Running Head: RESEARCH ANALYSIS FOR BUSINESSES 1 RESEARCH ANALYSIS FOR BUSINESSES 8 Research Analysis for Businesses Catrina Herbert ECO 561 University of Phoenix July 06, 2019 I decided to go with the Tesla Motor Company which is a company located in the United States and deals in the manufacture of electric cars. The market structure that the Tesla tor Company competes in is the oligopoly structure of market. The reason behind this is that it is accompany that only competes with other companies that deal in automobiles. This is a company which totally owns the market in which they deal in [I am not sure that I agree with you here. Check your facts and argument carefully.] and this is an advantage to them. The only issue is that there is still manufacturing of vehicles which run in diesel or gasoline which are cheaper compared to the electric ones. The company has been doing well over the years and in 2018 they produced more cars than ever before. They increased from 120,000 in 2017 to 350,000 in the next year which was 2018. The fact that they haven’t been able to sell most of their vehicles is because their prices are relatively high and folks with high incomes are the ones who could afford to get them. [Very good research! You supported your assertion well! It is important to have a valid citation to support such facts. Your citation was missing, though.] Comment by Eugene Kaufman: [Use 1-inch margins at the top, bottom, left, and right of every page.] Comment by Eugene Kaufman: What is that? Comment by Eugene Kaufman: [Check spelling of this word. This is an incorrect use of this word. Please consult a dictionary to find the word's definition and to locate the right word for this context.] There are various factors which goes a long way to prevent other investors from falling into this path. The following are the factors which obscure them, they include; first is the cost of production. The production of electric cars is extremely costly and before a person thinks about this, they should have billions of dollars with them. As much as the government provides incentives to help with the production, still it would be a lot of money needed to start this business. The other factor is the issue of infrastructure. The infrastructure which favors the electric vehicles is not yet deployed in most parts of the country and this would reduce the number of sales in areas that lack them. These infrastructures which I’m talking about are the charging points. The charging points that are already available are not efficient enough since they operate on modes one to three. [Very nice! You explained this idea quite well!] The other reason is that it would take a lot of time before this company would come to order so that they start the processes and by the time this happens, they would have used a lot of time as well as funds without any returns. This would not only be bad to the whole company but to the employees whom work there as we.

1. Running Head: RESEARCH ANALYSIS FOR BUSINESSES 1
RESEARCH ANALYSIS FOR BUSINESSES 8
Research Analysis for Businesses
Catrina Herbert
ECO 561
University of Phoenix
July 06, 2019
I decided to go with the Tesla Motor Company which is a
company located in the United States and deals in the
manufacture of electric cars. The market structure that the Tesla
tor Company competes in is the oligopoly structure of market.
The reason behind this is that it is accompany that only
competes with other companies that deal in automobiles. This is
a company which totally owns the market in which they deal in
[I am not sure that I agree with you here. Check your facts and
argument carefully.] and this is an advantage to them. The only
issue is that there is still manufacturing of vehicles which run in
diesel or gasoline which are cheaper compared to the electric
ones. The company has been doing well over the years and in
2018 they produced more cars than ever before. They increased
from 120,000 in 2017 to 350,000 in the next year which was
2018. The fact that they haven’t been able to sell most of their
vehicles is because their prices are relatively high and folks
with high incomes are the ones who could afford to get them.
[Very good research! You supported your assertion well! It is

2. important to have a valid citation to support such facts. Your
citation was missing, though.] Comment by Eugene Kaufman:
[Use 1-inch margins at the top, bottom, left, and right of every
page.] Comment by Eugene Kaufman: What is that?
Comment by Eugene Kaufman: [Check spelling of this
word. This is an incorrect use of this word. Please consult a
dictionary to find the word's definition and to locate the right
word for this context.]
There are various factors which goes a long way to prevent
other investors from falling into this path. The following are the
factors which obscure them, they include; first is the cost of
production. The production of electric cars is extremely costly
and before a person thinks about this, they should have billions
of dollars with them. As much as the government provides
incentives to help with the production, still it would be a lot of
money needed to start this business. The other factor is the
issue of infrastructure. The infrastructure which favors the
electric vehicles is not yet deployed in most parts of the country
and this would reduce the number of sales in areas that lack
them. These infrastructures which I’m talking about are the
charging points. The charging points that are already available
are not efficient enough since they operate on modes one to
three. [Very nice! You explained this idea quite well!]
The other reason is that it would take a lot of time before this
company would come to order so that they start the processes
and by the time this happens, they would have used a lot of time
as well as funds without any returns. This would not only be
bad to the whole company but to the employees whom work
there as well. Moreover, the case of obsolescence would also go
a long way to prevent new investors. Some people might not
want these cars yet. The reason being their prices are exorbitant
and they are willing to wait until they become common so that
their prices are reduced. This has made it easier for the Tesla
Motor Company so that it thrives well in its day to day
activities [Awkward and/or vague phrasing. I am not too clear
what you are trying to say. Please rewrite for greater clarity.] .

3. The fear of getting to this business has made them the only firm
in America and therefore no competition for them. The firm
would continue to thrive every minute until the time where most
of the citizens would adopt to them. Eventually, the
improvement in technology which takes place on a daily basis
would trigger more companies to come up and deal in electric
vehicles. For instance, in the need to conserve the environment,
the government would pass a law that would encourage people
to use the electric vehicles more and abandon the fuel driven
vehicles. This would make the investors to perceive a new
market and therefore they would ultimately bring up more
competition for the Tesla Company. [This is a good assumption.
I cannot disagree with your reasoning.]
Currently, the Tesla Motor company is at the trough stage of the
business cycle. It has been facing a lot of challenges lately.
First, it has had issues over its finances. Without finances a
business cannot run as the daily activities would be reduced.
The other challenge was the inability of the company to build
the cars to scale. This is the inability of the company to build
cheaper cars for their consumers who have been waiting. They
say that they can’t make cheaper cars without the help of China
who are supposed to manufacture their spare parts in large
scale. The issue about the GDP has also brought up a lot of
questions in the company. The credit worthiness of Tesla
Company has reduced drastically due to the various fluctuations
in its performance. The company has not been producing a good
result when the Gross Domestic Product is concerned and this
has led to a great mess. Comment by Eugene Kaufman: [What
do you mean? I don't quite follow what you are asserting.]
Comment by Eugene Kaufman: Why?
The Tesla Motor Company has been influencing inflation in
America. The company has only reduced the prices of the cars
once by $2,000 when the government had granted them a tax
relief which reduced the cost of production. The Company
hasn’t been able to increase inflation levels of the country
despite their expensive prizes which are only favor the wealthy

4. people. The calculation of the Consumer Price Index showed
that the company was safe from causing inflation nonetheless
the prices of the electric cars. The company has greatly
contributed to the employment of the citizens with an average
pay of $20 in the hour of work. They continue to create
employment for the fresh students from college as well as
providing internship for the continuing students.
Tesla Motor Company has been struggling for some time now
concerning creating enough profit in each quarter in order to
meet its wants. It has been facing expensive challenges which
have made them yearn for more Federal funds in order to
moderate their spending. They have been lately planning to
issue shares to the public as well other companies as well as
convertible debts. The company’s spending has been
overwhelming there proceeds such that they would require new
cash so that they are safe from incurring losses and enable them
to carry on with their growth plans. Tesla Company has missed
their production targets for the Model 3 a lot of times and the
sale of almost 400,000 0f these cars were supposed to be sold so
that they would be able to fund their ingenuities. This hasn’t
been a real struggle for them in the past years and therefore
they require funds. Their prime rate has dropped to $3 billion to
$4 billion if they would get a way to meet their target of making
up to 10,000 Model 3’s in the year 2019. [Very good research!
You supported your assertion well! It is important to have a
valid citation to support such facts. Your citation was missing
again.] Comment by Eugene Kaufman: [Check spelling of
this word. This is an incorrect use of this word. Please consult
a dictionary to find the word's definition and to locate the right
word for this context.]
Over the last three years, the demand for electric cars has been
increasing putting more pressure on the Tesla Company. They
went on to fail when they entered into the first quarter as well
as the second when they failed to reach their targets. The
company was able to deliver 63,000 vehicles to their customers
in the first quarter of 2019 which was about 31% drop from the

