise fees. Tim
Horton’s system wide and same-store sales growth have enhanced in contrast to the first quarter
of 2013. They continue to operate in a challenging macro-economic climate with low growth, but
they are following their unique business model from day one.
Tim Hortons Current Events
Tim Hortons was recently confronted with the revelation of a fake Tim Hortons store
sighted in South Korea. The store is operated under the name “Tim House” (Dehaas, 2015). A
photo can be seen in Appendix B; Figure 1. A Canadian passerby, A.J. Specht, noted the sign in
March while biking in Seoul. She posted a photo to her Facebook page for her fellow Canadians
to see. Another such sighting involved pre-packaged instant coffee labeled “Tim Mortons”
instead of Tim Hortons. It was discovered by Canadian Mike Elgar (Bogart, 2015) who reported
it to the Toronto Star. A photo depicting the counterfeit packages can be seen in Appendix B;
Figure 2. Tim Hortons was not impressed by any means and is taking action to combat such
violations of its copyrights and intellectual properties.

41
On a positive note, Tim Hortons is experiencing rapid growth. Jamie Sturgeon of Global
News reported Tim Hortons executives as stating, “Canada has yet to hit peak” (2015). Between
the months of April through June, the chain added 46 locations doubling “the number of
openings in the same timeframe last year” (Sturgeon, 2015). The company is positioning itself
to widen the gap with its competition, McDonald’s. Restaurant sales are up 5.5% and expected
to grow at a rate of 1% through 2017. In order to respond to consumer demand, Tim Hortons
plans to enhance its product lines, “densify” locations in urban areas, and move into “non-
traditional” formats such as kiosks in hospitals and universities (2015). Expansion in US
markets is planned.
Distinctive Competencies of Starbucks, Dunkin’ Donuts and Tim Hortons
The authors Hunger and Wheelen Essentials of Strategic Management (2011) defines
competency “as the cross-functional integration and coordination of capabilities. A core
competency is a collection of competencies that cross-divisional boundaries, is widespread
within the corporation, and is something that a corporation can do exceedingly well.
Furthermore, when a core competency is superior to those of the competition, they are called
distinctive competencies.” (p. 53). Below are the trends notable to be the distinctive
competencies of the Great Cups of Coffee Company’s competitors in the coffee industry:
Starbucks Corporation, Dunkin Donuts and Tim Hortons.
Starbucks’ Distinctive Competencies
Starbucks continues to be a leading competitor in the coffee industry due to their core
competencies that are significantly distinctive towards other industry coffee retailers and
marketers around the world. For instance, authors Lemus, Von Feigenblatt, Orta and Rivero
(2015) state, “the company’s values and philosophy are strongly instilled in the sustainability of

42
employees, coffee farmers, and coffee growing practices.” (p. 28). Starbucks Corporation is well
known to have an outstanding and innovation training development program, which enhances
employee competence and commitment to the corporation’s organizational culture. According to
Walker and DeBusk (2008), “the company spends about twice as much on training as it does on
advertising (the reverse is true of most comparable firms); its turnover rate has hovered at less
than half the industry average; and the company boasts an 82% employee job satisfaction rate,
versus an average of 50% from a random sample of employers (p.10). Additionally, Starbucks
Corporation values its employees pay benefits and provide higher pay wages and offer full
medical coverage to its employees, to include their part-timers. Thus, Starbucks’ takes pride in
employee-customer satisfaction, which has paid huge dividends in the success of this mega
corporation.
Dunkin’ Donuts’ Distinctive Competencies
Unlike Starbucks, Dunkin Donuts has successfully joined in the breakfast line franchising to
their daily business operations. According to Dunkin’ Brands report (2014), “the company had
more than 18,000 points of distribution in nearly 60 countries.” In today’s business world,
Dunkin Donuts business strategy has paid huge dividends and remains very competitive in the
coffee industry. Additionally, another distinctive competency of Dunkin Donuts is the quality of
customer services. For instance, they value customer’s time and provide top quality fast food
service in their drive-thru windows (Boyle & Neering, 2006, p. 53). Due to this distinctive
competency, customers are extremely satisfied by their customer service and remain loyal to this
coffee mega retailer and marketer.

