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Starbucks - Company Analysis

Essay by   •  December 5, 2011  •  Case Study  •  1,452 Words (6 Pages)  •  1,688 Views

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Mission Statement

Thousands of consumers make a stop at the air-conditioned, eco-friendly, welcoming counters of the Starbucks stores every day all over the world. Operating in more than 50 countries (Annual Report 2010), this paper highlights the world renowned roaster and retailer of coffee, Starbucks. Starbucks Corporation, which is enlisted on NYSE with a ticker symbol of SBUX, was established in the year 1985 and had been under the management of CEO, president and chairperson, Howard Schultz who had witnessed the growth of Starbucks into one of the largest and recognized brand in the world today.

With an objective to strive in the market, the company states on its website that Starbuck's mission is "to inspire and nurture the human spirit - one person, one cup and one neighborhood at a time" (Our Starbucks Mission Statement). Simply stated, Starbucks intends to provide and/or brew the best quality of coffee beans to maintain the same quality of products and services to its loyal base of everyday customers. With eco-friendly, homely stores opening at every hub of the town, Starbucks intends to capture the market share one step at a time, pegging their presence in the hearts of people, its customers and its competitors.

Strategic Objectives

For Starbucks to remain one of the respected and popular brands of this era, strategic objectives are put in plan in order to generate revenue and increase earnings for their shareholders, while directing some objectives towards the customers and welfare of the society.

With almost 17,000 stores worldwide, (Annual Report 2010) including 11,000 within U.S., Starbucks further intends to generate growth and increase market share by building more stores and benefit from opportunities arising within the U.S.as well as outside with "major emphasis on expansion in key emerging markets such as China and Brazil (Starbucks 10-K). With an intention to increase market share, Starbucks aims to provide the same Starbucks experience as they do within United States. However, every country has its own norms and values which require careful and sensitive actions adhering to local customs and taste of these "new" markets.

Global Responsibility is a key issue taken seriously by the Starbucks Corporation and its Board of Directors. The company holds itself responsible and is deeply committed to how it conducts business all over the world. With focus on ethically sourcing high quality coffee, reducing environmental impacts and contribution towards communities, (Goals and Progress 2010) Starbucks integrates these actions into everyday life for its farmers (suppliers), customers, employees, and for the sustainability of future generations.

Starbucks has been monumental in taking advantages of joint ventures in its path of expansion. Since 1994, Starbucks entered an engagement with PepsiCo to create ready-made coffee related products and marketed certain brand products sitting on shelves of retail stores. They also started licensing in areas where Starbucks were not able to reach and open by allowing their brand name to sell in licensees stores in return of royalties and fees giving an indirect hedge towards market share (Annual Report 2010).

Financial Objectives

Starbucks has been financially sound and had a successful year ending October 3, 2011 with net income generating up to $1.7 billion as compared to $1.4 billion earned in 2010. For the following year, Starbucks intends to grow moderately with increased store sales, new stores opening and increased market share internationally (Starbucks 10-K). Earnings for 2011 was $1.62, compared to EPS of $1.24 in 2010 and the increase in net income and EPS has been credited to improving sales leverage, higher commodity costs, and certain gains during the current fiscal year (Starbucks 10-K). Given the company's optimistic vision, modest revenue growth, and plan for new stores, they expect a modest growth in EPS towards the end of 2012. The reason behind expecting moderate growth in net earnings and EPS is because Starbucks expects to increase their capital expenditures towards store renovations and increased manufacturing capacity (Goals and Progress 2010).

A clear leader in its industry, Starbucks 52-week high for year was $42.00 while the 52-week low was $25.37 and declared a cumulative cash dividend of $0.56/share to its (Yahoo! Finance). The following chart shows the stocks movement relative to the industry and S& P 500 Index over a period of 5 years.

Source: (Starbucks 10-K)

Company Strategy

Starbucks has initiated a key economic change which will change the structure within the company starting from 2012. The company has executed a "multi-brand, multi channel strategy classifying the 54 markets outside United States into three regions; China and Asia Pacific, Americas, and EMEA" (New Company Alignment Optimizes Multi-Brand Strategy, 2011).

Seattle's Best Coffee (SBC), a product and an independent coffee chain under Starbucks promises great growth in the future and the company hopes to shape this chain into a $1 billion dollar business through expansion and

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