5. number of vehicles they had delivered from the previous
quarter. The company has pledged that they would deliver
360,000 to 400,000 vehicles by the end of this year.
The prices of the vehicles are as follows; Model 3 starting price
is at $36,200, Model S $86,000, Model X $88,000, Model Y
$48,200 and the Roaster at $200,000.as seen these prices are a
bit too exorbitant for starter. The customers whom as mostly
middle income earners wouldn’t want to get them. So company
should consider doing a price elasticity of demand by
calculating the percentage of quantity demanded of the cars and
divide by the percentage change in the price which would be
settled at to determine it. This would aid in determining the best
price for the car and the same time the price that the customers
would gladly comply to. When this is achieved, the company
will be guaranteed an increase in sales thus more profit. [Where
is this data coming from?!?]
The manufacture of electric cars obviously is very high. The
Chief Executive Officer of Tesla has a strategy which includes
China manufacturing their batteries in bulk and exporting them
to the U.S. this would be a variable cost which may have
positive impacts in the company’s output. Some fixed costs that
the company incurs may include utility expenses, property
taxes, insurance are ones which wouldn’t have a lot of impact
on the outputs since they cannot be avoided regardless of the
level of production or sales. Other expenses of the company
such as transport are variable costs which are only paid for
when the services are needed and may be negotiable so they
would have less impact on the business.
In conclusion, I would like to recommend the company to
perform some certain activities which would guarantee them
great output at the end. The company should ensure that they
introduce new cars to the market, making sure that it exceeds
the customers’ expectations so that they wouldn’t think twice in
buying them. The prices should be regulated so that it is not too
expensive for the market and at the same time not too low so
that it brings loss to the company. The issue of funds should be

6. dealt with immediately by finding new investors and
shareholder who would entrust their money in the business for
its success. In not so, the few profits that are being received by
the company should be brought back to the business so that they
would be able to perform their activities.
Most important of all is that the company should reduce their
plans, take some points of the list so that they focus more on the
important issues and reduce the burden in which the want to
carry on their backs. The company should also look for market
overseas so that they don’t only rely of the American Citizens.
This will help expand their market so that more profits may be
felt. The company should acknowledge the market structure and
the stage in which they are every single time so that they don’t
over produce vehicles when the market demand is low or
produce fewer vehicles when the demand is high. By following
these instructions, plus the fact that there are no other
competitors, the company would thrive and yield more than it
did before. Enduring that all the incentives and government
funds are put to good use, using proper advertising techniques,
proper pricing and ensuring that you follow the business cycles,
the Tesla Motor Company would thrive well to become the
multi-billion dollar company that it is meant to be.
[Where are you references?]
Good work with this paper! Though you have tried to explain
and support your arguments using a clear and constructive
method, there were parts that lacked the necessary details. I was
able to sense that you had a somewhat of a handle on this topic,
but I did not fully see it in your writing. Going forward, you
need to provide support for your answers using experience
and/or research. This creates stronger arguments, and better
understanding of the materials. Good organization of the paper!
However, some of your ideas were not relatively easy to follow.
Though some flowed effectively into each other, others did not.
To make sure that there would be no confusion in regards to
how each paragraph relates to the previous, you need to look at

7. your finalized paper as a whole. This way you will be able to
see ways to improve the overall organization of this paper. Your
paper has many positive aspects with the way it is written.
However, it is blemished by the number of writing mechanics
errors that are in this paper. This paper is not at the level that it
needs to be for this class. It is very important that you
diligently took the necessary effort to proofread your work. You
need to use Enhanced Writing Resources in the Center for
Writing Excellence to help you improve your writing. It is
important to be able to write well. If you need additional
assistance with your writing, please let me know. This paper is
not APA formatted. Please review the APA format
requirements. Please see the sample paper in the Tutorials &
Guides section of the Center for Writing Excellence for detailed
information about correct formatting. If you need further
assistance with APA, please view the APA tutorials in the
Center for Writing Excellence. Keep up the good work!
Rubric

8. Criteria
Weight of grade total
Maximum Possible Points
Points Earned
Content and Conceptualization
60%
60.0
45.0
Logical organization of thoughts, ideas and structure
20%
20.0
15.0
Writing mechanics
16%
16.0
10.0
APA format
4%
4.0
2.5
Total:
100.0
72.5
Milestone One – Project Management Plan
Page 1
Milestone One - Operations Management Plan

9. Teresa Reed
Southern New Hampshire University
Professor Jeff Myers
September 23, 2017
Significant Forces –
Operations management in the hospitality industry in the past
was focused on increasing pricing to offset gains in operating
expenses, hotel management practices were documented
manually and upper management made decisions regarding
personnel management. Today, there are significant forces both
internal and external that have an impact in the operation of a
hotel and hotels have had to change how they do business.
Internal factors affecting operations are the business reputation,
staffing, management structure, physical décor and
creditworthiness to name a few.
External factors include; government regulations, taxes,
competition, terrorism, natural disasters and the economy.
Other factors in play are the competition in a global
environment, innovation, consumer confidence, and a shift in
consumer spending from goods to services and experiences and

10. rising consumer demand.
In the development of an operations management plan, each
area of the Inn will be analyzed for appropriate financial
management, staffing, inventory, training and up to date
technology available to ensure the efficiency of the department
and to best analyze operations to ensure the most accurate
forecasting of supply and demand.
The Inn will be focused on satisfying stakeholder needs or
preferences to achieve above average returns. Consumers are
making their choices with regards to whom they do business
with based on how business decisions are made by companies
and the impact they are making on the environment. Objectives
and goals of The Inn at the Ranch will be developed while
making a positive social impact and maintaining sustainability
(Reed, 2017).
The hospitality industry is sensitive to changes in price and
price is sensitive to changes in demand (Starfleet Media, 2017,
Reed, 2017). The concepts that are in play when determining
demand for a product or service are perishable and elasticity.
Perishable means that they lose their usefulness and value if not
utilized within a certain period. Price elasticity of demand
looks at the demand of a product or service that is sensitive to
changes in price and price is sensitive to changes in demand
(Starfleet Media, 2017). Hotels have a lot of elasticity because
their main product, guest rooms, are both perishable and fixed
in capacity (Reed, 2017).
In determining demand, first these questions need to be
answered.
· Who are the customers? (Demographic, geographic, lifestyle
choices (tastes and values), personality traits).
· What are the goods and/or services that potential customers
need? (Knowing ones’ customers is very import in obtaining
and sustaining a competitive advantage).
· How to satisfy customer needs? (Determine how to bundle
resources to satisfy customer needs).
("Business Level Strategy," 2017, Reed, 2017)

11. Intelligent pricing in the hospitality industry looks at key
factors when determining price.
· What is the best price to charge to maximize revenue?
· What is the best rate for a guest room, considering the type of
room and length of stay?
· When discounted rates, how to not reduce revenue and profits
in the long run?
(Vashisht, n.d., Reed, 2017)
Forecasting demand while using Intelligent pricing will answer
these questions by analyzing demand forecasts, competitor
rates, price sensitivities and other demand drivers like
seasonality, day-of-week differences and market dynamics
(Starfleet Media, 2017). Revenue management is a core
competency and will be important to the Inn’s success. In
forecasting the demand for the Inn during the first 6 months of
operation the type of product and pricing strategy is taken into
consideration for the demand forecast to be as accurate as
possible. Key Obstacles –
Today, technology plays a vital role in the hospitality industry.
The Ranch at the Inn will have a web page with the ability to
view room availability, see pricing, read reviews, and have the
ability to make reservations online. The website will also give
information on area sites and available entertainment and
activities available. The facility will have to date technology,
culinary and beverage options to cater to guests. It is also
important to develop partnerships with OTA’s (Online Travel
Agencies), suppliers and area businesses.
Customer Service is key in the hospitality industry today. The
key is to understand peoples wants, needs and preferences.
Collecting data on each guest will be done through the
collection of data at the time of reservation, interaction during
check in/out, any interactions with staff whether it be the
housekeeper or the bartender. It is important to understand the
guest at every aspect of their stay.
Customer satisfaction begins with employee satisfaction.
Training and incentive programs will be developed to ensure

12. that employees are just as happy to be at work at the Inn as the
guest is to be staying there.
Security is also a very important aspect of this business.
Customers depend on their information being safe when
utilizing a website to make purchases, and also have appropriate
safety measures for those customers who are using the internet
while staying on site.
Operations are also managed through information systems that
control inventory, financial management, property operations,
risk management, preventative management and energy use. All
operations of management are handled through
technology.Changes –
Hotel reservations used to be done via telephone, check in and
check out used to be done in person. Today, with the
technology available, reservations are done online and checking
in and out of your room can be done with keyless entry via an
application on your phone. Technology not only make things
easy on customers, but technology also is important to
collecting data on those customers to ensure that their needs are
met. This data is also used in forecasting, marketing, inventory
control and the determination of services that should be
provided to clients based on their demographic and personal
taste information.
Changes in operations and organizational structure happen as a
result of multiple factors:
· Business affected by global policy and regulation
· Relationship with online travel agencies
· Threats
· Competition
· Changes in economic and Political conditions
· Increase cost of healthcare coverage
· Labor shortages
· Decrease in business travel due to virtual meetings
It is important to make adjustments in operations, based on
internal and external factor changes. Staffing changes are a
result of a high turnover industry, training and updating