43
Tim Hortons’ Distinctive Competencies
Tim Hortons’ distinctive competencies rely heavily on their innovative marketing
techniques that have been enormously successful during the past three decades. According to
Cathy Whelan Molloy, TDL’s vice-president of brand advertising and merchandising, says, “In
everything we do, we’ve always focused on the concept of being that friendly, unpretentious,
good neighbor you’d want living down the block from you” (Pearson, 2012, p.35). Tim
Hortons’ Coffee Shops incorporate genuine customer service, provide superior quality of their
products, exhibit trustworthiness, and pay special emphasis on giving back to the community by
participating in the local communities with the creation of the nonprofit Tim Hortons Children’s
Foundation (Pearson, 2012, p.35).
Therefore, due to its remarkable marketing business strategies, this corporation takes
extreme pride on providing fresh coffee blends and donuts to its customers around the clock.
They understand the customer service needs to be genuine and embrace customer feedback from
their internal surveys; hence, continually implementing and prioritizing customer satisfaction.
According to Pearson Education (2012), Tim Hortons is well known to “focus on the customer
and is organized to respond effectively to changing customer needs. They have well-staffed
marketing departments, and all their other departments—manufacturing, finance, research and
development, personnel, purchasing—also accept the concept that the customer is king.” (p.45).
Due to these virtues, Tim Hortons’ coffee shops and franchises have become a famous
commodity all around Canada and other parts of the world.
In summary, even though all three competitors have their own unique distinctive
competencies, they all have been very successful in the coffee industry throughout the years due
to perseverance and well thought out business strategies that are aligned with their company’s

44
vision and mission. These competitive coffee retailers capitalized on their own core
competencies and found innovative marketing methods that are superior respectfully from their
competitors in today’s coffee business industries.
Core Competencies of Starbucks, Dunkin Donuts’ and Tim Hortons
For companies to remain successful and provide valued products and services to
customers, it is important to leverage core competencies. Core competencies are defined as “a
firm’s strategic resources that reflect the collective learning in the organization” (Dess, Lumpkin,
Eisner, & McNamara, 2014, p. 183). Such resources are derived from technical and
nontechnical skills including experience, innovation, and management. The goal of most
companies is to develop core competencies that are unique and “difficult for competitors to
imitate or find substitutes for” (p. 183). In the following sections, the core competencies of three
Great Cups of Coffee Company competitors; Starbucks, Dunkin’ Donuts, and Tim Hortons will
be examined. Each company uses its brand name and core competencies to enhance their image,
build customer loyalty, and maximize human capital.
Starbucks’ Core Competencies
Starbucks Corporation, a leading competitor with” more than 21,000 stores in over 65
countries” (Starbucks Corporation, 2015), boasts a highly recognizable brand image. The
company’s values and philosophy are strongly engrafted in “sustainability of employees, coffee
farmers, and coffee growing practices” (Lemus, von Feigenblatt, Orta, & Rivero, 2015, p. 28).
The values and philosophy are upheld by sound core competencies; including its employee
training and engagement, “legendary customer service, product innovation, and a pattern of
transformational and transactional leadership styles” (p. 34). Starbucks prides itself on creating a
sense of community by strategically selecting its locations and places where coffee is grown.

