Running head: STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
MODULE 6 - ASSIGNMENT 2
Kenawa E. Jigba
B6028 BLO Solutions to Organizational Challenges: A Capstone Experience
Argosy University
Instructor: Dr. Andrea Banto
Due: August 7, 2013
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STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
Starbucks SWOT Analysis and Strategic Scorecard
SWOT ANALYSIS
STRENGTHS

The organizations vision is to be a
WEAKNESSES

catalyst of change.

Brand recognition and customer loyalty

Diverse product portfolio catering to all

term growth prospects

No monetary switching costs for
customers
tastes and ages, including non-coffee

Negative large corporation image
beverages and food items

Pay 23% more for coffee than market
prices
Excellent customer service and the
value of the Starbucks experience

Saturation of the market diminishes long-

Potential limitations of international
Licensing relationship with top-brands
expansion due to cultural clashes with
such as Pepsi-Cola and Kraft that
American coffee experiences
minimize costs and leverage the
strategic advantages of those companies

Strong employee relationships

Economies of scale providing superior
distribution networks and supplier
power

Primly-located retail stores

Positive image attributed to social
responsibility
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
OPPORTUNITIES


Appealing to students and creating



External forces such as unstable
inviting drink sensations that would
governments especially in some parts of
motivate a special visit and acceptance
Africa have posed considerable threat to
of a higher price.
the growth and expansion of the company
There is great support politically for the
(Kurtz, 2009).
company to venture in new markets. In

THREATS

There have been other challenges such as
all the countries that the company is
poor understanding; lack of interest and
targeting, there has been good will and
attitudinal issues especially from the local
support from such countries.
communities among the target groups has
Have the ability to reduce premiums
posed threats to the expansion of the
paid for coffee
company (Tasker, 1997).
Room for international expansion (75%

In some parts especially in the new
of revenues came from the United
markets, there has been a challenge in
States in fiscal 2007 and international
accessing the targeted groups due to poor
same-store sales growth is strong)
infrastructure.
Room to compete on multiple fronts

Increasing coffee and diary prices
including quality and price

Intense competition in the specialty coffee
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD

further utilize brand strength to capture

beverage business
Increase licensing relationships to

profits at little cost to the company
lower the demand for expensive
There has also been great support from
beverages
the traditional investors as well as the

Community resistance to store expansion
new ones. All the stakeholders have

The possibility that the demand for
shown great support for the company so
far. Support from the media has made
the company to make a great leap.

