Strategic Map of Starbucks Coffee Company
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The document presents a strategic performance measurement assignment for Starbucks, detailing its operational segments, SWOT analysis, and strategic objectives across four perspectives: customers, financial, internal processes, and learning & growth. It emphasizes Starbucks' mission to inspire and nurture community, as well as its strategies for product development, market expansion, and enhancing customer and employee satisfaction. Key goals include increasing market share, improving service quality, and maintaining strong supplier relationships, all while adapting to potential threats such as economic downturns and competition.
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Strategic Map of Starbucks Coffee Company
- 1. Performance Measurement Assignment 2 Strategic Map of Starbucks Coffee Company Group 4: Alessia Bianchi (1381946), Valentina Chiarini (1573971), Claudia Klapproth (1574367), Federico Nardini (1343623), Andrea Padovani (1347780)
- 2. Starbucks Operating Segments SWOT The Strategy DRIVERS The Objectives MEASURES 1. Customers MEASURES 2. Financial MEASURES 3. Internal Process MEASURES 4. Learning & Growth STRATEGIC MAP 1. United States: Contains company-operated retail stores and specialty operations within the US (e.g. licensed retail stores) 2. International: Contains retail store licensing operations in almost 50 countries and foodservice (primarily in Canada and UK) 3. Global Consumer Products Group (CPG): Contains packaged coffee and tea, Starbucks VIA Ready Brew and other branded products sold worldwide
- 3. SWOT Analysis Strengths SWOT The Strategy DRIVERS The Objectives MEASURES 1. Customers MEASURES 2. Financial MEASURES 3. Internal Process MEASURES 4. Learning & Growth STRATEGIC MAP Weaknesses • Internationally known, strong, valuable brands • Efficiency and effectiveness in supply chain • High quality of products and service • Starbucks Experience • High accessibility (Starbucks at every corner) • Strong relationship with suppliers, i.e. low risk of non-delivery • Starbucks Global Responsibility strategy • Dependent on relationship with suppliers • Health effects of consuming Starbucks products • Natural disasters may largely affect supply • Dependent on US operating segment (75% of total revenues in 2010) • Future growth is increasingly dependent on International operating segment (might not work due to taste differences) • Regional or global health pandemic could affect business Opportunities Threats • Leverage Starbucks brand even more outside the company-operated store base • Product innovation and new growth platforms • Expand international operating segment • Expand in Chinese market (believed to become largest market after North America) and Brazilian market • Global Consumers Product Group (e.g. Starbucks VIA and Seattle’s Best Coffee) • Supply and price of coffee is subject to significant volatility • Large number of competitors in specialty coffee beverage business can lead to low profitability • Economic conditions in US and certain international markets might decrease customer spending Group 4 3
- 4. Mission and Strategy SWOT The Strategy DRIVERS The Objectives MEASURES 1. Customers Mission “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” Strategy It mainly touches four specific fields: • Social • 3° place between home and work with the Starbucks Experience • Social community (online and around the physical store) MEASURES • Markets & Products 2. Financial MEASURES 3. Internal Process MEASURES 4. Learning & Growth • Introduction of new products in the existing market (Product development) • Expansion in to new markets with existing products (Market development) • Diffusion of existing products in existing market (Market penetration) • Public Responsibility • Environmental responsibility • Giving back to the community served both on the local and international level • Service • High quality service STRATEGIC According to the strategy Starbucks is adopting, different drivers and MAP objectives can be identified for each one of the four perspectives. Group 4
- 5. 1. Customer Drivers and Objectives SWOT The Strategy DRIVERS The Objectives According to this perspective, the most important to Starbucks, it’s easy to identify 3 main drivers, all of them obviously related to the first point of Starbucks’ strategy, the «social» side of its activity. • With the customer as main reference, the company focuses its effort on the existing market, the US one, looking for a diversification in its product offer, in order to increase the customer profitability and the brand loyalty through a higher client satisfaction, in order to maintain and enhance its customers’ sense of community • Taking into consideration the new market (Europe and Asia), the main goal for Starbucks is the expansion of its market share, through the acquisition of new customers and the increment of the sales per customer • Talking about reputation the company cares about 2 main aspects of its strategy: the awareness of the public about its environmental effort and the creation of the «Third place, between work and home», both oriented to the improvement of it’s public image. Group 4 MEASURES 1. Customers MEASURES 2. Financial MEASURES 3. Internal Process MEASURES 4. Learning & Growth STRATEGIC MAP