45
The company believes in balancing “profitability with a social conscience” (Starbucks
Newsroom, 2013). Within each store, the focus is on creating an atmosphere of comfort and
inspiration.
The employees of Starbucks are highly-trained and motivated. The high level of
expected professionalism has been groomed over the company’s many years of service. One of
the company’s distinct training techniques is used as employees help customers “select a specific
product based on their personal taste” (Lemus von Feigenblatt, Orta, & Rivero, 2015, p. 33).
Starbucks has appeared on “countless “Best Places to Work” lists and has garnered media
attention for its positive treatment of employees (or “partners” as Starbucks prefers to call them)”
(Birkner, 2015). The energetic and friendly customer service is consistent from store to store.
The company shares the same legendary customer service in its relationships with suppliers,
roasters, farmers, and other business associates.
Product innovation is a well-known aspect of Starbucks’ operations. Whether the
company is finding a unique niche in a foreign country, or expanding its food offerings or new
coffees, the brand name prevails in the marketplace. The passion for coffee has driven the
company since its inception. Starbucks reinforces the passion by continuing to maintain
company-owned stores and refusing to franchise. In the words of CEO, Howard Schultz
“franchising is almost a forbidden word at Starbucks” (Schultz, 1997, p. 172). In this manner the
company retains control over training and operations in its stores. Authenticity of Starbucks
products can also be retained throughout the chain.
Corporate leadership is vital at Starbucks; however, the company promotes personal
leadership as well. Every employee is given “a little green booklet, called The Green Apron
Book as a reminder of Starbucks mission (Baer & Goldstein, 2007, p. 4). The author states, “The

46
principles are literally brewed into the way we work, make decisions, confront problems, care
about one another, persevere, and create opportunities for our future” (p. 4). Baer uses the
principles for coaching other leaders at all levels.
At Starbucks, a transformational leadership style is exhibited by leaders who recognize
the need for change and inspire others within the company to commit to their vision. Leadership
of this type requires an ethical culture that promotes behavioral support of the company’s vision
and mission statements (Lemus, von Feigenblatt, Orta, & Rivero, 2015, p. 34). Howard Schultz
believed in remaining true to the company’s core values and adopted a transformational
leadership style to serve as a role model for Starbucks. He passed the baton to the new CEO,
Orin Smith and the Starbucks management team in 2000 (p. 27).
The second type of leadership style exhibited by Starbucks is called transactional.
Establishing clear goals and objectives undergirded by “either punishments or rewards to
encourage compliance” is the basis of the transactional leadership style
(BusinessDictionary.com, 2015). A company’s transactional leadership style is tied to the day-
to-day operations, supervision, and performance. An example of a transactional leadership quote
from Howard Shultz reads as follows:
“Starbucks is not an advertiser; people think we are a great marketing company, but in
fact we spend very little money on marketing and more money on training our people
than advertising” (Spahr, 2015).
Dunkin’ Donuts’ Core Competencies
Dunkin’ Donuts Chairman and Chief Executive Officer, Jon Luther, summed up the
company’s core competencies in the following statement: “Our core competency is the a.m., and
part of that a.m. is our breakfast sandwich line” (Caldwell, 2007, p. 72). At the time, Luther was

47
touting the new sausage supreme omelet, which appeared on the menu in September 2006. The
development of this product initiated a means for “franchisees to grow breakfast sales without
investing in new equipment” (p. 72). One challenge the research and development team faced
with the product was how to keep the peppers from bleeding and turning the eggs a reddish
color. The food technologist and manufacturer were able to develop a process that stabilized the
color, thus, correcting the problem (p. 72).
Although, Luther cited the breakfast line as Dunkin’ Donuts core competency, the
company has many outstanding attributes. As of 2014, the company had “more than 18,000
points of distribution in nearly 60 countries” (Dunkin’ Brands, 2014). Unlike Starbucks,
franchising has been a strong avenue of growth for almost 120 years in the Dunkin’ chain. From
this fact, it can be determined that another of Dunkin’ Donuts core competencies is satisfactory
customer service. It also speaks to the quality of the products provided by the company.
Satisfied customers are prone to continually patronize a business that offers an enjoyable
experience and speedy service.
Dunkin’ Donuts places great emphasis on fast service. Drive-thru lanes were added for
customers who only wanted coffee. Items on the menu include “cookies and ham-and-cheese
melts” (Boyle & Neering, 2006, p. 53). The goal was to have food in the customer’s hand in 150
seconds or less (p. 53). Over the years, Dunkin’ Donuts has tried many innovative strategies to
remain on the cutting edge of new technology. Additionally, the company spends substantial
amounts on advertising in promoting brand awareness.
Tim Hortons’ Core Competencies
Tim Hortons, also known as “Tim’s” or “Timmy’s,” (Simon, 2015, p. 46) is in the midst
of a transitional year as it adapts to a merger with Burger King and new leadership of Brazil’s 3G