Unfavorable economic conditions that
specialty coffee is a fad

Further diversification of fast food
restaurants that cuts into market share
Communities in the new markets have
received the company very well and
have supported the company greatly.
Starbucks SWOT Analysis and Strategic Scorecard
The proposed scorecard strategic objectives are shown attached (last page; Appendix 1)
and are based on my SWOT analysis. Kaplan & Norton Balanced Scorecard show that the
perspectives would interact with each other, with learning and growth improving both internal
business process and customer satisfaction for example. Then, in turn, the improved business
process and customer satisfaction would impact and improve the financial perspective. These
relationships are shown below as Exhibit 1.1 (Buggey, 2007).
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
Two strengths and opportunities discussed in my SWOT analysis are appealing to
students and creating inviting drink sensations that would motivate a special visit and acceptance
of a higher price. I have proposed two objectives. First, that Starbucks aggressively create new
distinctive recipes, such as the Chip Coffee, that establish Starbucks as the drink innovator in the
industry. Currently other brands create “knock offs” of Starbucks drinks. I propose that
Starbucks continue to create drinks that create “knock off” envy. The initiative is to create an
email and tweet campaign among Starbucks card users (most loyal customers) to suggest new
flavor sensations. Give awards for most creative, most non-coffee like and so forth. The
measure would be number of introductions with the goal being at least two major innovations a
year.
The second strategic objective in learning and growth would be to offer “study friendly”
drinks for the student population. This would entail offering free “extra shots” with an exam
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
schedule and more advertising the week before midterms and finals on campus. The measure
will be to share with the student drink market and the goal is 20% or more.
For the internal business process, I recommend three strategic initiatives. First, I believe
Starbucks needs to stick to its “perfect” drink commitment to maintain its quality image and
price point. This requires backing up the promise with rework and redemption coupons.
Secondly, I believe that Starbucks must compete during the rush hour by offering a better drink
but not at the expense of getting to work on time. During rush hour, the most experience baristas
will serve at the window and being the shift is fully stocked. Finally, the third strategic objective
will be to offer more access to Starbucks items at non-Starbucks locations. This will be achieved
through partnerships with local event venues with the goal of having an event monthly and one
event for every 30,000 of the population.
The customer perspective has two strategic initiatives in addition to add to the benefits
that will accumulate from the strategic moves suggested in the learning and growth and internal
business process perspectives. First, Starbucks will position themselves as the “affordable treat”
in the downturn. What I am simply implying in this concept is that if you can afford a brown
new car or go on vacation, or even get away, in this downturn economy, then it is eminent that
you can also get away with Starbucks products for less than $5 and have a great time doing it.
The second thing is that, Starbucks would start offering cell phone advertisements and tweet
coupons to regular customers to try the new innovative drinks and get free coupons if any of
their flavors are adopted. This would appeal to the technologically-advanced market segment.
Finally, the financial perspective should enjoy the benefits of the strategic initiative and
objectives in the other three perspectives. To make sure the benefits cascade into financial
results, I propose two measures that are classics. First, return on sales. Even though we offer
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
targeted discounts, we have to maintain a certain margin to offer a reasonable return on equity to
our owners. So, we have to maintain our average margins. We will do this by limiting discounts
to those opportunities where we are creating new customers, or new “addictions” to high margin
untried flavors. The goal is to create a new solid customer base that will continue and grow
through the economic recovery. Secondly, the strategic objective is to create additional
transactions without added “bricks and mortar” by offering Starbuck drinks at local venues. The
measure is return on assets and should exceed cost of capital by a historical margin. Overall, the
strategic objectives that are suggested create ideas that capitalize on strengths and support areas
of weakness as noted in the SWOT analysis.
Starbucks Balanced Scorecard
The balanced scorecard requires that the organization be viewed from four main
perspectives (Hefner, 2011). These perspectives include learning and growth, financial, internal
business process and finally the customer perspective. The need to look at an organization from
the four perspectives is to develop metrics, collection and interpretation of data relating it to all
the four perspectives (Hefner, 2011).
Learning and Growth
Given this cause-and-effect relationship among the perspectives, I started with the
learning and growth section. At this stage, there is need to focus at the employee training.
Employees at Starbucks are trained with the objective that they are going to reach their full
potential. Mediocrity and procrastination are avoided so that employees can realize what they are
best at in a personal level and the potential the organization has (Hefner, 2011). The company
therefore insists on timely and quality deliveries to its employees during the training period. The
employees are made to understand that they do not need to package themselves to what they are
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
not but rather they are given room to develop themselves to be what they want to be (Kurtz,
2009). Learning goes on even after the basic orientation. Employees are made to understand that
learning is a lifetime process and the only way for the company to be a step ahead of their
competitors is through having a human resource that is knowledgeable. Information is therefore
an important tool in the business. It is for this reason that the company has created a culture of
information sharing. Employees are encouraged to share information to improve them and as a
result improve the organization as a whole.
