This an analysis of star bucks corporation case study 2011.This case study is given in the book of strategic management by Fred and David.

1. OVERVIEW:
Starbucks is a world largest coffee house chain operating over 20000 locations worldwide. It was
founded in 1971.Starbucks is serving hot and cold beverages as well as snacks. It has the potential
to become the most famous corporation in the world.
VISION STATEMENT:
Starbucks coffee does not present its vision statement officiallybut a careful reading of the
company’s website reveals that its vision statement is “to establishStarbucks as the premier
purveyor of the finest coffee in the world while maintaining our uncompromising principleswhile
we grow”. The vision statement has the followingcomponents relevant to Starbucks which are
premier purveyance, finest coffee in the world, uncompromising principles and growth. If we
elaborate, being a premier purveyor means that Starbucks wants to achieve leadership in providing
its products, especiallycoffee of the best quality. Starbucks has already achieved the premier
purveyance component of its visionstatement by becoming the largest coffee and coffee house
company in the world.
As far as the quality of Starbucks coffee is concern, analysts and critics do not rate McDonalds’ and
Dunkin donuts much better then Starbucks. Starbucks claims to exercise is uncompromising
principle. They do posses a warm culture and ethical conduct. The firm satisfiedthe growth
component of its visionstatement as it has expanded their growth through new Starbucks cafes.
The Starbucks coffee has more than 22,500 locations around the world. Thus, the firm effectively
addresses its visionstatement.
MISION STATEMENT:
Starbucks does not provide any concrete and comprehensive mission statement policy what does
Starbucks do, what its value, competitive advantages and social responsibilitiesare, how company
treats its employeesetc. Let see if the company do qualifywith standard mission statement
components:

2. Customers:
“When we are fullyengaged, we connect with, laugh with, and upliftthe life of our customers if just
for a few moments sure its start with the promise of a perfectly made beverage, but a work goes far
beyond that. It’s reallyabout human connections.” Starbucks do claim a versatile bunch of
customers but truth of the matter is its highest cost products only attract the lavish living
customers. This problem should be sorted out if they want to become a truly worldwide brand.
Products and Services:
The main product of Starbucks is coffee. They also serve hot and iced espresso beverages coffee
and non coffee blended beverage of Tazo tea, Ethos water, Seattle’s best coffee and Italian coffee.
It also sellsrelated merchandise such as home espresso. It also sells related merchandise such as
home espresso machines, coffee mug and accessories etc. They also provides baked pastries,
sandwich and salad etc
Markets:
Starbucks headquarter is in Seattle Washington. It is aggressively expanding its coffee in the U.S,
where it sees a potential $377 millionmarket for flavored coffee is opening 100 new stores in Brazil.
In early 2011, Starbucks has a total 0f 16,635 stores in 50 countries including 500 stores in Tokyo
and London. It also has outlets in Beijing and Paris. There is no major market in sub-continental
which is quite unlikelyfor the brand like statement.
Technology:
As use of technology for any firm of organization is the order of the day. Starbucks has also been
recognized for its innovative use of technology. In June 2010, Starbucks was named the most
popular social media brand according to a snapshot taken of its fans, followers and subscribers by
fame count on online statics and analyst’s provider. It also launched a nationwide mobile payment
app in early 2011. It can also been used as make shiftoffice and meeting place thanks to its free,