48
Capital Partners. The merger is considered a huge deal in the expansion of Tim Hortons into the
U.S. coffee chains. Tim Hortons has endeavored to remain true to its list of core values to be:
“friendly, neighborly, unpretentious, gently playful, frugal, trustworthy, and clean,” (Pearson
Education, 2012, p. 35). In order to meet said standards, Tim Hortons’ core competencies evolve
around outstanding quality, superior customer service, community leadership, innovation, and
exceptional training.
The customer service at Tim Hortons presents the customer with an always fresh cup of
coffee. The selection of premium blends, and the company’s signature blend, are of the highest
quality. Tim’s relies heavily on feedback from customers and franchisees for continuous
improvement and customer satisfaction. The company also believes in giving back to the
community by supporting local sporting programs for children, and charities. The communities
in which their coffees are grown also receive benefits through Tim’s sustainability efforts.
Tim Hortons takes pride in employee development and engagement. The Tim Hortons
University was launched in January 2012. The company’s goal is to become one team “focused
on delivering the ultimate guest experience” (Tim Hortons, 2015). Below is a depiction of the
training model adopted by the company for internal and external opportunities for training and
development. The model is featured on the Tim Hortons University website.
Figure 3. Tim Hortons’ Training Model.

49
Tim’s understands, in some cases, employees will pursue other career aspirations. However, the
exceptional training will equip the individuals with valuable leadership and transferrable skills.
Sources of Strategic Advantage for Starbucks, Dunkin’ Donuts and Tim Hortons
Starbucks’ Sources of Strategic Advantage
According to Vitez (2015), “A competitive advantage allows a company to produce or
sell goods more effectively than another business.” Starbucks has risen to be one of the number
one competitors in the coffee business and can attribute that to a couple of distinctive ways they
do business.
“Businesses that need to buy significant quantities of coffee can hedge against rising
coffee price by taking up a position in the coffee futures market. These companies can
employ what is known as a long hedge to secure a purchase price for a supply of coffee
that they will require sometime in the future” (The Options Guide 2015).
Weather conditions in Brazil, the region that supplies much of the world’s coffee is driving the
cost of the Arabica bean to high prices. Starbucks has capitalized on the option to hedge by
forming a contract to purchase coffee at a given price. According to Cohen (2015) “Several of
the U.S.'s largest roasters, including Starbucks and Keurig Green Mountain locked in prices on
more than 90 percent of their coffee needs for 2015 by the end of the 2014 calendar year.”
Another competitive advantage of Starbucks is their product innovation that looks for
new products to broaden their customer markets. In the external and industry analysis, the threat
of substitutes was a strong reality for the coffee industry and Starbucks has addressed that issue
with the expansion of tea products in their stores. According to Starbucks (2014), “Starbucks is
planning to invest in the rapidly growing beverage categories of juice and tea. Starbucks
acquired Evolution Fresh in 2011 and Teavana in 2012, and Schultz believes the tea market has