Internal business
It refers to the internal business processes. Managers interested in this perspective use
metrics to measure the performance of their business, whether the company services and
products do conform to the customer’s requirements. Managers at the Starbucks Corporation
(SBUX) make sure that they develop metrics within the organization that are meant to measure
these processes.
Customer
Starbucks Corporation has realized the need to value their customers from the very start.
It is for this reason that one of the core values of the company is service excellence. Customer
satisfaction is paramount since this induces repeats and referrals and hence more profits. To
measure customer satisfaction, Starbucks Corporation (SBUX) is keen on several indicators.
These indicators include customer repeats and referrals. If a customer is not satisfied, he or she
will find another supplier who will meet their needs. It is therefore important to consider such
indicators since their occurrence may mean decline in profits in future even when the current
financial status looks just fine (Kurtz, 2009).
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
Managers at the SBUX Company have therefore designed metrics for customer
satisfaction whereby the customers are analyzed. In this regard, customers are analyzed as
individuals, the kind of processes through which the company is providing a service or a product
to those particular customers.
Financial
Funding data is a major priority at the SBUX Company. The data has to be timely and
accurate. The SBUX has implemented a corporate data base making sure that more of the data
processing is centralized and automated. From past experiences, SBUX realized that more
emphasis on financials led to the unbalanced situation with regard to all the other perspectives. It
is for this reason that SBUX decided to include additional related financial data. Good examples
would be the risk assessment not forgetting the cost benefit data.
For Starbucks Corporation to succeed in achieving its objectives, it has come up with a
strategy. The strategy is mapped in such a way that the company highlights the need to improve
performance in the objectives that are found in the learning and growth perspective which forms
the bottom row. Improved performance at this level has enabled the company to improve in its
internal process objectives which form the second row up. Consequently, this has led the
company to come up with desirable results to its customers and finance which forms the top row.
Starbucks Corporation has not only focused on its goals as an organization but has also
created a 360 degree in the way its employees think. This has ensured that people do not just
think in a particular way but they instead explore on their way. This has been possible through
the sharing of information and the freedom that the employees are given to utilize the knowledge
acquired in practice without the fear of making mistakes. This way, the company can be said to
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
have made giant leaps over the last few decades while at the same time improving its employees
at an equal rate.
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
References
Buggey, T. (2007, Summer). A Picture Is Worth.... Journal of Positive Behavior Interventions,
9(3), 151-158. Retrieved December 14, 2007, from Academic Search Premier database.
Buggey, T. (2007, Summer). Storyboard for Ivan's morning routine. Diagram. Journal of
Positive Behavior Interventions, 9(3), 151. Retrieved August 6, 2013 from Academic
Search Premier database
Hefner, L. (2011). Network Balanced Scorecard . White Plains, NY: New York
Kaplan, R. S., & Norton, D. P. (2007, Jul). Using the balanced scorecard as a strategic
management system. Harvard Business Review, 85, 150-161. Retrieved from
http://search.proquest.com/docview/227841808?accountid=34899
Kurtz, S. (2009). Balanced Scorecard Basics. New York: Cambridge University Press, New
York
Starbucks Corporation (SBUX) (2010). Form 10-K. United States Securities and Exchange
Commission, Washington D. C. Starbucks Corporation, Seattle Washington. Financial
Content.http://markets.financialcontent.com/stocks/quote/filings/quarterly?Symbol=SBU
X. Retrieved 11-05-11.
Sun, V. (2008). What is SWOT analysis. Englewood Cliffs, N. J.: Prentice Hall, Inc.
Tasker, F. (1997). SWOT analysis . Englewood Cliffs, N. J.: Prentice Hall, Inc.
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
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Appendix 1 : Starbucks
Balance Scorecard
Objectives
Measure
Target
Initiative
Financial
1
Profitable transactions
Return on sales will be 9%
or higher
Return on assets will
exceed cost of capital by
5% or more
Limit discounts to special flavors and
high transaction customers.
Percent increase in
number of servings
Number of coupons
redeemed from tweets
and cell phones
5% increase in sales
volume
15% redemption rate
Advertise the "affordable get-away": a
Starbucks visit
Offer discounts on particular new
flavors using tweet coupons and cell
phone coupons
Number of re-made
drinks or redemption
tickets distributed
Rework/redemption tickets
are below 1% of drinks
served
Offer redemption ticket or rework for
any drink that is not perfect.
Return on sales
2
Leverage assets with nonstore profits
Customer
1 Be the "affordable treat" in
a down market
2
Appeal to the technology
savvy, educator buyer
Internal Business Process
1
Perfect drink every time
2
Quick drive through during
rush mornings
Create access to Starbuck
3 products at social, sporting
and fun events
Learning and Growth
Create new taste sensations
1 -- be the drink innovator of
the industry
Return on assets
Drive through orders
completed in two
minutes or less
Number of non-store
events offering Starbucks
each month
95% of drink-only orders
completed in two minutes
One event for every 30,000
in the population per
month
Number of new drinks
introduced each year
Two major innovations a
year (or more)
Event sales will increase transactions
without increasing assets employed
Put experienced baristas on drivethrough during 6-9 am rush. Have all
stations stocked prior to 6am.
Create partnerships with event
suppliers in area
Solicit customers for ideas; offer
rewards for flavor suggestions
STARBUCKS SWOT ANALYSIS AND STRATEGIC SCORECARD
2
Offer trendy "study
friendly" drinks for student
Share of market of
student population
20% or more of student
market
Advertise on campus the week before
midterm and final exams. Offer free
extra shots with final exam schedule.
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