Current Performance
Starbucks is one of the fastest-growing food chains in the global food industry. Over the years, the company has been successful in creating a positive brand image in different markets globally. It is planning to increase the number of stores in growing markets that will have a positive impact on its earnings in the coming years. The company’s success is driven by its ability to develop a unique corporate culture, manage costs effectively, and commitment by the top management (Leinwand and Mainardi 2016).
The last reported operating cash flow was substantial and enough to support the company’s plan to develop new stores. The financial records of the company indicated that Starbucks achieved a high return on new store openings (Starbucks Corporation – Form 10K Report 2015). Also, the market share and profitability of the company has increased in the last few years (Trefis Team 2016).
Strategic Posture
Mission
Starbucks has a strong and impressive mission statement that reflects the efforts that the company makes to keep its business running successfully. The company’s mission statement is “to inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time” (Starbucks – Our Mission 2016, p. 1).
Vision
The vision statement of Starbucks has several important components that are relevant to its business including premier purveyance, finest coffees, corporate principles, and focus on overall growth (Starbucks – Our Mission 2016).
Objectives
Starbucks has mentioned its purpose to all employees, and it helps them to achieve their goals. The objectives of the company are “to sustain its position in the market as the most recognized” (Starbucks Details Five-Year Plan to Accelerate Profitable Growth 2014, p. 2) and a respected coffee brand globally and increase its mass-market reach. For these, Starbucks has developed strong strategic goals that help it to achieve its mission (Starbucks – Company Information 2016).
Strategies
- Use of fresh coffee beans for best taste.
- Introduce new and different flavors of coffee.
- Introduce new product lines such as sandwiches and breakfast items (Thompson 2016).
- Expansion of online services.
- Allow customers to place pre-orders and pay online (Starbucks Mobile Order & Pay Now Available to Customers Nationwide 2015).
- Maximize the number of customers in the market.
- Team up with strong and reliable suppliers and companies (Geereddy 2014).
Corporate Governance
Board of Directors
The Starbucks Board of Directors is responsible for developing and enforcing corporate governance principles. The committee charter and policies govern corporate governance practices. The founder of Starbucks, Howard Schultz is the President and CEO. He served as the Chairman of the board from 1985 till 2008 (Starbucks – About Us 2016). After that, he was given the position of the company’s CEO and President. Currently, the Starbucks Board of Directors comprises 11 individuals. The details of all directors along with their joining years are provided in the following table.
Table 1: Board of Directors. Source: (Starbucks Corporation – Form 10K Report 2015).
Top Management
Howard Schultz, CEO hired people with extensive experience to strengthen the company’s management. It helped in managing the expanding retail network of the company (Lebowitz 2016). The four key individuals who have been part of the management team include Howard Schultz, Dave Olsen, Howard Behar, and Orin Smith (Starbucks Corporation – Form 10K Report 2015). They created the corporate values, principles, and culture through collective decision-making and efforts.
Situational Analysis
The coffee manufacturing and distribution industry is growing at a rapid pace. The number of companies operating in this industry is increasing that is making the competition complex and difficult to manage. The companies are focusing on innovative store designs and differentiable products. Moreover, consumer preference for low-price coffee products suggests that the demand for instant coffee is expected to grow in the years to come. The coffee companies are engaged in co-branding to increase their sales network.
SWOT Analysis
Table 2: SWOT Matrix.
External Environment: Opportunities and Threats
Table 3: External Factor Analysis Summary.
Internal Environment: Strengths and Weakness
Table 4: Internal Factor Analysis Summary.
Strategy Recommendations
The company needs to focus on developing its international business. The developed countries such as the US are reaching their maturity stage, and the growth opportunities are limited in these markets. Therefore, the company should focus on new markets in Asia and Africa. Moreover, the company should invest in research and development to improve its product variety. The customers are increasingly becoming more concerned about their health.
The company can introduce low-calorie food items that complement its main coffee products. The company should take steps to enhance the differentiation that could help it in the existing and new markets. The company should also work on developing leadership within the organization that could follow the footsteps of Howard Schultz.
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