13. recruitment and retention practices. Government regulation
could mean changes to healthcare costs, health and safety
regulations, and environmental changes.Business Operations -
The Inn at the Ranch operations will consist of:
· General Manager of Operations
· Human Resources – Recruitment and Retention, Training of
staff and benefits management
· Accounting and Cash Management – Financial operations and
payroll
· Purchasing and Inventory Management – Inventory control and
supply management
· Customer Services – All aspects of customer contact
· Front Desk Management
· Housekeeping
· Licensing and Permitting
· Marketing and Sales
· Property Operations to include Maintenance, Security and IT
management
· Restaurant Management/Food and Beverage
· Grounds Keeping and Maintenance
· Barn Management
· Event Planning
· Public Relations Key Trends –
Research show that more business travelers are blending work
related trips with vacation time. The “bileisure” group is
expected to grow in 2017, this group is a combination of the
business traveler who is either coming early for leisure
activities or extending their stay beyond the business meeting.
49% of business travelers already extend their business trips to
further enjoy the destination while 75% intend to do so the same
or more in the coming year. Business travel is increasingly
appreciated as an opportunity to expand horizons, find
inspiration and progress in a career. ("8 Big Travel Predictions
for 2017," 2016 ; Reed 2017)
The trends for 2017 are:
· Local Experiences

14. · Technology – mobile bookings to plan trips and social
networking to share experiences.
· Millennials – expected to rise 47% from 2013 to 320M trips by
year 2020
· Bileisure Traveler
· Wellness Retreats and Spa’s
· Sustainability in the Environment
(Ellis, McGroarty 2016; Reed 2017)
Millennial travelers, the generation now between the ages of 18
and 34, represent a huge opportunity for the industry. The
Millennial traveler is looking to spend time away from their
normal environment. They are looking for that “adventure”.
More Millennials are traveling solo, wanting the freedom to
explore. The coming year will see many travelers prioritizing
health conscious trips that promise harmony for the mind, body
and soul (Reed, 2017)
The Inn at the Ranch will develop changes in operations
and services based on the trends in the industry. The Inn will
be focused on wellness and providing experiences to guests,
whether those be adventure experiences, or health and wellness
activities within the Inn.Impact –
The sustainability and the measurement of environmental
performance have become standard within most major hotel
companies around the world. This has been driven by interest
in improving operational efficiency, costs, and lessening one’s
environmental impact in response to growing evidence of
climate change. When a property can find solutions to local
problems, they may be truly innovative in their own destination
even though the practices are common elsewhere. This can be
on-site installation of solar heating in a remote area where
technology is not commonly available, or providing
environmental training to staff (Reed 2017).
Trends in the marketplace are always changing. It is important
that a business pay attention to the currents trends and take
advantage of the opportunities that present themselves in the
industry. In the hospitality industry, it is important to

15. understand the motivations of travelers. Trends that have been
identified for 2017 are:
· Responsible and sustainable tourism:
· The wellness trends
· Millennials, seniors and female solo travelers
· Experiential travel and authentic experiences
· Adventure travel
· Remote working
· Travel Photography
· Bleisure traveler
· Food tourism
· Be authentic unique and personal
("2017 Travel and Hospitality Industry Outlook | Deloitte US,"
n.d.)
Sustainability and socially conscious travel is being promoted
globally and the Inn would do well to adapt to this mindset of
travelers (Burkhard, Kow, & Fuggle, 2016, Reed, 2017).
Consumers are more in tune with the environment and how
businesses are making an impact on the environment. The Inn
will develop a reputation for having a positive social impact and
sustainability which will have positive effects in promoting this
new type of accommodations.
Hilton Worldwide has a proprietary process of measuring
success within its brands. Hilton’s “Framework for Action”. A
strategic approach to sustainability and delivers value to owners
without additional cost (Hilton Worldwide, 2016). This system
is used to reduce impact, improve the guest experience and
drive economic returns (Hilton Worldwide, 2016). This
framework is equivalent to the SMART system used by
businesses to measure success.
· Measurement
· Reporting
· Learning
· Continuous Improvement
In evaluating the success of the Ranch Inn and Spa there are
several metrics to be evaluated. Utilizing the Framework for

16. action and a SMART system to identify data needed to
determine the actions necessary to the success of this new
portfolio of accommodations. These metrics will be measured
quarterly for the first year and later analysis will be completed
based on seasonal occupancy (Reed, 2017).
References
Reed, T. (2017). Business Development Plan. Manchester, NH.
Starfleet Media. (2017). The 2017 Smart Decision Guide to
Hospitality Revenue Management. Retrieved from https://user-
assets-unbounce-com.s3.amazonaws.com/
Butler, M. (2016, December 13). Travel and Hospitality
Predictions for 2017 | By Mihaela Lica Butler – Hospitality Net.
Retrieved from
https://www.hospitalitynet.org/opinion/4079917.html
Hilton Worldwide. (2016). Investor Presentation. Retrieved
from http://ir.hilton.com/~/media/Files/H/Hilton-Worldwide-IR-
V3/events/park-presentation-12-08-2016.pdf
Zwilling, M. (2011, January 5). Five Smart Exit Strategies -
Business Insider. Retrieved from
http://www.businessinsider.com/startup-exits-should-be-
positive-and-planned-early-2011-1

17. Burkhard, S., Kow, N., & Fuggle, L. (2016, December 1). 7
travel trends for 2017 that will drive the global tourism
industry. Retrieved May 3, from
https://www.trekksoft.com/en/blog/7-travel-trends-for-2017-
that-will-drive-the-global-tourism-industry
8 Big Travel Predictions for 2017. (2016, December 6).
Retrieved from
http://www.hospitalitynet.org/news/4079782.html
2017 Travel and Hospitality Industry Outlook | Deloitte US.
(n.d.). Retrieved from
https://www2.deloitte.com/us/en/pages/consumer-
business/articles/travel-hospitality-industry-outlook.html
M
ilestone One
–
Project Management Plan
Page
1
Milestone One
-
Operations
Management Plan

18. Teresa Reed
Southern New Hampshire University
Professor Jeff Myers
September 23, 2017
Milestone One – Project Management Plan
Page 1
Milestone One - Operations Management Plan

19. Teresa Reed
Southern New Hampshire University
Professor Jeff Myers
September 23, 2017
1
Alcoholic Coffee Brewhouses
MBA 560 Final Project- Comprehensive Business Plan
Alcoholic Coffee Brew Houses Exclusively at Starbucks
Carmen Hendrickson
02/19/2019
Executive Summary
This business plan will outline an integration of alcoholic
beverages mixed with coffee to be exclusively offered at

20. flagship Starbucks locations both foreign and domestic.
Through test markets and extensive research into this niche
area, the success of this product will rely heavily on meeting
the demands of an ever-changing market. The management
team is charged with the responsibility of becoming more
efficient, staying ahead of current trends, and meeting the
demands of the market. In order to do so and reach the full
potential, Starbucks will need to employ key top level
executives that are prepared to face the scrutiny of public
opinion, keep up with the challenges of the market, gain
knowledge of the new trends and innovations, offer appropriate
prices and always be different from the rival companies. The
goal is not only to be unique, but also to offer interesting and
desirable products that support expanding the current customer
base in which the company will have a voluntary monopoly and
be an absolute favorite of the customers. This paper offers an
in-depth insight to the introduction of alcoholic coffee brew
houses. The company is Starbucks and this niche product will
mainly be marketed to major cities with sufficient number of
tourists. The paper below will discuss the branding of the
product along with the context of the idea, the main features of
the brew houses, the marketing, the ways to compete with the
rivals, the definition of the service and the pricing - along with
the comparison with the rival companies.
Context
Starbucks' main corporate mission, values, goals and vision are
to create a culture which is valuable to the clients on a personal
level, offer a culture of warmth and belonging in order to make
each customer feel welcome (Harju, et al., 2015). The company
aspires to challenge the status quo and constantly keep up with
the process of finding new ways to grow. The alcoholic coffee
brewhouses perfectly align with the terminal values of the
corporation - since it is indeed innovating and in accordance
with the customer needs.
The alcoholic coffee is generally not sold in Starbucks but is
created as an add on to its already famous drink menu. Creating

21. an alcohol-related service between the hours of 12pm til close
will be appealing to a wide range of populations. Even though
the age limit may become a problem, the alcoholic coffee
brewhouses can also attract customers, especially in the zones
and cities that are famous tourist destinations. Its main feature
would be the alcohol content.
The brew houses will be branded with the Starbucks logo, but
they should also present an environment that will be different
from the classic Starbucks coffeehouses in order to attract new
types of customers. Since the brewing was, initially a cottage
industry and the production mainly took place at home, it would
be a good idea to keep the interior classic and cozy, but the
brew houses should be located in the places that are
strategically placed at tourist destinations such as city centers
or popular sites (Avoloi, et al., 2004).
Currently, Starbucks operates in more than 23,500 locations
worldwide. Of course, each of these coffeehouses is facing
different competitors, which vary depending on the culture and
country of each Starbucks location (Stahl, Cutcher-Gershenfeld,
2013). If Starbucks offered the customers alcoholic coffee
brewhouses, the company would be uniquely uniting the ideas
of cafes, bars, and even pubs. Offering alcoholic coffee may be
exactly what the company needs to differentiate itself from the
competition. Alcoholic coffee is rarely sold in coffee shops and
if they are - they are often too expensive.
In order for the alignment of pricing to be compatible with the
market position and the corporate goals, the pricing should be
more or less affordable. The pricing should take into account
the differences of each country that Starbucks is opened in since
it is the core on which it can be measured how much an average
person can afford to pay even for their finest coffee. However,
the pricing of the competitors should also be taken into account,
since the alcoholic coffee is almost always twice as pricey as
the regular one, while the concentration of alcohol and
therefore, the resources spent on it is not as high (Stahl,
Curtcher-Gershenfeld, 2013).