- 6. 2. Financial Drivers and Objectives SWOT The Strategy DRIVERS The Objectives Since Starbucks’ main goal is customer and product profitability 3 main drivers can be identified: • MEASURES 1. Customers MEASURES Revenue Growth, reached by increasing the number of new products throughout differentiation (product development, not only coffee and bakery, but also salads, sandwiches, bottled drinks sold in supermarkets…), reaching new customers and markets and changing to more profitable product or service mix. 2. Financial MEASURES • 3. Internal Process Cost Reduction, throughout a reduction of product/service cost per unit (huge implementation of economies of scale and scope economies) and administration costs. MEASURES 4. Learning & Growth STRATEGIC MAP • Asset utilization. With higher availability, it is possible to produce and sell more products with the same invested capital, generating more income while the fixed costs remain the same (economies of scale -> same distribution channel for more than one final product or raw material). Group 4
- 7. 3. Internal Drivers and Objectives SWOT The Strategy DRIVERS The Objectives Starbucks wants to improve on every aspect of its business, from suppliers to operations to customers. This allows us to focus on three drivers, namely • Enhancing consumer relationships, since, as previously mentioned, customers are the most important aspect of Starbucks’ strategy. This could be done through an increase in service efficiency and quality, as well as an improvement in the complaints resolution service. • Enhancing supplier relationship, since Starbucks’ supply of fresh coffee is one of its major point of strength. This necessitates an increase in its long-term supplier relationships, which would go hand in hand with an increase in quality and yield of coffee. • Regarding its operations, Starbucks has to work on decreasing process cost and time, as well as increasing process efficiency and quality, in order to be more responsive and rapid and further give consumers an improved experience. MEASURES 1. Customers MEASURES 2. Financial MEASURES 3. Internal Process MEASURES 4. Learning & Growth STRATEGIC MAP Group 4
- 8. 4. Learning & Growth Drivers and Objectives SWOT The Strategy DRIVERS The Objectives This fundamental perspective focuses completely on the company’s employees. Starbucks’ main goal is to have the best possible staff and be an employer of choice in order to grow in the long-run. To do so, this perspective is divided into 3 main drivers. • MEASURES 1. Customers MEASURES • 2. Financial MEASURES 3. Internal Process MEASURES 4. Learning & Growth STRATEGIC MAP • All the employees have to be skilled and prepared to reach their goal, and the company tries to enhance employee capabilities mainly through its training and formation program. This way, Starbucks is also able to retain and attract the employees who have the best qualities and skills. The employee motivation is fundamental for a good performance on the job and therefore customer satisfaction. The company's goal is to maintain the level of commitment as high as possible, through bonuses and career opportunities. The last driver is the alignment of objectives. It's important that the personal goal of each worker is aligned with the company's strategy, giving them a common objective. Starbucks is able to align the objectives thanks to the organization of committees and the distribution of stock options for the manager staff. Group 4
- 9. • 1. Customer Measures Existing Market (US) – • • • SWOT – DRIVERS – The Objectives 1. Customers 1. Customers – • 4. Learning & Growth STRATEGIC MAP Increase market share • • • 3. Internal Process MEASURES • Number of products per receipt Number of purchases per week New Market (Europe , Middle East and Asia) – MEASURES Number of new accounts on website per year Number of participants to events organized by Starbucks Number new fan on facebook per year Increase customer profitability • • MEASURES Customer survey satisfaction rating Number of complaints per year Average time spent in the store per customer Increase sense of community • • • MEASURES MEASURES Number of cards given per year Customer survey loyalty survey Number of accounts created on website per year Increase satisfaction • • • The Strategy 2. Financial Increase loyalty Percentage market share Total sales to new customers Total sales per new store Reputation – Environmental effort * • • • – Percentage of stores built following the LEED certification* Percentage of beverages served in reusable cups (objective: 25% by 2015) Percentage of water consumption reduction (objective: 25% by 2015) Create the 3rd place • • Average time spent in the store per customer Average duration of the connection to the store wifi Group 4 9
