Bus1Ban Analysing Business Data - Assessment Answer

Answer:

1 . Mission and vision statement

a) Mission Statement- Starbucks’s missions is “ to inspire and nurture human spirit, one person, and one neighbor at same time”
b) Vision Statement- “To establish Starbucks as most recognized and respectable brand in the globe and become a national firm with additional values and guiding principles that employees could feel proud of.”
Competitive profile matrix

S.no			STARBUSCKS	STARBUCKS	PEET’S COFFEE	PEET’S COFFEE	DUNKIN DONUTS	DUNKIN DONUTS
	CRITICAL SUCCESS FACTOR	WEIGHT	RATING	WEIGHTED SCORE	RATING	WEIGHTED SCORE	RATING	WEIGHTED SCORE
1.	Innovation	0.05	3	0.15	3	0.15	3	0.15
2.	Product quality	0.15	3	0.45	4	0.6	2.5	0.375
3.	Customer loyalty	0.15	4	0.6	4	0.6	3	0.45
4.	Global expansion	0.10	2.5	0.25	3	0.3	2	0.2
5.	Convenience	0.6	3.5	0.21	3	0.18	2	0.12
6.	Market share	0.5	3.5	0.175	2.5	0.125	3	0.15
7.	Brand Image	0.15	4	0.6	3	0.45	3.5	0.525
8.	Price	0.10	1.5	0.15	1	0.1	3.5	0.35
9.	Location	0.04	3	0.12	2.5	0.1	4	0.16
10.	Brand Marketing	0.15	3.5	0.525	2	0.3	3.5	0.525
	Total	1.00		3.23		2.91		3.01

Competitive profile matrix of any firm helps the firm to design a very offensive as well as defensive strategy and tactics plan for it. In case of Starbucks, Dunkin donuts and Peet’s coffee were identified as being major competitors or rivals. Every single firm has own critical success factors, which the firm’s outshine in. Coffee beans used by Peet’s are all free traded and thus they provide a better quality as compared to Starbucks and even Dunkin. Coffee by Starbucks carries the greatest level of buyer loyalty, particularly through reward program, that permit them to elevated up to greatest rating in the segment. Analyzing all the three firms weighted scores, Coffee supplied by Starbucks has highest followed by Dunkin close behind it and then Peet’s being the last one (Ansoff, 2014).

External factor evaluation matrix

S.NO	OPPORTUNITIES	WEIGHT	RATING	SCORE
1.	New market in Latin America as well as Europe	0.05	3	0.15
2.	Diversification in product mix	0.1	4	0.4
3.	Innovation in cup designs	0.03	3	0.09
4.	Expansion in Asia, middle east and Africa	0.1	2.5	0.25
5.	Home delivery experience	0.05	3	0.15
6.	Alliance with other companies	0.08	3.5	0.28
7.	Buyer packaged products	0.05	3.5	0.175
8.	Integration vertically	0.04	3	0.12
	THREATS
1.	Imitation	0.03	2	0.06
2.	Rising prices of coffee beans	0.09	1	0.09
3.	Competition from low cost coffee sellers	0.1	1	0.1
4.	Independent coffee house movements	0.1	1	0.1
5.	Trademark and copyright infringement	0.07	2.5	0.175
6.	Cheaper options available	0.05	3	0.15
7.	Peet’s coffee and Dunkin Donuts	0.02	2	0.04
8.	Social activists	0.04	3	0.12
	TOTAL	1

External factor evaluation is s tool that uses all the opportunities and also threats from the SWOT analysis of a firm to analyze the exterior ecology for the firm. More of the EFE score of a firm represents the betterment of all its current strategies in capitalization of the opportunities existing and thereby removal of all threats. With Starbucks EFE score being 2.45 depicts that the firm is doing all an average work in its field (Haskova, 2015).