22. The brand effectiveness should improve with the offering of
alcoholic coffee, especially along with the creation of the brew
houses, since the locals, as well as the tourists, are always
looking to try something new. A new product offered by an old
well-known company is always interesting, and since Starbucks
is already not limited to just coffee and offers a selection of
premium teas, fine pastries, and other available treats, it should
also be a definite success to offer alcohol, since despite not
being good for health, it is still very demanded and after all -
the market always provides according to customer needs (Harju,
et al., 2015).
Defining Product or Service Need
Behavioral and/or lifestyle demographics of the targeted
consumer or buying style of organizational buyer and why they
are a good choice will be critical in setting up the locations.
Starbucks' target market is often described as affluent or high
income. Nevertheless, this does not mean that the people with
middle income would not be willing to spend some of it on
premium coffee drinks. In fact, Starbucks is known to be a
revolutionary chain of coffee shops precisely because it has
always known the target audience very well. The target age of
the market is 22-60, which is perfectly compatible with the age
restrictions on drinking alcohol. In many countries, people
above 18-21 are already allowed to purchase alcoholic drinks.
Offering coffee lovers an alcoholic drink is not a safe business
move, one might think. However, many describe Starbucks
lovers as very adaptive to change, and the demand on alcoholic
drinks clearly exists. Other than that, the brew houses may be
an alternative to the classic coffee shops Starbucks offers, it
may develop as a new and more prominent hang-out for the
customers, not just to run in and get coffee to go, but to relax
and spend free time in an even more comfortable environment.
The marketing of the new service should be carefully planned.
All the information should be available to the customers
worldwide, via the internet and the official website. However,
since some countries actually ban the popularization of alcohol

23. and other harmful products, the advertisements should be
discrete. Starbucks, according to the CEO always respects the
culture of each country it opens in.
The product - the alcoholic coffee - will be purchased in the
brewhouses, which will offer the customers a wide range of
different kinds of alcohol to mix in drinks that are currently on
the menu, there will be special attention devoted to domestic
and the imported beers that will be brewed with coffee as the
base. The brewhouses will have a bar-type structure with
popular music and friendly atmosphere, along with a place to
rest and relax. The purchases will not be limited to ordering and
getting the coffee at the pick-up, as it used to be - the clients
will be allowed to enjoy the calm environment in a much less
crowded place than competing cafes.
Starbucks is most known to have customers, which adopt new
technologies well, flexible to change and are mostly urban.
While the company itself has become an inseparable part of the
social media, alcoholic coffee may be a way to address a
completely new target audience, which will not only be
profitable, but will also be beneficial in giving the corporation a
different image. Those who were not the regular customers of
Starbucks may become interested in the coffee shops after
seeing new brew houses, and those who were the loyal
customers of Starbucks will probably find the new idea
fascinating.
SWOT
Perhaps the most important strength of Starbucks would be its
brand image, since the customers are aware of it around the
world (Simon, 2009). While Starbucks has very strong base in
the western world, the consumers in other parts of the world,
especially Asia have noticed the high quality coffee being
offered in Starbucks shops. This is likely to be a huge benefit
for the alcoholic brewhouses, since the consumers are aware of
the high quality products already available in the shop and
would likely try out the newly introduced product too.
Another strength is the extensive global supply chain. Starbucks

24. has worked hard over the decades to establish supply chain for
its products to guarantee the quality for the consumers.
Therefore, it is no surprise that the company has managed to
build up one of the best supply chains in the industry (Hsieh, et
al., 2019). This is likely to benefit the brewhouses, since the
existing suppliers can already deliver many of the ingredients
for the products. At the same time, there would be certain
products, where Starbucks needs to find new suppliers around
the world fully satisfyng their demands.
A major strength for the company is its moderate diversification
through subsidiaries. This allows the company to hold control
and profits of the most lucrative shops, while at the same time,
innovating with the help of the subsidiaries (Lemus, et al.,
2015). The subsidiaries often generate great ideas, which can
then be integrated throughout the chain. For the brewhouses,
this could prove challenging, since the subsidiaries are likely to
have differing positions about such substantial changes in the
business model.
The company has been performing well financially. This is
despite the fact that the share price of SBUX has not risen
significantly over the past few years. Strong investment and
awaiting the results of the investment can be blamed for this
(Banco, Kobakova, 2018). However, it can be claimed that the
company shares are likely to be sold at higher prices in the
future, and there may even be additional offering for the
company in the future. This is likely to generate substantial
money for the new investments including the brewhouses.
Finally yet importantly, the company has supportive customers.
It has managed to acquire the customer loyalty throughout the
decades because of the high quality of its products as well as
services (Typaldos, 2016). As a result, the brewhouses are
highly likely to significantly benefit from this customer loyalty,
as more individuals would be willing to taste the new product.
Customer loyalty also means that the company would be able to
generate the feedback at a very rapid pace, thereby improving
the product as necessary.Weaknesses

25. Despite all the above-mentioned strengths, Starbucks operates
at very high price points. If the consumers wish to drink coffee,
it is possible to do so in significantly cheaper locations. This
means that Starbucks always needs to provide the benefit to the
consumers (Banco, Kobakova, 2018). Only this way is it
possible for the company to keep up with these price points.
The problem would be similar for the brewhouses, as it would
need to generate certain benefit on top of the products being
offered.
The company also has generalized standards for most of the
products. While this should be considered as a strength from the
marketing perspective, Starbucks always needs to have ways of
integrating new products into these standards. This includes the
alcoholic brewhouses. Therefore, the company is likely to have
to spend substantially more for the integration of brewhouses
into the system due to these generalized standards.
Starbucks has long been suffering from the problem of
imitability. Due to its benefit, the company has very high price
points and constantly faces cheaper alternatives for any of the
products it introduces. As a market leader, it sometimes has to
spend considerably more for the innovations than it takes the
competitors to simply introduce to the market in case of its
success (Lemus, et al., 2015). Alcoholic brewhouses would
likely run into the same problem, since the competitors would
attempt to copy it.
Starbucks has traditionally suffered in terms of marketing.
There is no groundbreaking marketing campaign that the
company has generated such as their competitors, who often use
catch slogans or have mascots push the product; this passive
approach is because word of mouth and brand loyalty is the
preferred choice of marketing. Starbucks favors to provide
consumers with high quality products and reputation, with less
brand focuses to generate sales they rely heavily on the
customers spreading the word. Due to today’s demand for being
engaged and short attention span the company would have to
start some type of a marketing campaign at some point for the

26. alcoholic brewhouses. This would help the company generate
initial interest.
The company has traditional struggled with the operating
expenses. In fact, it regularly exceeds 80% of the revenues. This
means that Starbucks needs to be ready for further increase in
the operating expenses. This is because the brewhouses would
be slow to fully integrate in Starbucks environment. As a result,
its operating expenses would be relatively higher than the rest
of the chain. Additionally, it would struggle to generate high
revenues immediately, thereby further pushing the share of
expenses from the revenues.
The greatest opportunity for Starbucks as well as other famous
western brands would be the ability to enter the developing
markets. Starbucks is well known in these countries (Typaldos,
2016). In fact, the company has opened its branches in many of
them with the aim of generating foundation for the global
expansion. With regards to the alcoholic brewhouses, the
problem is the fact that many of the developing nations have
different cultural views regarding alcohol. As a result, it is
highly likely that the brewhouses will meet regulatory problems
in many of these nations at home and abroad.
While Starbucks offers great value in the coffee business, it has
been attempting to diversify its product range. Bakeries would
be a great example of this (Gavin, 2013). This is likely to prove
an excellent opportunity for the company, since the customers
are going to spend additional money for the products they need
with their coffee. Alcoholic brewhouses would also be an
excellent way to further diversify the product range.
Partnerships with other firms have long been used by the
companies around the world to not only expand, but also
diversify the risk (Hsieh, et al., 2019). As many of the
Starbucks products have reached the maturity stage, the
company is likely to be looking to diversify the products and
partnerships would be the best way to do this. The same can be
claimed with regards to the brewhouses, as Starbucks could
partner up with another firm to generate a great new product.