- 10. 2. Financial Measures • Revenue growth - Increase the number of new products • % of revenues from new products introduced in 2010 • % of revenue from licensed branded products (4% in 2010) • % of revenue from food (23% in 2010) • Number of pruduct in product portfolio - Attract new customers and enter new markets • % of revenues from new stores in US • % of revenues from new stores abroad • revenues resulting from new customer loyalty cards issued - Change to a more profitable product /service mix • Store sales growth % (open 13 month or longer) • Operating income by segment(US, International and Global CPG) • Gross profit margin (sustainability of business, success of pricing strategy and market acceptance of product-differentation strategy) • Cost reduction - Reduce product/service cost per unit • % reductions in cost per unit(cost of features, cost of quality, efficency of internal process ,customization, investment in R&D and investment in plant and equipment) - Reduce selling/general adminstration costs • % reductions in selling and administration costs Asset utilization - Improve asset utilization • ROI • Residual income • Economic value-added (EVA) SWOT The Strategy DRIVERS The Objectives MEASURES 1. Customers MEASURES 2. Financial 2.Financial MEASURES 3. Internal Process MEASURES 4. Learning & Growth STRATEGIC MAP • Group 4
- 11. 3. Internal Process Measures • Enhance Customer Relationship – • • • SWOT • • • DRIVERS • 1. Customers – 2. Financial • Quantity sold by each supplier Number of experts in each Farmers Support Centers Difference in productivity by farm with Farmers Support Centers and other farms Operations – Decrease process cost and time • • • 4. Learning & Growth STRATEGIC MAP Number of suppliers Average length of contract Increase in price in specific countries due to bad weather conditions Increase quality and yield of coffee • Volatility of coffee price • • • MEASURES MEASURES Increase long term relationships • • • MEASURES Percentage of complaints answered Number of complaints received per day Mapping of recurring complaints Enhance Supplier Relationship – MEASURES 3. Internal Process Average number of customers served per day Number of complaints resolved daily Percentage of loyalty card holders coming in daily - Improve complain resolution service The Strategy The Objectives Increase service efficiency and quality – Average cost of processing Quantity of coffee processed daily Average time of processing Increase process efficiency and quality • • • Percentage of samples not compliant with our quality standards after processing Amount of coffee processed per roasting facility Number of employees per roasting facility Group 4 11
- 12. 4. Learning and Growth Measures SWOT • – Improve quality of training The Strategy • • • DRIVERS • • • MEASURES MEASURES • 4. Learning & Growth Enhance Employee Motivation • • • • MEASURES MEASURES Revenues per employee Number of extra hours per employee Customer satisfaction survey rate – Maintain high level of motivation 2. Financial 3. Internal Process Number of hours of training per year Training satisfaction survey rating Employee evaluation form rates – Attract and retain quality employees The Objectives 1. Customers Enhance Employee Capabilities • Employee satisfaction survey Career opportunities Average bonuses and rewards per employee Stock option per manager Alignment of Objectives – Alignment of employees’ objectives with overall strategy • • Stock options Number of committees meetings per year STRATEGIC MAP Group 4 12
- 13. Strategy Map MISSION: “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” SWOT CUSTOMER The Strategy DRIVERS • • • • The Objectives MEASURES FINANCIAL 1. Customers • MEASURES • 2. Financial MEASURES 3. Internal Process INTERNAL PROCESS MEASURES 4. Learning & Growth STRATEGIC STRATEGIC MAP MAP • LEARNING & GROWTH Existing Market Increase loyalty Increase satisfaction Increase sense of community Increase customer profitability Revenue Growth Increase number of new products Change to a more profitable product /service mix Attract new customers and enter new markets Enhance Customer Relationship Increase service efficiency and quality • Improve complaint resolution service • • • • Enhance Eployee Capabilities • Improve quality of training • Attract and retain quality employees • • • New Market Increase market share Cost Reduction Reduce product/service cost per unit Reduce selling/general adminstration costs Enhance Supplier Relationship Increase long term relationship Increase quality and yield of cofee Enhance Employee Motivation Maintain high level of motivation • • Reputation Environmental effort create the third place Asset Utilization • Improve asset utilization • • • Operations Decrese process cost and time Increase process efficiency and quality Enhance Employee Alignment Alignment of employees