3. unlimitedWIFI availability in stores, It also produced a “Starbucks digital network” with partnership
of YAHOO. All in all they maintain a good technology mechanism to compete with market demand
Profitability:
Starbucks reported excellentfiscal third quarter 2011 after gaining ascendency in first and second
quarter of year in 2011. At the end of third quarter on 3rd July’ 2011 company earnings were
$279.1 million for the quarter up from $207.9 million.In the same quarter last year company’s
revenue rose 12 percent to 42.93 billionbeating analysts’ expectations. Starbucks plans to add 800
stores in 2012 fiscal year.
Philosophy:
The philosophy of Starbucks can be related with their public dealings. They create inspired moment
with customers and interact with them with warmth and geniuses. Thus, cherish a great human
phenomenon.
Concern for public image:
Starbucks do concern for its public image. It had the excellentidea of promoting its latest loyalty
scheme by mounting and interactive table like screen on the front window of four outlets in
Toronto and Vancouver.
Concern for employees:
“We are called partners because it’s not just a job. It’s our passion. Together, we embrace diversity
to create a place where each of us can be ourselves. We always each other dignity and we hold
each other to that standard”. That’s what they claim for their employeesbut they still need to come
up with a comprehensive and concrete “employed-policy” in physical shape to address employee’s
concern of job and future security.

4. PEST ANALYSIS
POLITICAL:
A wide range of political factor can affect on Starbucks sale and profitability.Current state of
recession had dented the purchase power of consumers. A government policy towards the business
is another significant factor effectingcompanies. Tax scandal faced by Starbucks in UK is the great
example.Now days it has become compulsory for Starbucks and other global business to engage in
sourcing of raw materials complying with environmental and social norms that are becoming
stricter. Negligence can cause political pressure on the business.
ECONOMICAL:
This is another significant factor which can create impact on Starbucks. The high economic growth
of developingcountries and declining un-employment rates creates opportunities .Starbucks to gain
more revenues from various markets around the world. However, the rising labor cost is in external
factor that threaten Starbucks as it Increases Company’s spending for ingredients. Local currency
exchange rates and local economic environment in differentmarkets can also be a potential factor.
SOCIAL:
Starbucks can offer cheaper products but it might have to compromise the quality. They have to
address this social culture challenge. It will introduce new lower and middle income customers.
They can chips in with a strong promotion schemes into changing lifestyle of population by
introducing a low calories ingredients. Westernization in sub-continental has also created a
potential new market opportunity.
TECHNOLGICAL:
These days of technology have become an integral part of any firm or organization. Starbucks do
posses or decent technology mechanism. The use of mobile apps is the introduction of technology

5. in supply chain has affected positively. However they may face a challenge of rising availability of
specialty coffee machines for home use. Starbucks has introduced WIFI capabilities in its outlets
already which has made Starbucks coffee or mobile office. It enhances the overall consumer
experience bio-technological developments and emerging of innovative technology can create a
huge positive impact.
COMPETITIVE ANALYSIS:
PORTER’S FIVE-FORCES MODEL
FORCES LEVEL RATIONAL
Competitive rivalry H
Starbucksfaces the competitiveforce of McDonald’sandDunkin
Donuts,as well asotherspecialty coffeecompanies.The strongforce of
competitionisalsodue tothe low switchingcost,whichmeansthatitis
easyfor customerstoshiftfromStarbucksto otherbrands.
Bargaining power of buyers H
Starbuckscustomerspossesslarge amountof bargaining power
because there isnoand minimal switchingcostforcustomers,and
there isan abundance of offersavailableforthem.
Bargaining power of suppliers L
Starbuckssuppliershave highbargainingpowerdue tothe factthat the
demandforcoffee ishigh inglobal level andcoffee beanscanbe
producedonlyincertaingeographical areas.
Threat of substitutes H
Starbuckscustomerscan easilyshifttosubstitutesbecause there are
manysubstitutes,suchasbeveragesfromrestaurants,andinstantand
bottledbeveragesandothergoodsfromgrocerystores.
Threat of new entrants M
New entrantscan compete againstStarbucksbecause of the moderate
costs of doingbusinessandsupplychaindevelopment.However,new
entrantsfinditdifficulttocompete againstestablishedbrandslike
Starbucksbecause itisverycostlyto developastrongbrand.