Internal Factor evaluation:

S.NO	STRENGTHS	WEIGHT	RATING	SCORE
1.	Strong brand image	0.1	4	0.4
2.	Extensive supply chain internationally	0.03	3	0.09
3.	Diversification in business throughout its subsidiaries	0.05	3	0.15
4.	Strong and robust customer loyalty	0.1	4	0.4
5.	Very strong public relation	0.04	3.5	0.14
6.	Growth of network in market	0.04	3	0.12
7.	Best product quality	0.08	4	0.32
8.	Operating efficiency and high growth resulting in good financial performance	0.06	3.5	0.21
	WEAKNESSES
1.	Very much dependent on a sole product	0.1	1	0.1
2.	Too much dependent on American segment	0.04	2	0.08
3.	Slow and steady expansion within European region	0.08	1.5	0.12
4.	Products that can be easily imitated	0.03	2	0.06
5.	Importing roasted coffee	0.1	2	0.2
6.	Generalization in standards of goods	0.03	2	0.06
7.	Misinterpreting needs and demands of customers	0.04	2	0.08
8.	Higher price points	0.08	1	0.08
	Total	1

For entire weighted scores, if the firm’s score is less than 2.5, it implies that the business is actually internally weak. Businesses that score more than 2.5 signify a very strong position of the firm internally. Starbucks has earned a score of 2.61; this is just somewhat more than the internally weak verge. This firm is performing on average internally (Haskova, 2015).

SPACE MATRIX (5 FP, 5IP, 5CP, 5SP)

X	Strong brand image	-1	Growth Potential	5
	Market share	-3	Profit potential	5
A	Product quality	-4	Financial stability	5
X	Lifecycle of the product	-5.5	Resource utilization	4
I	Customer loyalty	-2	Ease of entry in the market	3
S	Utilization of capacity	-3	Productivity and utilization of the capacity	3
	Extensive international supply chain	-4	Diversification in the product mix	4
	AVERAGE	-3.214285714	AVERAGE	4.142857143
	TOTAL X-AXIS SCORE	0.9285714286
Y	Return on investment	5	Rising price of coffee beans	-4
A	Leverage	5	Rate of inflation	-3
X	Liquidity	4	Variability in demand	-2.5
I	Working capital	4	Price rate of competing goods	-4.5
S	Cash inflow	5	Market entry barriers	-5
	Inventory turnover	5	Competitive pressure	-4
	Earnings per share	4	Ease of exit from market	-1
	Price earnings per share	3	Price elasticity of demand	-1
	AVERAGE	4.375	Risk involved in the business	-3
	TOTAL Y-AXIS SCORE	1.26388889	AVERAGE	-3.1111111

Source: (White, 2004)

Space matrix carries four quadrants and shows what strategy a company must follow from defensive, aggressive, conservative to competitive. This Matrix analyses firm’s financial strength as well as its competitive advantages and compares them to the firm’s stability in the environment and industry (Welsh, Raven & Al?Mutair, 1998). The quadrant at top left starting clockwise represent a very conservative then come aggressive, third quadrant shows competitive, and last one depicts a defensive strategy. After analyzing Starbucks on this SPACE matrix, we can see that the total points that were plotted brought the firm in the 2^nd quadrant thereby depicting an aggressive strategy to be followed by the firm. The firm can contemplate backward, forward and even horizontal integration, new market development, market penetration, product development or even diversification ("Starbucks – The Best Coffee and Espresso Drinks", 2018).