27. Opportunities and Threats
Digital marketing provides traditional firms with new
opportunities (Banco, Kobakova, 2018). New generations tend
to have more interest with digital marketing meaning that the
company can use the trend to generate higher revenues. AI and
other types of digital marketing opportunities can be used by
Starbucks in many ways. Alcoholic brewhouses also provide an
opportunity for this. The reviews and feedbacks from online
personalities for the alcoholic brewhouses could spark interest
for relatively low sums of money.
Other than digital marketing, the company has a chance to use
the mobile technologies to improve the customer service.
Starbucks has already promoted ordering coffee online and
picking it up at the store. This has enabled attracting another
segment of the consumers. However, there is much more that
can be done regarding the mobile technologies. New ways of
distributing products are coming up at all times. For the
brewhouses, this is unlikely to have significant effect, but it
needs to be taken into account, in case a good product for the
product distribution becomes available.
The biggest threat faced by Starbucks is the low-cost chains
(Manzo, 2015). Similar to the many other products, low-cost
chains tend to slowly catch up with the quality of the coffee. As
a result, Starbucks has to concentrate on other services being
offered at its stores in order to generate substantial revenues. If
the low-cost chains will be able to provide the added value,
Starbucks is likely to lose the customers. Alcoholic brewhouses
would be a benefit for the company and it would take a while
before the low-cost chains are able to integrate it in their
operations.
Similarly, the low-cost chains or even the single shops could
easily imitate Starbucks products and services (Lemus, et al.,
2015). While the logo is copyrighted, the culture and added
value provided in Starbucks is not. The company may spend
millions in the research to improve the environment for the
customers, which can be easily copied by the competitors. If

28. successful, alcoholic brewhouses would also be likely to be
imitated by the other low-cost chains.
Independent coffeehouse movements are becoming significantly
more popular these days becasuse of the ability for them to
market their offers online to particular groups of customers.
This may be a huge threat for giants such as Starbucks that are
not able to react to customer feedback as efficiently (Lemus, et
al., 2015). As a result, the company may need to consider an
alternative strategy for the alcoholic brewhouses, where most of
the ingredients are expensive in order to defer the independent
coffeehouse movements from copying its idea.
Consumer Trends
The changing customer trends could also become a huge factor
for Starbucks (Woldoff, et al., 2013). The millennial generation
tends to be significantly different from the previous ones.
Starbucks, while popular among millennials could find itself
struggling, if it does not constantly follow the available
customer trends. To do so regarding the alcoholic brewhouses,
the company would need to rapidly update its offers or face an
increased threat.
Finally, the international trade and regulations could be a huge
problem for Starbucks. China and the US appear to be engaged
in a trade war resulting in the decline of trade between the two
countries (Koch, 2019). Additionally, alcohol is already heavily
regulated in most of the countries. Therefore, alcoholic
brewhouses could give additional reason for the governments
against the US to attack Starbucks possibly destroying its brand
image in the country.Ethics and Branding
The SWOT analysis conducted demonstrated that the company
has very high price points and as a result, its ethics and
branding are affected. This is because it needs to justify the
high price points. Environmental push has been one way for
Starbucks to justify them. This includes the company strongly
urging for change in the way the environment is handled. It has
also introduced various green products (Banco, Kobakova,
2018). This way, the company aims to raise its brand image and

29. convince the customers that the company is ethical.Core
Competencies
Starbucks became well-known because of its ability to produce
high quality coffee. Since its early years, the company has not
given up on producing high quality coffee and as a result, has
grown incredibly fast. As a result, high quality products have
become one of its core competencies (Bishop, Bishop, 2013). It
is vital for the business to keep the high quality of the products,
since it is highly dependent on the return customers. These
return customers are only likely to come back, if they wish to
receive the same experience they had during their previous
visit.
It is not only the coffee that is high quality in Starbucks.
General environment that is pleasing for the customers is a
guarantor for their return. Starbucks essentially offers the
experience and not just the coffee (Koch, 2019). This type of
experience should be the main motivating factor for the
alcoholic brewhouses too. This would mean that the company
would generate the product integrating well with the already
existing environment.
Starbucks, unlike many other retail giants, has not bullied its
suppliers into cheaper prices. The reason is its high price points
(Perriam, 2013). As a result, many of the suppliers have
excellent relationship and Starbucks has greatly benefited in
terms of price modifications and market volatility. Similar
relationship would be necessary for the new suppliers
generating products for the alcoholic brewhouses. This way, it
would be possible for Starbucks to think of the long-term future
of the model.
Starbucks has worked very hard to guarantee it has a very
strong brand image. The company has been trying to avoid any
types of problems regarding the brand image and it includes the
way any type of emergency situation is handled by the
company. The staff are well trained to guarantee that they are
unable to damage the brand image. It is a core competency,
since it helps keep the price points very high. With the brand

30. image, Starbucks aims to generate the global growth that is
necessary for success in every country (Hsieh, et al., 2019).
Alcoholic brewhouses would there need to be introduced so as
not to damage the brand image of the company. They should be
viewed as an excellent service, rather than a way for Starbucks
to attract additional revenues.
With global trade increasing every year, as well as the number
of tourists rising across the globe, it makes sense for Starbucks
and other well-known brands to increase their availability
across the world (Simon, 2009). Starbucks has recently invested
heavily in Japan and this was seen as a positive move. Hence,
people from around the world would be able to find Starbucks
in every city they visit (Koch, 2019). Furthermore, availability
of Starbucks diversifies the macroeconomic risks carried by the
chain. For alcoholic brewhouses, it would be questionable
whether to immediately integrate them in every destination.
However, over a certain period, they would be likely to appear
around the world.
Pricing
Fixed costs are the ones that are available regardless of whether
the business is running successfully. They can be thought of as
the cost of running a business. Meanwhile, the variable costs
represent per unit cost of the products sold. In this case, it is
necessary to view the fixed costs as the ones Starbucks would
attempt to avoid. Such avoidance would be performed with the
help of the currently available stores. Brewhouses would not
necessarily be opened in new locations. Instead, they would
perform the role of an add-on to some of the already available
Starbucks locations (Galston, et al., 2018).
As it can be seen below, the fixed costs can be estimated at
around $40,000 in addition to the already available costs. This
is because inside marketing will be the main fixed cost along
with the potential hardware. On the other hand, variable costs
are likely to be higher including the taxes on alcoholic

31. products. Most of the countries, where Starbucks operates has
very high taxes on alcoholic products and this needs to be taken
into account.
Fixed Costs
$40,000
Variable Costs
$130,000
Competitor Pricing
Competitors tend to have lower prices for the coffee products
than Starbucks. This is because they are trying to appeal to the
lowest classes. Meanwhile, Starbucks’ business model has
always been to establish a brand and offer quality products
instead of simply being satisfied with the lowest quality and
lowest prices. Similarly, the brewhouses would also be more
expensive than the others. The reason for this is that Starbucks
would provide the highest quality brews for the customers. As a
result, the variable costs are also likely to increase. The
company would have to find not only the best produce, but also
guarantee that the knowledgeable individuals are in charge of
them.
Potential Pricing
Since the target market is going to be the individuals that go
visit the Starbucks, or the ones that are willing to visit the pubs
for mild alcoholic beverages, the price charged would be
substantially higher than the alcohol purchased in the
supermarkets. This would put it in the range of $6-7 per cup.
Such a price would also be well above the competitors’ pricing,
but the branding as well as the quality ingredients would make
up the difference. Additionally, the calm and relaxing
atmosphere offered by Starbucks is not repeated in any of the
competing stores.
The main reason for the suggested price would be the social
responsibility towards the customers. While the alcoholic
beverages are normally regarded to be bad for the human health,
in moderate amounts, they can even be beneficial. As a result,
Starbucks would attempt to provide only the sufficient amount

32. of alcohol in its products. This would also be ethical behavior.
Additionally, it is well-known that the company is engaged with
the environmental sustainability practices. Consequently, the
products it would obtain would also be organically farmed. This
would add the price, thereby increasing the price for the
consumer once again. The final intangible that needs to be
considered would be the service being offered. People employed
at Starbucks are usually the professionals of their craft and need
to be provided sufficient revenues.
Pricing Strategy
In terms of the pricing strategy, the premium pricing appears
most likely (Harju, et al., 2015). This is because the company
needs to ascertain itself as a market dominator. This would
mean that the individuals purchasing their products at Starbucks
would be guaranteed a very high quality service, while they
would also be able to provide sufficient revenues for the
brewhouses. For Starbucks, such an investment would
immediately be recognized worldwide. This means that the
premium pricing could immediately be afforded due to the
available marketing in the news. Furthermore, the premium
pricing guarantees that the visitors that simply want to try the
product bring substantial profit margins for the product. Given
the popularity of Starbucks, it would be predictable for the
alcoholic brewhouses to become extremely popular. The
company would need to supplement the interest with substantial
quality product though.
Refinement
Evaluating the success of the product is necessary at some point
after the product has been launched. This is because it may be
unsuccessful. It may in fact harm Starbucks not only because of
the costs associated with it, but also the brand image that is not
the same as what it used to be. At the same time, the company
must not rush the evaluation of success. After the product has
been launched, there is likely to be some type of hype about it.
This may indicate immediately increased sales. However, the