6. INTERNAL FACTOR EVALUATION MATRIX
Key Internal Factor Weight Rating
Weighted
Score
Strength
Starbucksdo possesa topclass managementfraternity 0.05 3 0.15
Good advertisingmechanismupliftbyITbasedpromotion
programs
0.15 4 0.6
Introductionof mobile appsforcustomerskeepsthem
highratedin social mediadomain
0.10 4 0.4
Starbuckscustomer-dealingpolicyisasgoodas one can be 0.07 3 0.21
Starbucksexpandingthemselvesfast. 0.03 3 0.09
Availabilityof productsin convenience stores,grocery
stores,departmentstores,movie theaters,businesses,
schools,andairports.
0.10 4 0.4
Weakness
Coffee needsimprovementasthe critics andvisionrate by
othercompetitors 0.05 1 0.05
Productsrate are at higherside whichonlyaffordablefor
lavishlivingpeople 0.08 2 0.16
Outletsare notat prime locations 0.07 2 0.14
47% dropin earningsin2008 0.10 2 0.2
Starbucksdo not have a concrete "Employees-policy"plan 0.15 2 0.3
Moody's investorrecentlydowngradeStarbuckscredit
ratings 0.05 1 0.05
Total 1.00 2.75

7. EXTERNAL FACTOR EVALUATION MATRIX
Key Internal Factor Weight Rating
Weighted
Score
Opportunities
16% of the U.S adultpopulationconsumedcoffee ondaily
basis,where 63%use itoccasionally
0.05 3 0.15
People are gettingmore healthconscioussotheylook for
lowincarbine/sugarcalories
0.1 4 0.4
The popularityamongst teenagersforspecialtycoffee
indicatesbrightfuture
0.15 4 0.6
Starbuckscustomer-dealingpolicyisasgoodas one can be 0.07 3 0.21
International markethasastrongereconomyand
accordingly,consumerswouldbe able topaypremiumprice
for specialtyorgourmetcoffee
0.09 4 0.36
Threats
Starbuckshas beencriticizedbyenvironmental expertsfor
pouringmillionsof gallonsof waterdownthe drainatits
coffee shops
0.1 1 0.1
McDonald’s and DunkinDonutsare challengingStarbucksbig
time byofferingspecialty coffeealongwithother
complementaryproducts
0.15 2 0.3
Smallercompetitorsare expandingtheirmarketsandtheir
productsline offering
0.1 2 0.2
In recenttrendsconsumersdemandnutritionalinfo be
postedonthe products eveninretail outletsthatmaycause
ascendancyincapital amount
0.09 1 0.09
From 2007 to 2009 economicrecessionbadlyaffectedthe
specialtycoffeeindustryandthiswillcontinue
0.1 2 0.2
Total 1.00 2.61

8. COMPETITIVE PROFIT MATRIX
In conclusion,competitorssuchas DunkinDonutsare becomingstrongerthenStarbucksbyinoffering
specialtycoffeealongwithothercomplimentaryproductswithmuchlowerratesandMcDonaldsis
anotherpotential threat.
Starbucks Dunkin Donuts
Critical Success Factors
Weighted Rating
Weighted
score Weighted Rating
Weighted
score
Provide highqualityof products 0.14 3 0.3 0.15 4 0.6
Run bytop management 0.13 3 0.39 0.13 4 0.52
Provide customerservices 0.09 2 0.18 0.1 3 0.3
International marketsalesatascendency 0.07 2 0.14 0.08 2 0.16
Using advancedtechnology 0.05 1 0.05 0.07 2 0.14
Healthyfinancial position 0.12 3 0.36 0.13 4 0.52
Strongrelationshipwithcustomers 0.09 2 0.16 0.08 2 0.16
Price competivenessadverselyathigherside 0.05 1 0.6 0.09 3 0.27
A goodadvertisingmechanism 0.16 4 0.64 0.06 2 0.12
Expandthe brand globally 0.1 1 0.05 0.11 3 0.33
Total 1 2.87 1 3.12