QSPM

QUANTITATIVE STRATEGIC PLANNING MATRIX		STRATEGIC OPTION 1	PRODUCT DEVELOPEMENT	STRATEGIC OPTIN 2	MARKET PENETRATION
KEY FACTORS	WEIGHT	AVERAGE SCORE	TOTAL AVERAGE SCORE	AVERAGE SCORE	TOTAL AVERAGE SCORE
OPPORTUNITIES
Expansion in Middle East, Africa and Asia	0.1	3	0.3	4	0.4
Diversification in the product mix	0.1	2	0.2	2.5	0.25
Partnership and alliances with other companies	0.08	4	0.28	3.5	0.28
New market in Latin America and Europe	0.05	3	0.15	3.5	0.175
Innovation in designs of cups	0.03	4	0.12	2.5	0.075
Home delivery experience	0.05	2	0.1	3.5	0.175
Vertical integration	0.04	2.5	0.1	4	0.16
THREATS
Competition from other coffee selling in lower cost	0.10	3	0.15	2.5	0.25
Social Activists	0.04	1.5	0.06	4	0.16
Imitation	0.03	1	0.05	2.5	0.075
Rising prices of coffee beans	0.09	2	0.18	2.5	0.225
Options of cheaper alternatives in the market	0.05	2.5	0.125	3	0.15
Infringement of trademark and copyright	0.07	3	0.21	3	0.21
Movement of independent coffee houses	0.10	3	0.25	3.5	0.35
Peet’s coffee and Dunkin Donuts	0.02	3	0.16	3.5	0.07
TOTAL	1

Source: (Snyder, 2006)

7.QSPM

QUANTITATIVE STRATEGIC PLANNING MATRIX		STRATEGIC OPTION 1	PRODUCT DEVELOPEMENT	STRATEGIC OPTIN 2	MARKET PENETRATION
KEY FACTORS	WEIGHT	AVERAGE SCORE	TOTAL AVERAGE SCORE	AVERAGE SCORE	TOTAL AVERAGE SCORE
STRENGTHS
Strong image of the brand	0.10	4	0.4	4	0.4
Exclusive supply chain	0.03	3	0.09	4	0.12
Diversified business throughout its subsidiaries	0.05	4	0.2	3.5	0.175
Efficiency in operations and strong growth rate resulting in superior financial performance	0.06	2.5	0.15	3.5	0.21
Rapidly growing network in market	0.4	2.5	0.1	3.5	0.14
Quality goods	0.08	3.5	0.28	3	0.23
Good customer loyalty	0.10	4	0.4	3	0.3
Properly build and maintained public relation	0.4	3	0.12	3.5	0.14
WEAKNESSES
Totally dependent on a sole product	0.10	1	0.3	4	0.4
Too much reliability on American segment	0.04	2	0.08	4	0.16
Very slow expansion rate in other nations	0.08	2	0.16	4	0.32
Import of roasted coffee	0.10	2	0.3	2.5	0.25
Misinterpreting customer needs and demands	0.04	4	0.16	1.5	0.06
Higher cost	0.08	2	0.16	2.5	0.2
Generalization of most of its offerings	0.03	2.5	0.075	2.5	0.075
Products that can be easily copied	0.03	3.5	0.105	2.5	0.075
TOTAL	1.00		5.715		6.37

Source: (Welsh, Raven & Al?Mutair, 1998)

For Starbucks, product developments as well as market penetration are seen as the most vital strategic alternatives available for the business to now look into. By analyzing the cumulative scores and weighted scores of new product development and comparing it to scores of market penetration, market penetration for the firm seems to be clearly more significant strategically (Cateora, Gilly, Graham & Money, 2016).

At corporate level the firm must try to reduce its price for its offerings by using cheaper coffee beans.
The firm must apply focus strategy to increase its strength

References

Ansoff, H. (2014). Strategic management. [Place of publication not identified]: Palgrave Macmillan.

Cateora, P., Gilly, M., Graham, J., & Money, R. (2016). International marketing. New York, NY: McGraw-Hill Education.

Haskova, K. (2015). Starbucks Marketing Analysis. CRIS - Bulletin Of The Centre For Research And Interdisciplinary Study, 2015(1). doi: 10.1515/cris-2015-0002

Snyder, M. (2006). State of the Profession: The Starbucks Effect. Academe, 92(1), 70. doi: 10.2307/40252902

Starbucks – The Best Coffee and Espresso Drinks. (2018). Retrieved from https://www.starbucks.com

Welsh, D., Raven, P., & Al?Mutair, N. (1998). Starbucks International enters Kuwait. Journal Of Consumer Marketing, 15(2), 191-197. doi: 10.1108/07363769810210386

White, C. (2004). Strategic management. Basingstoke, Hampshire: Palgrave Macmillan.

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