33. sales may decline eventually, if the product is not up to the
level of consumer satisfaction.
Hence, the company needs to run the product for at least 6
months, before the analysis can be made regarding its success.
The biggest way of evaluating success is always the number of
people using the product (Gavin, 2013). After all, all products
are designed to attract the consumers. Once the price point has
been settled, the number of people using the product needs to
match the envisaged number. This way, it will be possible to
generate an idea of whether the product is already successful or
if it needs to be modified to appease more individuals.
The number of people using the product can be counted by
identifying the number of individuals that buy the product
(Koch, 2019). Another way of identifying them would be to
check the percentage of individuals entering the store that
purchase the newly launched product line. This provides an
excellent way of measuring the success of the product not only
in absolute terms, but also against the already existing products.
Frequency of use of the newly launched products would provide
another way for the company to measure the success. The main
idea here is to see whether there are return customers. Often,
individuals tend to purchase the products just to try them. Since
Starbucks already has significant number of people entering the
stores with the aim of purchasing the traditional products, they
may be interested what the alcoholic brewhouse can offer
(Lemus, et al., 2015). As a result, individuals around the world
might simply be purchasing the offered alcohol because of the
interest. For this reason, Starbucks would benefit from
identifying the particular customers that were entering the store
to purchase the brews instead of the coffee. This way, the
company can analyze whether the product has been successful.
It can also analyze the ways of moving forward with the
product.
Depth of use of the new products is also necessary. Since
Starbucks would be likely to launch a new range of products
instead of simply one, the company needs to understand which

34. of the individual products are popular (Perriam, 2013).
Additionally, the company needs to investigate how the
consumption of a particular product affects the others. This
way, it would be possible to view each individual product
separately in terms of the success they have achieved in the
eyes of the consumers. Their popularity could then be used to
achieve further success on the market such as obtaining the
information regarding the potential new launches.
In general, attracting the new clients for Starbucks because of
the alcoholic brewhouses could be a main way to move forward,
since the coffee market appears to be saturated (Simon, 2009).
Moreover, the company could view it a success if the consumers
are using many of the introduced products. In order to keep the
whole range of the brewhouses running, it is necessary for
several individual brews to be successful. Otherwise, it will be
impossible for the company sustain the fixed costs of handling
the brewhouses. As a result, it is vital for the company to be
able to assess the depth of the success for the brewhouses.
Customer satisfaction is also key to success. The idea here is to
find out whether the customers feel anything should be changed
or they are happy with the brewhouses. Customer satisfaction is
the tool many of the companies use to retain the customers
(Woldoff, et al., 2013). It is highly necessary for the companies
to be able to retain the customers, especially when they are
selling low-cost products such as coffee and sandwiches.
Returning customers are the only way to guarantee stable
revenues for the company. This can further explain the way
company does not use much marketing, since it relies on the
individuals coming back. As a result, the best marketing for the
company would be excellent service. In the case of brewhouses,
the concept is the same. The company needs to succeed in
motivating the customers to come back to their stores (Simon,
2009).
Finally, goals need to be set before any type of change is
performed in the company. Introduction of the new product
needs to be associated with goal settings. Only this way would

35. it be possible for the company to assess their expectations and
examine whether they can be met (Typaldos, 2016).
Consequently, it is likely that Starbucks will set various
financial and non-financial aims for the product. These aims
would include timeframes during which they should be
performed. Examining whether the company has managed to
meet them could be the main way for the company to generate
ideas of whether they are meeting the expectations.
In case of a complete failure to meet the goals, the company
might consider scrapping the idea altogether. However, if the
goals are close to being met, more ideas would need to be added
to find out whether the goals are eventually achievable. Time is
also a vital feature of the goals. The company should be able to
see whether meeting the goals is accelerating over a period to
successfully identify the necessary ideas for the coming time
frames.
Feedback Loops
When launching a new product or service, feedback can be one
of the most challenging tasks due to the problem of emotions.
New product launches always provide the customers with an
urgency to express opinion (Banco, Kobakova, 2018). However,
since the product is not in stable consumption, the reviews may
be rushed and dissatisfactory. For this reason, the company
needs to ensure it does not react to the initial problems facing it
and only receives feedback after a substantial period has passed.
Eventually, feedback loops will be created. This implies the
constant evolution of the product and services on offer.
One of the most common ways of receiving feedbacks for the
companies around the world is the customer interviews (Bishop,
Bishop, 2013). This is done in order to receive not only the
feedback, but also the advice about the newly launched
products. After all, the most successful products are the ones
that are fully concentrated on customer needs. As a result, the
customer interviews usually provide qualitative analysis for the
companies and allow them to analyze the mistakes they are
making, while also generating new ideas for the future.

36. For the case of alcoholic brewhouses, the customer interviews
would be essential. This is because no major coffee chain runs
the alcoholic brewhouses and therefore, it is not possible for
Starbucks to obtain the information from past experience.
Instead, the company needs to gain new insights about the
product (Typaldos, 2016). Customer interviews will allow for
such insights. As a result, it is necessary to ask the customers
about their opinion in qualitative way. Furthermore, it would be
necessary to gain insight about each of the locations in this
way.
Similar to the interviews, customer surveys can be used to gain
insights in everything that is done correctly in the brewhouses.
Unlike the interviews, surveys can be performed relatively
rapidly and allow the individuals to provide their quantitative
ideas about the product and the service (Simon, 2009). This
would show some of the simplest statistics and allow
recognizing some of the common themes regarding the
brewhouses. Furthermore, the customer surveys can provide the
confirmation of the previously available ideas. Given the
modern internet technologies, it is possible to perform a
customer survey rather rapidly and frequently. There are many
tools for it online. As a result, the constant feedback and the
feedback loop can become available to constantly assess
whether the improvements have been substantial.
Customer support online and on phone has become yet another
way for the companies to generate feedback about the new
launches. After all, it is common for the customers to ask
questions about the launch (Woldoff, et al., 2013). Customer
support can then be used to generate the ideas from the
customers and ask the questions back. As a result, the customer
support can be used to gather not only qualitative, but also
quantitative feedback from the customers. Additionally, the
main customer concerns that may not be immediately available
will be investigated.
Internet has become a great tool for customer engagement. In
fact, the customer support nowadays can be available fully

37. online. On top of that, there are online reviews and feedback
forums for every brand including Starbucks. When a company is
launching a new product, it is necessary for the firm to be able
to identify the customer feedback and the feedback forums are a
great way to do this. Starbucks already does this with the
traditional products. The company will need to add alcoholic
brewhouse topics to such forums in order to receive the most
feedback possible for the new product. This way, the company
would have additional information about the launch and the
prospects of the new product. Furthermore, it can find out the
attitude of the customers towards the launch.
The final way for the company to obtain the information about
the launch is monitoring the sales. While the customer opinions
are important, the sales matter the most (Manzo, 2015). This is
because Starbucks needs to be able to generate sufficient
statistics about the financial information too (Banco, Kobakova,
2018). This would perhaps be the most important feedback loop.
Starbucks should be closely monitoring the sales numbers to
understand whether the customers have received the product in
a positive way (Lemus, et al., 2015). It is likely that the initial
sales of the alcoholic brewhouse beverages will be inflated due
to the effect of interest. However, since the model relies so
largely on the return customers, it will be necessary to observe
whether the sales slow down to an acceptable level. Sales
numbers can be claimed to be the ultimate feedback for the
companies, as the customers are speaking with their money
(Lemus et al., 2015). Accordingly, the price can be adjusted
depending on the feedback from the sales. While Starbucks
customers generally pay higher prices than usual, the alcoholic
beverages are likely to be taxed higher than coffee around the
world. As a result, for retaining the high margins, Starbucks
may have to introduce very high pricing for its brewhouse
products. Future Planning
While the abovementioned details are very important for
Starbucks to take care of, they would put the company in a
position of having to operate at common standards. For this