50
the greatest potential globally.” By expanding to substitutes such as tea, Starbucks can stop a
large substitute threat. Also by obtaining a healthy product such as the offerings of Evolution
fresh, they are branching out into a health conscious customer base that is growing exponentially.
Dunkin’ Donuts’ Sources of Strategic Advantage
Dunkin Donuts has taken a unique approach to competitive advantage by providing
“asset-light” franchising. According to Fontevecchia (2013),
“Dunkin’ Brands has developed an interesting business model: an asset-light platform
for entrepreneurial franchisees to build their network of stores in a context that
transcends the general economic environment. And it seems to be working, as shares in
Dunkin’ have outperformed every major rival over the past 12 months.”
This surge in growth seemed to have been short-lived amidst the news that Dunkin will close 100
stores, mostly in Speedway convenient stores. Entreprenuer.com (2015) lists Dunkin as the
number 11 of 500 top franchises to own.
Tim Hortons’ Sources of Strategic Advantage
Tim Hortons has been acquired by the fast food giant Burger King. Tim Hortons largely
operated in Canada and has expanded to the United States. There is much speculation as to why
the fast food giant decided to purchase Tim Hortons, but the number one reason was in regards to
Burger King making their breakfast presence stronger. According to Leonard and Wong (2014)
“Burger King doesn’t have much of a breakfast business. Tim Hortons is a coffee-and-
doughnuts joint; even if the chains stay two separate brands, breakfast dollars accrue to Burger
King. Overseas franchisees may add Tim Hortons to their mix of restaurant offerings.” After
making the analysis of possible competitive advantages of Tim Hortons, it is wise to say at this

51
time there is not one over Great Cups at this time but is a force to watch still as the international
market can propel sales for the Canadian coffee maker.
HR Notables for Starbucks, Dunkin’ Donuts and Tim Hortons
Human Resource notables are those unique things that stand out and can be used to draw
in potential employees or provide sustainability to an organization. The focus of providing those
standout opportunities provides a sense of belonging as well as a sense of pride that drives
institutions to a level of success not widely seen in other organizations. Three examples of these
HR notables are described below:
Starbucks’ HR Notables
Starbucks possesses several HR notables that put them in a league of their own. They
begin with the employee being referred to as a partner. This small gesture actually provides a
sense of ownership for each individual associated with the organization. The company goes on
to provide a 4-year bachelor’s degree through their College Achievement Plan to those that work
a minimum of 20 hours per week! (Starbucks Coffee Company) “Your Special Blend” is a
specific benefit package that is tailored specifically to the employee, which includes domestic
partnership benefits, and adoption packages (Starbucks Coffee Company). Employees even
receive Starbuck product weekly!
Dunkin Donuts’ HR Notables
Dunkin Donuts’ HR notables include benefits that are pro-rated based on hours worked
per week and include discounted services including auto and pet insurance, museum passes,
discounted movie tickets and so on (Dunkin Brands). An employee stock purchase plan is
available to eligible employees as well as a 401(k). Much of Dunkin Donuts benefits are based

52
on a generous standard package. Early release Fridays are available for all corporate employees
as well as an on-site fitness facility where applicable (Dunkin Brands).
Tim Hortons’ HR Notables
Tim Hortons did not seem to provide near the notables of the fore mentioned however,
the Standard of Business Practices manual that outlines the importance of an ethical workplace
and the specific responsibilities of the Tim Hortons employee is listed on the website (Tim
Hortons). This manual demonstrates the importance of professionalism within the organization.
The Team Tim Hortons Scholarship awards 220 team members, children and grandchildren are
eligible for the $1000 scholarship annually (Tim Hortons).
Value Chain Analysis of Starbucks, Dunkin’ Donuts and Tim Hortons
Starbucks’ Value Chain Analysis
Starbucks’ value chain analysis consists of a supply chain, operations, distribution,
marketing and sales, and service. The supply chain is coffee bean producers have chosen,
Operations are how the stores are operated, Distribution is storage and movement of products,
marketing and sales are marketing initiatives, and service is the high level customer service. The
following chart is seen below.
Figure 4. Starbuck’s value chain.
Dunkin’ Donuts’ Value Chain Analysis
Dunkin’ Donuts’ value chain analysis consists of a purchasing, operations, distribution,
marketing and sales, and service. The purchasing is coffee bean producers have chosen,
Supply
Chain
Operations Distribution
Marketing
and Sales
Service