38. reason, Starbucks also needs to consider other options and
methodology for the feedback. With the help of the innovative
ways, the company can guarantee very high quality development
for the alcoholic brewhouses. The plan is long-term. As a result,
the feedback and availability of the plan for the future are likely
to generate long-term revenues.
Cost of the product is one of the major ways of identifying the
success. Since Starbucks operates at many locations around the
world, different price points can be used to identify whether the
product has a chance of success at sufficient margin rates
(Hsieh, et al., 2019). Price points can also generate knowledge
about the necessary improvements for the products. Moreover,
the differing prices in different countries can be explained by
the availability of the supplies. This means that there will not
be any pressure on the brand to deliver similar prices
everywhere. In fact, the company is already operating the same
idea with the coffee. Alcoholic brewhouses, while meant to
generate substantial revenues, can be used to attract customers
in Starbucks environment. With the number of customers for the
coffee staying in the premise decreasing due to the order and
go, it is likely that the company will benefit significantly by
attracting individuals that wish to spend money on the
breweries.
The generated profits would be another great way of measuring
success of a product. Over the long-term, it is perhaps the
element that matters the most when it comes to the success of
product launches. Regarding the brewhouses, generating profits
will be rather difficult for the initial stages (Perriam, 2013).
However, the variable costs can be compared with the revenue
to see whether the company can afford to carry on operating the
part of the business. Additionally, with the improvement of the
profits, share price is also likely to rise, thereby attracting
additional investors to Starbucks. This will generate additional
motivation for the company to keep going with the brewhouse
plans. In fact, the change in market capitalization upon
announcement of the alcoholic brewhouse addition could also be

39. a significant motivator for the company to put increasing efforts
in the idea.
Starbucks already has sufficient marketing throughout social
media. At the same time, many of the visitors in Starbucks take
the pictures of the purchased products (Lemus, et al., 2015).
Generally, media success is likely to show whether the product
is going to be successful. If the positive social media posts are
significantly more than the negative ones, it can be considered
as a boost to the chances of the brewhouses becoming a
significant part of the business. Traditional types of media
should also be considered in this case (Typaldos, 2016;
Woldoff, et al., 2013)). If there are sufficient articles about the
product and how good it is, interest is going to be sparked
among the customers.
Once the brewhouses have been launched, Starbucks will also
have to think about potential modifications to it. This includes
not only eliminating the least successful products, but also
launching new ones. Normally, brewhouses tend to operate with
a large number of brews available to generate interest. Keeping
their stock is usually not a problem, since it can last for a long
period. As a result, possibilities of adding various products to
the launched line will also be considered as part of the success.
The company will have to carefully consider all of the available
options before launching anything new, but the feedback from
the customers about the possibilities can be very helpful.
Finally, the marketing practices need to be considered as well.
This means that Starbucks will have to carefully engage with its
consumers in order to guarantee the feedback. The marketing
for Starbucks is traditionally not very well-performed due to the
reliance on return customers (Koch, 2019). For this reason, the
company might have to consider engaging with marketing
agencies for the product launch as well as starting certain social
media campaigns. This way, it will be possible for Starbucks to
generate sufficient interest for the product to be talked about by
the customers initially, increasing the chances of return
customers. Subsequent marketing campaigns would also be

40. likely to involve higher budgets, thereby increasing the chances
of success for the product.
Conclusion
Overall, it can be confirmed that Starbucks needs some type of
innovation on their current products. Despite the company
selling all types of small products as well as the coffee
products, the new entry in the alcoholic beverage markets would
provide it with yet another boost in the revenues. Given that
most of the traditional Starbucks markets can be considered
saturated, it would allow the company to stop concentrating on
expanding in the foreign markets, where success is less likely
and instead obtain the revenues from another market (alcohol).
The strategy of introducing alcohol to the current drink menu
and creating new mixed brews that use coffee as a base is not
being used by any valid competitors. Furthermore, this new
product produces a larfer revenue source it along with
integrating another market in its coffeehouses, thereby
increasing the consumer base. While coffee is a very popular
product across the world, alcohol is also incredibly popular,
especially among the older generations. As a result, it would be
a way for Starbucks to engage with them too. This new concept
is an addition to a long-standing brand that has loyal customers
that are always ahead of the current trends.
References
Avolio, B., Weichun Zhu, William Koh, & Puja Bhatia. (2004).
Transformational Leadership and Organizational Commitment:
Mediating Role of Psychological Empowerment and Moderating
Role of Structural Distance. Journal of Organizational Behavior,
25(8), 951-968.
Banco, M. Kobakova, D. (2018), Turning a Commodity into an
Experience: the “Sweetest Spot” in the Coffee Shop, Innovative
Marketing, 14, 46-55.
Bishop, J., & Bishop, N. (2013). Limited to Words. Visual

41. Anthropology Review, 115(1), 132-144.
Galston, W., Hunter, J., & Owen, J. (2018). Democratic
Leadership. In Anti-Pluralism: The Populist Threat to Liberal
Democracy (pp. 105-125). New Haven; London: Yale
Gavin, D. (2013). Starbucks Exceptionalism: An Institutional
Ethnographic Exploration of Coffee Culture in America. Journal
of Psychological Issues in Organizational Culture J of Psych
Issues in Org Culture, 4(3), 44-58.University Press.
Harju, J., Kosonen, T., & Skans, O. (2015). Firm types and
heterogeneous consumption-tax incidence. Proceedings. Annual
Conference on Taxation and Minutes of the Annual Meeting of
the National Tax Association, 108, 1-42.
Hsieh, H-P. Lin, F. Li, C-T. Yen, I.E-H. (2019), Temporal
popularity prediction of locations for geographical placement of
retail stores, Knowledge and Information Systems. January.
Koch, L. (2019), Starbucks Espresso Drinks: More than the
Average Cup of Joe, Journal of Renal Nutrition, 29(1):1-4.
Lemus, E. von Feigenblatt, O. Orta, M. Rivero, O. (2015),
Starbucks Corporation: Leading Innovation in the 21st Century.
Journal of Alternative Perspectives in the Social Sciences, Vol.
7, No 1, pp. 23-38.
Manzo, J. (2015). “Third-wave” coffeehouses as venues for
sociality: On encounters between employees and customers. The
Qualitative Report, 20(6), 746-761.
Perriam, J. (2013). Coffee and Wi-Fi: An ethnographic
examination of the ‘sociability’ of people, objects and
infrastructure in independent cafes (Unpublished master's
thesis). Goldsmiths, University of London.
Simon, B. (2009). Everything but the Coffee: Learning about
America from Starbucks. Berkeley: University of California
Press.
Stahl, F., & Cutcher-Gershenfeld, J. (2013). Worker Leadership.
In Worker Leadership: America's Secret Weapon in the Battle
for Industrial Competitiveness (pp. 127-160). MIT Press.
Typaldos, C. (2016), Experiencing the Starbucks Experience: a
Cultural Analysis of the Effects of Glocalization, Lund

42. University.
Woldoff, R. A., Lozzi, D. M., & Dilks, L. M. (2013, October
13). The Social Transformation of Coffee Houses: The
Emergence of Chain Establishments and the Private Nature of
Usage. International Journal of Social Science Studies, 1(2).
Running head: STRATEGY AND DEMAND FORECAST
1
Carmen Hendrickson
Southern New Hampshire University
06/09/2019
“To inspire and nurture the human spirit – one person, one cup
and one neighborhood at a time”. (Starbucks, n.d) The
corporate mission of Starbucks says it all; in a continuation, the

43. theme to inspire, Starbucks will need to articulate a marketing
strategy that will successfully allow them to integrate alcohol
into current drink menu items. The three basic strategies that
Starbucks will use during the launch of this business plan
include but are not limited to determining a price point,
responsiveness of the test markets and differentiation from
competitors. Starbucks drinks have never been associated with
lower pricing among competitors. This strategy will align with
Starbucks business model, which seeks to establish a brand and
offer quality products instead of simply being satisfied with the
lowest quality and lowest prices. The current plan is to develop
a targeted marketing campaign in major cities across the United
States, which will serve as a test market. This product will only
be available at selected flagship stores and only offered aboard
once the results are in from the designated test markets. It will
embrace a best-cost provider strategy to price the new product
in a way that gives the customers more value for their money,
thus we will be implementing penetration pricing, with the
intent to attract a larger contingent of customers away from
competing brands. The idea is to use a better mix of product
benefits and a lower price to lure customers only modestly
satisfied with existing products. (Kokemuller, 2019)
We have factored in about an $8.00 price increase to each drink
item that will include Rum or Vodka. We also have decided to
cap the amount of alcohol in each drink to between 2 – 4 ounces
based on the drink size of a Tall (12 oz.) or Venti (16 oz.)
Customers will not be able to add an additional shot of alcohol
to their drink, as we will not be customizing the alcoholic
portion of the menu. If the product is launched prior to 2020
Starbucks will have complete saturation of the current market,
as there are no other known competitors that exclusively sell
coffee in combination with alcohol, outside of local pubs or
bars. This business concept is a distinct illustration of
differentiation because there are no other companies who can
reach the consumers in this industry due to an untapped market.
This strategy will concentrate on a narrow segment of customers

44. and provide them with a unique product package with
customized attributes (Polo & Weber, 2010). Last, a responsive
marketing orientation or test market will be utilized throughout
the first 2 years of the product used to ensure that the company
responds to the expressed needs of buyers.
Demand forecasting and supply forecasting are critical to track
in the food and beverage industry. This method allows the user
to monitor and forecast product development that is generated
from increased customer satisfaction; it reduces inventory stock
outs, and allows a more effective production of pricing and
marketing efforts. (Ahmed, 2017) Popularity of Starbucks
products and the existing demand of alcoholic beverages will
guarantee the company of a favorable demand for the new
product based on total market saturation. For the first six
months, Starbucks will closely monitor the designated test
markets located at the flagship stores. With this being a new
product in the market, relying on various sources such as
customer feedback, and investor inputs will be the best route.
After the initial year, Starbucks will transition over to utilizing
the time-series forecasts, which projects past experiences into
the future. This will be the best strategy for the blended
beverages because forecasting will never be perfect therefore, it
will be better to use historical data. A weighted moving
average method will be used to forecast the demand of the new
product. This method will apply a weighting scheme of 0.5, 0.3,
and 0.2 on the last three units of demanded product. The
demand for the first three months is estimated to be 50000
units, 60,000 units and 70,000 units respectively. For the fourth
month, the demand will be (0.5*70000+0.3*60000+0.2*50000)
=63000n units. The demand for the fifth month and the sixth
month will be (0.5*63000+0.3*70000+0.2*60000) and
(0.5*64500+0.3*63000+0.2*70000) respectively. This will be
64500 units for the fifth month and 65150 units for the sixth
month.
This method is preferred to the Simple Moving Average because

45. it follows demand more closely by using the most recent data
and weighing it accordingly (Denning Institute, n.d.). This
means that the WMA method is more accurate than the
corresponding the Simple Moving Average which measured data
equally. It is also relatively easy to implement compared to
other advanced methods. Blocher, Mabert, Soni and
Venkataramanan (2004) also found that the WMA method
performed better than smoothing methods such as the Croston’s
method.
References
Ahmed, M. (2017, March 29). Seven reasons why you need to
forecast in supply chain. Retrieved from
https://www.supplychaindigital.com/top-10/seven-reasons-why-
you-need-forecast-supply-chain
Blocher, J., Mabert, V., Soni, A., & Venkataramanan, M.
(2004). Forecasting Including an
Introduction to Forecasting using the SAP R/3 System.
Retrieved from
https://kelley.iu.edu/mabert/e730/Forecasting_February_2004.p
df
Denning Institute. Weighted moving average. Retrieved from
http://denninginstitute.com/modules/dau/stat/mvavgs/wma_frm.

46. html
Kokemuller, Neil. (2019, February 13). Penetration Vs.
Skimming Marketing Strategies. Small Business - Chron.com.
Retrieved from http://smallbusiness.chron.com/penetration-vs-
skimming-marketing-strategies-61569.html
Mission Statement. (n.d.). Retrieved from
https://www.starbucks.com/about-us/company
information/mission-statement
Polo, E., & Weber, W. (2010). Competitive Generic Strategies
Evolution and the Importance of
Michael E. Porter. Revista De Gestão, 17(1), 99-117.
R
unning head
:
STRATEGY AND DEMAND
FORECAST
1
Carmen Hendrickson

47. Southern New Hampshire University
06/09/2019
Running head: STRATEGY AND DEMAND
FORECAST 1
Carmen Hendrickson
Southern New Hampshire University
06/09/2019

48. MBA 690 Milestone One Guidelines and Rubric
The final project for this course is the creation of a project
management plan. In Milestone One, you will submit the
operations management section (Section I)
of your project management plan. Assess the history and trends
of operations management, focusing on the business or company
from your business plan in the
Marketing and Strategy course. Provide rationale for the
selection of your business development opportunity. Detail
initial estimates of demand based on your
forecasts and justify your selection of forecasting methods.
Determine site location(s) and provide specific quantitative
rationale for your selection.
Consider the underlying business information needs of the new
business and what information requirements will be needed.
Outline the management
information structure of the proposed business information
system for your new business opportunity as part of the overall
proposal based on the feedback
received from Module Two. Consider specific IS concepts in
Chapter 12 to outline your proposed system. For example, what
elements do you plan to incorporate
into your management information system? What linkages in the
information structure are proposed?
Prompt: Assess the history and trends of operations

49. management, focusing on the business or company from your
business plan in the Marketing and Strategy
course. Specifically, you should assess the significant forces
that have shaped operations management in recent history and
answer the following:
ations of your
company?
these forces will impact the business operations of your
company?
company management during the evolution of operations
management into the modern era. How
did your company’s management handle these obstacles? If your
company did not exist then, how do you think they would have
responded to these
issues?
d
organizational structures in response to the evolving complexity
of business operations. In
other words, what has changed and why? Analyze the business
operations of your selected company. Consider questions such
as these in your response:
o What organizational processes does the company use?
o How do the business operations support the strategic plan,
mission, and vision of the company?
o What factors affect productivity and profitability?
ource,
and information management with a focus on the business

50. operations of your company.
operations of your selected company and on the business
product, service, or other idea in your
business plan.
Note: If, for some reason, you cannot use the company and
product, service, or other idea from your business plan, you will
need to work with your instructor
to select another company and corresponding business product,
service, or idea.
Specifically, the following critical elements must be addressed:
a) Assess the significant forces that have shaped operations
management in recent history. How did these forces impact the
business operations of
your company? If your company does not yet exist, how do you
envision these forces will impact the business operations of
your company?
b) Critique the key obstacles and issues that confronted
company management during the evolution of operations
management into the modern
era. How did your company’s management handle these
obstacles? If your company did not exist then, how do you think
they would have
responded to these issues?
c) Assess changes to operations management philosophies and

51. organizational structures in response to the evolving complexity
of business
operations. In other words, what has changed and why?
d) Analyze the business operations of your selected company.
Consider questions such as these in your response: What
organizational processes
does the company use? How do the business operations support
the strategic plan, mission, and vision of the company? What
factors affect
productivity and profitability?
e) Determine the key trends in production, quality, resource,
and information management with a focus on the business
operations of your
company.
f) Assess the impact of these key trends on the business
operations of your selected company and on the business
product, service, or other idea
in your business plan.
Rubric
Guidelines for Submission: Your paper should adhere to the
following formatting requirements: It should be submitted as an
APA-style Microsoft Word (or open
source) document, 8–10 pages (not including title and reference
pages), double-spaced, using 12-point Times New Roman font
and one-inch margins. There
should be a minimum of two references cited in APA format.
Critical Elements Proficient (100%) Needs Improvement (75%)
Not Evident (0%) Value

52. Significant Forces Comprehensively assesses the
significant forces that have shaped
operations management in recent
history or will shape it in the future,
focusing on impact on business
operations of selected company
Assesses the significant forces that
have shaped operations management
in recent history or will shape it in the
future, but response lacks a focus on
impact on selected company or is
cursory or inaccurate
Does not assess the significant forces
that have shaped operations
management in recent history or will
shape it in the future
15
Key Obstacles Accurately critiques the key obstacles
or issues that confronted or will
confront company management
during evolution of operations
management into modern era,
focusing on management of selected
company
Critiques the key obstacles or issues
that confronted or will confront
company management during
evolution of operations management
into modern era, but response lacks a
focus on management of selected
company, is cursory, or is inaccurate

53. Does not critique the key obstacles or
issues that confronted company
management during evolution of
operations management into modern
era
15
Changes Comprehensively assesses changes to
operations management and
organizational structures in response
to evolving complexity of business
operations
Assesses changes to operations
management and organizational
structures in response to evolving
complexity of business operations,
but assessment is cursory or
inaccurate
Does not assess changes to
operations management and
organizational structures in response
to evolving complexity of business
operations
15
Business Operations Comprehensively analyzes business
operations of selected company

54. Analyzes business operations of
selected company, but response is
cursory or inaccurate
Does not analyze business operations
of selected company
15
Key Trends Accurately determines key trends in
production, quality, resource, and
information management, focusing on
business operations of company
Determines key trends in production,
quality, resource, and information
management, but response is not
focused on business operations of
company or has gaps in accuracy or
detail
Does not determine key trends in
production, quality, resource, and
information management
15
Impact Comprehensively assesses the impact
of identified key trends on business
operations of selected company and
business idea
Assesses the impact of identified key
trends on business operations of
selected company and business idea,
but assessment is cursory or

55. inaccurate
Does not assess the impact of
identified key trends on business
operations of selected company and
business idea
15
Articulation of Response Submission has no major errors
related to citations, grammar, spelling,
syntax, or organization
Submission has major errors related
to citations, grammar, spelling, syntax,
or organization that negatively impact
readability and articulation of main
ideas
Submission has critical errors related
to citations, grammar, spelling, syntax,
or organization that prevent
understanding of ideas
10
Total 100%