53
Figure 5. Dunkin’ Donuts’ value chain.
Tim Hortons’ Value Chain Analysis
Tim Horton’s value chain is similar to Dunkin’ Donuts with that they are both small in
size so they have the same needs. The analysis consists of a purchasing, operations, distribution,
marketing and sales, and service. The purchasing is coffee bean producers have chosen,
Figure 6. Tim Hortons’ value chain.
Product Life Cycle of Starbucks, Dunkin’ Donuts and Tim Hortons
Starbucks’ Product Life Cycle
Starbucks is now at the end of its growth stage and entering maturity, according to some
industry experts (Lister, n.d). This has been determined because of Starbucks’ high brand
awareness, wide distribution, lower prices, and product modification that allow it to stay
Purchasing Operations Distribution
Marketing
and Sales
Service
Purchasing Operations Distribution
Marketing
and Sales
Service

54
distinctive (Lister, n.d). Also, Starbucks is now starting to cater its products to more specific
target markets (Lister, n.d). The following chart is seen below.
Figure 7. Starbucks’ product life cycle curve.
Dunkin’ Donuts’ Product Life Cycle
Dunkin’ Donuts is entering the maturity stage. For Dunkin’ Donuts to continue their
success they could recreate promotional awareness, rebranding, and expanding their menus.
They could promote their apparel, have a “create your own donut” option, and open more stores
in the Walmart and Target stores. The following chart shows the life cycle.
0
Introduction Growth Maturity Decline
Sales
Time
ProductLife CycleCurve

55
Figure 8. Dunkin’ Donut’s product life cycle curve.
Tim Hortons’ Product Life Cycle
Tim Hortons is also in its maturity stage. Not far from Dunkin’ Donuts, Tim Hortons has
to keep up the accomplishments and bring in new ideas. Tim Horton’s are working with local
waste management companies to expand recycling program and the whole cup has recently been
remade into trays through a new Tim Hortons initiative. They are working on becoming greener.
Below is the product life cycle chart for Tim Hortons.
0
Sales
Time

56
Figure 9. Tim Hortons’ product life cycle curve.
Strengths and Weaknesses of Starbucks, Dunkin’ Donuts and Tim Hortons
In 2004, the coffee industry accepted the Fair Trade Act, which instituted a pre-
determined price for coffee beans for all growers. This strengthened the economy of small
villages that were dependent upon coffee as a major industry as it gave them the opportunity to
sell their beans for the same price the corporate coffee farms received.
Starbucks’ Strengths and Weaknesses
From the very beginning Starbucks has set out to be a different kind of company and has
proven that by being named 2015 Worlds Most Ethical Company. Below is a list of Starbucks
strengths and weaknesses:
Strengths
 Starbucks’ recently launched first major advertising campaign that focuses on
customer satisfaction.
 They have a website for customers can give feedback about their experience.
 Social media promotions
 Closing unprofitable stores and devoting more attention to the remaining ones.
0
Sales
Time

57
Weaknesses
 Regional executives were ill-equipped to manage new stores.
 Misalignment of company goals.
 Failed to understand and ask what customers wanted. Did not take into account
when designing stores and new drinks.
 Not on-the-go customer friendly.
Dunkin’ Donuts’ Strengths and Weaknesses
Unlike Starbucks, Dunkin’ Donuts proudly promotes itself as American coffee and not
European coffee, emphasizing the value of hard work. According to a Dunkin’ Donuts press
release in 2012, Dunkin’ Donuts experiences strong customer loyalty, sweeping the coffee
category in the Brand Keys Customer Loyalty Engagement Index for the past six years. Below
are lists of Dunkin’s Donuts strengths and weaknesses:
Strengths
 Dunkin’ Donuts is known for their large variety of doughnuts, flavors and other
baked items and are available at more than 6,590 franchises and 4,815 alone are in
the US.
 Founded in 1950, Dunkin’ Donuts has today expanded in many countries and now
is one of the largest baked goods and coffee companies in the world.
 Dunkin’ Donuts is known for using 100% original Arabica coffee beans to make
their coffee.
Weaknesses
 Dunkin’ Donuts has limited marketing of their products and media advertising.
Tim Hortons’ Strengths and Weaknesses

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